Compensation of CEOs from the top 30 listed companies typically range between $4m-$5m.
Remuneration packages of CEOs in Singapore are fairly modest in comparison to their global counterparts, according to Kumar Subramanian, partner for talent rewards and performance, southeast Asia at AON. “For perspective, the CEO of an S&P 500 company was paid on an average around US$14m a year. If you look at Singapore listed companies, only two or three CEOs would probably make that sort of figure,” said Subramanian.
In this interview with Singapore Business Review, he further discusses how CEOs in Singapore are paid, and the sectors that pay their senior executives more than their peers outside of their industry.
SBR: How much are CEOs from Singapore-listed companies paid annually, and what is included in their compensation packages?
KS: If you look at the CEOs of top 30 Singapore listed companies, their compensation generally ranges between S$4m-S$5m.
This compensation includes the guaranteed salary which includes a base salary and, in a few instances, 13th-month bonus, which is essentially an extra one month guaranteed salary for that specific year. This is applicable only if the 13th month bonus is practised throughout the organisation. Other forms of guaranteed compensation include various allowances (e.g. car) that are paid in the form of cash.
Then you have, typically, an annual incentive programme which is based on a performance scorecard that is agreed on between the Board and the CEO at the onset of the year. That performance scorecard would essentially have a list of key KPIs (Key Performance Indicators) and goals, including financial and non-financial. Depending on the actual achievement of scorecard against targets, the performance bonus could be higher or lower.
Many of the top 30 STI listed companies also have an EVA (Economic Value Added) Incentive plan. This is distinct from the annual performance bonus as it is based on economic profit, which measures the return in excess of the cost of capital. This plan normally pays out in the form of cash.
In addition, there are long-term incentives. The incentive is a contingent award of shares. These shares will typically vest over a period of three or four years. To monetise the award, the CEO needs to stay in the company as an active employee and also achieve certain performance conditions that will be attached to the vesting of the awards.
If we look at the overall package of S$4m-5m, approximately one third of the compensation would be guaranteed salary, the second one-third will be cash bonus, and the last one-third would be long-term incentives.
How have salaries changed over the last few years?
Over the last three to four years, there has been a nominal increase in the total compensation of the senior executives of the top 30 STI listed companies. The base salary increases have been quite modest, at less than 2% per annum. A significant part of the increase, therefore is a result of performance-based compensation.
How do CEO salaries differ across companies or industries in Singapore?
Several factors influence CEO compensation including the size of the company, the industry and the performance achieved. CEOs in the financial services sector get paid more than their peers outside of their industry, followed by the CEOs in the property development sector, and then broadly others.
There are a few factors that drive the pay premium. Number one is the globalisation of the talent pool. In Singapore, there are a number of global financial services firms that operate [locally], and their compensation would be aligned with global standards.
In addition, the mobility of senior management talent pool for financial services is increasingly getting globalised. You would not be surprised to see a leader who has run a fairly large business for a global financial services firm in Europe or in the US move to Singapore to lead a business unit or the corporation.
How do Singapore-based CEOs' salaries shape up compared to other countries?
The CEO of an S&P 500 company, is paid on an average around US$14m a year. If you look at Singapore listed companies very few CEOs would probably make that figure.
But you can’t necessarily compare the salaries in absolute numbers and deduce any significant conclusions from that. It would be important to take the size, industry, performance and various other factors into consideration.
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