How Is Far East Hotels and Entertainment's (HKG:37) CEO Paid Relative To Peers?

Derek Chiu is the CEO of Far East Hotels and Entertainment Limited (HKG:37), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Far East Hotels and Entertainment.

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$74m, and reported total annual CEO compensation of HK$1.1m for the year to March 2020. That's a notable decrease of 56% on last year. In particular, the salary of HK$673.8k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.9m. This suggests that Derek Chiu is paid below the industry median. What's more, Derek Chiu holds HK$16m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 87% of total compensation out of all the companies we analyzed, while other remuneration made up 13% of the pie. Far East Hotels and Entertainment sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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 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 87% per year. Its revenue is down 7.6% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Far East Hotels and Entertainment Limited Been A Good Investment?

Since shareholders would have lost about 70% over three years, some Far East Hotels and Entertainment Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we noted earlier, Far East Hotels and Entertainment pays its CEO lower than the norm for similar-sized companies belonging to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.

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. That's why we did some digging and identified 1 warning sign for Far East Hotels and Entertainment that you should be aware of before investing.

Important note: Far East Hotels and Entertainment 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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