How Is Far East Hospitality Trust's (SGX:Q5T) CEO Paid Relative To Peers?

The CEO of Far East Hospitality Trust (SGX:Q5T) is Gerald Lee, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Far East Hospitality Trust.

Note: The company does not report funds from operations, and as a result, we have used earnings per share in our analysis.

Check out our latest analysis for Far East Hospitality Trust

Comparing Far East Hospitality Trust's CEO Compensation With the industry

At the time of writing, our data shows that Far East Hospitality Trust has a market capitalization of S$1.2b, and reported total annual CEO compensation of S$994k for the year to December 2019. We note that's an increase of 62% above last year. We note that the salary portion, which stands at S$547.3k constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from S$537m to S$2.1b, we found that the median CEO total compensation was S$1.5m. Accordingly, Far East Hospitality Trust pays its CEO under the industry median. What's more, Gerald Lee holds S$853k worth of shares in the company in their own name.

Component	2019	2018	Proportion (2019)
Salary	S$547k	S$472k	55%
Other	S$447k	S$142k	45%
Total Compensation	S$994k	S$614k	100%

On an industry level, roughly 25% of total compensation represents salary and 75% is other remuneration. Far East Hospitality Trust pays out 55% of remuneration in the form of a salary, significantly higher than the industry average. 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 Hospitality Trust's Growth Numbers

Over the past three years, Far East Hospitality Trust has seen its earnings per share (EPS) grow by 12% per year. Its revenue is down 8.9% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Far East Hospitality Trust Been A Good Investment?

Far East Hospitality Trust has generated a total shareholder return of 3.5% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

As we noted earlier, Far East Hospitality Trust pays its CEO lower than the norm for similar-sized companies belonging to the same industry. At the same time, EPS growth has been exceptional over the past three years. Unfortunately, although shareholder returns are growing, they haven't impressed us as much in comparison, over the same period. We would wish for better returns (whether dividends or capital gains) but we do admire the solidEPS growth on show here. So considering these factors, we think Gerald is modestly compensated.

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. In our study, we found 5 warning signs for Far East Hospitality Trust you should be aware of, and 1 of them is a bit concerning.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. 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.
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