Here's Why We Think Litian Pictures Holdings Limited's (HKG:9958) CEO Compensation Looks Fair for the time being

Key Insights

• Litian Pictures Holdings to hold its Annual General Meeting on 31st of May
• CEO Tian Tian's total compensation includes salary of CN¥1.12m
• The overall pay is comparable to the industry average
• Litian Pictures Holdings' EPS declined by 81% over the past three years while total shareholder return over the past three years was 84%

CEO Tian Tian has done a decent job of delivering relatively good performance at Litian Pictures Holdings Limited (HKG:9958) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 31st of May. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

See our latest analysis for Litian Pictures Holdings

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

At the time of writing, our data shows that Litian Pictures Holdings Limited has a market capitalization of HK$894m, and reported total annual CEO compensation of CN¥1.2m for the year to December 2023. We note that's an increase of 12% above last year. In particular, the salary of CN¥1.12m, 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 below HK$1.6b, reported a median total CEO compensation of CN¥1.2m. This suggests that Litian Pictures Holdings remunerates its CEO largely in line with the industry average. Furthermore, Tian Tian directly owns HK$192m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.1m	CN¥1.0m	94%
Other	CN¥72k	CN¥20k	6%
Total Compensation	CN¥1.2m	CN¥1.1m	100%

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. Litian Pictures Holdings 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.

Litian Pictures Holdings Limited's Growth

Litian Pictures Holdings Limited has reduced its earnings per share by 81% a year over the last three years. It achieved revenue growth of 391% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Litian Pictures Holdings Limited Been A Good Investment?

We think that the total shareholder return of 84%, over three years, would leave most Litian Pictures Holdings Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Some shareholders will be pleased by the relatively good results, however, the results could still be improved. We reckon that there are some shareholders who may be hesitant to increase CEO pay further until EPS growth starts to improve, despite the robust revenue growth.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Litian Pictures Holdings that investors should think about before committing capital to this stock.

Switching gears from Litian Pictures Holdings, 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.