On Wednesday (8 May), Second Finance Minister Lawrence Wong said in Parliament that the Government keeps an “arms-length relationship” with GIC and Temasek Holdings, and does not get involved in their operational decisions, such as remunerations.
Mr Wong, who is also Minister for National Development and sits on the GIC’s board of directors, was responding to Workers’ Party Member of Parliament (MP) Png Eng Huat, who asked if there is a salary cap for key management of companies like sovereign wealth fund GIC and state-owned investors Temasek Holding.
The Minister did not reveal the salaries of the top brass at the two firms, and added that instead the Government expects the Boards to hold accountable for their respective performances.
Mr Png had specifically requested for the range of total annual remuneration – which include salary, annual and performance bonuses – of the top three highest-paid executives at GIC and Temasek Holdings over the last five years.
As such, Mr Wong noted that remuneration falls on performance and industry benchmarks, and supports a “prudent risk-taking culture”. In addition, a part of the remuneration at both companies are also tied to long-term performance.
Further pushing for figures, Mr Png said, “These two entities are managing our reserves, and the Government is the sole shareholder. Usually shareholders would know the remuneration packages for the companies they own.”
Despite the push, Mr Wong still refused to divulge the figure and said that there’s a system that is presented to determine compensation. Based on the past performances of these two entities, it shows that the system works, he added.
The system does not solely look at “one or two expense items” like remuneration. Instead, it comprises of a “thorough assessment” to decide long-term expected return, which will then be proposed to the President who will conduct an independent assessment with the help of advisors.
“Ultimately, the Government evaluates the performance of the two entities based on their long-term returns, net of all expenses incurred,” said Mr Wong. He added that the returns can be looked at their annual report.
Although Temasek Holdings does not reveal the salaries of its top management in its annual report, a part of its website shows the compensation structure, where it is benchmarked against relevant markets and includes incentives and clawbacks based on performance.