Singapore-listed firms mandated to disclose CEO salaries

But reports suggest this could just make pay go higher

Singapore-listed firms mandated to disclose CEO salaries

Singapore-listed companies will now be required to disclose the salaries paid to their chief executive officers as well as individual directors, according to the Singapore Exchange Regulation (SGX RegCo).

The new rule will take effect for annual reports prepared for the financial years ending on or after Dec. 31, 2024.

The disclosure must include base or fixed salary, variable performance-related income or bonuses, benefits in kind, stock options granted, share-based incentives and awards, as well as other long-term incentives.

"SGX RegCo believes that the increased transparency will enable investors to assess whether the directors and CEO are appropriately incentivised," the SGX RegCo said in a media release early this year.

According to SGX RegCo CEO Tan Boon Gin, the change will enable 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."

To reflect the change, the Monetary Authority of Singapore (MAS) also introduced changes to its Code of Corporate Governance.

"The latest enhancements, which are in line with global best practices, are important steps to further strengthen director independence, encourage board renewal and improve market transparency," Lim Tuang Lee, assistant managing director (Capital Markets) at MAS, said in a statement.

Pay disclosures among executives have been introduced in the past in the United States, United Kingdom, and the European Union.

Bloomberg recently reported that 40% of the 103 companies it tracked disclose pay.

Higher salaries in sight

Despite the mandated disclosure, however, a new report from Bloomberg forecasts that pay granted to CEOs and individual directors will likely still increase.

There is "little evidence" that pay disclosure could moderate pay, according to Alexander Pepper, professor of management practice at the London School of Economics and Political Science, as reported by Bloomberg.

Pepper cited the case of CEOs in the FTSE 100 Index, who registered pay rises of about 10% per year between 1995 and 2017.

"The result of disclosure has been a ratcheting up in pay — companies copy the pay practices of other companies as they fear being left behind with the least able top executives," Pepper told Bloomberg.

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