SINGAPORE - The average pay for Chief Executive Officers (CEOs) in Singapore remained flat in 2011, according to a report released today by global management consulting firm Hay Group.
Based on an analysis of compensation data from 145 Singapore publicly-listed companies, the Singapore CEO Remuneration Report 2012 found that the average pay of CEOs in the financial year (FY) 2011 is approximately $2.35 million compared to 2010's $2.36 million.
The average company profit grew by one per cent.
According to the report, the median total remuneration which includes salary, bonus, allowance and long-term incentives was $1.3 million in FY 2011.
The median total remuneration for CEOs in large-sized companies was at $3.88 million, followed by $1.63 million in medium-sized companies, and $0.88 million in small-sized companies.
Although Singapore CEOs in large-sized companies received a higher median total remuneration, their remuneration accounted for a much smaller percentage (0.6 per cent) of the companies' profit compared to 1.7 per cent in medium-sized companies and 5.4 per cent in small-sized companies.
With 78 per cent of Singapore companies having at least one long-term incentive plan (LTI), it shows that there is a prevalence of LTI plans that includes performance-based share plan, restricted share plan, or share option plan in Singapore companies.
But only one-third of Singapore companies with LTI plans rewarded their CEOs with LTI in FY 2011, constituting 27 to 30 per cent of the median total remuneration.
"Compared to more mature economies, the lower utilisation of LTI in rewarding CEOs in Singapore companies could arise from a concern of potential dilution and challenges in setting performance measures for share plans, especially the long-term performance measures," explained Kevin Goh, Director of Executive Rewards, Hay Group.
Earnings growth and shareholder returns are two common performance indicators in accessing CEO pay, especially the variable component.
The report shows that 60 per cent of CEO bonuses changes correspondingly with their company growth or drop in earnings per share (EPS), while 20 per cent of the companies still paid higher bonuses to their CEOs despite negative earnings growth in the same period.
The remaining 20 per cent of the companies with improved earnings paid lower bonuses to their CEOs.
Mr Goh added: "Companies need to demonstrate a clearer and stronger link between executive remuneration and company performance."