A. Explanation

This Provision provides guidance on the formation and duties of a Remuneration Committee (RC).

It encourages the setting up of an RC to help the Board determine the remuneration of directors and executives. This is a common approach that enhances responsible governance of director and executive remuneration, especially with contemporary concerns about, and scrutiny of, pay matters.

The SGX-ST Listing Rules require the formation of one or more committees that would, among others, cover the function of an RC (MR 210(5)(e) and CR 406(3)(e)).

The role of the RC is to recommend to the Board:

• The overall framework for remuneration of directors and key management personnel (KMP).
• The specific remuneration package for each director and KMP.

Further details of the framework and remuneration packages are provided in Provision 6.3 and its explanation.

Practice Guidance 6 makes it clear that the role of the RC is to recommend to the Board, and that the Board is ultimately accountable for all remuneration decisions.

B. Practice Guidance

• Practice Guidance 6: Procedures for Developing Remuneration Policies.

C. Related Rules and Regulations

• MR 210(5)(e) and CR 406(3)(e): Directors and Management.
• MR 720(1) and CR 720(1): Directors and Management.

D. CG Guides

• RC Guide 1.3: Terms of Reference [RC Composition].
• RC Guide 1.7: Selection of RC Members [RC Composition].
• RC Guide Appendix 1C: Scope of an RC’s Responsibilities [RC Composition].
• RC Guide Appendix 1D: Sample RC Terms of Reference [RC Composition].
• RC Guide 3.1: Introduction [Non-Executive Director Fees].
• RC Guide 3.2: Non-Executive Director Fee Philosophy [Non-Executive Director Fees].
• RC Guide 3.3: Non-Executive Director Fee Components [Non-Executive Director Fees].
• RC Guide 3.4: Use of Equity [Non-Executive Director Fees].
• RC Guide 3.5: Determining Non-Executive Director Fees [Non-Executive Director Fees].
• RC Guide Appendix 3C: Sample Non-Executive Director Fee Framework for Boards of Subsidiary Companies [Non-Executive Director Fees].
• RC Guide 4.1: Introduction [Executive Remuneration].
• RC Guide 4.2: Executive Remuneration Philosophy [Executive Remuneration].
• RC Guide 4.3: Executive Remuneration Components [Executive Remuneration].
• RC Guide 4.4: Executive Remuneration Levels [Executive Remuneration].
• RC Guide 4.8: Executive Remuneration Administration [Executive Remuneration].
• RC Guide Appendix 4C: Sample Remuneration Framework [Executive Remuneration].
• RC Guide Appendix 4I: Framework for Setting Performance Goals [Executive Remuneration].
• RC Guide 5.4: Plan Design [Equity-Based Remuneration].
• RC Guide Appendix 7C: Sample Remuneration Framework Disclosure [Stakeholder Engagement].

E. Related Articles

• “CEO pay ratios: populism or good governance?” by Shai Ganu. (154KB)
• “Pay for results: aligning executive compensation with business performance” by Fermin Diez. (108KB)
• “Scrutinising Singapore’s top executive pay” by Kevin Goh. (1.1MB)
• “Are you providing the right pay package for your C-suites?” by Tan Yong Fei. (582KB)
• “What boards need to know about compensation management in the post-global financial crisis environment” by Na Boon Chong. (85KB)
• “The current state of play in director remuneration” by Jon Robinson. (3.5MB)
• “Is ‘say on pay” the only way?” by Shai Ganu. (843KB)
• “Improving remuneration governance” by Jon Robinson. (115KB)