Board renewal and remuneration matters remain areas where improvement is needed, according to findings from an independent review of companies’ disclosures, Singapore Exchange Regulation (SGX RegCo) said today.

In the disclosure review, KPMG in Singapore (KPMG) evaluated information in annual reports and company websites based on the 2018 Code of Corporate Governance (CG Code). Annual reports of 585 listed companies whose financial years ended between 1 July 2020 and 30 June 2021 (both dates inclusive) were reviewed.1 One-third of each score was awarded when the relevant disclosure is present while the quality of the disclosure determined the rest of the score.

The results of this disclosure review are not fully comparable with the previous one done in 2016 based on the 2012 version of the CG Code. This is because the 2018 CG Code was streamlined from the 2012 version. Nevertheless, overall scores increased in the latest survey.

Separately, 474 responses were received in a survey of directors by SGX RegCo and KPMG interpreted these together with the disclosures review to arrive at the findings.

Key findings on independent directors (IDs) and remuneration matters include:

  • 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.

Commenting on the findings, SGX RegCo CEO Tan Boon Gin said, “Board renewal and disclosure of directors’ and CEOs’ remuneration are important for board independence, effectiveness and accountability, which in turn, contribute to the sustainability of companies. We had expected companies to use the 2-tier vote sparingly to retain quality independent directors beyond 9 years. What we saw was a rush to use the 2-tier vote to retain long-serving directors despite us cautioning against this. 70% of 391 long-serving IDs seats up for re-election were put to the 2-tier vote, based on a study by Associate Professor Victor Yeo of Nanyang Business School.2 Even for the 172 long-serving ID seats not due for re-election, 73% were put up for re-election via the 2-tier vote. If this is allowed to continue, we may not be able to achieve the renewal and diversity outcomes that we seek. It is therefore timely for SGX RegCo to consult on hard-coding the 9-year limit for independent directors.”

“The review also showed that remuneration disclosures remain poor. Companies argue that for competitive reasons, remuneration details should be kept vague. But the information is important for understanding the link between business performance and financial rewards. SGX RegCo is of the view that remuneration details of directors and the CEOs should be transparent as they have a fiduciary duty and the question of competition is less of a concern. We will therefore be consulting on requiring the actual remuneration of directors and CEOs to be disclosed.”


More details of the disclosure review and directors survey are found here

The Corporate Governance Advisory Committee’s statement on the review is here

1 Some 14% are large-capitalisation companies with market value exceeding $1 billion, 13% are mid-cap companies of market value of $300 million to $1 billion, while the rest of the companies (73%) are small-cap ones. Two thirds of the companies are listed on Mainboard and the rest are Catalist companies.

2 The “Study of the Implementation of the Nine-Year Rule for Long-Serving Independent Directors” by Associate Professor Victor Yeo of Nanyang Business School, Nanyang Technological University, was released on 24 July 2022 and is found here

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For media enquiries, please contact:

Ng Huiwen
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KPMG in Singapore

Jeanie Lee
Associate Director, Marketing & Communications
KPMG in Singapore

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