Fewer Singapore firms reward CEOs long-incentive plans: Survey

A Korn Ferry Hay survey found out that fewer Singapore-listed firms offer their chief executives long-term incentive plans.

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If the latest survey by human resources consultancy firm Korn Ferry Hay Group is to be considered, then it would seem like fewer firms are offering their chief executives long-term incentive plans.

According to the survey, only 11 percent of 541 Singapore-listed organisations offer these executives long-term incentives.

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The report also revealed that the median total pay for CEOs remained stuck at S$625,000 for the 2016 financial year, a little to no change from the preceding year.

Straits Times reported that the survey looked at the remuneration data from local firms in nine sectors, including commerce, construction, and manufacturing. The data was then compared to the group's findings in the United States.

It is important to note that the total direct compensation for United States CEOs, which includes bonuses, reached S$16.8 million in the 2016 financial year, representing a 4.2 percent increase in the previous year. The whopping amount of compensation was due to the long-term incentives are given to the firms' chiefs.

This came whilst 31 percent of Singapore firms did not give their CEOs bonuses. Meanwhile, 21 percent paid out bonuses despite incurring losses.

Of the 11 percent of the firms who granted long-term incentives in Singapore, almost 70 percent were large firms.

The study also noted that there is a significant misalignment between company profitability and CEO pay, with about 32 percent of firms paying higher bonuses despite lower profits.

Korn Ferry Hay Senior Client Partner Kevin Goh said 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.

"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," he told the Straits Times.