Negative Bonuses For Temasek's Staff

To be fair, Temasek does have one of the fairer compensation system among "investing companies". In fact someone should recommend to Obama to adopt Temasek's bonus pool policy in his administration's attempt to revamp pay and bonuses on Wall Street.

The Straits Times: Temasek Holdings' portfolio lost more than S$40 billion in value in the last financial year, said chief executive Ho Ching yesterday. The exact figures for the 12 months to March 31 are not available yet, but the headline number indicates how the company has fared in the financial crisis. Temasek's next annual report, due out next month, will shed more light on the portfolio's performance.

In February, then Senior Minister of State (Finance and Transport) Lim Hwee Hua told Parliament that between March and November last year, Temasek had lost S$58 billion. Its portfolio value fell 31 per cent from S$185 billion to S$127 billion. It is unclear if Temasek managed to recoup any of those losses between November last year and March this year. But analysts say Ms Ho's comments yesterday indicate that even if Temasek did narrow its losses, it may not have been by much.

In a speech to the IPS Corporate Associates Lunch yesterday, Ms Ho said that Temasek had reported an amount of S$40 billion as its annual 'value-at-risk' for its financial year between April last year and March this year. This means there is a 16 per cent probability that the portfolio would drop by S$40 billion in the period, she said, adding: 'Indeed, it had turned out to be so, and more.'

Global stock markets plunged to record lows in early March, but have rallied strongly since. Nomura analysts estimated last month that Temasek had recouped a considerable amount of its losses between November and mid-May. They said the portfolio likely rebounded 13 per cent, or S$16 billion, in that time. But it is possible that most of these gains were made between March and May and will not be seen in the latest annual report.

The entire staff of Temasek Holdings are taking personal financial hits, with annual bonuses likely to be slashed in the wake of the investment firm's losses over the past year. Part of every Temasek employee's bonus goes into a pool that is paid out over a number of years rather than at the end of each year. When Temasek meets its internal performance benchmarks with higher-than-targeted returns, the pool of bonuses to be distributed grows and each employee gets a bigger slice. But when it fails to do so, employees get 'negative bonuses': They get no money from the pool, or the value of the overall pool shrinks. This compensation structure is based on a key principle of having staff 'share in the institution's performance, both for positive and negative results', said chief executive Ho Ching yesterday.

In her speech at the IPS Corporate Associates Lunch, she said: 'We share gains and pains alongside our shareholder. This is in essence having an owner's approach to our business and operations. Temasek came in below its targets last year as well as this year, which means staff get 'negative bonuses. From CEO to office attendants, all our staff were allocated negative bonuses last year, and will be allocated more negative bonuses this year,' said Ms Ho.

If Temasek achieves above-target returns, known as Wealth Added and reported in the annual Temasek Review, it will have gains to share with its staff. 'It is a tough challenge to share negative bonuses...it is even tougher to deliver a positive Wealth Added every year,' she said.

p/s photos: Linda Onn

Temasek's Team Under Ho Ching

I guess in an attempt to deflect criticism that it is a one-woman team, the cynical me would try to see through the "approved media blitz" via The Straits Times on the Temasek's senior management team. See how easy it is to twist words and intentions. It can be an exercise in transparency or propoganda to rebuild goodwill.

1 Charles Ong
Senior managing director and chief strategist

Formerly Temasek's chief investment officer in charge of overseeing all investment decisions, he became chief strategist in December 2006 while Temasek was grappling with the fallout from its takeover of Shin Corp earlier that year. Mr Ong, formerly with Lazard Freres & Co in New York, joined Temasek in 2002.

2 Tow Heng Tan
Senior managing director and chief investment officer

A chartered accountant, Mr Tow took over as chief investment officer after Mr Ong's replacement, Mr Jimmy Phoon, quit in 2007. Mr Tow also sits on the boards of Keppel Corp and ComfortDelGro, and was formerly senior director of DBS Vickers Securities.

3 Gan Chee Yen
Senior managing director and co-chief investment officer

The former director of finance for Singapore Technologies, Mr Gan joined Temasek in 2003 and heads the transportation and logistics investment group. He has served on the board of other companies, including Neptune Orient Lines.

4 Manish Kejriwal
Senior managing director, investment, international and India

A former partner at McKinsey and Company, Mr Kejriwal holds an MBA from Harvard University and was named a Baker Scholar, the top academic honour at Harvard Business School. He joined Temasek in 2004 and is in charge of investments in India and in financial services.

5 Cheo Hock Kuan
Senior managing director, corporate development and special projects

She joined Temasek in 2002 from Singapore Technologies, where she was head of executive resources and corporate human resources. A former military officer, she now oversees leadership dynamics, board governance and compensation for executives and board members, among other things. She is also a director of Fullerton Financial Holdings.

6 Leong Wai Leng
Chief financial officer, senior managing director (corporate development)

Appointed Temasek's first chief financial officer in 2006, she studied engineering at Cambridge University. She moved to Temasek after leaving Raffles Holdings - where she was the deputy chief executive and chief executive of Raffles International- after Raffles sold its hotel business.

7 Goh Yong Siang

Managing director, international and strategic relations

The former chief of the Singapore Air Force, Mr Goh retired in 1998 and went to work in the United States, first as president of ST Engineering and then in private equity. He was a partner in and chief executive of a Dallas, Texas-based charter airline, Patriot Air, which filed for bankruptcy less than two years after it was formed. Mr Goh joined Temasek in 2006 and was asked to head the Thai office that Temasek opened following the Shin Corp debacle.

8 Simon Israel
Executive director since 2006

Mr Israel is the chairman of the Singapore Tourism Board and sits on several other company boards, including SingTel, NOL and Fullerton Financial Holdings. A Singaporean, Mr Israel was previously Danone Group's Asia-Pacific chairman and spent 22 years with the Sara Lee Corporation.

9 Hiew Yoon Khong
Senior managing director, special projects

Previously CFO of CapitaLand and CEO of its commercial and financial units, Mr Hiew joined Temasek in 2003 and is now also the executive director and CEO of Mapletree Investments. Prior to that, he was managing director of Temasek's private equity investment funds portfolio.

10 Ng Yat Chung
Managing director, corporate

Less than four months after stepping down as Chief of Defence Force in 2007, Mr Ng joined Temasek in the newly-created position of managing director of portfolio management. A Cambridge University graduate, Mr Ng was also previously Chief of Army.

11 Michael Dee
Senior managing director, international

Formerly a Morgan Stanley investment banker and regional head, Mr Dee was recruited to join Temasek's newly-formed international division last year. He advised Temasek-backed Singapore Power when it bought the Australian business of energy giant TXU for $3.7 billion in 2004.

12 Vijay Parekh
Senior managing director, special projects

After 18 years with American Express, Mr Parekh joined Temasek in 2005 and became a director of Fullerton Financial Holdings in October 2006.

13 Jimmy Phoon
Senior managing director, strategy

Mr Phoon joined Temasek in 1999 but resigned in September 2007, less than a year after he was made chief investment officer following the Shin Corp incident. Formerly from Standard Chartered Merchant Bank Asia, Mr Phoon rejoined Temasek on Nov 1 last year.

p/s photos: Moe Oshikiri