New guide to help companies tackle remuneration matters

New guide to help companies tackle remuneration matters

The book uses best practices and case studies to explain key remuneration concepts and regulations in Singapore, as well as the responsibilities, issues and challenges faced by members of a remuneration committee.

SINGAPORE: A guide on remuneration matters was launched by the Singapore Institute of Directors (SID) on Friday (Jan 15) to help companies navigate the “prickly issue” with their employees.

Called the Remuneration Committee Guide, the book uses best practices and case studies to explain key remuneration concepts and regulations in Singapore, as well as the responsibilities, issues and challenges faced by members of a Remuneration Committee.

A Remuneration Committee helps the board determine the level and structure of remuneration to be paid to Board members and executive management, along with an assessment of the executives' performance.

The book also includes guidelines on how to manage equity-based rewards such as stock options.

The book is the second in a series about corporate governance launched by the association. The first book, the Nominating Committee Guide, was released in August last year.


(Photo: Patrick John Lim)

SID said many companies shy away from disclosing their remuneration policy, citing competitive reasons. But it added that the increasing shareholder pressure for transparency cannot be ignored.

Singapore Institute of Directors chairman Willie Cheng said: "Pay is always a sensitive and hot issue, especially in these times where there's a perception that top management pay in some cases has been excessive.

"So there's a lot of scrutiny from the public and consequently the regulators, and we also have the disclosure guidelines to pay which have not been very well complied with. I think (with) shareholder and public pressure, companies are going to find it increasingly difficult to not fully disclose both in line with the code and go beyond."

He added: "Across the world, there are increasing concerns and scrutiny on matters such as the level and basis of executive remuneration. This guide aids remuneration committees who have the unenviable task of balancing the myriad of stakeholder interests, complexities and requirements that relate to remuneration matters."

SGX CEO Loh Boon Chye, who was the Guest-of-Honour at the launch of the book, said: "Among regulatory compliance and disclosure matters, remuneration matters deserve equally robust and considered deliberation by boards.

"The guidelines will help set the tone and expectations for remuneration committees, provide guidance on common issues and questions companies may have, and in the long run, help companies to tackle remuneration matters transparently."

He added: "Shareholders could be individuals or institutions investing directly or through fund managers and at the end of the day, they are part owners of the company. And I think they, not being management, the transparency on such issues allows for better engagement, and better engagement and transparency will ... just lead to a better governance structure."

SID said it plans to issue the next guide in the series, the Board Risk Committee Guide, in March this year.

Source: CNA/mz/ms