When stockmarket declines affect compensation

SINCE January 2015, the Straits Times Index has dropped by approximately 15 per cent. The depressed share prices and low corporate earnings have affected Singapore companies in various ways. Some have cut jobs, some have frozen or reduced executive salaries, while others are awarding lower bonuses. The biggest impact, however, will likely be on the companies' long-term incentive (LTI) plans.

LTI plans are recommended by Guideline 8.2 of the Code of Corporate Governance. They should be designed to align the interests of management and shareholders, and…