Managerial remuneration: an enquiry about mandatory disclosure practices in India.
Kang, Lakhwinder Singh ; Payal
Introduction
[ILLUSTRATION OMITTED]
During late 90s, with formation of the committee on corporate
governance under the Chairmanship of Shri Kumar Mangalam Birla, SEBI
initiated the process of improving corporate governance in India. SEBI
made certain amendments in the listing agreement by introducing a new
clause 49 on February 21, 2000. Clause 49 contains mandatory disclosure
requirements related to remuneration of board of directors of the listed
companies, which are as follows:
* Disclosure of all elements of the remuneration package of all the
directors, i.e. salary, benefits, bonuses, stock options, and pension,
etc.
* Details of fixed component and performance linked incentives
along with the performance criteria, and
* Stock option details, if any, and whether issued at a discount as
well as the period over which accrued and over which exercisable.
The present study investigates the compliance by the Indian
companies with mandatory disclosure of managerial remuneration.
Remuneration disclosure provides information to investors regarding how
much remuneration is being paid to directors and how it is being paid.
Disclosure requirements ensure transparency and accountability on part
of directors to remunerate themselves. To the best of the
researchers' knowledge, hardly any study is available which have
examined managerial remuneration disclosure practices in India. The
present study would make a significant contribution to the existing
literature as well as would provide help to Indian companies in
developing new disclosure norms about the managerial remuneration.
Literature Review
A few studies have been conducted in different countries to examine
the corporate governance practices including managerial remuneration
practices. For instance, Desoky and Mousa (2012) and Raithatha and Bapat
(2012) have examined remuneration paid to the board members as a part of
the overall corporate governance mechanism. The impact of firm
characteristics, such as company performance, company size, ownership
structure, governance structure, etc., on disclosure of managerial
remuneration has been examined by many researchers (Conyon et al., 2002;
Nelson and Percy, 2005; Clarkson et al., 2006; Chizema, 2008; Laksmana,
2008; Nelson et al., 2010; Hearn, 2013; Schiehll et al., 2013). How the
disclosure of managerial remuneration affects the performance of the
company has also been enquired in a few studies (Gupta et al., 2009;
Sheu et al., 2010). Hill (1997) assessed the adequacy of the
remuneration disclosure regime for Australian listed public companies
and recommended improvements such as disclosure of the process by which
director remuneration is determined and policies and philosophy of the
board in structuring remuneration packages, including performance
criteria, disclosure of the performance based components of the
remuneration, etc., in disclosure rules. Ward (1998) inspected the
disclosure rules about director remuneration recommended by Greenbury
Committee and revealed that a loophole still existed regarding the
disclosure of additional income arising to the directors from outside
directorships. Conyon et al. (2002) reported high degree of information
disclosure about director share options in UK companies in 1994 and
1995. Lo (2003) studied the economic consequences of Securities and
Exchange Commission (SEC) regulation of executive compensation
disclosure in case of 195 firms in US and concluded that additional
mandated disclosures enhanced shareholder wealth. Craighead et al.
(2004) examined the impact of mandatory disclosure on CEO cash
compensation determination and found that with the imposition of the
mandated disclosure, performance contingent cash compensation increased
more in widely held firms than in closely held firms. Nelson and Percy
(2005) investigated the transparency of executive stock option
disclosures by Australian listed companies for the years 2000 and 2002
and reported that the transparency of executive stock option disclosures
was low but improved a little in the year 2002. Werder et al. (2005)
studied the compliance with the corporate governance code 2002 for a
sample of 408 German companies and stated that more than 20 percent of
all companies were not complying with the recommendation of reporting
the compensation of board members in terms of fixed, performance-related
and long-term incentive components. Less than two-third of the companies
were considering the chairmanship and the membership in committees of
supervisory board for additional compensation. Only half of the firms
were granting performance related compensation to the members of their
supervisory boards. Chizema (2008) found that a quarter of large 126
German firms had not disclosed individual executive compensation at the
end of the year 2005. Melis and Carta (2010) suggested that the
disclosure in annual reports concerning the cost of remuneration plans
increased following the adoption of IFRS 2 by Italian listed companies.
Nelson et al. (2010) studied the nature and extent of statutory
executive stock option disclosure by Australian listed companies from
2001 to 2004 and reported a progressive increase in the overall
compliance. It was also concluded that companies were significantly less
likely to disclose more sensitive executive stock option information.
Only Clarkson et al. (2006) and Laksmana (2008) have analysed the
remuneration disclosure practices in detail. Clarkson et al. (2006)
studied CEO remuneration disclosure practices for a sample of 124 firms
in Australia from 1998 to 2004. Disclosure was examined in accordance
with the Company Law Review Act (CLRA) 1998 and Director and Executive
Disclosures by Disclosing Entities (AASB1046) 2004. Significant
improvement in disclosures was found concurrent both with CLRA 1998 and
AASB1046 and it was also reported that detailed black letter
requirements through formal regulatory channels lead to high quality
disclosure. Laksmana (2008) examined the information reported in the
compensation committee report in S&P 500 firms for two years, i.e.
1993 and 2002 and revealed that more than 84 percent of corporate boards
disclosed the basis for determining the salary, type of general and
specific measures for determining annual rewards, and discussion about
annual rewards being granted on achievement of performance targets. In
contrast, weights assigned to performance measures, specific performance
targets, and award giving formulas were among the least reported items.
A number of firms disclosed that they kept these items confidential to
avoid compromising their competitive position. Compared with 1993,
significant increase was found in the percentage of firms disclosing the
employment of compensation consultants, the basis for determining the
salary, type of performance evaluation, weights on performance measures,
and range or absolute value of rewards.
Research Objective
The primary objective of the present study is to examine the level
of compliance by the companies in India with the mandatory disclosure
requirements about managerial remuneration mentioned in Clause 49 of the
listing agreement.
Research Methodolody
The present study covers a period of 10 years ranging from 2002-03
to 2011-12, because Clause 49 of the listing agreement was first
introduced in 2000 and was made applicable to the companies as per the
schedule of implementation. All companies, listed in the year 2000 with
paid up capital of 30 million and above, were required to comply with
the Clause 49 during the financial year 2002-03. Companies seeking
listing after the year 2000 came under the purview of Clause 49 at the
time of listing only. Managerial remuneration disclosure practices of
companies which came under the purview of Clause 49 as on March 31, 2003
are examined in the present study.
All the companies listed on the Bombay Stock Exchange are taken as
the universe of this study. Top 500 companies, ranked by the Business
Today magazine (Layak, 2012) on the basis of average market
capitalisation for the first half of the financial year 2012-13 were
considered. Banks, financial institutions and government companies were
excluded for the meaningful comparison of the private sector companies.
Finally, a sample of 150 private sector companies which includes big
names, like ITC, Hero MotoCorp, Infosys, Reliance Industries, and Tata
Motors, etc., drawn from 12 industrial sectors (Chemicals, Construction
and Real Estate, Diversified, Drugs and Pharmaceuticals, Electricity,
Food and Beverages, Machinery, Metal and Metal Products, Non-Metallic
Mineral Products, Textiles, Transport Equipment, and miscellaneous) as
reported in the Prowess Database, has been selected.
The following research questions were developed to assess the
compliance with mandatory requirements of disclosure of managerial
remuneration. Each statement is coded as "1" if the compliance
with the respective statement is made and "0" otherwise.
A. Disclosure of the remuneration of the executive directors
a. Disclosure of the bifurcated details of the remuneration of the
executive directors
b. Number of classes to represent the components of the
remuneration of the executive directors
c. Details of the fixed and performance linked incentives of the
executive directors
d. Disclosure of the performance criteria for determining the
remuneration of the executive directors
B. Disclosure of the components of the remuneration of the
executive directors
C. Disclosure of the remuneration of the non-executive directors
D. Disclosure of the performance criteria for determining the
remuneration of the non-executive directors
E. Disclosure of the stock options details
The reported compliance with the corresponding requirement was
checked by rating each statement as "yes" or "no".
Cochran's q test is used for analysing whether the proportion of
the companies complying with each requirement remained same or changed
during the period of study. The null and alternative hypotheses have
been set as follows:
[H.sub.0]: The proportion of companies complying with disclosure of
managerial remuneration over the period of study remained same.
[H.sub.1]: The proportion of the companies complying with
disclosure of managerial remuneration has significantly changed.
Repeated measures ANOVA is used to test whether there are any
differences in mean disclosure scores across ten years. To represent the
disclosure scores, mandatory Disclosure and Compliance Index (D&C
index) is developed. The maximum possible managerial remuneration
disclosure score in any given year is 14 for companies that grant stock
options to its executive and/or non-executive directors and 13 for those
that do not. The total assigned disclosure score to a particular company
on the basis of statements complied is divided by maximum available
disclosure score for that respective company in order to calculate the
D&C index. The null and alternate hypotheses for the repeated
measures ANOVA are stated below.
H0: There is no difference in the mean D&C index at all time
points.
H1: At least two mean D&C index are significantly different
from each other.
Welch ANOVA is applied to test whether there are any differences in
mean disclosure scores across the industries.
The null and alternate hypotheses for Welch ANOVA are stated below.
[H.sub.0]: There is no difference in the mean D&C index across
the industries.
[H.sub.1]: At least two mean D&C index are significantly
different from each other.
Analysis of Data
Analysis of data is reported in two sections; compliance with the
mandatory requirements of Clause 49 regarding disclosure of managerial
remuneration by the sampled companies and analysis of the mandatory
Disclosure and Compliance (D&C) index.
Compliance with the mandatory provisions of Clause 49:
Compliance with Clause 49 by the sampled companies is reported in
Table I and is discussed in the following text.
A. Disclosure of remuneration of the executive directors
In 2003, 93.1 percent of the sampled companies have been found
disclosing the remuneration paid to the executive directors and this
proportion increased consistently from 2003 to 2005. The major increase
was found for the financial year 2006 when 97.9 percent of the companies
disclosed the remuneration of executive directors. This proportion has
been found to be 98.6 percent in 2012. Though disclosing the
remuneration of executive directors by companies is a mandatory
requirement, but still not 100 percent of companies have been disclosing
the remuneration of their executive directors.
i. Breakup details of remuneration of the executive directors.
Around 81 percent of companies disclosing the remuneration of their
executive directors have been found furnishing the breakup details, like
salary, allowances, and commission, etc. In 2006 and 2007, 91.2 percent
of companies have been found disclosing more details about the different
components of remuneration of executive directors, but in 2012, this
proportion came down to 87.3 percent.
ii. Number of heads to represent different components of
remuneration. In 2003, 27.7 percent of the sampled companies furnishing
the breakup of remuneration of executive directors use three or more
than three heads (salary, allowances, perquisites, performance linked
bonus/ commission, and retirement benefits) to represent different
components of managerial remuneration. Remaining 72.3 percent companies
have been found using two heads only to report remuneration of the
executive directors. However, the proportion of companies using three or
more than three heads to report managerial remuneration has increased
consistently as it has been found to be 43.5 percent in 2012.
iii. Fixed and performance linked incentives. In 2003, 27.7 percent
of the companies have been found reporting information regarding fixed
and performance linked components of remuneration of the executive
directors. Generally, fixed components include; salary, perquisites,
allowances, and retirement benefits. Whereas, performance bonus,
commission and stock options are considered as performance linked
incentives. In 2012, 36.5 percent of companies have been found
furnishing the details about fixed and performance linked incentive
components of remuneration.
iv. Performance criteria for determining the remuneration of the
executive directors. Executive directors' remuneration is generally
governed by the terms of remuneration mentioned in their employment
contract and the legal restrictions. Any revision in their remuneration
is decided by either remuneration committee if any or by the board,
subject to the shareholders' approval. The corporate governance
reports reveal that performance of the company, individual performance,
industry standards, levels of responsibility, and qualification and
experience are some widely used parameters for determining the
remuneration of the executive directors. As shown in Table I, 34.6
percent of the companies disclosed at least one performance criteria for
determining the remuneration of the executive directors in 2003, whereas
this percentage increased to 57.8 percent in 2012.
B. Disclosure of components of remuneration of the executive
directors
Clause 49 requires that all the major heads of remuneration of the
executive directors should be disclosed in the corporate governance
reports. However, there is hardly any uniformity in the reporting of
these components. Some widely used components of executive
directors' remuneration and their mode of disclosure is explained
below.
i. Salary. 89.7 percent of companies disclosing the payment of
remuneration to the executive directors claimed and disclosed the amount
of salary paid to the executive directors in 2003. However, there were
only 69.1 percent companies which disclosed salary as a single
component. 30.9 percent companies have been found disclosing salary
clubbed with some other components of remuneration. The proportion of
companies claiming and disclosing salary was maximum, 95.2 percent in
2007 but it fell down to 93.7 percent in 2012. The proportion of
companies disclosing salary as a single component has seen a marginal
fall during the period of study and has come down to 67.6 percent in
2012.
ii. Allowances. Only 29.1 percent of companies in 2003 have been
found disclosing the allowances given to their executive directors. In
2003, only 10 percent of companies have been found claiming the payment
of allowances and disclosing these separately under the head
'Allowances'. But by 2012, 42.7 percent companies were
claiming the payment of allowances and still only 11.2 percent of
companies disclosed these allowances under separate head.
iii. Perquisites. In 2003, 69.3 percent companies claimed the
payment of perquisites to its executive directors and also disclosed
these. However, 45.2 percent of the companies claimed the payment of
perquisites and disclosed these separately and the remaining 54.8
percent of companies disclosed perquisites by clubbing these with other
components of remuneration. In 2012, 74.4 percent of the companies
reported perquisites being paid to executive directors, but the
proportion of companies disclosing these separately has fallen to 40.7
percent.
iv. Retirement benefits. In 2003, 53.2 percent of companies claimed
and disclosed the amount of different forms of retirement benefits paid
to the executive directors and in 2012, this proportion increased to
69.6 percent. Some companies claimed but did not disclose the amount
allocated for the provision of encashable leave, gratuity, premium paid
for group health insurance, contribution to provident fund,
superannuation fund, and other employee benefits. This is mainly because
of the absence of separate figures for the directors as these are
determined on the basis of the actuarial valuation for the overall
company. Although, the proportion of companies claiming the payment of
retirement benefits but not disclosing these is small, but this
proportion has been on increase. In 2012, 8.20 percent of the companies
claimed but did not report the amount of the retirement benefits.
v. Performance-linked payments. In 2003, 62 percent companies
disclosed the performance linked incentives paid to executive directors
and it increased to 70.3 percent in 2012. Mostly, companies disclosed
their performance linked incentives in the form of commission. Stock
options as a part of the executive directors' remuneration are not
much popular in India, as in 2012, only 4.6 percent of companies claimed
and disclosed the grant of stock options.
C. Disclosure of remuneration of the non-executive directors
In 2003, 86.6 percent of the companies claimed the payment of
sitting fee to the non-executive directors and out of this, 96.9 percent
disclosed it and the remaining 3.1 percent claimed but did not disclose
it. In 2012, 93.3 percent of the companies claimed the payment of
sitting fee to non-executive directors. 2.9 percent companies claimed
but did not report the amount paid as sitting fee to non-executive
directors in 2012. Similarly, in 2003, 36.6 percent of the companies
claimed the payment of commission but 3.7 percent did not disclose the
amount paid as commission. In 2012, the proportion of the companies
claiming the payment of commission increased to 59.3 percent but again,
98.8 percent of them actually disclosed the amount of commission paid.
Stock options are not a popular form of remunerating nonexecutive
directors in India as in 2012, only two percent of the companies granted
stock options to their non-executive directors.
D. Disclosure of performance criteria for determining the
remuneration of the non-executive directors
After the scrutiny of corporate governance reports of sampled
companies, it is found that commonly used criterion for determining
sitting fees and commission payable to non-executive directors are
performance of the company, individual performance, industry standards,
time and efforts put in the company's operations, chairmanship or
memberships of the various committees, and attendance at the board and
committee meetings. As shown in Table I, 15.3 percent of sampled
companies disclosed at least one performance criteria for determining
the remuneration of non-executive directors in 2003. In 2012, 47.3
percent companies are found reporting at least one performance criteria
for determining the remuneration of non-executive directors.
E. Disclosure of stock options details
Throughout the time-period of the present study (10 years), the
volume of stock options being granted to executive and non-executive
directors has been found to be very small and except in the year 2003,
100 percent disclosure regarding the details of stock options granted
has not been found. In 2012, 62.5 percent of companies claiming the
grant of stock options, disclosed the details of stock options granted
in the corporate governance reports.
Based on the reported cochran's q statistics, equality in the
proportion of the companies complying with the mandatory disclosure
about the managerial remuneration mentioned in the Clause 49 during the
period of study, is rejected at 5 percent level of significance in all
statements except disclosure of salary, allowances, and perquisites
under separate heads, proportion of companies claiming but not
disclosing the amount of retirement benefits, and the disclosure of
details of stock options.
Mandatory Disclosure and Compliance Index
The mean value of mandatory D&C index has consistently
increased from 0.51 in 2003 to 0.66 in 2012. The standard deviation for
the mean of 2003 is 0.233 and fell down to 0.207 for the mean in 2012.
The largest increase occurred during 2005 and 2006 (from 0.57 to 0.62).
To test the null hypothesis of equal mandatory D&C index at all
time points, repeated measures ANOVA is used. As shown in the Table II,
Mauchly's test statistic is found to be significant which implies
that the variances of the differences between years were significantly
different and the assumption of sphericity had been violated, [X.sup.2]
(44) = 1097.65, p= 0.000. Therefore, degrees of freedom were corrected
using Greenhouse-Geisser estimate of sphericity ([epsilon]= 0.289).
Tests the null hypothesis that the error covariance matrix of the
orthonormalised transformed dependent variables is proportional to an
identity matrix.
The results in Table III show that mean mandatory D&C index
differed statistically significantly between time points, F (2.601,
387.544) = 42.573, p = 0.000. For finding out which means are
significantly different from each other, the Bonferroni post-hoc tests
were applied and it reveals that mandatory D&C index is
significantly higher in 2011 and 2012 as compared to 2003, 2004, 2005
and 2006 at 5 percent level of significance. Mandatory D&C index is
also found to be significantly higher in 2006, 2007, 2008, 2009, and
2010 as compared to 2003, 2004, and 2005.
To test the null hypothesis of equal mandatory D&C index across
industries, Welch ANOVA is used. The results in Table IV reveal that
there is a statistically significant difference of mandatory D&C
index across industries by one-way Welch ANOVA (F (11, 475.667) = 8.106,
p = 0.000). Results of a Games-Howell post-hoc test reveal that
mandatory D&C index is significantly higher in chemicals sector as
compared to drugs and pharmaceuticals, metal and metal products, food
and beverages, construction and real estate, machinery, textiles, and
non-metallic mineral products industries at 5 percent level of
significance. Mandatory D&C index is also found to be significantly
less in non-metallic mineral products sector than service, transport
equipments, textiles, chemicals, and diversified sectors. Mandatory
D&C index is significantly higher in transport equipments sector as
compared to construction and real estate sector.
Summary and Conclusion
The above analysis reveals that not all companies are complying
with the mandatory disclosure provisions regarding managerial
remuneration. The companies have been found disclosing remuneration of
their executive directors in the corporate governance reports but the
level of disclosure is not very satisfactory. A significant number of
companies which disclosed the remuneration of their executive directors
have not been found disclosing component-wise breakup of remuneration of
their executive directors. A large number of companies showing the
component-wise breakup of remuneration of the executive directors have
been found classifying the total remuneration of executive directors
into two varying categories only. Though, with the passage of time, more
and more companies have started furnishing details of remuneration of
their directors under three or more categories, but still it seems that
the companies are not willing to furnish the detailed information
regarding different components of remuneration of executive directors.
The proportion of companies explaining the nature of components of
remuneration of executive directors has been found to be small. In 2012,
only 36 percent companies were found giving details of fixed component
and performance linked component of remuneration of their executive
directors.
The practice of the corporate sector to disclose different
components of remuneration of executive directors is also not
satisfactory. Amongst the fixed components of remuneration of executive
directors, salary and perquisites are two widely used forms of
remunerating executive directors. A large proportion of companies
claimed the payment of salary, allowances, and perquisites but did not
disclose the amount of these components under separate heads, rather
allowances and perquisites are clubbed with salary for disclosing
purpose. It has been observed that there has actually been a fall in the
proportion of companies disclosing these components under separate heads
in 2012 as compared to the year 2003. An increasing proportion of
companies has been found claiming the payment of different forms of
retirement benefits over the period of study. A small proportion of
companies claimed the payment of retirement benefits but did not
disclose the amount allocated for the said purpose. The reason stated in
corporate governance reports is the non-availability of separate figures
of the respective benefits for directors of the companies. An increase
has been found in the proportion of such companies over the period of
study. A consistent upward trend has been found in the proportion of
companies granting performance linked incentives to executive directors.
Commission is commonly used for providing the performance based
incentives to the executive directors. Companies granting stock options
to their executive directors have been found to be very less. However,
an increase in the proportion of companies granting stock options has
been noticed in 2012 as compared to the year 2003.
Performance of the company, individual performance, industry
standards, levels of responsibility, and qualification and experience,
have been found to be some widely used criterion for determining the
remuneration of the executive directors. Non-executive directors are
paid in the form of sitting fees, commission and stock options. Some
companies have been found claiming the payment of sitting fees and
commission to non-executive directors but did not disclose the amount of
sitting fees and commission paid to non- executive directors. There has
been a consistent upward trend in the proportion of companies claiming
and disclosing the payment of sitting fees and commission to the
non-executive directors. A negligible proportion of the companies used
stock options for remunerating the non-executive directors of the
company. Less than one-fifth of the sampled companies mentioned the
criteria for determining the remuneration of non-executive directors.
Performance of the company, individual performance, current remuneration
trends in the industry, time and effort put by the non-executive
directors, chairmanship or membership of the various board committees,
and attendance at the board and committee meetings have been reported as
widely mentioned criteria for determining the remuneration of the
non-executive directors. In-spite of being a mandatory provision of
disclosing details of the stock options granted, not all the companies
have been found complying with the requirement.
The mandatory disclosure index is found to differ significantly
across industries and years of the present study. The results of the
present study suggest that more strict rules need to be framed for
ensuring compliance with the detailed disclosure about the components of
managerial remuneration. The practice of disclosing the performance
criteria for determining the remuneration of executive and non-executive
directors also needs to be encouraged.
Remuneration disclosure provides information to investors regarding
how much remuneration is being paid to directors and how it is being
paid.
Disclosure requirements ensure transparency and accountability on
part of directors to remunerate themselves.
Compared with 1993, significant increase was found in the
percentage of firms disclosing the employment of compensation
consultants, the basis for determining the salary, type of performance
evaluation, weights on performance measures, and range or absolute value
of rewards.
Though disclosing the remuneration of executive directors by
companies is a mandatory requirement, but still not 100 percent of
companies have been disclosing the remuneration of their executive
directors.
A significant number of companies which disclosed the remuneration
of their executive directors have not been found disclosing
component-wise breakup of remuneration of their executive directors.
Performance of the company, individual performance, industry
standards, levels of responsibility, and qualification and experience,
have been found to be some widely used criterion for determining the
remuneration of the executive directors.
Some companies have been found claiming the payment of sitting fees
and commission to non-executive directors but did not disclose the
amount of sitting fees and commission paid to non-executive directors.
Performance of the company, individual performance, current
remuneration trends in the industry, time and effort put by the
non-executive directors, chairmanship or membership of the various board
committees, and attendance at the board and committee meetings have been
reported as widely mentioned criteria for determining the remuneration
of the non-executive directors.
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Lakhwinder Singh Kang Professor and Head, Department of Commerce,
Guru Nanak Dev University, Amritsar.
Payal Senior Research Fellow, Department of Commerce, Guru Nanak
Dev University, Amritsar.
Table I
Compliance with the Mandatory Disclosure of Managerial Remuneration
Disclosure Item Maximum 2003 2004 2005
Score
Mandatory Items
1. Disclosure of remuneration 1 0.931 0.932 0.939
of executive directors
2. Bifurcated details of the 1 0.809 0.804 0.844
remuneration of executive
directors
3. Extent of Bifurcation 1 0.277 0.327 0.376
4. Details of fixed component 1 0.277 0.289 0.287
and performance linked
incentives
5. Performance criteria for 1 0.346 0.371 0.412
executive directors
6. Salary
(i) Disclosure of salary 1 0.897 0.895 0.928
irrespective of separate head
or combined
(ii) Disclosure of salary under 1 0.691 0.709 0.689
separate head
7. Allowances
(i) Disclosure of allowances 1 0.291 0.340 0.359
irrespective of separate head
or combined
(ii) Disclosure of allowances 1 0.100 0.127 0.100
under separate head
8. Perquisites
(i) Disclosure of perquisites 1 0.693 0.702 0.733
irrespective of separate head
or combined
(ii) Disclosure of perquisites 1 0.452 0.443 0.441
under separate head
9. Retirement benefits
Proportion of companies 1 0.532 0.557 0.604
claiming and disclosing the
payment of retirement benefits
Proportion of companies 1 0.051 0.072 0.064
claiming but not disclosing the
amount of retirement benefits
10. Performance linked payments 1 0.620 0.594 0.647
to executive directors
11. Grant of stock options to 1 0.020 0.020 0.033
executive directors
12. Sitting fees to
nonexecutive directors
Proportion of companies 1 0.866 0.873 0.906
claiming the payment of sitting
fees to nonexecutive directors
Proportion of companies 1 0.969 0.969 0.977
claiming and disclosing the
amount of sitting fees to
non-executive directors
13. Commission to nonexecutive
directors
Proportion of companies 1 0.366 0.400 0.426
claiming the payment of
commission to nonexecutive
directors
Proportion of companies 1 0.963 0.966 0.984
claiming and disclosing the
amount of commission to
nonexecutive directors
14. Grant of stock options to 1 0 0.013 0.013
nonexecutive directors
15. Performance criteria for 1 0.153 0.180 0.226
non-executive directors
16. Details of stock options 1 1.000 0.750 0.666
Disclosure Item 2006 2007 2008 2009
Mandatory Items
1. Disclosure of remuneration 0.979 0.979 0.979 0.993
of executive directors
2. Bifurcated details of the 0.912 0.912 0.892 0.892
remuneration of executive
directors
3. Extent of Bifurcation 0.377 0.382 0.421 0.421
4. Details of fixed component 0.324 0.321 0.342 0.344
and performance linked
incentives
5. Performance criteria for 0.486 0.489 0.496 0.516
executive directors
6. Salary
(i) Disclosure of salary 0.937 0.952 0.945 0.945
irrespective of separate head
or combined
(ii) Disclosure of salary under 0.676 0.669 0.652 0.650
separate head
7. Allowances
(i) Disclosure of allowances 0.400 0.404 0.404 0.405
irrespective of separate head
or combined
(ii) Disclosure of allowances 0.086 0.118 0.118 0.116
under separate head
8. Perquisites
(i) Disclosure of perquisites 0.744 0.732 0.732 0.736
irrespective of separate head
or combined
(ii) Disclosure of perquisites 0.453 0.467 0.439 0.440
under separate head
9. Retirement benefits
Proportion of companies 0.648 0.650 0.657 0.662
claiming and disclosing the
payment of retirement benefits
Proportion of companies 0.062 0.075 0.068 0.074
claiming but not disclosing the
amount of retirement benefits
10. Performance linked payments 0.696 0.719 0.732 0.702
to executive directors
11. Grant of stock options to 0.081 0.067 0.120 0.087
executive directors
12. Sitting fees to
nonexecutive directors
Proportion of companies 0.933 0.933 0.933 0.926
claiming the payment of sitting
fees to nonexecutive directors
Proportion of companies 0.964 0.971 0.978 0.985
claiming and disclosing the
amount of sitting fees to
non-executive directors
13. Commission to nonexecutive
directors
Proportion of companies 0.426 0.533 0.520 0.520
claiming the payment of
commission to nonexecutive
directors
Proportion of companies 0.985 0.987 0.987 0.974
claiming and disclosing the
amount of commission to
nonexecutive directors
14. Grant of stock options to 0.053 0.033 0.033 0.040
nonexecutive directors
15. Performance criteria for 0.360 0.426 0.413 0.433
non-executive directors
16. Details of stock options 0.466 0.666 0.578 0.437
Disclosure Item 2010 2011 2012 Cochran's q
statistic
Mandatory Items
1. Disclosure of remuneration 0.993 0.986 0.986 50.738 ***
of executive directors
2. Bifurcated details of the 0.873 0.886 0.873 52.910 ***
remuneration of executive
directors
3. Extent of Bifurcation 0.435 0.436 0.435 70.449 ***
4. Details of fixed component 0.342 0.351 0.365 60.059 ***
and performance linked
incentives
5. Performance criteria for 0.526 0.533 0.578 118.037 ***
executive directors
6. Salary
(i) Disclosure of salary 0.932 0.939 0.937 67.208 ***
irrespective of separate head
or combined
(ii) Disclosure of salary under 0.661 0.661 0.676 6.895
separate head
7. Allowances
(i) Disclosure of allowances 0.405 0.412 0.427 64 ***
irrespective of separate head
or combined
(ii) Disclosure of allowances 0.116 0.114 0.112 10.653
under separate head
8. Perquisites
(i) Disclosure of perquisites 0.736 0.750 0.744 39.414 ***
irrespective of separate head
or combined
(ii) Disclosure of perquisites 0.440 0.423 0.407 10.892
under separate head
9. Retirement benefits
Proportion of companies 0.657 0.675 0.696 93.6 ***
claiming and disclosing the
payment of retirement benefits
Proportion of companies 0.080 0.081 0.082 12.988
claiming but not disclosing the
amount of retirement benefits
10. Performance linked payments 0.718 0.722 0.703 69.991 ***
to executive directors
11. Grant of stock options to 0.066 0.08 0.046 32.685 ***
executive directors
12. Sitting fees to
nonexecutive directors
Proportion of companies 0.933 0.933 0.933 40.242 ***
claiming the payment of sitting
fees to nonexecutive directors
Proportion of companies 0.978 0.971 0.971 40.403 ***
claiming and disclosing the
amount of sitting fees to
non-executive directors
13. Commission to nonexecutive
directors
Proportion of companies 0.573 0.593 0.593 116.281 ***
claiming the payment of
commission to nonexecutive
directors
Proportion of companies 0.988 0.988 0.988 120.496 ***
claiming and disclosing the
amount of commission to
nonexecutive directors
14. Grant of stock options to 0.026 0.026 0.020 18.115 *
nonexecutive directors
15. Performance criteria for 0.460 0.466 0.473 249.815 ***
non-executive directors
16. Details of stock options 0.583 0.600 0.625 14.487
* p less than 0.05, *** p less than 0.001
Table II
Mauchly's Test of Sphericity
Measure: MEASURE_1
Within Mauchly's Approx. Df Sig. Epsilon
Subjects W Chi-Square Greenhouse-Geisser
Effect
Time 0.001 1097.656 44 0.000 0.289
Within Epsilon
Subjects Huynh-Feldt Lower-bound
Effect
Time 0.295 0.111
Table III
Tests of within-Subjects Effects
Measure: MEASURE_1
Source Type III df
Sum of Squares
Time Sphericity Assumed 3.934 9
Greenhouse-Geisser 3.934 2.601
Huynh-Feldt 3.934 2.651
Lower-bound 3.934 1.000
Error (time) Sphericity Assumed 13.767 1341
Greenhouse-Geisser 13.767 387.544
Huynh-Feldt 13.767 395.041
Lower-bound 13.767 149.000
Source Mean Square F Sig.
Time Sphericity Assumed 0.437 42.573 0.000
Greenhouse-Geisser 1.512 42.573 0.000
Huynh-Feldt 1.484 42.573 0.000
Lower-bound 3.934 42.573 0.000
Error (time) Sphericity Assumed 0.010
Greenhouse-Geisser 0.036
Huynh-Feldt 0.035
Lower-bound 0.092
Table IV
Robust tests of Equality of means
Mandatory Disclosure and Compliance Index
Statistic df1 df2 Sig.
Welch 8.106 11 475.677 0.000
a. Asymptotically F distributed.
