Singapore-listed companies required to disclose salaries and payouts to CEOs and directors under new rule

    A nine-year tenure limit for independent directors was also introduced.

    Channel News Asia, 11 January 2023

    SINGAPORE: Singapore-listed companies will be required to disclose the exact amount of payouts and salaries paid to their individual directors and chief executive officers in their annual reports.

    The new rule will take effect for annual reports prepared for the financial years ending on or after Dec 31, 2024, the Singapore Exchange Regulation (SGX RegCo) announced in a news release on Wednesday (Jan 11).

    The information companies need to disclose must include base or fixed salary, variable or performance-related income or bonuses, benefits in kind, stock options granted, shared-based incentives and awards, as well as other long-term incentives.

    In a separate statement, the Monetary Authority of Singapore (MAS) announced the amendments to the Code of Corporate Governance, to reflect the rule changes made.

    "SGX RegCo believes that the increased transparency will enable investors to assess whether the directors and CEO are appropriately incentivised," said SGX RegCo, the exchange's regulatory arm.

    While concerns about competition, sensitivity and privacy were raised during the consultation, market participants largely supported the proposal for issuers to disclose the exact amount and breakdown of remuneration paid to directors and the CEO in their annual reports, it added.

    Before the amendment, the exact remuneration disclosure requirement for directors and CEOs was set out in the Code of Corporate Governance on a “comply or explain” basis, according to MAS.


    In another move, SGX RegCo will limit the tenure of independent directors serving on the boards of listed companies to nine years.

    The proposal stemmed from recommendations by the Corporate Governance Advisory Committee (CGAC) and received broad market support during a public consultation process, said SGX RegCo.
    It will also remove, with immediate effect, the two-tier vote mechanism for companies to retain long-serving independent directors who have served for more than nine years.

    Previously, long-serving independent directors could continue to be deemed independent so long as their appointment was approved by all shareholders, and then by all shareholders excluding the directors and the CEO of the company and their associates.

    "This mechanism was widely used by issuers to retain hundreds of long-serving independent directors, inhibiting board renewal and progress on board diversity," said SGX RegCo.

    To allow affected companies to search for new independent directors, those whose tenure have exceeded the nine-year limit can continue to be deemed independent until the company's annual general meeting held for the financial year ending on or after Dec 31, 2023.

    SGX RegCo said companies can consider tapping on the resources or services provided by the Council for Board Diversity, the Singapore Institute of Directors, as well as the relevant professional associations to help in their search for new independent directors.

    SGX RegCo CEO Tan Boon Gin said: "These changes provide an opportunity for 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."

    Minister for Social and Family Development Masagos Zulkifli encouraged companies to "use this opportunity to think actively about succession planning and refresh their boards with the right mix of board directors to best chart their path forward".

    "This is an important move that will promote good governance, as well as greater diversity that strengthens boards’ decision making process.

    "This also is in line with our action plans in the White Paper on Singapore Women’s Development, to increase the representation of women on boards."

    MAS said it will amend the "Notice to All Holders of a Capital Markets Services Licence for Real Estate Investment Trust Management" to reflect the change in remuneration disclosure requirements. The changes will take effect on Jan 1, 2025.

    The revisions to the code and listing rules followed recommendations made by CGAC on Sep 13. The recommendations were in response to the review of SGX-listed companies' corporate governance disclosures, which was conducted by audit firm KPMG.
    Mr Lim Tuang Lee, Assistant Managing Director (Capital Markets) of MAS, said: "High standards of corporate governance, characterised by strong accountability and transparency, are critical in upholding investor confidence in our capital markets.

    "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."