It pays to disclose board, CEO remuneration

FOR all the talk about the need for greater disclosure and transparency in recent years, Singapore-listed companies, it seems, have merely been paying lip service to the notions of corporate governance and what makes for good board practices. Under the veil of anonymity, a majority of companies have been candid enough to declare in a poll that they will not - as required under revised corporate governance guidelines - openly and fully reveal the remuneration of individual directors and the chief executive, citing mainly confidentiality and fear of poaching.

Compliance with the Code of Corporate Governance is essentially voluntary but the guidelines - updated in 2012 - spell out the disclosure standards expected, if not industry-wide best practices in key global markets. No doubt, compensation details tend to be a highly sensitive issue, particularly with CEOs whose pay is multiples of rank-and-file wages. But the spotlight on executive remuneration and increased regulation around governance of late have come in response to the corporate crises and scandals, and public outcry over excessive CEO compensation, over the decade. In any case, top management commanding million-dollar pay packets, especially those at the helm of public companies, should know that full remuneration disclosure is par for the course. And any company that can easily argue why their CEO is worth every cent that he or she is paid should have no issue publishing the pay figures.

But it is not just the requirements around executive pay disclosure that companies are not heeding, going by the findings of the survey, conducted jointly by the Singapore Institute of Directors, Singapore Exchange, Egon Zehnder International and PricewaterhouseCoopers. Apparently, their remuneration systems also are not quite up to mark in terms of being aligned with long-term interests and prudent risk-taking. While the Code recommends that companies activate contractual claw-backs, nine in 10 firms do not have any such provision to recover bonuses or any excessive payment in the event of fraud or crisis, and only 2 per cent said that they were considering addressing the issue over the next 12 months.