Key Insights

• BAIOO Family Interactive's Annual General Meeting to take place on 26th of June
• CEO Jian Dai's total compensation includes salary of CN¥1.08m
• The overall pay is comparable to the industry average
• Over the past three years, BAIOO Family Interactive's EPS fell by 110% and over the past three years, the total loss to shareholders 84%

BAIOO Family Interactive Limited (HKG:2100) has not performed well recently and CEO Jian Dai will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 26th of June. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

How Does Total Compensation For Jian Dai Compare With Other Companies In The Industry?

At the time of writing, our data shows that BAIOO Family Interactive Limited has a market capitalization of HK$695m, and reported total annual CEO compensation of CN¥1.3m for the year to December 2023. We note that's a small decrease of 7.6% on last year. In particular, the salary of CN¥1.08m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Hong Kong Entertainment industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.2m. From this we gather that Jian Dai is paid around the median for CEOs in the industry. Moreover, Jian Dai also holds HK$166m worth of BAIOO Family Interactive stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. There isn't a significant difference between BAIOO Family Interactive and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

BAIOO Family Interactive Limited's Growth

Over the last three years, BAIOO Family Interactive Limited has shrunk its earnings per share by 110% per year. It saw its revenue drop 17% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has BAIOO Family Interactive Limited Been A Good Investment?

The return of -84% over three years would not have pleased BAIOO Family Interactive Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for BAIOO Family Interactive (1 is a bit unpleasant!) that you should be aware of before investing here.

Important note: BAIOO Family Interactive is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com