Most SGX listcos fail to offer transparency on how executive bonuses are set: NUS study
SGX RegCo CEO Tan Boon Gin says executive pay serves as an important indicator of corporate value creation
Add BT as a preferred source
[SINGAPORE] A large majority of Singapore Exchange (SGX)-listed companies do not disclose how bonuses are determined for executive directors, based on a study on remuneration practices by the Centre for Investor Protection (CIP) at the National University of Singapore (NUS) Business School.
The study, published on Monday (Mar 23), covers 510 SGX-listed issuers with annual reports for financial years ending on or after Dec 31, 2024. It found that 284 companies provided no information on bonus performance measures.
Among companies that did disclose, 22 disclosed only financial measures, 146 disclosed both financial and non-financial measures, and two disclosed only non-financial measures.
These findings were presented at “Pay for Value: Rethinking Remuneration for Long-Term Performance”, an inaugural forum hosted by the newly established GDInstitute (GDI).
Founded by corporate governance advocate and NUS Business School accounting professor Mak Yuen Teen, GDI was launched earlier this year as a rival to the Singapore Institute of Directors.
Speaking at the forum, Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo), noted that the Code of Corporate Governance has long recommended exact pay disclosure for directors and CEOs.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
However, most companies “still preferred to take advantage of the leeway offered by the rules, which allowed companies to disclose remuneration in bands”, he added.
Tan emphasised that disclosure is crucial for investors to assess whether the interests of a company’s directors and CEO are aligned with those of shareholders.
He said: “Remuneration disclosures strengthen the accountability of the board and the remuneration committee. They allow investors to set benchmarks and make comparisons. And they enable informed questioning and voting on director election and remuneration matters at the annual general meeting.”
From an investor’s perspective, Tan noted that executive pay serves as an important indicator of corporate value creation.
“How CEOs are paid in the last financial year should reflect how they have performed, (and) how they are paid in the coming years should be aligned with value creation for shareholders,” he added.
In 2023, SGX RegCo updated the rules to require companies to disclose the exact remuneration of their directors and CEOs. The rule applies to annual reports for financial years ending on or after Dec 31, 2024.
Remuneration remains “opaque”
Despite greater transparency in directors’ and CEOs’ pay, the CIP report found that remuneration for key management personnel and employees related to substantial shareholders, directors or CEOs remains opaque.
Disclosure of remuneration policies also remains weak, making it difficult for investors to understand the link between pay and long-term value creation.
Based on the findings, the study made 12 recommendations to improve remuneration practices and better align pay with long-term value creation.
These include: disclosing the identity of remuneration consultants; providing clearer guidance on performance-based pay for management who are significant shareholders; and proposing that companies disclose specific performance measures and weightings.
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Copyright SPH Media. All rights reserved.
