A. Explanation

This Provision sets out the disclosures companies should make on how remuneration is set, and the remuneration of each director, CEO and the top five Key Management Personnel (KMP).

Practice Guidance 8 recommends the inclusion of a remuneration report in the annual report, either as an integral part or as an annexure. The remuneration report should be the main means by which the company reports to shareholders on all forms of remuneration, other payments and benefits by the company and its subsidiaries to its directors and KMP.

The annual remuneration disclosures should cover:

1. The policy and criteria for setting remuneration.
2. The names, exact amounts and breakdown of remuneration for individual directors and the CEO.
3. The names, amounts and breakdown of remuneration in bands no wider than S$250,000 for at least the top five KMP (who are not directors of the CEO).
4. The total aggregate remuneration paid to these top five KMP.
5. The names and remuneration of certain employees who are related to a director, the CEO, or a substantial shareholder.

The first four disclosure items are covered in this Provision. Item 5 is covered in Provision 8.2.

In disclosing the policy and criteria for setting remuneration, the Board should seek to provide a better understanding of the relationships between remuneration, performance and value creation. Practice Guidance 8 suggests a number of matters that could be disclosed:

• The company’s definition of value creation for its stakeholders and how it is measured.
• The process for formulating the remuneration policies, including the governance of the process.
• The way remuneration has been designed to drive corporate performance, including the key performance indicators chosen in the context of the company’s strategy, or desire to create value and generate shareholder returns.
• The way remuneration is used to manage risk, especially excessive risk taking.
• The way performance is measured, including the types of financial and non-financial metrics adopted.
• The way individual performance is assessed and accounted for.
• The metrics used to measure variable remuneration.
• Why the metrics used are appropriate, and whether relative performance is measured against peers.
• The periods over which performance is assessed.
• Pay-outs and their forms (cash, shares, etc) for hitting or exceeding targets.
• The breakdown in company and individual performance outcomes and actual remuneration paid.
• Where discretion can be exercised by the Board and/or RC in determining the relationship between remuneration, performance and value creation.
• The existence of any gateways (or negative indicators) to pay-outs, and the existence and structure of any clawbacks for malfeasance.

When disclosing the remuneration of each director, CEO and each KMP, the amounts should include all forms of remuneration (see Provision 8.3).

The disclosure of the amount of remuneration for directors and the CEO is rounded to the nearest thousand.

The amount of remuneration for the top five KMP (who are not directors or the CEO) can be disclosed in bands no wider than $250,000.

In addition to disclosing the total aggregate remuneration paid to the top five KMP, the aggregate amount of any termination, retirement and post-employment benefits that may be granted to directors, the CEO and the top five KMP (who are not directors or the CEO) should be separately disclosed.

B. Practice Guidance

• Practice Guidance 8: Disclosure on Remuneration.

C. Related Rules and Regulations

• Nil.

D. CG Guides

• RC Guide Appendix 7B-4: Disclosing Realised Pay [Stakeholder Engagement].
• RC Guide Appendix 7G: Sample Non-Executive Director Fee Disclosure [Stakeholder Engagement].

E. Related Articles

• “A question of pay” by Adrian Chan. (457KB)
• “An inconvenient question: how much is a director paid?” by Wong Su Yen. (58KB)
• “Remuneration disclosures: Is ‘comply-or-explain enough?’ by Chua Wei Hwa. (130KB)
• “Six tips for better remuneration-related disclosures” by Shai Ganu. (336KB)
• “Disclosure of Non-Executive Director and CEO remuneration in Singapore” by Mak Yuen Teen and K. K. Lalanika Vasanthi. (453KB)
• “Scrutinising Singapore’s top executive pay” by Kevin Goh. (1.1MB)
• “The current state of play in director remuneration” by Jon Robinson. (3.5MB)