Here's Why Far East Hotels and Entertainment Limited's (HKG:37) CEO May Not Expect A Pay Rise This Year

Key Insights

• Far East Hotels and Entertainment to hold its Annual General Meeting on 2nd of September
• Total pay for CEO Derek Chiu includes HK$465.0k salary
• Total compensation is 81% below industry average
• Far East Hotels and Entertainment's EPS declined by 104% over the past three years while total shareholder loss over the past three years was 29%

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The disappointing performance at Far East Hotels and Entertainment Limited (HKG:37) will make some shareholders rather disheartened. The next AGM coming up on 2nd of September 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. The data we gathered below shows that CEO compensation looks acceptable for now.

View our latest analysis for Far East Hotels and Entertainment

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

At the time of writing, our data shows that Far East Hotels and Entertainment Limited has a market capitalization of HK$346m, and reported total annual CEO compensation of HK$493k for the year to March 2025. We note that's a decrease of 33% compared to last year. In particular, the salary of HK$465.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Hospitality industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.6m. In other words, Far East Hotels and Entertainment pays its CEO lower than the industry median. Furthermore, Derek Chiu directly owns HK$89m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 87% of total compensation represents salary, while the remainder of 13% is other remuneration. There isn't a significant difference between Far East Hotels and Entertainment and the broader market, in terms of salary allocation in the overall compensation package. 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 Far East Hotels and Entertainment Limited's Growth Numbers

Over the last three years, Far East Hotels and Entertainment Limited has shrunk its earnings per share by 104% per year. It saw its revenue drop 21% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Far East Hotels and Entertainment Limited Been A Good Investment?

Given the total shareholder loss of 29% over three years, many shareholders in Far East Hotels and Entertainment Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for Far East Hotels and Entertainment (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Switching gears from Far East Hotels and Entertainment, 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.