One in three CEOs did not receive bonuses in 2016

Only 11% of companies rewarded them with long-term incentive plans.

In the face of sinking profits, 31% companies did not pay bonuses to their CEOs, whilst 21% paid bonuses to their CEOs despite losses.

According to a report by organisational advisory firm Korn Ferry, 32% of companies still kept their CEOs afloat with significantly higher pay for 2016.

This indicates a "significant misalignment between company profitability and CEO pay," it said.

Of the companies that paid out bonuses, 75% of companies paid bonuses that are less than 5% of net profit after tax (NPAT), 15% paid bonuses that were between 5-10% of NPAT, and 10% paid more than 10% of NPAT.

Korn Ferry noted that the highest bonus recorded was above 200% of NPAT.

“There is heightened pressure from shareholders to demonstrate the linkage between CEOs’ pay and the performance of the company. 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,” said Korn Ferry Hay Group senior client partner Kevin Goh.

CEOs at large-sized companies were paid a median total compensation of $3.41m per annum in 2016, higher by 0.4% YoY.

Those in medium-sized companies were paid $1.3m, which is lower by 18% YoY.

Meanwhile, small-sized company CEOs were paid $599,640, a 4% dip from last year's amount.

Median total remuneration level for CEOs in Catalist companies stayed at $375,000.

In terms of sectors, CEOs from the property industry were paid the highest with a median compensation of $1.5m per annum.

They were followed by multi-industry CEOs paid $1.3m and finance CEOs paid $1.2m.

CEOs in the transport, storage, and communications sector were paid the lowest with $500,000.

Only 11% of the companies rewarded their executives with long-term incentive (LTI) plans in 2016. About 68.8% of large companies gave out LTI pay, followed by 19% and 5.2% of medium and small companies.

“Compared to more mature economies, Singapore companies have a lower utilization of LTI in rewarding CEOs,” Goh said. “Having an LTI plan is a way of delivering the message that top executives need to balance both the short- and long-term sustainability of the company. A well-designed remuneration structure with executive pay having some resemblance to what shareholders will get out of their investment should be able to motivate executives to take actions.”