Key Insights

• iDreamSky Technology Holdings to hold its Annual General Meeting on 28th of June
• Total pay for CEO Michael Chen includes CN¥1.22m salary
• The total compensation is 61% less than the average for the industry
• iDreamSky Technology Holdings' EPS declined by 49% over the past three years while total shareholder loss over the past three years was 40%

The disappointing performance at iDreamSky Technology Holdings Limited (HKG:1119) will make some shareholders rather disheartened. The next AGM coming up on 28th of June will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

How Does Total Compensation For Michael Chen Compare With Other Companies In The Industry?

Our data indicates that iDreamSky Technology Holdings Limited has a market capitalization of HK$4.5b, and total annual CEO compensation was reported as CN¥1.3m for the year to December 2023. That's a notable increase of 20% on last year. Notably, the salary which is CN¥1.22m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Entertainment industry with market capitalizations ranging between HK$1.6b and HK$6.2b had a median total CEO compensation of CN¥3.3m. Accordingly, iDreamSky Technology Holdings pays its CEO under the industry median. Furthermore, Michael Chen directly owns HK$768m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. iDreamSky Technology Holdings has gone down a largely traditional route, paying Michael Chen a high salary, giving it preference over non-salary benefits. 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.

A Look at iDreamSky Technology Holdings Limited's Growth Numbers

Over the last three years, iDreamSky Technology Holdings Limited has shrunk its earnings per share by 49% per year. In the last year, its revenue is down 26%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has iDreamSky Technology Holdings Limited Been A Good Investment?

With a total shareholder return of -40% over three years, iDreamSky Technology Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

iDreamSky Technology Holdings pays its CEO a majority of compensation through a salary. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for iDreamSky Technology Holdings that investors should be aware of in a dynamic business environment.

Important note: iDreamSky Technology Holdings 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