Glass Lewis has submitted a response to the Singapore Exchange Regulation (SGX RegCo) consultation on the topic of Board Renewal and Remuneration Disclosures. The consultation sought comments on whether there should be a set 9-year limit on independent director tenure, which could also lead to the elimination of the two-tier voting mechanism currently in place for long-serving independent directors.
The consultation also sought comments on whether to mandate the disclosure of board and CEO remuneration on a named basis in annual reports. Currently, public companies listed on the Singapore Exchange are not required to disclose the specific remuneration of directors and CEOs on a named basis, but instead broadly disclose director and executive remuneration in bands.
The consultation followed the release of a report done by KPMG on behalf of SGX RegCo in September 2022 that examined both issues. Notably, KPMG reported its findings which found that:
- About half of the companies disclosed that they had IDs serving beyond 9 years.
- 24% of directors surveyed thought a hard limit of 9 years should apply to IDs.
- Disclosures on why companies considered individual long-serving IDs as independent were often lengthy but “not so meaningful”.
- Most companies continued to report remuneration of directors, CEOs and key management personnel in bands. Only 35% and 18% of companies disclosed director and CEO remuneration in dollar value respectively.
- Disclosures on how remuneration was determined were mostly high level, and companies often did not explain how remuneration, performance and value creation were related.
If the proposals in the consultation paper are enacted, there could be some notable changes including:
- Independent director tenure would be limited to 9 years, while the transition for Singaporean public companies to find new independent directors could be as short as one year.
- Public companies could be mandated to increase their remuneration disclosure on a named basis for directors and their CEO. This could include the breakdown of types of remuneration as well.
Glass Lewis is supportive of the proposals put forth by SGX RegCo. We view the proposed changes as better aligning Singaporean corporate governance practices and disclosure in the important areas of independent director tenure and remuneration disclosure. You can download our full response here:
For more information on Glass Lewis’ approach to proxy research, contact:
GROW@glasslewis.com (Institutional Investors) | ENGAGE@glasslewis.com (Public Companies)