Shining More Light on Remuneration Disclosures and Practices in Singapore

Published December 01, 2017

Mak Yuen Teen and Chew Yi Hong[1]

Executive remuneration is one of the key concerns of investors, especially outside of Asia. Although boards and remuneration committees would arguably be in a better position than shareholders to determine how much and how best to pay senior management, many are seen to have failed in discharging their responsibilities. Poorly designed “pay for performance” schemes have led to excessive executive pay, sharp increases in the ratio of top executive pay to average employee pay, management myopia, inappropriate risk-taking and other dysfunctional management behaviour, and are widely considered as a key contributory factor to the global financial crisis. In response, regulations in a growing number of countries now give shareholders a binding or advisory vote on executive remuneration matters through “say on pay” reforms.

By comparison, non-executive director remuneration has received less attention because of its generally small quantum relative to executive remuneration. Further, total non-executive remuneration is already subject to a binding vote by shareholders in nearly all markets. For non-executive directors, the focus has been more on how they are paid rather than the amounts, with the use of share options or other performance-based share schemes being particularly contentious.

In Asia, investors have generally been more concerned with related party transactions rather than remuneration. However, remuneration is in essence a form of related party transaction, and this is recognised by financial reporting standards which require information on key management personnel remuneration to be disclosed as part of related party disclosures.

The 2016 KPMG report on compliance with the Singapore Code of Corporate Governance by Mainboard companies commissioned by SGX found compliance with the guidelines to be the poorest of the four areas covered by the Code. This exacerbates the risks of excessive remuneration or inappropriately designed remuneration schemes.

New Report

In our forthcoming report on executive and director remuneration, we cover remuneration disclosures, amounts, mix and practices for directors, CEOs and key management personnel of more than 600 companies with a primary listing on SGX for companies with year ends from April 2016 to March 2017.

This article discusses selected findings from the report, especially on the disclosure and amount of remuneration for board chairmen and CEOs.

Overall, disclosure of exact remuneration remains low. The levels of exact disclosure are: 36% for Chairman, 30% for CEO, 27% for executive directors, 42% for non-executive non-independent directors, 38% for independent directors and 6% for key management personnel.

Remuneration disclosures for chairmen and CEOs

About 56% of the companies have an executive chairman, with 21% having a non-executive non-independent chairman and 21% with an independent chairman. Chairmen who also hold the CEO position are classified as executive chairmen. A handful of companies (2%) were without a chairman on the date of their reporting.

Disclosure of chairman remuneration was poorer for executive chairmen compared to other chairmen. For those with an executive chairman, only 29% of the companies disclosed the exact remuneration, including 4% (out of the 29%) who waived their remuneration or drew nominal sums. Two-thirds disclosed the remuneration in bands, usually of $250,000. A further 3% disclosed the remuneration of the executive chairman with no upper limit, with the bands ranging from “above $500,000” to “above $1.5 million”. Some companies that disclosed an unlimited top band for the executive chairman include Falcon Energy, Noble Group and Raffles Medical Group.

Disclosure in bands is generally not meaningful for non-executive non-independent chairmen and independent chairmen given their fee levels and typical width of the bands used.

In the case of companies with a non-executive non-independent chairman, 51% disclosed the exact remuneration (including 10% waiving or getting a nominal sum), 44% disclosed in bands, and 5% disclosed remuneration bands without naming the individuals in the bands. 44 companies (80%) that disclosed the remuneration of the non-executive non-independent chairman in bands used a 0-$250,000 band. Only five companies used smaller bands, including 0-$50,000, 0-$80,000, 0-$100,000 and $100,000-$200,000.

For companies with an independent chairman, a disappointingly low 41% disclosed exact remuneration and the remaining 59% disclosed in bands, although all the large cap companies (with market cap exceeding $1 billion) that have an independent chairman disclosed the exact chairman remuneration.  Of the 4 mid-cap (market cap of $300 million to $1 billion) and 73 small-cap (market cap below $300 million) companies that disclosed the independent chairman remuneration in bands, 68 of them used a 0-$250,000 band. The mid-cap companies that disclosed in bands are Chuan Hup, Talkmed and Q&M Dental Group which used a $250,000 band and Gallant Venture which used a $500,000 band. Seven companies used bands of less than $250,000, while Ezion used a US$250,000 band.

387 (64%) of the companies have a CEO (or managing director or equivalent), with 29% disclosing exact remuneration and 66% disclosing in bands. Four percent of these companies used a tighter band of 0-$50,000 or 0-$100,000 while over 90% used a band of $250,000. Of the latter group, 18% of the CEOs were within the 0-$250,000 band, 29% within the $250,000-$500,000 band, and 20% within the $500,000-$750,000 band. More than ten companies disclosed an unlimited top band, including BRC Asia, New Silkroutes Group and Olam International. The bands for this group ranged from “above $250,000” to “above $2 million”.

Remuneration amounts for chairmen and CEOs

For the companies that disclosed the exact remuneration for the chairman, the mean remuneration for executive chairmen was $984,000 and the median $545,000, with a maximum of $8.4 million. By comparison, non-executive non-independent chairmen were paid a mean remuneration of $121,000, a median of $70,000 and a maximum of $960,000, while for independent chairmen, the mean was $258,000, median $90,000 and maximum $1.8 million. The independent chairman fees are heavily skewed by the three banks which paid their chairmen between $1.0 million and $1.8 million. Without the banks, the mean was just $182,000.

For those that disclosed the remuneration of the executive chairman only in bands, using the mid-point of the band, the mean was $857,000, median was $375,000, and the maximum was $9.4 million.

Based only on the companies that disclosed exact remuneration, the median remuneration for an executive chairman is $2.0 million for a large cap company, $1.6 million for a mid cap company and $468,000 for a small cap company. For non-executive chairmen, the amounts are $141,000, $70,000 and $39,000 respectively, while for independent chairmen, they are $438,000, $120,000 and $64,000 respectively.


Executive Chairman Chief Executive Officer (or equivalent)
Exact disclosure Disclosure in bands Exact disclosure Disclosure in bands
Mean $984,000 Mean $857,000 Mean $1.6 million Mean $685,000
Median $545,000 Median $375,000 Median $614,000 Median $450,000
Maximum $8.4 million Maximum $9.4 million Maximum $12.9 million Maximum

$4.4 million


Non-executive non-independent Chairman Independent Chairman
Exact disclosure Exact disclosure Exact disclosure

(without the 3 local banks)

Mean $121,000   Mean $258,000 Mean $182,000
Median $70,000   Median $90,000 Median $83,000
Maximum $960,000   Maximum $1.8 million Maximum $895,000


Companies that disclosed exact CEO remuneration had a mean CEO remuneration of $1.6 million, median of $614,000 and maximum of $12.9 million. For those that disclosed in bands with an upper limit, the mean is $685,000 and the median $450,000 using the mid-point of the bands, with the highest band of $4.25 million to $4.5 million.

Based only on the companies that disclosed the exact remuneration, the median remuneration for a CEO is $3.0 million for a large cap company, $924,000 for a mid cap company and $414,000 for a small cap company.

Need to raise the bar

It is disappointing that disclosure of remuneration remains so poor in Singapore, not only compared to markets like Australia, United Kingdom and United States, but also Hong Kong. In Hong Kong, disclosure of exact remuneration and breakdown for each individual director by name is required. To the extent that the five highest paid individuals are not among the directors, similar detailed disclosure requirements apply to them. These disclosures are mandatory under the listing rules and not merely “comply or explain”.

In our view, there is no justification for using bands when disclosing the remuneration of non-executive and independent directors. Excuses such as fear of poaching are even more tenuous for such directors. Lack of full disclosure of the remuneration of independent directors also reflects poorly on these directors as one would have expected them to set the example on transparency and accountability by ensuring that their own remuneration is fully disclosed.

In the case of directors and key management personnel who are major shareholders or related to these shareholders, there is also little justification for not disclosing fully. For founder- and family-controlled companies, the use of unlimited top bands could be a means to disguise outsized remuneration that is not commensurate with the market and that is in effect an extra “dividend” that other shareholders are not entitled to.

Since remuneration is not covered by SGX rules on interested person transactions (IPTs), companies may be tempted to use remuneration instead of IPTs to expropriate from minority shareholders. We suggest that remuneration disclosure rules be aligned with IPT rules and therefore, like IPTs, any amount exceeding $100,000 paid to controlling shareholders, directors or their associates should be disclosed in exact dollar terms. Unlimited band disclosures also have no place in a disclosure-based regime.

There is also a need to minimise under-reporting of remuneration paid to directors and key management personnel. For example, in the remuneration table included in the corporate governance report, some companies exclude remuneration paid by the subsidiary companies or share options and shares granted. Companies may also exclude share options or shares granted in the directors’ remuneration put up to shareholders for approval at the general meeting. This practice has persisted even though one of the authors has previously highlighted that it is not in compliance with Section 169 of the Companies Act.

In our full report, we will shine more light into the dark corners of remuneration.

[1] The writers are, respectively, an academic and corporate governance advocate, and an active investor and corporate governance researcher.


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