DETERMINANTS OF NON-EXECUTIVE DIRECTORS' COMPENSATION: EVIDENCE FROM SINGAPORE

Abstract

While many studies have attempted to research on the determinants of director compensation, most of these studies are based on firms in the US. As directors are agents acting as monitors for the shareholders, there is an efficient compensation arrangement that aligns the interests of both parties. However, it is likely that the arrangement to mitigate agency problems may be different in the Singaporean context. I examine the relationship of board composition, economic and regulatory environment with non-executive director compensation as hypothesized in previous literature and replicate the study based on 50 firms listed in Singapore over the 2006-2010 period. It was found that director compensation has a significant relationship with the hypothesized determinants that is associated with the complexity and difficulty of the directors' monitoring role. However, regulatory changes do not appear to be a significant factor in determining director compensation.