The objective of the study was to analyse how SGX-listed companies paid their executive and non-executive directors in the light of the new Code of Corporate Governance.
Statistics on executive directors’ remuneration and non-executive directors’ fees obtained from 2004 annual reports of 575 SGX-listed companies were compared with those in 2003 and 2002.
As most remuneration data were available only in an aggregate form and in bands of $250,000, the study focused on group and aggregate analyses.
The range of executive directors’ remuneration and director fees paid by the various companies varied substantially but the amounts were generally dependent on company size.
The average remuneration paid to executive directors as a group in 2004 varied from an average of $522,298 for small companies (those with shareholders’ funds of less than $20 million) to $6,485,481 for large companies (those with shareholders funds of over $3 billion).
For non-executive director fees, they averaged in 2004 from $86,916 for small companies to $693,382 for large companies.
An increasing proportion of executive directors’ remuneration was linked to performance and the variable component accounted for an average of 20.3% of the remuneration packages in 2004 compared to 18.1% in 2003.
With increased profits, executive directors’ remuneration was more affordable than in previous years as it accounted for a decreasing proportion of profit. As a proportion of profit before tax, it took up an average of 23.5% in 2004 down from 30.4% in 2003 and 31.1% in 2002.
Most companies increased the remuneration to their executive directors in line with their increased profits. Executive directors’ remuneration increased by an average of 21.7% in 2004 and 12.2% in 2003. Substantial as this increase was, it was however, significantly lower than that in non-executive directors’ fees. Non-executive directors’ fees increased by 35.6% and 26.9% in 2004 and 2003 respectively. The higher increase in non-executive directors’ fees was probably due to higher basic and higher additional fees for enhanced corporate governance duties.