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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
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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
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Scorecard Initiative
3
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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
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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
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Scorecard Structure
6
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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
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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)
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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.
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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
*
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Key Trends and Findings
11
- Singapore’s Performance
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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
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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
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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
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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
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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
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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
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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
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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
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Further Trends and Findings
20
- Selected Highlights in Relation to Board Diversity
and Corporate Governance Review Drawing from ACGS Data
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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)
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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.
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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
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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
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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
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Top Singapore Companies
26
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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