Bangkok--26 Dec--SET
Compensation of Thai listed firm’s directors rose 8 — 11% a year and in line with operational performance, Corporate Governance (CG) Center of The Stock Exchange of Thailand (SET) revealed. This CG Center summary of remuneration paid to directors and management by Thai public companies will be useful for listed firms to use as a reference in determining remuneration in a transparent manner vis-?-vis their industry.
The CG Center summary came from information disclosed in the firms’ annual reporting form (#56-1) required by the Securities and Exchange Commission (SEC), reported Mr. Suthichai Chitvanich, SET Executive Vice President-Corporate Compliance & Governance Division. The report will be especially useful during early 2007, when most firms will have a meeting to appoint directors and determine remuneration level. Then, in April, they will normally have an annual general meeting with the matter included in the agenda.
“We found that most companies compensated their directors and executives in line with the firms’ revenue and profitability. Over 2006, although directors were paid from zero to THB 9.4 million, with an average rate of THB 0.5 million, variances from the mean were wide. Therefore each firm should consider other factors besides the industry average, e.g., directors’ qualifications, experience, caliber, and responsibility, as well as the firm’s profitability.
According to CG principles, directors’ remuneration should be determined in a transparent manner and approved by the shareholders. Moreover, it should be attractive enough to draw in qualified persons. “Directors should not be overpaid, but should be compensated in accordance with the director’s experience and performance, and be on a par with other companies in the industry, ” Mr. Suthichai said.
Total remuneration paid in 2006 to one executive ranged from THB 0.2 million - THB 27.76 million, with an average of THB 3.2 million a year. During the past four years, on average, directors have been earning rises of 11% p.a., or slightly higher than the 8% enjoyed by executives.
By sector, the top three sectors with highest average rate of directors’ remuneration were Banking, Energy & Utilities, and Petrochemicals & Chemicals. On the other hand, the top three sectors with highest average rate of executives’ remuneration were Banking, Commerce, and Mining. The Finance & Securities Sector has had a wide discrepancy between the lowest and highest remuneration since 2003, due to increasing number of listed firms in the sector.
Mr. Suthichai noted that the SET had been promoting CG among listed companies and recognized that capable and ethical directors were very important to a firm. In 2006 alone, the CG Center provided consultancy service to directors and executives from about 50 companies, or a total of 451 firms since 2002. The Center also provided a THB 4.0 million annual subsidy to support 524 directors’ participation in the Center’s Director’s Accreditation Program (DAP). Moreover the Center organized 52 educational seminars in 2006, and produced several guidelines for listed companies on issues, such as how to provide opportunity for minority shareholders to propose meeting agenda beforehand, how to produce business ethics manuals, and how to solve practical issues concerning CG implementation. The Center also reported on directors’ and executives’ remuneration.
“In 2007, the Center will focus on shareholders’ rights and awareness of directors’ roles. Also, the Center will continue to encourage listed firms to have Investor Relations (IR), so that they will be able to communicate to the shareholders and public more effectively. This will enable shareholders to better estimate the companies’ true value and, hence, better manage their investment,” Mr. Suthichai said.
Additionally, the CG Center will continue to subsidize listed firms’ directors to attend the DAP with a THB 4.0 million budget, provide consultant service to directors and senior executives, and encourage listed firms to have active IR (Investor Relations) units.
The CG Center’s report on directors’ and executives’ remuneration showed the remuneration paid as at the end of the most recent accounting period. In 2006, the data was from 472 companies in 29 sectors (excluding firms that had been delisted, had incomplete information, or were under rehabilitation). “Executives” were defined as being the first four executives under the President, including those whose rank was equivalent with the fourth one.
For more information, please contact the Corporate Communications Dept.:
Ladawan Kantawong Tel: 0-2229-2036 / Kulvida Jintakawong Tel: 0-2229-2037 /
Nattaporn Boonprapa Tel: 0-2229-2049 / Watsamon Saowakhonsathien Tel: 0-2229-2797