How much could the CEO of Temasek Holdings be earning?

A recent conversation on Facebook got me interested on the topic of how much the CEO of Temasek Holdings might be earning. I realised that this information has not been made available to the public and the company has no legal obligation to do so. While we may never find out the real value of the CEO’s earnings, there is enough information to make an educated guess.

Starting from the Annual Report of 2018 for Temasek Holdings (published in July 2018), we can see that the Administrative Expenses in that year amounted to $8.6 billion as shown below (excerpt from page 50). As salaries are accounted for in this particular section of the Income Statement, we can establish that the theoretical maximum of the CEO’s salary would be this value. Of course, taking into account that Administrative Expenses include the salaries of all staff (of which there are 729 others at Temasek Holdings), any consultant fees and any legal fees paid out, it is clear that the salary would be only a fraction of this. However, even if the salary accounts for 0.1% or 0.001 of the total Administrative Expenses declared by Temasek Holdings in FY2017, then the CEO’s salary would be worth $8.6 million.

Another point of reference could be the declared CEO salaries of similarly-sized organisations. On the Singapore Stock Exchange, DBS Holdings has the largest market capitalisation. According to its Annual Report of 2017 (published in March 2018), it reports a profit of $4.5 billion (page 127) with a shareholder equity of $49.8 billion (page 130) and total assets valued at $517 billion (page 129). Temasek Holdings comparatively reports a profit of $26.8 billion (page 50) with a shareholder equity of $272 billion (page 51) and total assets valued at $417 billion (page 51) in its Annual Report of 2018.

Based on the reported earnings of the DBS Holdings CEO, who earned $10.3 million in 2017 according to Business Insider (see figure extracted below), The Business Times and Dollars & Sense, we can extrapolate the potential salary for the CEO of Temasek Holdings at around $49.5 million, after adjusting for the difference in asset value between the companies and the bigger profit for Temasek Holdings.

However, considering that the CEO of Temasek Holdings would not have any direct shareholding as the funds are wholly owned by the Ministry of Finance, the more appropriate benchmark would be the base salary and bonus as earned by the CEO of DBS Holdings. In that regard, the CEO of DBS Holdings earned $1.2 million as the base salary and $3.8 million in bonus payments. Adjusting for the asset value between the two companies and the bigger profit for Temasek Holdings, we arrive at the potential corresponding base salary of $5.76 million with potentially $18.25 million in bonus payments (i.e. total annual salary of $24 million).

It must be noted that the figures derived here are all hypothetical and speculation based on available data from a comparably-sized local company that is involved in investment and financial services. Based on the non-existent information regarding the salary of the CEO of Temasek Holdings, it is equally possible that there is no bonus payment involved or the salary could be a token amount.

However, considering that Temasek Holdings prides itself as a firm that operates on a commercial basis, it serves to reason that the CEO is paid based on the typical model of having a base salary with bonus payments in parity with the market. If that is indeed the case, then the likelihood of the salary being close to $6 million is strong, with even a $24 million pay packet quite easily justifiable on account of the size of the company coupled with its sizeable profit margin.

Being the sole shareholder, the Ministry of Finance is likely to be aware of such details as the salary being paid to the CEO of Temasek Holdings. And since the ministry acts on behalf of the people, it would seem fair that it should reveal such information when asked for by the citizens. While Temasek Holdings does not have any legal obligation to be transparent with the people of Singapore, the government agency that has invested the country’s money should honour this obligation. In fact, if the relationship between the ministry and Temasek Holdings is purely transactional, then the reasonable expectation would be to see its justification on using this investment firm even though the administrative charges are high.

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