Want better pay? Turn to Asian firms in Singapore

Survey says 32% of Asian firms in Singapore are more likely to pay irregular, ad hoc awards, outside of the annual grant cycle.

According to a release, significant differences in executive pay practices in Asian firms as compared to Western firms operating in Singapore were identified by Mercer's 2011/2012 Asia Executive Remuneration Snapshot Survey which was conducted among both types of companies.

Annual variable pay tends to be higher at Asian firms compared to Western ones. "Asian companies based in Singapore prefer more flexible pay structures which can be adjusted based on business performance, while Western firms have a higher fixed pay component (fixed pay component is 41% in Asian companies and 65% in Western companies)" observed Ms Lee Shiau Fei, Principal, ASEAN Executive Remuneration Practice at Mercer. The performance metrics on which these bonuses are based are more equally balanced between the top and bottom line measures at Asian firms compared to Western firms which tend to place a greater emphasis on profit based metrics (83% at Western companies versus 61% at Asian firms). Asian firms also practise a bonus determination process that is less formulaic and more discretionary.

While long-term incentive (LTI) plans are more prevalent in Western firms in Singapore (70%, as compared to 54% of Asian firms), the survey shows that more Asian firms (32%) expect to make changes in the design of their LTI plans and to increase the target pay-outs of these awards. "Asian companies are very active in the redesign and re-evaluation of their long-term incentive practices," said Mr Fermin Diez, Senior Partner and Mercer's Asia Pacific Business Leader for Human Capital Consulting. "Changes that Asian companies based in Singapore are planning to make include providing a larger grant size and increasing the usage of service based restricted stocks". Across the region, one of the biggest changes in the LTI landscape is the decreasing popularity of stock options, prevalence of which has fallen from 58% to 46% among all companies surveyed.

As compared to Western firms, Asian firms in Singapore are also much more likely to pay irregular, ad hoc awards, outside of the annual grant cycle (32% of Asian firms, as compared to 11% of Western firms), for the purpose of new hires, retention and special recognition. Singapore survey participants also reported that succession planning, retention and motivation of executives were the top three executive talent challenges for their organizations.

The Asia Executive Remuneration Snapshot Survey revealed that Asian companies have an increased awareness of hot-button compensation issues and the need for more engagement and transparent communication with shareholders. "Almost half (45%) of the Asian companies surveyed had indicated to us that they plan to explain the rationale for their pay decisions with greater clarity" added Ms Lee.