Biggest pay packet goes to Singapore's smallest bank's chief

United Overseas Bank Ltd. (UOB) CEO Wee Ee Cheong became the highest-paid bank chief in Singapore after DBS Group Holdings Ltd. docked Piyush Gupta's pay over tech disruptions in 2023.

Wee's annual pay for 2023 was S$15.9 million, up 10.62% from S$14.2 million in 2022. His annual remuneration package includes a base salary of S$1.2 million, annual bonus of S$14.7 million and S$40,000 worth of perks and other compensation.

Gupta, a former Citigroup Inc. executive who has been at the helm of DBS Group since 2009, was paid S$11.2 million in 2023, 36.92% less than the S$15.4 million he received in 2022. Gupta's base salary remained at S$1.5 million, but his annual bonus was reduced to S$4.1 million from S$5.8 million in 2022, while his stock awards were cut to S$5.6 million from S$8.0 million. DBS is Southeast Asia's biggest lender by assets, while UOB is the smallest of the three major banks in Singapore.

Oversea-Chinese Banking Corp. Ltd. (OCBC) CEO Helen Wong's total compensation also increased to S$12.1 million, up 7.44% from S$11.2 million in 2022. Wong's remuneration package includes base pay of S$1.4 million, an annual bonus of S$6.4 million and stock awards of S$4.2 million, according to S&P Global Market Intelligence data.

Docked payments

The DBS board cut the management team's variable compensation by a collective 21% as a result of a series of digital disruptions in 2023. As a consequence of repeated disruptions in the bank's digital banking and ATM networks, the Monetary Authority of Singapore imposed a six-month pause on the lender's nonessential IT changes, which lifted in April. It also prohibited DBS from new business ventures and reductions in its branch and ATM networks. The bank set aside S$80 million in November 2023 to enhance its system resilience and improve its technology to prevent disruptions to its services.

Gupta said senior management took accountability for the disruptions and agreed to the pay cuts. DBS has "tight measurement rubrics" on senior management's performance, which includes measurements on customers, employees and transformation, the CEO said during the bank's Feb. 7 earnings call for the full-year results.

"The size and timing of variable components of overall remuneration are frequently a tricky topic," Lindsey Stewart, director of stewardship research and policy at Morningstar Sustainalytics, told Market Intelligence in an email. "Proponents believe that they are an effective way of motivating executives to generate profit. Sceptics argue that they can incentivize extreme risk taking, and could end up paying out before the impact of that risk taking has been fully realized," Stewart said.

The CEO's pay will likely grow in 2024 as Singaporean banks are expected to extend their profit run as fee income and stable net interest income growth continue. First quarter net profit at DBS and OCBC increased year over year, with only UOB reporting a decrease in net profit for the quarter due to one-off integration expenses associated with the bank's acquisition of Citigroup Inc.'s consumer banking business.

Aggressive compensation

UOB engaged with two external management consulting firms, Aon Solutions and Oliver Wyman, for an independent review of its remuneration framework, it disclosed in its annual report. Oliver Wyman provided an independent review of the group's variable pay deferral policy. Of senior management's total pay, 46% was variable, 33% was deferred shares and 15% was fixed.

Singapore's banks are "quite aggressive in using variable pay practices," Mak Yuen Teen, professor of accounting and director of the Centre for Investor Protection at the NUS Business School, wrote in a Feb.14 commentary for Channel News Asia. High reliance on variable pay runs the risk of excessive remuneration, Teen said, adding that there needs to be transparency in how CEO's performance is measured.

"The remuneration policies for senior management and even rank-and-file employees must be subject to appropriate oversight by a truly independent committee," Teen said.

DBS said in its annual report that factors including key performance indicators, transforming the bank and areas of focus are considered when deciding on executive remuneration. Variable pay or bonuses account for 34% of total remuneration, and deferred shares for 43%, while 23% is fixed pay, it said.

OCBC did not disclose details on its remuneration considerations for 2023.