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The region is in the early stage of ESG integration
StarHub, the Singapore-headquartered telecoms company, has never received an investor query around ESG and executive pay. ESG in general is growing as a topic of conversation but not in how it impacts compensation, even though – unusually for companies in the region – StarHub does in fact link ESG to senior pay, is in the process of formalizing its approach and is happy to discuss its plans.
At present, ‘executives who are responsible for ESG-related KPIs – such as good corporate governance, transparency, diversity, talent management, succession planning, employee engagement, personal data and cyber-compliance – within our operations are rewarded for achieving or exceeding their performance targets,’ says Veronica Lai, chief corporate officer at StarHub. She adds that these ‘rewards are cascaded [down] to various staff in the departments who contribute toward our main corporate targets.’
Lai says investors are increasingly interested in ESG more broadly, if not yet specifically in how it relates to compensation, but the company has already seen the benefits of its ESG-pay link internally.
‘It has given us the impetus for greater clarity in our sustainability strategy and approach, tightened our target setting and [helped] formalize roles and responsibilities,’ she notes.
Now StarHub wants to take this further. ‘We are in the process of formalizing our ESG-pay-link framework to develop a set of metrics applicable across the entire company,’ Lai continues. ‘Once we [have done this], we intend to include this information in our sustainability report to bring greater transparency and credibility.’
Not a talking point
A Willis Towers Watson survey from December 2020 notes that almost 70 percent of firms in the Asia-Pacific region plan to introduce ESG measures into their LTIPs over the next three years, while 61 percent plan to do the same with their annual incentive plans. But few want to go on the record or expand on the brief statements provided in their reporting.
‘Asian companies are behind Europe and North America, both in disclosing their ESG efforts generally and in tying their executive pay to ESG initiatives,’ says Trey Davis, executive compensation leader for Asia-Pacific at Willis Towers Watson.
‘Partly, Asian companies generally are behind the rest of the world in adopting these kinds of ESG metrics. But – probably more importantly –there is just a lack of disclosure around all kinds of executive compensation issues in Asia.’
It’s not an issue specific to ESG. There are a number of reasons companies generally don’t talk about compensation, including a lack of regulation such as say-on-pay votes, and a lack of investor and media pressure. On the investor side, a lot of that is down to the fact that many companies have a majority-block shareholder or are family-owned. On the media side, Davis highlights the fact that ‘pay levels for senior executives in Asia are much lower than they are in the rest of the world, so we don’t have as many articles around, quote-unquote, excessive CEO pay.’
But he adds that, internally at least, attitudes around ESG and compensation are changing. Most of the boards and clients Willis Towers Watson works with on this in Asia ‘see ESG as necessary for ensuring the sustainability and long-term success of the company,’ explains Davis, citing how vocal big, global investors are on their views of ESG issues as essential to company success.
This is an extract of an article from the Spring 2021 issue of IR Magazine.
Best practice interviews with South East Asia’s finest IR teams
Storm analogies reigned supreme among the winners of the IR Magazine Awards – South East Asia 2020. From perfect storms to depressions, tropical storms and hurricanes, it’s clear that many teams had to batten down the IR hatches to weather the pandemic winds.
But with ‘innovation and agility’, IR Magazine’s award-winning companies not only overcame the challenges thrown up by Covid-19 but also ensured they were available to communicate during extreme volatility even as issues such as ESG gained an ever-greater focus.
Here we present video interviews with some of the award-winning companies from across the region.
The virtual event took place on December 8, 2020 and, as with other IR Magazine Awards, trophies were split across two categories. In the awards-by-research categories, the runners-up and winners were decided by a survey of hundreds of investors and analysts. In the awards-by-nomination categories, companies submitted entries that were then judged by a panel of investor relations experts.
CP All - Best overall investor relations (large cap) - Best investor relations officer (large cap): Jiraphan Thongtan - Best in sector: consumer staples
‘A perfect storm’ is how Jiraphan Thongtan, head of IR at CP All in Thailand, describes 2020. The challenges the company confronted, she says, were not just focused around Covid-19. The company also completed a ‘complicated’ $10.6 bn deal for Tesco’s Asian operations. ‘This [was] one of the biggest deals in Asia,’ explains Thongtan. There were a lot of rumors around the deal, which was confidential for a long time, making communication with investors and other stakeholders a particular challenge for the IR team. And then there was the pandemic. The company had to respond to ‘protective measures’ put in place by the Thai government, such as curfews, as well as panic-buying by consumers.
Indorama Ventures - Best overall investor relations (mid-cap) - Best investor relations officer (mid-cap): Vikash Jalan - Best in sector: materials
Sustainability is something that has been ‘magnified in a big way’ during 2020, says Vikash Jalan, vice president of strategic planning and investor relations at Indorama Ventures. ESG – as well as market volatility due to the pandemic – has really been a key issue over the past year. The company has around 25,000 employees across 33 countries and, as a result of the pandemic, it created a global management team with a focus on ESG issues. Much of what the company does around health and safety, for example, ‘is a given,’ says Jalan, adding that in future it’s going to be more about ‘how we include that [information] as part of our regular materials. How do we communicate this important information?’
This is an extract of an article that was published in the Spring 2021 issue of IR Magazine. Click here to read the full article.
Asian companies visit most geographically diverse roadshow destinations, shows research
Singapore and Hong Kong remain the top two cities visited by Asian companies in 2020, according to research for the 11th annual Global Roadshow Report from IR Magazine.
The two Asian finance hubs are also the only cities to have been visited by a majority of companies for in-person roadshows during the research period, which covered the last two quarters of 2019 and the first two of 2020 as the world went into Covid-19 lockdown.
The Asia top 10 list – which actually comprises 12 destinations because 10th place is shared by three cities – is the most diverse of the regions studied. Six of the cities on the list are in either the US or Europe. Neither of the top 10 destination lists for North America or Europe feature a single Asian city. In fact, the European top 10 features only four US cities and the North American top 10 features just London from outside the region.
Three new entries
Outside of the usual roadshow destinations to top the list for Asian firms, three new cities have made the top 10: Kuala Lumpur in fifth place, Shanghai in ninth and Taipei (sharing 10th place with Edinburgh and Frankfurt).
IHS Markit has shared some numbers on the biggest institutions by assets for those three cities. Click here for more information or to download your copy of the Global Roadshow Report 2020, which, as well as global and regional roadshow destination lists, also features research on the most-used brokers for both in-person and virtual roadshows, plus insights into what
makes an impressive roadshow and how companies approached ESG roadshows.
Kuala Lumpur: Fifth place
Shanghai: Ninth place
Taipei: joint 10th
All investor data provided by IHS Markit and correct as of February 19, 2021