Singapore: show us the money

by Jane Moir, ACGA

16 November 2022

Disclosure of director and CEO remuneration will be on a named basis under proposed changes to the listing rules, writes ACGA Head of Research Jane Moir

In the weeks ahead of a public consultation on disclosure of board remuneration, regulators in Singapore prodded a few issuers on their decision to stay schtum on executive pay. While companies are encouraged to be full and frank, few do so.

Typically, issuers have cited poaching concerns for their reticence to be explicit (and are only required to disclose remuneration of the top five key personnel in bands), a weak argument in a market heavily dominated by family-run companies.

This was well demonstrated by the case of sushi chain Sakae Holdings. The Singapore Exchange (SGX) queried what prejudice Sakae would suffer by disclosing pay details of its chairman and CEO, given the former was its founder and controlling shareholder, and the latter was his sister. Somewhat implausibly, Sakae on 25 October 2022 claimed disclosure would put it at a competitive disadvantage.

In September 2022, SGX asked a similar question of construction firm Lian Beng Group, founded by Ong Sek Chong. Five members of the Ong family currently work for the company, or its subsidiaries. The issuer replied, perhaps not putting the family members in the most flattering light, that disclosing their remuneration “may give rise to recruitment and talent retention issues in a highly competitive business environment with a limited talent pool.’’

Upping the ante

Both cases are timely precursors to a slight shift in the regulatory landscape. In a 19-page consultation paper released on 27 October 2022, Singapore Exchange Regulation (SGX RegCo) outlined plans to require disclosure of the amount and breakdown of each director’s remuneration, and that of the CEO, on a named basis.

Family firms who fear family members being poached from the board will have much to complain about. The change will however bring Singapore in line with markets such as the UK and the US (where it is a legal requirement), as well as Hong Kong and Malaysia, where listing rules require similar disclosure.

SGX took the view that the prospects of personnel being wooed away was less likely in the case of directors and the CEO: “We believe these considerations are outweighed by the fiduciary duty owed to shareholders to provide transparency.”

Out with the old

Also in the same consultation, the Exchange is proposing to put a hard limit on independent director tenure at nine years. As we wrote earlier this year, Singapore has been cautiously turning up the heat on entrenched INEDs. From January 2022 it upgraded a requirement for a two-tier shareholder vote on INEDs at the nine-year mark from a comply-or-explain code provision to a listing rule.

Now SGX is proposing to scrap the two-tier vote and cap tenure at a hard nine years. This would put it ahead of Malaysia, which will draw the line on INED tenure at 12 years from June 2023, and Hong Kong, where its CG Code will from January 2023 require issuers with a full house of long-serving INEDs to appoint an additional independent director on a comply or explain basis.

It is worth noting that SGX says it is acting on recommendations by the Corporate Governance Advisory Committee (CGAC), formed by the Monetary Authority of Singapore (MAS) in February 2019, an industry body with representatives of institutional investors, retail shareholder groups, as well as CG experts and academics. Its mandate is advisory but it is to be hoped that this is one of several CG issues where stakeholder prudence trumps vested family interests.

About the Author(s)

Jane Moir
Head of Research, ACGA

Jane Moir
 joined ACGA as a Research Director focussed on Hong Kong. Prior to joining ACGA, she worked as a barrister and financial journalist, including 11 years at the South China Morning Post covering legal and regulatory issues. Jane has also worked as a part-time lecturer in law at HKU Space and was a contributing writer for Lexis-Nexis on securities law, corporate crime and money laundering.

No Comment Yet.
Leave a Comment
Your email address will not be published. Required fields are marked *
Comment *
Remaining 500 character(s)
Name *
Company *
Email *
Location *