Singapore listed companies poor in disclosing pay practices: Study

The report found that the disclosure of remuneration amounts paid out by companies remains weak across all categories of directors and management.
The report found that the disclosure of remuneration amounts paid out by companies remains weak across all categories of directors and management.ST PHOTO: LIM YAOHUI

SINGAPORE - The disclosure of pay practices by listed companies in Singapore, in accordance with the Code of Corporate Governance, is uneven at best and inadequate at worst, according to a new report released on Thursday (Jan 11) by corporate governance advocate Mak Yuen Teen.

The report covers 609 companies with a primary listing on the Singapore Exchange (SGX), and analysed annual reports for financial years ending between April 2016 and March 2017 and published between August 2016 and July 2017.

It found that the disclosure of remuneration amounts paid out by companies remains weak across all categories of directors and management - with the disclosure of the components of remuneration often lacking sufficient clarity to allow stakeholders to assess the structure or mix of remuneration.

Another key finding of the report challenges the oft-cited argument by companies that they withhold pay information for fear of their talent being poached, Prof Mak said. The study found that, within the same market capitalisation group, companies with higher remuneration tended to be less - rather than more - transparent in remuneration disclosures.

"Companies often cite fear of poaching for not fully disclosing remuneration. Fear of poaching would imply that companies are paying below the market. Our findings do not support this. On the contrary, they are consistent with the argument that companies that disclose less may be trying to avoid drawing attention to relatively higher remuneration," he said.

The report also provides information on remuneration amounts and remuneration ratios, in order to assist companies and stakeholders in making comparisons with other companies. For example, the 609 companies paid a combined S$2.5 billion in the year, or about S$4.1 million on average per company. Shareholders in these companies approved or pre-approved total non-executive director remuneration of S$188 million, ranging from S$50,000 to S$4 million.

"The Singapore Report on Remuneration Practices: Avoiding the Apaycalypse" also lauds good behaviour and identifies overall leaders in remuneration practices, especially in terms of disclosure. Among these are CapitaLand, Frasers Centrepoint, SGX and SingTel. Small caps such as Nera Telecommunications and SP Corporation also made the list.

The report - supported by the SGX - was authored by Prof Mak, who is a professor of accounting at NUS Business School, and MBA graduate and active investor Chew Yi Hong.