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ASEAN Corporate Governance Scorecard Country Report for Singapore 2018
3 April 2018
Dr Lawrence LohDirector
Centre for Governance, Institution & OrganisationsNUS 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 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 2Bonus items reflecting other emerging good practicesPenalty 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)Disclosure and transparency (25)
Total Score Attainable(Max = 130 points)
Responsibilities of the board (40)
Level 1 Score (Max = 100 points)
Rights of shareholders (10)
Equitable treatment of shareholders (10)
Role of stakeholders (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 scoresData Sourcesa. Annual reports for year ending between
1 April 2016 and 31 March 2017b. 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 70.7278.14 78.45
0
10
20
30
40
50
60
70
80
90
100
Ave
rage
To
tal S
core
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
YearAverage
Total ScoreAverage
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
13
23
36
22
12
1 21
11
27
23
1012 11
5
0
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
Nu
mb
er
of
Co
mp
anie
s
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
7.99.2 9.8
18.1
28.5
0
5
10
15
20
25
30
35
Part A: Rights of Shareholders(10 points)
Part B: Equitable Treatment ofShareholders
(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 andTransparency (25 points)
Part E: Responsibilities of theBoard
(40 points)
2012 2013 2014 2015 2017
Sco
reca
rd R
evis
ion
Sco
reca
rd R
evis
ion
Sco
reca
rd R
evis
ion
Sco
reca
rd R
evis
ion
Sco
reca
rd R
evis
ion
15
Note: 2016 was a gap year for revision and no assessment was conducted
Singapore Scores (Normalised) Breakdown Over the Years
5.1
7.85.7
14.1
21.8
5.87.6 6.8
17.4
26
6.57.9 7.7
17.3
26.1
7.48.5 8.6
19.1
29.7
7.99.2 9.8
18.1
28.5
0
5
10
15
20
25
30
35
Part A: Rights of Shareholders(10 points)
Part B: Equitable Treatment ofShareholders
(Normalised to 10 points)
Part C: Role of Stakeholders(Normalised to 15 points)
Part D: Disclosure andTransparency
(25 points)
Part E: Responsibilities of theBoard
(40 points)
2012 2013 2014 2015 2017
Sco
reca
rd R
evis
ion
Sco
reca
rd R
evis
ion
Sco
reca
rd R
evis
ion
Sco
reca
rd R
evis
ion
Sco
reca
rd R
evis
ion
16
Note: 2016 was a gap year for revision and no assessment was conducted
6
51
22
56
27
91
0
10
20
30
40
50
60
70
80
90
100
Disclosing BoardAttendance at AGM
Disclosing DetailedAGM Voting Results
Nu
mb
er o
f C
om
pan
ies
2014 2015 2017
Selected Results by Sections
17
Part A - Rights of Shareholders
Part B - Equitable Treatment of Shareholders
27
53
27
6463
92
0
10
20
30
40
50
60
70
80
90
100
Directors to Abstainfrom Board Discussions
When Conflicted
Interested PersonTransactions
Conducted in Fair andAt Arm's Length
Nu
mb
er o
f C
om
pan
ies
2014 2015 2017
65 6370
0
10
20
30
40
50
60
70
80
90
100
Having a SeparateSection/Report on
Sustainability Reporting
Nu
mb
er o
f C
om
pan
ies
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
4550
81
0
10
20
30
40
50
60
70
80
90
100
Disclosing Dividend Policy Disclosing Corporate Objectives
Nu
mb
er o
f C
om
pan
ies
2014 2015 2017
Part E – Responsibilities of the Board
18
37
13
48
28
70
0
10
20
30
40
50
60
70
80
90
100
Disclosing Measurable Standards toAlign Performance-based
Remuneration with Company's Long-term Interests
Disclosing Detailed Fee Structure ofNon-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
0
5
10
15
20
25
30
0 1 2 3 4 5 6 7
Nu
mb
er o
f C
om
pan
ies
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 requirement2 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 A3 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
Perc
enta
ge o
f Fe
mal
e D
irec
tors
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
6.76.0
4.2
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
0 1 2 3
Ave
rage
Ten
ure
of
Ind
epen
den
t D
irec
tors
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
Ave
rage
AC
GS
Tota
l Sc
ore
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-termIndependent Director
At Least 1 Long-termIndependent Director
Ave
rage
AC
GS
Tota
l Sc
ore
Long-term Independent Directors (9 years)
All-male
At Least1 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 AllDirectors
Female Representation AmongIndependent Directors
Boards withIndependent 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