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Most firms here won't disclose directors' pay: poll

Tuesday, March 18, 2014 - 06:00

[SINGAPORE] Most Singapore companies will stray from the new corporate governance code's guidelines on disclosing individual directors' compensation, and all but a handful pay little heed to gender equality, a survey of Singapore companies has found.

Singapore boards also remain overwhelmingly focused on using directors to provide functional expertise like audit or compliance, instead of more strategic functions such as industry know-how, according to the Board of Directors Survey by the Singapore Institute of Directors (SID) and Singapore Exchange.

The Singapore Code of Corporate Governance was updated in 2012.

But boards told the survey that they faced the most challenges in complying with remuneration-related recommendations, such as aligning remuneration to risk and introducing contractual clawbacks.

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The survey found that 68 per cent of respondents said they did not plan to follow the recommendation that companies should fully disclose the remuneration of each individual director and the chief executive on a named basis.

The top reason for deviating from the Code was confidentiality, cited by 81 per cent of respondents. The second most cited reason, by 50 per cent of the companies, was to prevent poaching.

But Na Boon Chong, senior client partner for Aon Hewitt in South-east Asia, said at a panel discussion before top executives yesterday that some of those reasons may be excuses for not wanting to disclose what are fundamentally poorly designed remuneration systems. For example, a company's compensation structure may not be equitable, whereby the CEO could be earning much more than the next executive, and opening up that structure to scrutiny could cause unhappiness in the ranks.

"I have a bit of a problem in terms of the unwillingness to disclose or the principle of transparency. It's almost like, we go public for funding; when it comes to how we pay, we go private. That doesn't seem to jive with me," Mr Na said.

Gender diversity also appeared to be a very low priority, with 95 per cent of respondents saying they did not have any policies to encourage more female representation, and 84 per cent saying they did not have any plans to do so within the next two years.

A recent board diversity study found that only about 8 per cent of Singapore's directors are women.

The weak emphasis on gender diversity is related to the broader question of overall board diversity, Egon Zehnder Singapore managing partner Elaine Yew said. "What we're really after is diversity of thinking, and gender diversity is a proxy for that, but it's not the only way we can achieve that," she said, noting that beyond having diverse members on a board, whether companies actually tap that diversity is a different question.

Adrian Chan, vice-chairman of the SID and senior partner at Lee & Lee, also did not completely buy into companies' top-cited reason of lack of suitable and interested candidates for the lack of gender diversity in Singapore.

"That's clearly not true . . . if you look at the audience today, I see a good 30 to 40 per cent are women, who are each of you capable of being appointed directors," Mr Chan said.

The survey also found that most boards sought directors who had some sort of functional expertise, such as in legal, financial, or compliance areas, compared to just 18 per cent that valued business or subject matter expertise.

Most board also delegated risk management to internal auditors.

Said PricewaterhouseCoopers partner Ng Siew Quan: "Far too many boards are bogged down with operational issues - financial issues, regulatory issues - which rightly should be done by management. And then the board can have the time to think of the strategic direction of the company in the year to come."

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