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27 Jun 07
Remuneration disclosures and policies for directors and senior executive have been identified as “a significant area of weakness” among Singapore companies, according to a study on corporate governance of listed companies here.
There was also evidence that many Singapore companies use mainly short-term incentives – such as annual cash bonuses and share incentives that vest over short periods – which are not necessarily consistent with the creation of long-term shareholder value, the study said.
“The lack of transparency in remuneration policies and levels increases the risk of excessive remuneration,” said Associate Professor Mak Yuen Teen of the National University of Singapore who carried out the study and authored the report.
The Monetary Authority of Singapore (MAS) and Singapore Exchange Ltd (SGX) released the findings today.
It was the first comprehensive review of the state of corporate governance practices of SGX-listed companies based on key areas in the Singapore Code of Corporate Governance since the code was introduced in 2001.
The study recommended several measures to improve remuneration disclosures and policies, including the need for minority shareholders to apply more pressure on companies to provide full disclosure of remuneration.
During the study, Mak reviewed the annual reports of 659 Main Board and Sesdaq-listed companies to assess how well they disclosed and implemented the best practice guidelines, and held discussions with a number of independent directors and other market participants.
The report sets out eight key recommendations, including the one on remuneration disclosures and policies, to strengthen corporate governance.
MAS and SGX said it would carefully study the report findings to help determine what practical steps to take with industry stakeholders to enhance corporate governance.
“MAS and SGX are exploring two immediate initiatives. The first, in conjunction with the Singapore Institute of Directors, is to initiate a review of how we can significantly enhance current efforts in director training and professional development in Singapore,” MAS and SGX said.
“The second is to examine giving practical guidance for audit committees on how they can better perform the critical role they play in the performance and governance of listed companies,” they added