To go with AFP story Singapore-finance-market-IPO-SGX, FOCUS by Bhavan JAIPRAGAS A woman walks past the Singapore Exchange Linited (SGX) building in Singapore on April 30, 2014. A dearth of big-name share listings of overseas firms and a multi-billion dollar penny-stock crash have hampered the growth ambitions of Singapore's stock exchange as Asian rivals flourish, analysts say. AFP PHOTO / ROSLAN RAHMAN
SINGAPORE: Listed companies in Singapore must overcome a culture of reluctance to disclose the pay packages of their top executives, as this will help them build accountability with shareholders and elevate local corporate governance standards to attract more investors.
Experts said companies should, by now, have a strategy to manage any fallout from disclosing the exact remuneration paid to their directors and chief executives ahead of a Singapore Exchange (SGX) listing rule requiring all public companies to do so by 2024.
The disclosure must include base or fixed salary, variable or performance-related income or bonuses, benefits in kind, stock options, incentives and awards, as well as other long-term incentives.
This comes on the back of data released in a Singapore Institute of Directors report last Wednesday showing that around two-thirds of companies polled still do not disclose exactly how much their CEOs and directors earn.
Published once every two years, the Singapore Directorship Report 2023 collected information from 650 companies, 42 real estate investment trusts and five business trusts listed on SGX.
The report reveals that disclosure standards have diminished over the past two years, even as CEO pay has increased.
Only 37.5% of the companies polled provided detailed remuneration disclosures, unchanged from 2021, while 48.3% gave the information in bands compared with 54% in 2021.
The data also shows that 14.2% did not make any disclosures, almost double the proportion of companies in 2021.
In contrast, 47.7% of CEOs who are also directors of their company were paid above S$500,000 in 2023, up from 43.3% in 2021.
The proportion of CEO-directors who received between S$500,000 and S$1mil and those paid more than a million, are also higher compared with 2021.
“There continues to be a reluctance among firms to fully disclose CEO and directors’ remuneration. In Asia, the culture is such that we seldom talk about how much we are paid. It is a big area we need to overcome,” said accounting professor Ho Yew Kee at the Singapore Institute of Technology.
He added that adequate and timely disclosure ensures that remuneration practices are fair, competitive and in line with a firm’s performance and industry standards.
“Yet, full disclosure is still a problem in Singapore,” he said.
Associate Professor Victor Yeo from Nanyang Business School noted that some reasons for non-disclosure are linked to concerns about the poaching of talent by competitors who are able to pay more.
“This could also lead to internal demand for higher salaries if existing pay packages are not on a par with the industry, so firms would need to start paying more every year as salaries rise.”
Professor Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore (NUS) Business School, noted that some are also concerned about personal security should their full pay cheques be revealed.
This is especially the case with CEOs, who are rewarded much more than the rest of the board and management.
He said companies have lost some top talent who opted to leave or refrain from working in public companies to avoid full disclosure.
But the experts agreed that the benefits of full remuneration disclosure far outweigh the cons.
Accounting professor Mak Yuen Teen from NUS Business School said companies that fail to be transparent could give investors a negative view of their board and management.
“It sends a signal that the company does not want to be transparent about pay equity and has something to hide. If it is rewarding its directors fairly, there should be no issue with fully disclosing this information.”
He added: “If shareholders have appointed you to sit on the board of a public company, they have a right to know in detail how much you are paid.” — The Straits Times/ANN
