Listed firm boards more independent but still lack diversity, says report

Independent directors now make up a larger share of listed companies' boards but women remain under-represented, according to a new report.

It also found that not enough firms are disclosing information about directors' remuneration.

The Singapore Directorship Report compiled by the Singapore Institute of Directors (SID) and the Institute of Singapore Chartered Accountants (ISCA) analyses data on 3,780 directors on the boards of 758 companies, business trusts and real estate investment trusts listed on the Singapore Exchange as of last December.

The report, now in its second edition, was first released in 2014.

Mr Adrian Chan, deputy chairman of the SID's advocacy and research committee, said the latest report found that boards are becoming more independent - partly driven by regulatory requirements.

The revised Code of Corporate Governance states that independent directors should make up half the board if the chairman is not independent, as opposed to one-third otherwise.

A total of 62 per cent of firms have independent directors making up at least half of the board, a notable increase from 55 per cent in 2014.

But regulation is not the sole driver, Mr Chan noted. Another sign of this trend is the increase - from 54 per cent to 68 per cent - of firms that have appointed a lead independent director.

Overall, there was a 30 per cent increase in the number of lead independent directors, compared with 2014.

"All these signs show that the shoots are sprouting. Hopefully we'll see more independent oversight of boards," added Mr Chan.

This is a positive trend, said Mr Ho Tuck Chuen, the chairman of ISCA's corporate governance committee. "Independent directors can bring with them the benefits of providing an independent and objective view on their board, thus acting as a check and balance on the acts of the board and management of the company," he added.

Less positively, the report also found that only 34 per cent of firms surveyed disclosed the remuneration of named individual directors. The finance sector has the highest compliance rate and mainboard-listed firms do better than those on the Catalist board. Only 27 per cent of firms disclosed chief executive remuneration. "There seems to be real cultural bias towards avoiding disclosure of pay," said Mr Chan.

He also pointed to "disappointing" gender diversity numbers that are "moving at a glacial rate".

The report found that the percentage of women directors crept up from 10 per cent in 2014 to 11 per cent of the total pool of directors. Slightly more than half of all firms have no women on their boards and this depends largely on size - large-cap and mid-cap firms have the smallest percentage of all-male boards, compared with smaller firms.

A version of this article appeared in the print edition of The Straits Times on October 19, 2016, with the headline 'Listed firm boards more independent but still lack diversity, says report'. Print Edition | Subscribe