More regulation is not the answer for dealing with executive compensation issues, said two panellists at a discussion on corporate governance yesterday.
Qian Hu Corporation executive chairman Kenny Yap and RSM Ethos managing director Tay Woon Teck both said that executive pay in Asia is not excessive and family-managed businesses do set good examples.
Mr Tay, an auditor and business adviser, said that as companies have to disclose CEO and director pay in annual reports, they want to avoid awkward shareholder questions by not paying excessively.
"In Singapore, Chinese-managed businesses are very thin-skinned. They don't like to be challenged at AGMs. The reality is they tend to make sure they are not out of the norm," he said.
There are various regulating mechanisms in play already and more rules like pay caps should not be set, he said.
Mr Yap, the boss of the mainboard-listed homegrown ornamental fish breeder, said it is difficult to run a company when other people are telling him how to pay.
"If you're bad, whatever regulations you have, you'll still be bad," he said.
The two were speaking at the second day of the 4th Asian Investors Corporate Governance Conference. The conference is part of this year's Corporate Governance Week organised by investor lobby group Sias, or the Securities Investors Association (Singapore).
Mr Tay said companies here are regulated on pay in other ways - through an independent element on remuneration committees, and through a clawback mechanism in pay contracts that will be activated in the event of fraud, as suggested by the code of corporate governance.
Businesses also believe a Chinese saying to the effect that "if I don't behave, take more than I deserve, the people down the line will do monkey business", he said. "There's this ethical limit which I find encouraging."
Other panellists, however, see things differently.