Singtel CEO underpaid in 2 periods

Find out what caused Singtel to pay Lee Hsien Yang a substantial cash bonus of SGD1.9m upon his departure in 2007.

According to MayBank KimEng analyst Gregory Yap, while there was a rough correlation between Mr Lee Hsien Yang’s cash compensation and total shareholder return (TSR) from FY3/02 till FY3/07 when he stepped down as SingTel’s CEO, there were two periods when he might have been underpaid.

Here's an analysis from MayBank:

For example, in FY3/04 and FY3/06, TSR rose by 79% and 8%, respectively, as SingTel did two capital reductions in those years.

However, Mr Lee’s pay lagged behind, rising by only 32% in FY3/04 and 4% in FY3/06. In fact, although TSR accelerated to 8% in FY3/06, his pay increase of 4% that year was lower than his pay increase of 7% the previous year.

Note however that we have not been able to find any data on performance share vesting prior to FY3/07.
Arguably, the capital reductions must have been difficult to pull off, given that SingTel under his leadership had taken on more than SGD10b worth of debt to finance the acquisition of Optus in 2001.

However, Mr Lee succeeded and by the time he left in 2007, Optus had become a significant contributor to the group’s earnings while debt had been pared down to just over SGD6b.

This may have resulted in SingTel’s decision to pay him a substantial cash bonus of SGD1.9m upon his departure in 2007.

In addition, as Mr Lee also cashed in most of his performance shares in that year, this resulted in a 413% jump in CEO compensation in FY3/0.