ASEAN Corporate Governance Scorecard Country ry Report for - - PowerPoint PPT Presentation

ASEAN Corporate Governance Scorecard Country ry Report for Singapore 2018

3 April 2018

Dr Lawrence Loh Director Centre for Governance, Institution & Organisations NUS Business School

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

7

LEVEL 1 LEVEL 2

Bonus items reflecting other emerging good practices Penalty items reflecting issues indicative of poor governance

Covers five areas:

• Rights of Shareholders
• Equitable Treatment of Shareholders
• Role of Stakeholders
• Disclosure and Transparency
• Responsibilities of the Board

New Scorecard Methodology

8

Bonus (+30) Penalty (-65)

Dis Disclosure an and tr transparency (25 (25) Total Score Attainable (Max = 130 points) Responsib ibili ilitie ies of

• f th

the boa

• ard (40

(40)

Level 1 Score (Max = 100 points)

Rights of shareholders (10) Equitable le tr treatment of

• f sh

shar arehold lders (10 (10) Role of

• f stakehold

lders (15 (15)

Level 2 Score (Max = 30 points)

Bonus (+30) Penalty (-65)

Scorecard Items

9

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.

Assessment Process

10

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

*

Key Trends and Findings

11

• Singapore’s Performance

Singapore Average Total Scores

12

55.67 71.68 70.72 78.14 78.45

10 20 30 40 50 60 70 80 90 100

Average Total Score 2012 2013 2014 2015 2017

Note: 2016 was a gap year for revision and no assessment was conducted

Singapore Performance Over the Years

13 * Out of a maximum Level 1 score of 100 points

Year Average Total Score Average Level 1 Score* Total Score Range Maximum Attainable 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

Note: 2016 was a gap year for revision and no assessment was conducted

Total Score Distribution Curve

14

Note: 2016 was a gap year for revision and no assessment was conducted

1 3 23 36 22 12 1 2 1 11 27 23 10 12 11 5

5 10 15 20 25 30 35 40 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

Number of Companies Total Score

2015 2017

Singapore Scores Breakdown Over the Years

5.1 11.7 3.8 14.1 21.8 5.8 11.4 4.5 17.4 26 6.5 11.9 5.1 17.3 26.1 7.4 12.7 5.7 19.1 29.7 7.9 9.2 9.8 18.1 28.5 5 10 15 20 25 30 35 Part A: Rights of Shareholders (10 points) Part B: Equitable Treatment of Shareholders (15 points for 2012-2015; 10 points for 2017) Part C: Role of Stakeholders (10 points for 2012-2015; 15 points for 2017) Part D: Disclosure and Transparency (25 points) Part E: Responsibilities of the Board (40 points) 2012 2013 2014 2015 2017 Scorecard Revision Scorecard Revision Scorecard Revision Scorecard Revision Scorecard Revision 15

Note: 2016 was a gap year for revision and no assessment was conducted

Singapore Scores (Normalised) Breakdown Over the Years

5.1 7.8 5.7 14.1 21.8 5.8 7.6 6.8 17.4 26 6.5 7.9 7.7 17.3 26.1 7.4 8.5 8.6 19.1 29.7 7.9 9.2 9.8 18.1 28.5 5 10 15 20 25 30 35 Part A: Rights of Shareholders (10 points) Part B: Equitable Treatment of Shareholders (Normalised to 10 points) Part C: Role of Stakeholders (Normalised to 15 points) Part D: Disclosure and Transparency (25 points) Part E: Responsibilities of the Board (40 points) 2012 2013 2014 2015 2017 Scorecard Revision Scorecard Revision Scorecard Revision Scorecard Revision Scorecard Revision 16

Note: 2016 was a gap year for revision and no assessment was conducted

6 51 22 56 27 91

10 20 30 40 50 60 70 80 90 100 Disclosing Board Attendance at AGM Disclosing Detailed AGM Voting Results

Number of Companies

2014 2015 2017

Selected Results by Sections

17

Part A - Rights of Shareholders Part B - Equitable Treatment

• f Shareholders

27 53 27 64 63 92

10 20 30 40 50 60 70 80 90 100 Directors to Abstain from Board Discussions When Conflicted Interested Person Transactions Conducted in Fair and At Arm's Length

Number of Companies

2014 2015 2017

65 63 70

10 20 30 40 50 60 70 80 90 100 Having a Separate Section/Report on Sustainability Reporting

Number of Companies

2014 2015 2017

Note: 2016 was a gap year for revision and no assessment was conducted

Part C – Engagement with Stakeholders

Selected Results by Sections

18

Part D - Disclosure and Transparency

38 25 34 45 50 81

10 20 30 40 50 60 70 80 90 100 Disclosing Dividend Policy Disclosing Corporate Objectives

Number of Companies

2014 2015 2017

Part E – Responsibilities of the Board

18 37 13 48 28 70

10 20 30 40 50 60 70 80 90 100 Disclosing Measurable Standards to Align Performance-based Remuneration with Company's Long- term Interests Disclosing Detailed Fee Structure of Non-executive Directors 2014 2015 2017

Note: 2016 was a gap year for revision and no assessment was conducted

In Focus: Board Diversity Performance

19

Diversity Score from ACGS (Max 7 points)

Gender Diversity (Max 3 points)

1 Female Independent Director 2 points More than 1 Female Independent Director 3 points

Diversity Policy and Disclosure (Max 4 points)

• Policy
• Disclosing measurable objectives
• Reporting on progress in achieving its objectives

27 13 22 13 16 6 1 2 5 10 15 20 25 30 1 2 3 4 5 6 7 Number of Companies Diversity Score

Further Trends and Findings

20

• Selected Highlights in Relation to Board Diversity

and Corporate Governance Review Drawing from ACGS Data

21

Source: Singapore Institute of Directors

Corporate Governance Council Recommendations

Board Diversity

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 3 MR=SGX Listing Rules (Mainboard); CR=SGX Listing Rules (Catalist)

Board Gender Representation in 100 Largest Singapore Companies

22

6.4% 6.8% 7.4% 7.7% 10.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2012 2013 2014 2015 2017

Percentage of Female Directors 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.

Independent Director Tenure and Gender Representation

7.6 6.7 6.0 4.2 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 1 2 3

Average Tenure of Independent Directors

Number of Female Independent Directors

23

Governance Performance and Gender Representation

24

73.77 81.67

68.00 70.00 72.00 74.00 76.00 78.00 80.00 82.00 84.00

Average ACGS Total Score

All-male At Least 1 Female

76.93 71.19 84.94 78.99

60.00 65.00 70.00 75.00 80.00 85.00 90.00 No Long-term Independent Director At Least 1 Long-term Independent Director

Average ACGS Total Score

Long-term Independent Directors (9 years) All-male At Least 1 Female

Board Chairman and Gender Representation

25

9.9% 11.8% 11.3% 11.2% 8.5% 9.0% 9.5% 10.0% 10.5% 11.0% 11.5% 12.0% Female Representation Among All Directors Female Representation Among Independent Directors Boards with Independent Chairman Boards with Non- independent Chairman

Top Singapore Companies

26

Top Singapore Companies

27

Ranking 2017

Company Name

Total Score 2017

1

Singapore Telecommunications Ltd

119.96 2

CapitaLand Ltd

116.44 3

DBS Group Holdings Ltd

115.73 4

Singapore Exchange Ltd

113.06 5

United Overseas Bank Ltd

112.24