Disclosure of directors’ pay
Careful, regional partners watching practices here
THE relaxation of disclosure rules on directors’ pay – specifically, reducing the number of bands to only three broad ones of less than $250,000, between $250,000 and $499,999, and more than $500,000 – should be reviewed to avoid sending out mixed signals about the Stock Exchange of Singapore’s disclosure standards.
It is natural that some directors should complain about disclosure rules being “burdensome”.
While some may even be uncomfortable about the disclosure, the uneasiness is probably because they have not done it before.
The feedback I got recently from several of my director contacts who had to disclose their remuneration under the original rules was that they soon got over their unease after their initial experience.
They said the fact that all publicly-listed companies had to make such disclosures made compliance easier and they soon realised also that such information was useful for benchmarking purposes.
Directors’ pay is the decision of the board acting on shareholders’ interests.
It is therefore against the principle of disclosure if remuneration packages above $500,000 are given special “cover” status.
§ Directors’ pay is the decision of the board acting on shareholders’ interests. It is therefore against the principle of disclosure if remuneration packages above $500,000 are given special ‘cover’ status.
§ It discriminates against the smaller companies which pay their executive directors below $500,000 and also those companies with fewer directors – it is easier to figure out roughly $2 million paid to two directors compared to $10 million paid to eight directors.
§ It also discriminates against those which have already complied with earlier disclosure requirements.
Secondly, it discriminates against smaller companies which pay their executive directors below $500,000 and also those companies with fewer directors (it is easier to figure out roughly $2 million paid to two directors than $10 million to eight directors), not to mention those which have already complied with the earlier disclosure requirements.
As Singapore’s role in regional business grows, more Singaporeans will become CEOs of joint ventures abroad.
Increasingly, foreign joint-venture partners, especially those in the emerging market economics, are getting concerned about the size of the expatriate Singaporean director’s pay.
For example, it was reported recently that a regional joint-venture partner even tried to limit the company’s share to US$50,000 (S$72,000) for the Singaporean CEO’s package, above which the Singaporean partner would have to bear the excess on its own.
Our regional partners, in trying to learn from us, are observing our practices very closely.
We should not be giving them an ambivalent example – such as the latest SES relaxation – to follow, especially when we need foreign joint-venture partners to disclose more, not less, information.
Singapore is setting a fine example in heading for greater transparency in public policies and business practices.
We should keep this goal in mind when making changes to policies that already encourage transparency.