ASEAN Corporate Governance Scorecard Country ry Report for Singapore 2018 Dr Lawrence Loh Director Centre for Governance, Institution & Organisations NUS Business School 3 April 2018
Contents Scorecard Initiative Scorecard Structure Key Trends and Findings - Singapore’s Performance Further Trends and Findings - Selected Highlights in Relation to Board Diversity and Corporate Governance Review Drawing from ACGS Data Top Singapore Companies 2
Scorecard In Initiative 3
Scorecard Background • ASEAN Corporate Governance Scorecard (ACGS) started in 2011 • 6 participating countries include Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam • Underlying rationale • Reflect global principles and internationally recognised good practices • Universal and capable of being applied to different markets in ASEAN • Robust quality assurance processes to ensure independence 4
Scorecard Implementation • ASEAN Capital Market Forum Working Group • Comprises representatives from six countries • Currently coordinated by Securities and Exchange Commission Philippines • SID and CGIO appointed by Monetary Authority of Singapore as domestic ranking body • Scorecard enhancement • Scorecard revised in 2016 • G20/OECD Principles of Corporate Governance used as main benchmark 5
Scorecard Structure 6
Scorecard Framework Covers five areas: • Rights of Shareholders • Equitable Treatment of Shareholders LEVEL 1 • Role of Stakeholders • Disclosure and Transparency • Responsibilities of the Board Bonus items reflecting other emerging good practices LEVEL 2 Penalty items reflecting issues indicative of poor governance 7
New Scorecard Methodology Level 2 Score Level 1 Score (Max = 100 points) ( Max = 30 points) Rights of shareholders (10) Equitable le tr treatment of of sh shar arehold lders (10 (10) Bonus Penalty Bonus Penalty Role of of stakehold lders (15 (15) (+30) (-65) (+30) (-65) Disclosure an Dis and tr transparency (25 (25) Responsib ibili ilitie ies of of th the boa oard (40 (40) Total Score Attainable (Max = 130 points) 8
Scorecard Items Part Number of Items A – Rights of Shareholders 20 B – Equitable Treatment of Shareholders 15 C – Role of Stakeholders 13 D – Disclosure and Transparency 32 E – Responsibilities of the Board 65 Level 1 Total 145 Bonus 13 Penalty 25 Total 183 Note: 31 items (or 21%) out of the total 145 Level 1 items are given more weight based on the key areas to sharpen the focus. 9
Assessment Process Shortlist : 100 largest companies by market capitalisation * Analyse : 100 companies using Scorecard Peer review : Top 35 Singapore companies by governance performance Publish : Companies by rank based on corporate governance scores Data Sources a. Annual reports for year ending between 1 April 2016 and 31 March 2017 b. SGX announcements and media articles between 1 August 2015 and 31 July 2017 c. REITs and Business Trusts were excluded 10
Key Trends and Findings - Singapore’s Performance 11
Singapore Average Total Scores 100 90 78.45 78.14 80 71.68 Average Total Score 70.72 70 55.67 60 50 40 30 20 10 0 2012 2013 2014 2015 2017 Note: 2016 was a gap year for revision and no assessment was conducted 12
Singapore Performance Over the Years Average Average Maximum Attainable Year Total Score Range Total Score Level 1 Score* Score 2012 55.7 56.4 37.9 - 81.7 117 2013 71.7 65.1 46.8 - 105.0 142 2014 70.7 67.0 43.9 - 105.5 128 2015 78.1 74.6 49.0 - 116.0 126 2017 78.5 73.7 46.4 - 120.0 130 * Out of a maximum Level 1 score of 100 points Note: 2016 was a gap year for revision and no assessment was conducted 13
Total Score Distribution Curve 40 36 35 Number of Companies 30 27 23 23 25 22 20 2015 2017 15 12 12 11 11 10 10 5 3 5 2 1 1 1 0 40.01-50.00 50.01-60.00 60.01-70.00 70.01-80.00 80.01-90.00 90.01-100.00 100.01-110.00 110.01-120.00 Total Score Note : 2016 was a gap year for revision and no assessment was conducted 14
Singapore Scores Breakdown Over the Years 35 29.7 30 28.5 26 26.1 25 21.8 19.1 20 18.1 17.4 17.3 14.1 15 12.7 11.9 11.7 Scorecard Revision 11.4 Scorecard Revision Scorecard Revision Scorecard Revision Scorecard Revision 9.8 9.2 10 7.9 7.4 6.5 5.8 5.7 5.1 5.1 4.5 3.8 5 0 Part A: Rights of Shareholders Part B: Equitable Treatment of Part C: Role of Stakeholders Part D: Disclosure and Part E: Responsibilities of the (10 points) Shareholders (10 points for 2012-2015; Transparency Board (15 points for 2012-2015; 15 points for 2017) (25 points) (40 points) 10 points for 2017) 2012 2013 2014 2015 2017 Note: 2016 was a gap year for revision and no assessment was conducted 15
Singapore Scores (Normalised) Breakdown Over the Years 35 29.7 30 28.5 26.1 26 25 21.8 19.1 20 18.1 17.4 17.3 14.1 15 Scorecard Revision Scorecard Revision Scorecard Revision Scorecard Revision Scorecard Revision 9.8 9.2 8.6 8.5 10 7.9 7.9 7.8 7.6 7.7 7.4 6.8 6.5 5.8 5.7 5.1 5 0 Part A: Rights of Shareholders Part B: Equitable Treatment of Part C: Role of Stakeholders Part D: Disclosure and Part E: Responsibilities of the (10 points) Shareholders (Normalised to 15 points) Transparency Board (Normalised to 10 points) (25 points) (40 points) 2012 2013 2014 2015 2017 Note: 2016 was a gap year for revision and no assessment was conducted 16
Selected Results by Sections Part A - Rights of Part B - Equitable Treatment Part C – Engagement Shareholders of Shareholders with Stakeholders 100 100 92 100 91 90 90 90 Number of Companies 80 80 Number of Companies 80 70 Number of Companies 64 63 70 65 63 70 70 60 53 60 56 60 50 51 50 50 40 27 27 40 40 30 30 27 20 30 22 20 10 20 10 0 6 10 0 Directors to Abstain Interested Person 0 from Board Discussions Transactions Having a Separate Disclosing Board Disclosing Detailed When Conflicted Conducted in Fair and Section/Report on Attendance at AGM AGM Voting Results At Arm's Length Sustainability Reporting 2014 2015 2017 2014 2015 2017 2014 2015 2017 Note: 2016 was a gap year for revision and no assessment was conducted 17
Selected Results by Sections Part D - Disclosure and Transparency Part E – Responsibilities of the Board 100 100 90 90 81 80 70 80 70 Number of Companies 70 60 48 60 50 50 37 40 45 50 28 38 30 18 40 34 13 20 30 25 10 0 20 Disclosing Measurable Standards to Disclosing Detailed Fee Structure of 10 Align Performance-based Non-executive Directors 0 Remuneration with Company's Long- Disclosing Dividend Policy Disclosing Corporate Objectives term Interests 2014 2015 2017 2014 2015 2017 Note: 2016 was a gap year for revision and no assessment was conducted 18
In Focus: Board Diversity Performance Diversity Score from ACGS 30 27 (Max 7 points) 25 22 Gender Diversity Number of Companies (Max 3 points) 20 16 1 Female Independent Director 2 points More than 1 Female Independent Director 3 points 15 13 13 Diversity Policy and Disclosure (Max 4 points) 10 6 - Policy 5 - Disclosing measurable objectives 2 1 - Reporting on progress in achieving its objectives 0 0 1 2 3 4 5 6 7 Diversity Score 19
Further Trends and Findings - Selected Highlights in Relation to Board Diversity and Corporate Governance Review Drawing from ACGS Data 20
Corporate Governance Council Recommendations Board Diversity Source: Singapore Institute of Directors Footnotes: 1 Type of change: N=New or R=Review to an existing requirement 2 Reference to the Listing Rule (LR) number in Annex G of Consultation Paper; Code Provision in Annex C; Practice Guidance in Annex F; Consultation Question in Annex A 21 3 MR=SGX Listing Rules (Mainboard); CR=SGX Listing Rules (Catalist)
Board Gender Representation in 100 Largest Singapore Companies 12.0% 10.9% Percentage of Female Directors 10.0% 7.7% 7.4% 8.0% 6.8% 6.4% 6.0% 4.0% 2.0% 0.0% 2012 2013 2014 2015 2017 Sources: 2012-2015 - CGIO and KornFerry; 2017 - ACGS Notes : 1. ACGS 2017 is based on annual reports with financial year end between April 2016 and March 2017. 2. Diversity Action Committee’s announcement on 13 February 2018 revealed 13.1% of the board directorships of top 100 primary-listed companies are held by women as at 31 December 2017. 22
Independent Director Tenure and Gender Representation 7.6 8.0 Average Tenure of Independent Directors 6.7 7.0 6.0 6.0 5.0 4.2 4.0 3.0 2.0 1.0 0.0 0 1 2 3 Number of Female Independent Directors 23
Governance Performance and Gender Representation 90.00 84.00 84.94 81.67 85.00 82.00 Average ACGS Total Score Average ACGS Total Score 78.99 80.00 80.00 76.93 78.00 75.00 All-male All-male 71.19 76.00 At Least 1 Female 73.77 70.00 At Least 74.00 1 Female 65.00 72.00 70.00 60.00 No Long-term At Least 1 Long-term 68.00 Independent Director Independent Director Long-term Independent Directors (9 years) 24
Board Chairman and Gender Representation 12.0% 11.8% 11.5% 11.3% 11.2% 11.0% 10.5% Boards with Independent Chairman 9.9% 10.0% Boards with Non- 9.5% independent Chairman 9.0% 8.5% Female Representation Among All Female Representation Among Directors Independent Directors 25
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