The Business Times
Monday, Oct 08, 2012
DISCOMFORT over some proposed changes to Standard Chartered Bank's board, notably the inclusion of too many executive directors on the board, was one of the reasons its major shareholder, Temasek Holdings Pte Ltd, had abstained from voting at the bank's May meeting, industry sources told BT.
The Singapore investment body preferred strong independent boards and did not want a situation where a small group of individuals dominates the board's decision-making. This is likely to happen with an overwhelming number of executive directors, BT understands.
According to earlier foreign media reports, StanChart said Temasek had abstained from voting to re-elect some of the bank's board members because it had misinterpreted UK corporate governance rules.
When contacted, Temasek International's associate director of corporate affairs, Jeffrey Fang told BT: "We promote sound corporate governance in our portfolio companies, and support the formation of high-calibre, experienced and diverse boards to guide and complement management leadership."
He said Temasek felt that boards should be independent of management to provide effective oversight of management on behalf of shareholders.
"We do not support excessive numbers of executive members on company boards," Mr Fang said. Temasek, he added, is keen to see boards which have the appropriate composition and strength to provide oversight of management, and will vote accordingly at shareholder meetings.
The UK Corporate Governance Code provides that the board should include an appropriate combination of executive and non-executive directors (in particular, independent non-executive directors), such that no individual or small group of individuals can dominate the board's decision-making.
The Code also provides that at least half the board, not counting the independent chairman, should comprise non-executive directors determined by the board to be independent.
StanChart had earlier told Bloomberg News: "Temasek has assured us that their abstention does not imply any criticism of the individuals concerned, nor Standard Chartered's performance or strategy."
Since 2007, the number of executive directors at StanChart has climbed from four to six, while the number of independent directors has remained the same.
Talk has been swirling that Temasek, which owns 18 per cent of Asia-focused StanChart, was considering offloading its stake for £6.4 billion (S$12.7 billion).
Asked to comment, Mr Fang said: "Temasek does not comment on rumours and speculation."
Temasek first bought into StanChart in March 2006, when it acquired 12 per cent of the lender from the estate of the late Singaporean hotelier Khoo Teck Puat for £2.3 billion.
Earlier, a source had told BT that talk of Temasek wanting to divest itself of its StanChart stake was not new as the company had said previously that there were no sacred cows when it came to its portfolio.
By March 31 this year, Temasek had invested $139 billion and divested $87 billion over the decade. Temasek has said that as an active investor, it rebalances its portfolio from time to time.
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