|If necessary, the RC should seek expert advice inside and/or outside the company on remuneration of all directors. The RC should ensure that existing relationships, if any, between the company and its appointed remuneration consultants will not affect the independence and objectivity of the remuneration consultants. The company should also disclose the names and firms of the remuneration consultants in the annual remuneration report, and include a statement on whether the remuneration consultants have any such relationships with the company.|
This Guideline covers the use of expert advice by the RC, and related disclosure requirements.
Since remuneration is a complex matter, RC members cannot be expected to have in-depth and current knowledge on all aspects of the subject. In addition, a key aspect of remuneration is benchmarking with comparable organisations. Such data is often not available in-house.
Using expert advice, whether from within or outside the company, becomes important, if not, essential.
Within the company, the human resource department (HR) often has some level of expertise on the subject, as well as a deep familiarity with the company’s existing remuneration framework and its implications. Indeed, CHRO is often the secretary to the RC.
However, the source of market data and trends would usually be external consultants who specialise in these matters, and who have built up databases of market compensation.
The key caveat in this Guideline is to ensure the legitimacy, independence and objectivity of such consultants. Some useful measures include:
- Requiring disclosures by the consultant and management of past and existing relationships, and the consultant’s declaration of its independence.
- Ensuring that the consultant is selected by the RC, and reports directly to the RC rather than through management.
For transparency, the Guideline requires that the names and firms of the remuneration consultants be disclosed in the annual remuneration report so that shareholders are also able to assess their independence.
B. SGX Disclosure Guide
C. Related Rules and Regulations
D. CG Guides
- RC Guide 1.2: Structure and Authority [RC Agenda].
- RC Guide 3.2: Non-Executive Director Fee Philosophy [Non-Executive Director Fees].
- RC Guide 5.1: Introduction [Equity-Based Remuneration].
- RC Guide 7.8: Independent Advisors and Consultations [Stakeholder Engagement].
E. Related Articles
- “A question of pay” by Adrian Chan. (456KB)
- “Addressing remuneration matters as set forth in the new Code of Corporate Governance” by Na Boon Chong. (89KB)