March 25, 2009
$20.5m bonus for CapitaLand's chief
Amount awarded to Liew Mun Leong for property boom year 2007
By Joyce Teo
CAPITALAND'S president and chief executive Liew Mun Leong was awarded a bonus of $20.52 million in 2007 for helping the property developer achieve a record profit of $2.76 billion that year.
The huge bonus, notched up in a year the local property market was white hot, is believed to be a record for any executive at a Singapore listed company.
Mr Liew, 62, married with two daughters and a son, is a civil engineer who spent 22 years as a civil servant before taking the corporate world by storm.
Details of his 2007 bonus emerged yesterday in CapitaLand's 'Summary report 2008', along with a smaller $2.98 million bonus for the year ended Dec 31, 2008.
His base pay was $1.15 million in 2007 and $1.19 million in 2008.
The reason both bonuses were disclosed together is that CapitaLand has just changed its bonus disclosure system.
Before, it disclosed what it paid to Mr Liew for that financial year. The payment was for bonuses that had been awarded for the performance of past years.
But now it has started disclosing bonuses awarded, though not actually paid in full, relating to the year just gone.
Mr Liew's bonus goes into an individual bonus account and he takes home one-third of the balance every year. In a bad year for CapitaLand, that running total in his bonus account may be clawed back.
In other words, he might not eventually pocket all the bonuses awarded to him.
Mr Liew gave a brief press conference yesterday at Capital Tower. He said while his bonus was believed to be the largest here, he may not get all of it.
'Although the sum is the highest, it is accrued...so it's put into a bank account and you are only allowed to take one-third out,' said Mr Liew. 'If you ask if it's the highest, if you take one-third out, then it's not.'
The top bonus believed to have been paid at a listed firm here was between $16.75 million and $17 million, including non-cash perks, paid to Venture Corp's chief executive Wong Ngit Liong in 2005.
Mr Liew's $20.52 million bonus works out to about 0.7 per cent of CapitaLand's $2.8 billion profit. The average bonus of some top company executives here is 2 to 4 per cent, Mr Liew told reporters.
Knight Frank director of research and consultancy Nicholas Mak said: 'Top executives at property firms were getting big bonuses in 2007 because the property market was at its most buoyant in the past 10 years.'
That year, Keppel Corp executive chairman Lim Chee Onn earned up to $9 million.
CapitaLand's bonus plan for key management is an Economic Value Added (EVA) incentive plan introduced in 2000. EVA measures the net operating profit after tax less the cost of capital employed.
Mr Liew said his EVA bonus in 2003 was negative - which meant his bonus account was clawed back.
'A pay-for-performance plan does introduce volatility into your pay,' said co-director of the Corporate Governance and Financial Reporting Centre Mak Yuen Teen. 'The EVA plan is generally seen as a good plan because it takes into account the cost of capital. If you have a plan with a clawback feature, it is better. That would ensure the CEO takes a longer-term horizon in making a decision.'
Mr Liew's 2008 bonus includes $10,000 worth of shopping vouchers. The company said last month it will distribute a small part of this year's bonuses to about 680 managerial staff here in the form of $1 million of shopping vouchers.
Yesterday, Mr Liew said he has already used some of his vouchers to buy a small computer, a grooming set and a shaver.
In December, CapitaLand announced that senior management would receive salary cuts of between 3 and 20 per cent. Mr Liew's salary was cut by 20 per cent.
CapitaLand's share price peaked at $7 in April 2007, after taking into account the recent rights issue. Yesterday, its shares rose nine cents to close at $2.29.