Award winning director and actor Feng Xiaogang finds himself reaching deep into his pockets once again after his company Dongyang Meila failed to reach its promised quota as part of the conditions of sale to Huayi Brothers. In 2015, Huayi acquired a 70% stake in Feng Xiaogang’s company for a whopping RMB 1.05 billion, making them its sole shareholder aside from Mr. Feng. Dongyang Meila is obligated to net Huayi a guaranteed amount per year, with any losses covered by Feng Xiaogang.
In the past, Huayi has worked closely with Chinese superstar Fan Bingbing and is said to be one of the big investors in a lot of her projects. However, when the scandal over her “yin and yang” contracts erupted, share prices of the company also plummeted .. down to a jaw dropping 90% in fact. Whether the two situations are related or not remains to be seen, however with the huge fiscal blow dealt to the company’s bottom line, Huayi at least still has this stipulation to help “prop” up their bottom line …
Huayi’s 2020 annual report shows that Dongyang Meila did not achieve its promised net profit of RMB 174.9 million. Like many companies brought to a standstill when the pandemic hit last year, Dongyang only netted RMB 5.5M, which means the remaining RMB 168 million will have to be shouldered by Mr. Feng. The same thing actually happened back in 2018 as Dongyang Meila fell short of achieving its RMB 132 million quota. Since it only managed to net RMB 65 million, the remaining RMB 67 million had to be compensated by Feng Xiaogang.
Lucky for him, the agreement only covers up to five years from when the contract was inked, making this the last year Feng Xiaogang has to pay for any shortfalls in revenue out of his own pocket. In total, Feng Xiaogang compensated Huayi Brothers RMB 235 million .. not too bad for him considering he still walks away with more than RMB 800 million from the acquisition.