Singapore Boards Are Killing Value

Fixing gender imbalances and retiring overworked directors may boost shareholder value.

Four months ago, Singapore Post was an attractive e-commerce logistics company with Alibaba as its second-largest shareholder. The Chinese Internet giant is still around, but SingPost is starting to look like what it was before the online retail revolution: A dead letter office for shareholder value.

The troubles began with the shock departure of its commercially successful chief executive in December, followed by a special audit to probe possible governance lapses. Then came legal skirmishes with an investor group and on Thursday, a boardroom revival left in disarray after the chairman-designate declined to take up the job on the grounds it would take more time and focus than he was prepared to give.

Suddenly, SingPost is looking for both a full-time CEO and a chairman, and its claim that it's business as usual has few takers: The stock fell as much as 4 percent Thursday (although it reclaimed some ground Friday morning), and is down almost 20 percent over the past 12 months.

Lost in the Mail

SingPost shares undershoot the index

Source: Bloomberg

The sorry episode has a message for Singapore's publicly traded companies: Put some dedicated leadership back in the boardroom. If the directors can't avert disasters, they should at least be able to deal with it effectively. Else, shareholders will revolt.

A starting point would be to retire overworked directors. One of SingPost's directors, Keith Tay Ah Kee, serves on four other listed company boards, according to the company's website. Goh Yeow Tin, meanwhile, is the lead independent director of Vicom and Sheng Siong Group, an independent director of Lereno Bio-Chem and AsiaPhos, and the non-executive chairman of Seacare Medical Holdings. The national average for the most thinly stretched directors at large Singaporean companies is 4.6 additional board duties. The busiest directors appear to be more distracted than their counterparts in the U.S. and Europe:

I'm Sorry, You Were Saying What?

Highest number of additional company directorships held by any board member, except the CEO *

Source: Bloomberg

* Averaged, by geography, for companies with market values of at least $1 billion.

Dedicated boards matter, especially since they're paid so much. At large companies that pay at least an average of $100,000 a year to board members, Singapore directors' annual compensation comes in at $239,000, according to data compiled by Bloomberg. Typically, these gents -- only 9 percent are women versus 29 percent in France -- hang around for about seven years.

Take April 2009 as the start of the value-creation cycle for the currently maturing crop, and it looks like Singapore shareholders are getting a raw deal: A total return of just 0.5 percent for every thousand dollars shelled out. Directors in Germany and Britain, who are paid less, have a far superior track record when it comes to investor returns.

Worth It

Return on equity over the past seven years at large companies for every thousand dollars paid to a director *

Source: Bloomberg

* Companies with market values of more than $1 billion and paying at least an average of $100,000 annually to directors. Data as of April 8, 2016. Shareholder returns and boad members' average compensation in U.S. dollars.

Fixing the gender imbalance should be the next obvious step in Singapore's board clean-up. But it's equally important to get the mix of experience and enthusiasm right. The average age of Alibaba's board members is 54; for SingPost, it's 58, Bloomberg data show.

Helping companies reach their growth potential is the CEO's job, but ensuring they don't destroy or diminish shareholder value along the way will require dedicated, diverse and less geriatric boards. SingPost's unpleasant experience of the past few months should come as a wake-up call.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Andy Mukherjee in Singapore at

    To contact the editor responsible for this story:
    Katrina Nicholas at

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