SGX queried over salaries, tech spending at AGM

Investors concerned exchange may not be on the right track as markets slow down

Mr Loh Boon Chye (above), CEO of SGX, faced questions about his $3.2 million pay package.
Mr Loh Boon Chye (above), CEO of SGX, faced questions about his $3.2 million pay package.
Mr Loh Boon Chye (above), CEO of SGX, faced questions about his $3.2 million pay package.PHOTO: SEAH KWANG PENG

The Singapore Exchange (SGX) fielded a string of queries at its annual general meeting (AGM) yesterday with investors voicing concerns over salaries and the recent trading disruption.

Around 700 shareholders attended the AGM at the Star Theatre yesterday which lasted for about three hours. Due to a slew of questions, voting on the first resolution did not start for over an hour into the meeting.

Long-time shareholder Mano Sabnani questioned the level of pay for chief executive Loh Boon Chye, given a difficult year.

The SGX recorded a full-year net profit of $349.02 million, a shade above the $348.61 million a year earlier.

Mr Loh, who became CEO in July last year, is getting a remuneration package of $3.2 million. Mr Sabnani suggested the salaries paid to top executives be reduced.

"If you want to incentivise your executives properly, and if the market is not doing well, maybe you want to make them feel the pain a bit and work harder to improve," he said, drawing applause from shareholders.

Chairman Chew Choon Seng responded: "We have to have a competitive compensation structure, comparable to financial institutions in Singapore, in order to attract the right people... and retain them."

Mr Chew, who retired from the board and as chairman at the end of the AGM, added that the exchange's performance was partly affected by market forces beyond its control. Board director Kwa Chong Seng will be the next chairman.

In his opening remarks, Mr Loh said that SGX had to grapple with interest rate changes, slower global growth and volatile commodity prices during the year.

Nonetheless, he said, the SGX has further cemented its position as a multi-asset class exchange, pointing to the launch of an over-the- counter bond trading platform in December.

"In the derivatives business, we launched the MSCI China Free Index contracts and the first offshore India Nifty sector futures," he noted, saying that the SGX is looking to add South Korea's equity index into its futures platform that already covers indices in China, India, Japan and Taiwan.

But not all investors were convinced that the SGX is on the right track. One shareholder challenged the management to "think outside the box" to incentivise companies to list on the SGX.

He also pressed the SGX on the 2013 penny stock saga: "Three years have passed, which is a long time, and there is still no resolution in sight."

Chief regulatory officer Tan Boon Gin pointed to court proceedings in January where the prosecution had said that charges would be brought by the end of this year.

Another shareholder questioned whether the spending on technology, which rose 10.3 per cent to $127.85 million in the last financial year, has been effective, given the recent trading disruption in July.

Mr Loh said the outage was prolonged due to the longer-than-expected time needed for broker firms to reconcile the market data and that the backup system was actually functioning properly.

Other issues raised yesterday also included the impact of the implementation of the minimum trading price (MTP).

An investor asked: "Out of the many AGMs I have attended, I have not found one company that said (the MTP) is a right move. Are you out of tune with the listed companies?"

Mr Loh pointed to the recent proposed refinements to the MTP scheme, adding that the SGX is open to feedback.

All resolutions were passed yesterday.

A version of this article appeared in the print edition of The Straits Times on September 23, 2016, with the headline 'SGX queried over salaries, tech spending at AGM'. Print Edition | Subscribe