Paul Y. Chen
About Paul Y. Chen
Paul Y. Chen, age 60, has served on Karat Packaging Inc.’s board since January 2019 and is the Lead Independent Director. He is a practicing CPA, managing partner and CEO of Chen & Fan Accountancy Corporation, and previously worked as an auditor and tax manager at Deloitte. He holds an MBA from the University of Southern California and a B.S. from UCLA. He is recognized by the board as an Audit Committee Financial Expert and brings 30+ years in public accounting across distribution, manufacturing, banking, biotech, and R&D services .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Chen & Fan Accountancy Corporation | Managing Partner and CEO | 1999–present | Financial audits, advisory, tax compliance; focus on U.S. entities with Pacific Rim operations |
| Deloitte | Auditor and Tax Manager | Prior to 1999 | Audit and tax experience |
External Roles
| Organization | Role | Type | Committees/Impact | Tenure |
|---|---|---|---|---|
| Genesis LA Economic Growth Corporation | Committee member | Nonprofit CDFI | Audit and finance committees | Not disclosed |
| Various community Chambers of Commerce and nonprofits (Southern California) | Board member/participant | Nonprofit | Community and economic development engagement | Not disclosed |
Board Governance
- Roles: Lead Independent Director (appointed January 2019) and Chair of the Audit Committee; Audit Committee Financial Expert per SEC rules .
- Committee memberships: Audit (Chair), Compensation, and Nominating & Corporate Governance (N&CG) .
- Independence: The board determined Mr. Chen is independent for board and committee service under SEC and Nasdaq standards .
- Attendance and engagement (FY2024): Board held 4 meetings (plus 4 unanimous written consents); Audit held 4 meetings (plus 2 UWCs); Compensation held 2 meetings (plus 1 UWC); N&CG held 0 meetings (2 UWCs). Each director attended at least 75% of their board and committee meetings; all directors attended the 2024 annual meeting .
- Audit Committee report: As Chair, Mr. Chen signed the Audit Committee Report recommending inclusion of the 2024 audited financials in the 10-K .
- Board structure: CEO also serves as Chair; Mr. Chen’s Lead Independent role provides counterbalance (presides over independent director sessions, liaison with Chair) .
Fixed Compensation (Non-Employee Director)
| Metric | FY2023 | FY2024 |
|---|---|---|
| Cash fees (USD) | $30,000 | $37,500 |
| Meeting fee policy | Increase to $7,500 per board meeting effective Aug 7, 2023 | $7,500 per board meeting in effect |
| Committee chair fees | Not disclosed | Not disclosed |
Performance Compensation (Equity Grants)
| Grant type | Grant date | Shares/Units | Grant-date fair value | Vesting |
|---|---|---|---|---|
| RSU (annual director grant) | May 7, 2024 | 2,000 | $56,440 | Vests in two equal installments on May 7, 2025 and May 7, 2026 |
No director performance metrics (e.g., TSR, EBITDA) are tied to director equity; the RSUs vest time-based .
Other Directorships & Interlocks
| Company | Public/Private | Role | Committee roles | Notes |
|---|---|---|---|---|
| None disclosed (public company boards) | — | — | — | Company proxy discloses none |
| Genesis LA Economic Growth Corporation | Nonprofit | Committee member | Audit and Finance | Not a public company; no competitive interlocks disclosed |
Expertise & Qualifications
- CPA; 30+ years in public accounting across multiple industries .
- Audit Committee Financial Expert under SEC Rule 407; financial sophistication under Nasdaq rules .
- Advanced education: MBA (USC), B.S. (UCLA) .
- Lead Independent Director responsibilities (executive session leadership; liaison with Chair) .
Equity Ownership
| As-of (Record Date) | Shares Beneficially Owned | % of Outstanding | Notes |
|---|---|---|---|
| April 22, 2024 | 11,667 | <1% | Includes shares/awards vesting within 60 days as per SEC rules |
| April 21, 2025 | 16,000 | <1% | Same methodology; total shares outstanding 20,036,505 |
No pledging or hedging disclosures specific to Mr. Chen were provided in the proxy; beneficial ownership is below 1% in both periods .
Insider Trades
| Year | Disclosure | Detail |
|---|---|---|
| 2024 | Section 16(a) compliance | One late Form 4 reported for Mr. Chen (and certain others) for the year ended Dec 31, 2024 |
| 2023 | Section 16(a) compliance | No late filings noted for Mr. Chen in FY2023 proxy; late filing referenced only for Ms. Wang |
Related-Party Exposure (Context for Board Oversight)
- Keary Global/Keary International (entities controlled by CEO’s brother) act as inventory suppliers and purchasing agents; purchases totaled $35.1M in 2024 ($39.6M in 2023); year-end A/P to these entities was $3.13M (2024) and $5.31M (2023) .
- The company sold its 49% JV stake in “Bio Earth” to Keary Global in 2023 for total consideration of ~$6.1M approved by the Board; N&CG oversees related-party policy .
Governance Assessment
-
Positives:
- Strong financial oversight: Mr. Chen chairs the Audit Committee and is designated the Audit Committee Financial Expert; he signed the audit report recommending inclusion of audited financials, and the committee met four times in 2024, indicating active oversight .
- Independent leadership: Serves as Lead Independent Director, presiding over independent sessions and acting as liaison with the Chair, which helps mitigate combined CEO/Chair risks .
- Independence and attendance: Board affirms his independence; all directors met ≥75% attendance in 2024; all attended the 2024 annual meeting .
- Director equity: Time-based RSUs provide some alignment; grant of 2,000 RSUs (vest 2025/2026) complements cash fees .
-
Watch items / RED FLAGS:
- Structural governance risk: CEO also serves as Chair; founders control ~66.2% of voting power, which can diminish minority shareholder influence; the Lead Independent Director role is important here .
- Related-party transactions: Significant ongoing purchases and a JV share transfer with entities controlled by the CEO’s brother; while overseen under policy by N&CG, these are material and warrant continued scrutiny .
- Committee cadence: N&CG held no formal meetings in 2024 (two actions by unanimous written consent); monitor effectiveness of governance processes .
- Compliance footnote: One late Form 4 filing for Mr. Chen in 2024 (minor but noted) .
Overall, Mr. Chen brings deep audit and accounting expertise, occupies key independence roles (Lead Independent and Audit Chair), and maintains acceptable attendance. The primary governance risks stem from company-level structure (combined CEO/Chair, concentrated control, and related-party dealings), which elevate the importance of Mr. Chen’s oversight and independence .