Singapore regulators push for transparency in CEO pay, seek tighter alignment with performance

Singapore’s capital markets could be headed for a significant governance shift, as regulators move to tighten disclosure rules around executive compensation in a bid to restore investor confidence and improve transparency.

In proposals released on April 22, authorities overseeing the Singapore Exchange and its regulatory arm, Singapore Exchange Regulation, outlined plans to require listed companies to disclose the specific performance metrics used to determine pay for chief executives and executive directors. The move targets a longstanding opacity in the market, where more than 60 percent of large listed firms do not currently reveal the benchmarks underpinning executive remuneration.

Regulators say the initiative is designed to close the information gap between corporate leadership and investors, ensuring compensation structures are clearly tied to long-term value creation. Without such disclosures, investors have often struggled to assess whether executives are being rewarded for genuine performance or tenure, an issue that has weighed on governance perceptions and, in some cases, company valuations.

Under the proposed framework, companies would need to detail both financial and non-financial indicators driving executive pay in their annual reports. These could include traditional measures such as return on equity and total shareholder return, alongside operational and sustainability metrics like customer satisfaction, on-time delivery rates and emissions targets.

The reforms are part of a broader consultation package aimed at revitalising Singapore’s equities market. Alongside remuneration transparency, regulators are also pushing for clearer dividend policy disclosures and mandatory investor relations frameworks. These measures complement initiatives such as the S$30 million Value Unlock programme, which offers grants to help firms sharpen corporate strategy and strengthen shareholder engagement.

Market observers note that insufficient disclosure has long contributed to information asymmetry, making it harder for investors to accurately price risk. “Insufficient disclosures can create risks for both companies and capital markets as they heighten perceptions of governance risk, weaken investor trust and exacerbate information asymmetry,” said Lee Wei Hock, Singapore assurance leader at EY.

The proposed rules would primarily target executive leadership, excluding non-executive directors who are typically paid fixed fees. The focus, regulators say, is on those responsible for day-to-day management and execution of corporate strategy.

“By increasing transparency and engagement with investors, the proposed disclosures would significantly raise investor confidence and help them make better informed decisions,” Lee added. “When remuneration disclosures articulate how incentives support sustainable growth, risk management and capital discipline, they help investors better assess management quality and future performance potential.”

Beyond pay transparency, companies may also be required to disclose and adhere to formal dividend policies, providing investors with greater clarity on how profits are allocated. Firms would need to explain any deviations from these policies, though the rules stop short of mandating dividend payouts or prescribing specific ratios.

In addition, listed firms would be expected to establish and disclose investor relations policies, maintain dedicated websites for shareholder communication, and outline engagement activities in their annual reports. These steps aim to improve accessibility of information and foster consistent two-way dialogue between companies and investors.

The consultation phase will run until May 22, with implementation expected in phases from January 1, 2027, affecting annual reports filed from 2028 onward.

Analysts believe the reforms could have far-reaching implications for Singapore’s positioning as a global financial hub. Greater transparency in executive pay is increasingly viewed as a cornerstone of strong ESG practices, an area of growing importance for institutional investors.

If implemented effectively, the measures could reduce perceived governance risks, support stronger valuations, and boost liquidity in the market. They may also set a benchmark for the broader ASEAN region, as rising disclosure standards in Singapore prompt similar demands in neighbouring markets.

Ultimately, the success of the reforms will hinge on the quality of disclosures and the willingness of companies to go beyond compliance. For regulators, however, the message is clear: transparency, accountability and alignment with shareholder value are set to define the next phase of Singapore’s market evolution.