Key Insights

• FriendTimes to hold its Annual General Meeting on 16th of May
• Total pay for CEO Xiaohuang Jiang includes CN¥1.14m salary
• The total compensation is similar to the average for the industry
• Over the past three years, FriendTimes' EPS fell by 108% and over the past three years, the total loss to shareholders 63%

Shareholders will probably not be too impressed with the underwhelming results at FriendTimes Inc. (HKG:6820) recently. At the upcoming AGM on 16th of May, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Comparing FriendTimes Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that FriendTimes Inc. has a market capitalization of HK$1.7b, and reported total annual CEO compensation of CN¥1.4m for the year to December 2023. Notably, that's an increase of 19% over the year before. In particular, the salary of CN¥1.14m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Entertainment industry with market capitalizations ranging between HK$782m and HK$3.1b had a median total CEO compensation of CN¥1.9m. This suggests that FriendTimes remunerates its CEO largely in line with the industry average. Moreover, Xiaohuang Jiang also holds HK$1.1b worth of FriendTimes stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. FriendTimes is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at FriendTimes Inc.'s Growth Numbers

Over the last three years, FriendTimes Inc. has shrunk its earnings per share by 108% per year. Its revenue is down 31% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has FriendTimes Inc. Been A Good Investment?

Few FriendTimes Inc. shareholders would feel satisfied with the return of -63% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

Shareholders may want to check for free if FriendTimes insiders are buying or selling shares.

Switching gears from FriendTimes, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.