Sembcorp's CEO, top executives take pay cuts

Sembcorp Industries' chief executive Neil McGregor is voluntarily taking a pay cut of 15 per cent amid a challenging 2017 for the company, whose net profit for the year fell 41.6 per cent to $230.8 million.
Sembcorp Industries' chief executive Neil McGregor is voluntarily taking a pay cut of 15 per cent amid a challenging 2017 for the company, whose net profit for the year fell 41.6 per cent to $230.8 million.PHOTO: BLOOMBERG

Sembcorp Industries' chief executive Neil McGregor is voluntarily taking a pay cut of 15 per cent while its top executives have opted for a 10 per cent pay cut, the company revealed yesterday in its latest annual report.

The company's non-executive directors, meanwhile, will lower their fees by 15 per cent.

The reductions, which will apply to their remuneration for financial year 2017, are to underscore their support for the company through these challenging times, said a joint statement by company chairman Ang Kong Hua and Mr McGregor, who was appointed CEO in April last year.

With the cut, Mr McGregor took home $1.14 million in salary and $521,000 in bonuses for FY2017. Mr Ang received $638,000 in director's fees last year, of which $191,000 was share-based.

In their statement in the annual report, the two said their first priority was to lift the group's performance, with disciplined capital allocation being the key.

It was a challenging 2017 for Sembcorp, which saw net profit for the year fall 41.6 per cent to $230.8 million from $394.9 million a year ago, on lower contribution from its utilities and marine businesses.

  • $1.14m

    What Sembcorp Industries' chief executive Neil McGregor took home in salary for FY2017. In addition, he received $521,000 in bonuses.

  • $638k

    What company chairman Ang Kong Hua received in director's fees last year, of which $191,000 was share-based.

To sharpen capital allocation, Sembcorp will be looking at both the strategic allocation of resources as well as the quality of investments.

"By defining our priorities and investment criteria centrally we believe we can better diversify risk, and also capture opportunities through aligning our businesses with trends in the global marketplace," said the statement.

The company will step up capital recycling efforts, with one plan being the proposed initial public offering (IPO) of its India energy business.

"To build a platform for the business' future growth and sustainability, we initiated the process for an IPO of Sembcorp Energy India Limited on BSE Limited and the National Stock Exchange of India, with the filing of a draft red herring prospectus in February 2018," said the statement.

Sembcorp has also entered into a conditional agreement to divest its municipal water operations in South Africa.

Over the next two years, it is targeting divestments of its peripheral utilities assets to deliver estimated cash proceeds of up to $500 million. This is additional to potential proceeds from the proposed IPO of Sembcorp Energy India.

"We believe that this focus on active and systematic capital recycling will enable the group to strengthen our balance sheet and deliver sustainable growth," it said.

A version of this article appeared in the print edition of The Straits Times on March 30, 2018, with the headline 'Sembcorp's CEO, top executives take pay cuts'. Print Edition | Subscribe