The Singapore Exchange will require listed shipping and maritime companies to disclose the exact pay of their chief executives under new rules just unveiled.
Information to be disclosed must include base or fixed salary, variable or performance-related income or bonuses, benefits in kind, stock options granted, share-based incentives and awards, and other long-term incentives.
The SGX has said it will also limit to nine years the tenure of independent directors serving on the boards of listed issuers.
This new rule will take effect for annual reports prepared for the financial year ending on or after 31 December 2024.
Singapore Exchange Regulation, the bourse’s regulatory arm known as SGX RegCo, said that the increased transparency will enable investors to assess whether the directors and CEO are “appropriately incentivised”.
Under the existing system, most companies listed in Singapore reported the remuneration of directors, CEOs and key management personnel in bands.
“While concerns about competition, sensitivity and privacy were raised during the consultation, market participants largely supported the proposal for issuers to disclose the exact amount and breakdown of remuneration paid to directors and the CEO in their annual reports,” SGX RegCo said.
A review of disclosures by Singapore-listed companies by KMPG Singapore found only 18% of companies disclosed what they paid their CEOs, and only 35% disclosed their actual director remuneration.
SGX RegCo said it will also remove with immediate effect, the two-tier vote mechanism for companies to retain long-serving IDs who have served for more than nine years.
Previously, long-serving IDs could continue to be deemed independent so long their appointment was approved by all shareholders, and then by all shareholders excluding the directors and the CEO of the issuer, and associates of these directors and CEO.
“This mechanism was widely used by issuers to retain hundreds of long-serving IDs, inhibiting board renewal and progress on board diversity,” SGX RegCo said.
SGX RegCo chief executive Tan Boon Gin said these changes provide “an opportunity for companies to inject new skills, experience and knowledge into their boards, all of which will be invaluable in guiding the business for the long term”.
“This is an important move that will promote good governance, as well as greater diversity that strengthens boards’ decision-making process,” said Singapore’s minister for social and family development Masagos Zulkifli.
“This also is in line with our action plans in the White Paper on Singapore Women’s Development, to increase the representation of women on boards.”
