Alan Yu
About Alan Yu
Alan Yu, 55, co-founded Karat Packaging in 2000 and has served as Chairman and Chief Executive Officer since founding; he attended the University of California, Los Angeles . Under his leadership, 2024 revenue grew 4.2% year over year to $422.6 million, gross margin expanded to 38.9%, and Adjusted EBITDA was $55.3 million; Q4 2024 also saw net sales growth and margin expansion . Management reiterated focus on supply-chain diversification (Taiwan >50% of sourcing in 2024) and eco-friendly products (35% of Q4 sales), which are relevant to execution quality and pricing power .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Karat Packaging Inc. | Co‑founder; Chairman & CEO | 2000–present | Led expansion with eco-friendly product push (35% of Q4 2024 sales) and supply chain diversification (Taiwan >50% of sourcing in 2024) |
Fixed Compensation
| Fiscal Year | Base Salary ($) | All Other Compensation ($) | Notes |
|---|---|---|---|
| 2024 | 293,077 | 37,500 | Salary prorated due to amendment effective 3/12/2024; “All Other” equals $7,500 per board meeting fee paid to each board member . CEO Amendment increased base to $300,000 effective 3/12/2024 . |
| 2023 | 270,000 | 30,000 | “All Other” equals board meeting fees . |
Performance Compensation
RSU Grants (CEO)
| Grant Date | Award Type | Shares Granted | Grant‑Date Fair Value ($) | Vesting Schedule | Performance Metrics |
|---|---|---|---|---|---|
| 3/12/2024 | RSUs | 24,000 | 705,120 | 8,000 RSUs vest on 5/12/2024, 5/12/2025, 5/12/2026 | Time‑based; no performance metrics disclosed . |
Outstanding Equity Awards (as of 12/31/2024)
| Instrument | Unvested Shares | Market Value ($) | Notes |
|---|---|---|---|
| RSUs | 16,000 | 484,160 | Market value computed at $30.26 as of 12/31/2024 . |
| Stock Options | — | — | No options outstanding for Alan Yu . |
Policy note: The Compensation Committee stated that historically, including fiscal 2024, it has not granted option-like awards to NEOs .
Annual Cash Incentives
- No target bonus percentage, performance metrics, or actual cash bonus for the CEO were disclosed in the 2024–2025 proxy narratives; CEO compensation emphasized base salary and time-based RSUs .
Equity Ownership & Alignment
| As‑of Date | Shares Beneficially Owned | % of Shares Outstanding |
|---|---|---|
| 4/14/2022 | 7,362,498 | 37.2% |
| 4/22/2024 | 6,950,098 | 34.8% |
| 4/21/2025 | 6,956,348 | 34.7% |
- Upcoming CEO RSU vestings: 8,000 shares scheduled for 5/12/2025 and 8,000 on 5/12/2026, creating identifiable liquidity windows .
- As of 12/31/2024, CEO had 16,000 unvested RSUs valued at $484,160 at $30.26 per share .
- Insider concentration: Executives and directors as a group beneficially owned 66.2% as of 4/21/2025 (Yu 34.7%; Cheng 30.5%) .
Employment Terms
| Term | Detail |
|---|---|
| Employment Agreement | Amended 3/12/2024; base salary increased to $300,000; initial term through 3/12/2026 with automatic extensions unless either party provides 60 days’ notice . |
| RSU Vesting Protection | CEO Amendment granted 24,000 RSUs vesting in three equal installments on 5/12/2024, 5/12/2025, and 5/12/2026; if Mr. Yu resigns or is terminated before the final vesting on 5/12/2026, he is entitled to receive such RSUs subject to Section 5 of his employment agreement . |
| Severance | Company disclosure indicates at-will employment agreements; upon termination for cause or without good reason, NEOs are entitled only to accrued pay/benefits and no severance; standard confidentiality/invention assignment and arbitration agreements apply . |
| Clawback | SEC/Nasdaq-compliant clawback policy effective 10/2/2023 requiring recovery of incentive-based compensation upon an accounting restatement; recovery can come from prior or future incentive pay, cancellation of awards, or direct repayment . |
| Insider Trading Policy | Amended insider trading policy effective 3/12/2024; insider trading policy referenced in 2025 proxy . |
Board Governance
- Structure: CEO also serves as Chairman; Board determined this provides effective leadership given Mr. Yu’s industry experience and company knowledge. A Lead Independent Director (Paul Y. Chen) presides over independent sessions and serves as liaison .
- Meetings and attendance: Board held four meetings and took six unanimous written consents in 2023; each director attended at least 75% of Board and committee meetings .
- Committees and independence:
- Audit Committee: Members Paul Y. Chen (Chair; financial expert), Eve Yen, Eric Chen; all are independent under SEC/Nasdaq; oversees financial reporting, controls, and cybersecurity risk management .
- Compensation Committee: Members Eve Yen (Chair), Paul Y. Chen, Eric Chen; oversees executive/director pay, contracts, goals/oversight, clawback policy administration .
- Nominating & Corporate Governance Committee: Members Eve Yen, Paul Y. Chen, Eric Chen; Eric Chen serves as Chair .
Director Compensation (context for dual role)
- Non‑employee directors receive $7,500 per Board meeting and were granted 2,000 RSUs on 5/7/2024 vesting in two equal installments on 5/7/2025 and 5/7/2026 .
- CEO (as a director) received $37,500 in “All Other Compensation” for Board meeting fees in 2024 and $30,000 in 2023, on top of executive pay .
Say‑on‑Pay & Shareholder Feedback
| Year | Votes For | Votes Against | Abstentions | Broker Non‑Votes |
|---|---|---|---|---|
| 2025 | 16,925,755 | 485,849 | 10,372 | 820,674 |
| 2024 | 16,989,274 | 367,006 | 9,789 | 748,560 |
| 2023 | 18,382,519 | 23,027 | 4,153 | 473,158 |
Performance & Track Record Highlights
- FY2024: Net sales $422.6M (+4.2% y/y); gross margin 38.9% (+120 bps); Adjusted EBITDA $55.3M (13.1% margin) .
- Q4 2024: Net sales $101.6M (+6.3% y/y); gross margin 39.2% (+350 bps y/y); Adjusted EBITDA $11.3M (11.1% margin) .
- 2025 outlook: Full‑year net sales growth 9–11%; gross margin 36–38%; Adjusted EBITDA margin low‑to‑mid double-digits (company guidance) .
- Strategic actions: Reduced China dependency to ~20% of imported goods; >50% sourcing from Taiwan in 2024; price increases implemented in select categories in March–April 2025 to mitigate tariffs; eco-friendly products 35% of Q4 sales .
Compensation Structure Analysis
- Mix shift: CEO pay moved from cash‑heavy in 2023 to equity‑heavy in 2024 with a $705,120 RSU grant; no options outstanding for CEO (time‑based RSUs reduce downside risk vs options) .
- Cash elements: Base salary increased to $300,000 effective 3/12/2024; CEO also receives per‑meeting Board fees (e.g., $37,500 in 2024) .
- Performance linkage: No disclosed annual bonus plan targets or performance metrics for CEO; RSUs are time‑based rather than tied to revenue/EBITDA/TSR metrics .
- Governance controls: Company adopted an SEC/Nasdaq‑compliant clawback policy; Compensation Committee oversees pay and clawback administration .
Equity Ownership & Alignment Considerations
- High insider alignment: CEO owns ~34.7%; total insiders 66.2% as of 4/21/2025, aligning incentives but concentrating control .
- Vesting calendar: Remaining CEO RSUs vest on 5/12/2025 and 5/12/2026 (8,000 shares each), creating identifiable potential selling windows post‑vesting .
- No options for CEO as of 12/31/2024; time‑based RSUs outstanding (16,000 unvested) .
Investment Implications
- Alignment vs. control: Very high insider ownership aligns long‑term incentives but consolidates voting control; combined CEO/Chair structure is partially mitigated by a Lead Independent Director and independent committees .
- Pay‑for‑performance: 2024 equity grant materially increased CEO’s at‑risk equity component, but awards are time‑based with no disclosed performance metrics; investors relying on performance‑conditioned pay may view this as lower hurdle compensation .
- Liquidity/overhang: Two remaining 8,000‑share CEO RSU vestings (May 2025/May 2026) represent small, date‑certain supply; monitor Form 4s around vest dates for any selling activity .
- Risk management: Presence of a formal clawback policy and updated insider trading policy support governance hygiene; sustained say‑on‑pay support indicates current structure is acceptable to shareholders .