Singapore Telecommunications Ltd. defended the company’s policy of rewarding its chief executive officer and senior management, with Chairman Simon Israel saying that total compensation is determined by more than profit alone.
“Our compensation framework ensures an alignment between compensation and performance,” Israel said in a one-page statement on Tuesday. “It is important that our stakeholders and the public have a balanced and complete view.”
SingTel issued its 2015 annual report on Monday, including details of the remuneration of CEO Chua Sock Koong and senior staff. Chua’s total cash and benefits for the year to March 31 was S$5.6 million ($4.2 million), including fixed pay of S$1.68 million and a variable bonus of S$3.83 million. She also earned S$1.74 million in stock. Israel said it’s important to note that the bonus can be clawed back if SingTel doesn’t continue to deliver sustainable value.
“It’s not an easy job,” Nicholas Teo, a strategist at CMC Markets in Singapore, said by phone on Wednesday. “She has obviously maneuvered the company really well in the face of competition, in the face of the deteriorating environment domestically. There is reasonable success in the region with the footprint they have, so it’s relative.”
Chua aims to plow profits from phone operations at home and Australia into new digital initiatives such as video, marketing and data. In April, it announced its biggest acquisition since the 2001 takeover of Australia’s Optus by spending $810 million on cyber-security business Trustwave Holdings Inc.
“The increase in total compensation to the chief executive officer of 11 percent (19 percent cash component) reflects the outperformance against various plans and their targets, and not profits alone,” Israel said. SingTel’s total shareholder return for this year’s award was 25 percent, compared with 11 percent for the Straits Times Index and 12 percent for the MSCI Asia-Pacific Telco Index, he said.
SingTel reported a 3.5 percent increase in net income to S$3.78 billion for the year ended March 31. The stock ended 0.7 percent lower at S$4.24 on Wednesday, paring gains over the past 12 months to 11 percent.
“As a large and complex business that operates across the region, our compensation is benchmarked against comparable businesses,” Israel said. “Three quarters of our earnings come from overseas and this diversification has helped create considerable shareholder value.”
Chua’s pay was covered by local media on Tuesday. The public-relations department at SingTel wasn’t immediately available after office hours on Tuesday and didn’t respond to an e-mail asking for further comment on Israel’s statement.
“We would encourage the media to take a considered view of remuneration matters in striving for higher standards of corporate governance in Singapore,” Israel said.