Keppel leads the pack in governance and transparency

[SINGAPORE] Keppel Corp has been named the best governed and most transparent listed company here, in the Governance & Transparency Index (GTI) 2014 - pipping frequent winner SingTel and last year's title-holder, the Singapore Exchange (SGX), to the top spot.

The rankings were announced, and the top five companies honoured, at the CPA Forum organised by CPA Australia yesterday.

The index, into its sixth year after its relaunch as the GTI, is a tripartite collaboration between CPA Australia, NUS Business School's Centre for Governance, Institutions and Organisations (CGIO), and The Business Times.

The GTI, which aims to reflect the key trends in Singapore's corporate governance landscape, looked at 644 Singapore-listed companies that released their 2013 annual reports before May 31, 2014, for its 2014 edition.

Keppel Corp was said to have fared well in several corporate governance measures used for the GTI. For example, the conglomerate disclosed details on the process by which it appointed its new chief executive officer (Loh Chin Hua), including the criteria for CEO succession, in its annual report.

Lee Boon Yang, Keppel Corp's chairman, said of the recognition: "Keppel is committed to upholding the highest standard of corporate governance and transparency in the conduct of our business. We believe this is essential for high and sustainable performance. The board and management have a strong sense of accountability towards our stakeholders. We have always aligned the company with the best practices and abided by the Code of Corporate Governance 2012. We are pleased to be ranked as Singapore's most well-governed and transparent company, and for our efforts to be recognised by the business and investing communities."

Keppel Corp finished a hair's breadth ahead of SingTel, scoring 116 points to the telco's 115 points in this year's GTI.

SembCorp Industries came in third with 113 points. SGX, last year's winner, chalked up 112 points to come in fourth, despite dropping just one point from last year's score.

Gateway services and food solutions provider SATS came into the top five for the first time, bagging 108 points to be ranked fifth. This, after it put in place a fully independent remuneration committee and disclosed the exact remuneration of its executive and non-executive directors.

"The annual trends and detailed GTI rankings over the last six years show that Singapore-listed companies are making positive strides in reinforcing the values of good corporate governance, risk management and transparency, which are at the core of financial infrastructure and foundation," said associate professor Themin Suwardy, Singapore divisional president at CPA Australia. "While there is room for improvement among listed companies in the broader market, it is clear that well-governed entities create sustainable value for organisations and are trusted by investors big and small."

Overall, the study found that the majority of listed companies have embraced the new Code of Corporate Governance, which came into effect in November 2012. For example, more companies disclosed the exact remuneration of both executive and non-executive directors, and more have whistleblowing policies in place and are implementing voting by poll during annual general meetings.

Still, there remains room for improvement. Companies could provide more detailed disclosures on board matters and investor relations; for the 2014 GTI, only 4.4 per cent of companies revealed succession plans, and only 10.4 per cent responded to investor relations queries.

Associate professor Lawrence Loh, project leader of the GTI at the CGIO, said: "Current efforts must be sustained to attain higher standards of corporate governance, which are essential to not just safeguarding shareholders' interests, but also protecting the reputation of firms."

At the panel discussion that followed the presentation of the results, the issue of whether small companies could do as well as large companies in sustaining exemplary corporate governance practices was raised. William Liem, CEO of Tuan Sing Holdings, said it depended on a company's resources - of which smaller companies typically have less - and its targets, for example, some companies' shareholders are more focused on its net-profit performance and dividend payout.

Ian Macdonald, president of Hong Leong Finance, agreed it was a matter of resources, but added: "There is one exception - Kenny Yap (of Qian Hu Corp, a relatively small company which regularly scores highly in corporate governance rankings)."

Associate professor Mak Yuen Teen, a well-known corporate governance advocate, stoked a discussion on independent directors when he asked the panel if they thought it would be a good idea to have non-controlling shareholders vote on the election/re-election of independent directors, as is the case now in Malaysia and Hong Kong.

Lim Ho Seng, chairman of Baker Technology, said the idea was attractive as it would give minority shareholders a greater say in the issue, but that he was not sure about how it would be executed.

Irving Low, head of risk consulting at KPMG in Singapore, said he felt that the state of mind of an independent director - manifested in his actions - was more important than how independent he appeared on paper.