Bosses’ shrinking pay packages

Bosses’ shrinking pay packages

Large listed companies paid CEOs less, in a trend likely to continue

By Lee Su Shyan , ASSISTANT MONEY EDITOR

EVEN Singapore’s highest-paid bosses felt the pinch last year with take-home pay among the million-dollar earners down sharply, a trend set to continue.

Only 15 per cent of 60 blue-chip firms surveyed by Ernst & Young paid their chief executives packages of over $5 million - down from 23 per cent in 2007.

‘Companies appeared to be taking a more moderate view towards executive compensation,’ said Ms Julia Smith, its performance and reward leader here.

‘There were no dramatic swings in the total compensation levels for senior executives.’

It is not hard to see what drove the pay squeeze - the economic downturn, especially within the financial sector.

Take OCBC chief executive David Conner. He was in the $5 million club in 2007 but his pay last year fell 40 per cent to between $3.75 million and $4 million.

United Overseas Bank chief executive Wee Ee Cheong saw his package trimmed by about 8 per cent from 2007 although he remained in the club, earning between $5.5 million and $5.75 million.

The tech sector’s woes were reflected in the pay packet of Venture Corp chief executive Wong Ngit Liong.

In 2007, he earned as much as $6.5 million but this declined to about $4 million last year, in part because of the decline in the value of his options.

A Straits Times check found a number of bosses still in the over $5 million club, including outgoing Singapore Exchange chief executive Hsieh Fu Hua and City Developments’ Kwek Leng Beng.

The E&Y survey checked last year’s annual reports for the 60 largest firms listed here, excluding those where detailed information was not available and companies with a primary listing base overseas.

The survey showed the spread of CEO pay packages upwards of $250,000. The largest proportion - 27 per cent - fell in the $3 million to $4 million band, including developer Wing Tai’s Cheng Wai Keung.

At the lower end of the spectrum, the proportion in the $500,000 to $1 million band shrank from 10 per cent to 7 per cent.

The proportion of CEOs receiving between $250,000 and $500,000 held steady at 5 per cent. One was Hyflux boss Olivia Lum, who described 2008 as a challenging year for the water treatment firm.

Some traditional top earners do not come from the largest companies.

Mr Jopie Ong from medium-sized Metro Holdings, for example, took home between $9 million and $9.25 million for the year ended March 31, 2008, after the sale of a property. In the 2009 financial year, the figure dived to $3.5 million.

Remuneration committees are responsible for reviewing CEO pay.

Mr Robson Lee, a partner in law firm Shook Lin & Bok, chairs several of these committees. He said: ‘When we make adjustments to the base salary or variable bonus, we do look at data of comparable businesses, and also see what the CEO can contribute in the next few years.

‘We also take into account his track record. During this downturn, we are conscious of the sentiment of minority investors towards overpaying CEOs.’

E&Y’s Ms Smith expects the moderate approach to continue.

She said the challenge is to strike a balance between rewarding and retaining key executives needed to drive business through the downturn while explaining to shareholders how pay ties in with performance.

Managing director Jon Robinson of consultancy Freshwater Advisers expects packages for this year to be lower than last year, partly because base salaries are unlikely to rise much and bonus levels may not have recovered. Firms are still likely to be focused on controlling costs.

But as the business climate rallies, so will profits and this should mean higher bonuses next year, added Mr Robinson.

If the stock market keeps rising, the value of performance shares awarded to employees will rise, adding to the overall value of the package.

Top management pay in Singapore has not been as contentious as in the United States, where regulators are clamping down on excessive pay, especially in banks.

US Treasury Department paymaster Kenneth Feinberg has ordered pay cuts averaging more than 50 per cent for 136 executives at seven banks which have still not repaid the US government bail-out money. The affected banks include Citigroup and Bank of America.

Source : Business Times - 28 October 2009

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MDA developing virtual world, e-book potential

MDA developing virtual world, e-book potential

By WINSTON CHAI

THE Media Development Authority of Singapore (MDA) is looking to grow the local digital media market further by tapping on the nascent potential of electronic books and virtual worlds.

The media regulator has introduced two new programmes - FutureBooks and FutureWorlds - to spur the development of new applications and services that can be delivered through online publishing or virtual world environments.

The MDA has identified these platforms as new ‘high-growth areas’ in the digital media space and it is seeking proposals from companies to help seize the opportunity.

According to a Deloitte study last year, the global interactive publishing market is expected to grow 14 per cent annually from 2007 to 2015, while the virtual and immersive media segment will soar from around $18 billion last year to $44 billion in 2012.

Short-listed projects under the new MDA schemes will receive support in research and development, content aggregation and commercialisation, the MDA said in a statement.

The two initiatives will draw their financing from a combined $730 million war chest created under MDA’s Singapore Media Fusion plan and the National Research Foundation’s IDM R&D (interactive digital media research and development) fund.

Besides financing, the MDA said that it will also help match-make selected projects with relevant business partners.

Singapore Press Holdings, Creative Technology and Popular e-Learning Holdings are among the companies that are in the partner network for the FutureBooks programme.

Another group of organisations including ST Electronics, Singapore Tourism Board and Street Directory are backing the media regulator’s FutureWorlds movement.

The MDA previously received 73 proposals for similar programmes that were targeted at the television, computer games and mobile sectors.

Source : Business Times - 28 October 2009

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Economists rethink S’pore growth models

Economists rethink S’pore growth models

Country needs to go beyond tweaking or fine-tuning in post-crisis world

By TEH SHI NING

LOCAL economists said yesterday that Singapore’s model of economic growth needs rethinking, as they presented ideas such as encouraging more privately owned local enterprise, a sharper shift to services, and aiding regionalisation.

Mr Bhaskaran: Suggested building a more diversified corporate eco-system
At the fourth Singapore Economic Policy Forum, organised by the Economic Society of Singapore (ESS), both private sector economists and local academics shared their views with an audience of about 190 fellow economists, public-policy makers and educators.

To meet post-crisis challenges, Singapore needs to ‘go beyond tweaking or fine-tuning’, to really rethink its economic growth model, said Manu Bhaskaran, Centennial Group partner and vice-president of the ESS.

He said that there has been an ‘inordinate emphasis on numerical targets of GDP (gross domestic product) growth’ over the past few years, which may have led to larger reactions to episodic shocks than they warranted. The economy needs to build resilience by diversifying both demand and production so as not to be as dependent on selected markets and multi-national companies (MNCs), Mr Bhaskaran said.

To strengthen ‘inherent capacity’, he suggested building a ‘more diversified corporate eco-system’ with more strong, privately owned home-grown enterprises. This could help raise consumption too, he said, Singapore’s low consumption ratio being another concern among some economists.

Given the huge savings pool in Singapore, Mr Bhaskaran said, there is much capacity for growth for Singapore’s ‘pygmy financial sector’, if savings can be mobilised to nourish the local rather than the foreign financial sector.

He also recommended regionalisation, and gave the example of Iskandar Malaysia and how linking Singapore to it could open up a larger market for local businesses.

Also calling for a change in mindset among economists in the bureaucracy, was Nanyang Technological University (NTU) economist Choy Keen Meng, who said that a ‘long-held bias in favour of manufacturing must be shed’ so as to develop the services sector.

Singapore’s high but declining growth rate has come with severe volatility not merely due to external factors such as the global economy or electronics cycles, but also domestic industrial restructuring and the falling consumption ratio, Dr Choy said.

A stronger services sector would help temper volatility and stimulate private consumption, he said, adding that he expects services to make up 70 per cent of output in future. He thinks that the government can offer greater tax incentives and reduce start-up costs for service companies.

To boost domestic demand in the medium term, he suggested that government-linked companies hand out shares to raise Singaporeans’ wealth.

Long-term growth has been the focus of several Singaporean economic forums now. In May, the government formed the Economic Strategies Committee to look at new ways for Singapore to grow, and will unveil its recommendations before next year’s Budget.

But yesterday’s forum also saw a couple of more specific discussions, on the use of monetary policy to contain asset price bubbles, as well as Singapore’s health care system.

Tackling the latter, National University of Singapore (NUS) economist Tilak Abeysinghe spoke of how Singapore should move towards a more equitable financing of universal health care.

But his suggestions for compulsory Medishield, cross-subsidies via a Medishield tax, and an elimination of the ward-class system from public wards, drew opposing voices from the floor.

Source : Business Times - 28 October 2009

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Lian Beng wins $112.7m contract

Lian Beng wins $112.7m contract

By UMA SHANKARI

LIAN Beng Group has bagged a $112.7 million contract to build The Gale, a freehold condominium in Flora Road.

The design-and-build contract was awarded by Tripartite Developers - part of the Hong Leong Group - and comprises 329 apartment units in nine eight-storey blocks, a basement carpark, a club house, swimming pool and other communal facilities.

Work is expected to start next month and to be completed by November 2012.

The Gale’s design has received the Green Mark Gold Award from the Building and Construction Authority.

‘Securing the contract for The Gale is a timely development for Lian Beng,’ the company said in a filing to the Singapore Exchange.

‘The group recently completed the construction of Ferraria Park, which is on an adjoining plot, thus minimising the resources required for the initial set-up at the new work site.’

The Gale contract comes two months after the company was awarded the job of building Waterfront Key, a 437-unit joint venture development by Frasers Centrepoint and Far East Organization, and will boost Lian Beng’s order book to about $658 million.

The group’s existing project portfolio includes the development of camp facilities at Kranji, Kovan Residences, Amber Residences and The Ritz-Carlton Residences.

Lian Beng said that it will continue to tender for construction projects in the public and private sectors.

The company’s shares lost 0.5 of a cent, or 1.5 per cent, to close at 32 cents yesterday.

Source : Business Times - 28 October 2009

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