Should this call into question board governance and impartiality?
According to new research by CTPartners, HongKong’s largest firms join vast majority of Asian peers which choose to place their CEOs on boards, ranging from 100% in Singapore to 67% in China. Nonetheless, while this may call into question board governance and impartiality over CEO executive pay, the executive search firm noted that it is balanced by the fact that Asia’s largest companies also exhibit high levels of board independence.
A few large corporations in Asia stand out for having boards that are exceptionally independent. They are Reliance Communications in India, the Hong Kong Exchanges & Clearing in Hong Kong, as well as SembCorp Industries, Singapore Airlines, United Overseas Bank and CapitaLand in Singapore.
The executive search firm looked at some of Asia’s corporate crème de la crème in terms of the largest companies from four countries that made it to this year’s 2011 Global 2000 rankings by Forbes. Together, the 164 companies from China, Hong Kong, India and Singapore control over 13 trillion dollars worth of assets.
Another piece of good news is that a relatively fewer number of Asia’s largest companies are giving their CEOs the chairman role; those that do range from just 11% of Singapore’s largest companies to 54% of Indian corporate giants. In the US, the number of American firms that separate the chairman and chief executive roles has risen sharply though they lag behind Asia’s giants. 58% of companies in the S&P 500 still combine the two roles.
Of the four countries in the research, the largest Chinese listed companies have the lowest incidence of independent directors (45%). Chinese boards also tend to be very large, with some having as many as 21 directors. These large boards invariably tend to represent financial institutions, such as China Merchants Bank, Shenzhen Development Bank, Huatai Securities, Ping An Insurance and Hua Xia Bank. Singapore’s largest listed companies lead their peers in terms of the average percentage of independent directors (59%) and in having at least one-third of their boards independent overall. Overall, Singapore’s largest listed companies also tend to have smaller board sizes. Amongst the four countries in the research,
India’s top 50 largest companies have a greater tendency to put their CEOs in the Chairman role (54%), as compared to China (33%), Hong Kong (30%) or Singapore (11%).
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