CEO salaries an issue of proportionality

Despite Singtel's explanation (Singtel has pay-for-performance philosophy; July 7), I am unconvinced that job performance alone can justify the unusually generous pay packages that it has approved for its top executives.

In his letter, Mr Roland Chia correctly pointed out that Singtel's recent financial results - the main yardstick by which senior management teams the world over are judged - were decidedly underwhelming (Are CEOs' massive pay packages justified?; July 6).

More than that, the prospect of a multi-million-dollar salary raises serious questions over proportionality.

The contributions of top managers can certainly create tremendous value for the company.

But there is the ethical consideration that executives' pay in public-listed companies should not be excessive for the amount of work rendered.

This is especially in comparison to the salaries of lower-ranking staff, who have done their fair share in turning amorphous corporate strategy into real returns.

In many advanced economies, therefore, it is standard practice, and even a legal requirement, for companies to express remuneration for chief executives as a multiple of the average employee's wage.

For instance, the United States Securities and Exchange Commission mandates this through its Ratio Disclosure Requirement.

Last year, the chief executives of Germany's largest companies were paid salaries that were, on average, 93 times that of regular front-line workers.

In contrast, the remuneration for Singtel's chief executive, at $6.56 million, is about 145 times the Singaporean median salary, which is estimated to be in the region of $45,000.

It appears that Singtel's pay packages are relatively inflated, compared to those offered by its global peers.

A pay-for-performance philosophy is admirable in theory, but the execution leaves much to be desired.

Bearing in mind these international benchmarks as well as simmering discontent over growing income inequality, it would be wise for Singtel and other top corporations to reassess their pay policies.

Paul Chan Poh Hoi

A version of this article appeared in the print edition of The Straits Times on July 15, 2017, with the headline 'CEO salaries an issue of proportionality'. Print Edition | Subscribe