Thread by @jamuslim

Corporate governance is one of the less-sexy topics within corporate finance and asset management. After all, everyone wants to know about firms’ profitability metrics, new product lines, and growth plans. (1/n)

In contrast, issues such shareholder rights, board independence, and compensation schemes evoke yawns among all but the most nerdy analysts and researchers. What does “governance” really mean for a private corporation anyway? (2/n)

These matters appear to be best left to insiders, who may know best for how to run the business. But such matters are actually enormously important. There is a sizable literature that links strong corporate governance metrics to outsized returns. (3/n)

Indeed, @SGX recently promoted greater disclosure for one particular dimension of corporate governance: remuneration. With rising inequality, and C-suite execs earning many more multiples than the employees they oversee compared to the past, such transparency seems overdue. (4/n)

But Singapore actually has publicly-owned companies that aren’t publicly traded (wrap your head around that). In particular, our government investment entities are not listed on the stock exchange, and are not obliged to adhere to the same standards. (5/n)

This is despite the fact that they are (directly and indirectly) funded with public monies, and (indirectly) perform a public service. It seems reasonable that GIC and Temasek be paragons of corporate transparency. (6/n)

The model here is Norway’s Government Pension Fund (GPF). GPF publishes detailed annual reports that include all manner of information about the fund, including the salaries and names of senior management. (7/n)

Such disclosure allows GPF to be accountable, and allows the public to assess whether salaries are commiserate with performance (also published in detail). The report runs more than 160 pages and is chock-full of data (GIC’s is 100+, while Temasek’s is 60+). (8/n)

Such transparency appears to work. The investment fund recently announced that it is increasingly voting against large executive pay packages at companies that it owns, and is own top salaries are not egregious. (9/n)

In a response to a parliamentary question I posed on expanding remuneration disclosure, Minister Wong responded that the two entities were not subject to the same code of corporate governance, and did not commit to requiring them to do so. (10/n)

Instead, GIC and Temasek are “encouraged” to continually review whether there are more “meaningful disclosures” they can make. It strikes me that the corporate governance code already spells out what these are. #makingyourvotecount (n/n)

Postscript: You may read the full question and response here: mof.gov.sg/news-publicati…