Asia found lagging in disclosure of executive compensation

Other News Materials 3 March 2008 05:41 (UTC +04:00)

Asia needs to improve executive compensation disclosure because the current inadequate rules put investors at risk, a study said on Monday. ( dpa )

Prevailing regulations and practices in Hong Kong, Japan and Singapore leave much to be desired, said the CFA Institute Centre for Financial Market Integrity.

"The current practice in Asia deprives share owners of their right to know how much of the corporate funds they helped build are going to the individuals whom they have entrusted to run the business," the centre's study said.

Reporting compensation of executives on an individual basis is the practice in the United States, Britain and Australia and is advocated by institutional investors worldwide.

A lack of regulatory push, inadequate information in financial reports, little use of long-term incentive plans, poor board oversight and lack of investor influence on executive compensation render Asian markets vulnerable to pay abuses, the study said.

The CFA Institute Centre, which promotes fair and open markets as well as investor protection, recommended that investors exercise vigilance to ensure that management incentives are aligned with their interests.

It said companies should try to exceed minimum requirements on executive compensation disclosure particularly of individual executives' remuneration.