Few Singapore chief executives enjoy long-term incentives, unlike their foreign counterparts
Just 11% of 541 surveyed Singapore firms gave their CEOs long-term incentives, a survey found, highlighting a “significant misalignment” between executive compensation and performance.
Of this, almost 70% were large firms, 19% were medium- sized and 5.2% small.
Thirty-one percent of Singapore firms did not pay their CEOs bonuses in the 2016 fiscal year while 21 per cent paid them despite incurring losses. Of this latter group, about a third gave out higher amounts in 2016 than in 2015, The Straits Times reported.
Median total pay for CEOs remained at $625,000 for the 2016 financial year, hardly changed from the previous year.
HR consultancy firm Korn Ferry Hay Group conducted the survey among SG companies in nine sectors that filed annual reports between May 1, 2016 and April 30, 2017.
“Remuneration committees need to address the enhanced scrutiny from corporate governance activists, with added emphasis on pay-for-performance and ultimately sustainable performance in the long term," Kevin Goh, a senior client partner at Korn Ferry Hay, told The Straits Times.
Korn Ferry Hay then compared its findings with its study of CEO pay at 300 of the largest US companies.
In contrast, US bosses’ pay increased 4.2% to $16.8 million in the 2016 financial year. Significantly, the increase was “almost entirely owing to a 4.4% rise in what is called the grant-date fair value of long-term incentives…base salaries grew only 0.8 percent.”
The long-term incentives at US firms "were by far the largest component of CEOs' pay, representing 66 per cent of their total direct compensation," according to The Straits Times.
Having a long-term incentive plan emphasises the point that "top executives need to balance both the short- and long-term sustainability of the company," Goh said.
