Net Bonus or Malus?

For the second year running, Temasek Holdings staff will be looking at “negative bonuses”, revealed Ms Ho Ching.

Though it delivered almost 7 per cent of positive total shareholder return last year, Temasek saw its portfolio value fall by at least $40 billion in the year to March 2009. Thus, there will be cuts in the staff’s bonus pool that comes under the Wealth Added Bonus plan, where employees share in the institution’s performance.

Returns above the cost of capital target means Temasek has gains to share with staff. But returns below its risk-adjusted cost of capital hurdle means deductions from the staff’s bonus pool.

The challenge lies in how to share a negative bonus equitably and fairly among staff, said Ms Ho, noting that “from CEO to office attendants”, all staff were allocated negative bonuses last year and will be distributed more of the same this year once audited financials are approved.

Temasek did not elaborate if this means staff would take home smaller or no bonuses.

However, Today understands the company’s total bonus package also consists of a 13th-month payout and a performance bonus.

Ms Ho said this “very difficult market cycle” has put Temasek’s compensation framework to the test, and enabled it to rethink and refine its incentive elements. Leong Wee Keat

http://www.todayonline.com/Business/EDC090730-0000099/Negative-bonus-for-all-staff

While the concept of malus is certainly not novel it is certainly an industry practice and one that should be rightfully adopted by Temasek at this current juncture. However what remains unclear as pointed out above is, is it a net malus or net bonus? All signs point to a mere slap on the wrist, ie a net bonus. For shame.

And another thing, could someone explain to me like I’m a 3 year old how Temasek could achieve overall 7% net shareholder gain yet lose S$40b of their portfolio? Am I being a moron or does that statement read like an oxymoron?

Goodbye to Goodyear

Shocking news from Temasek Holdings, Chip Goodyear, who was hand-picked as incoming CEO of Temasek Holdings, in a regal and year long selection process, has been booted! Hitherto previous CEO Ho Ching will resume her position as CEO of Temasek Holdings. I guess that puts paid to speculations that she would enter politics beside her husband.

So, literally, WTF happened with Chip and Temasek? According to official statements Chip’s directions didn’t gel with the overall strategic direction of Temasek. Eh? Isn’t the CEO’s role to chart the direction and for the company to follow? I think it’s clear from here that a privately-owned corporation is a totally different creature from a GLC like Temasek, where the true captains of the ship are the political masters, especially if you have SWFs on the table. Instead of being the puppeteer, the CEO ended up being the puppet, and I think that didn’t go down very well with Chip.

This will not bode well for Temasek in any future endeavours in trying to find another successor to helm Temasek, since any idiot will give Chip a call to dig some dirt and there will be dirt. Who in their right mind will want a job working alongside political sycophants, wastrel scholars looking for the high-life and otherwise never-do-wells paying more attention to the OB markers than stock indices?

Speaking of wastrels, what happened to Wee Shu Min?

Capital idea to capital gains?

The MOF(?), in an attempt to rein in property speculation, has decided to put in place a capital gains tax. I have been unable to obtain the figures for this tax, but for the longest time Singapore did not in fact have a capital gains tax for property sales. Meaning if you bought and sold a property in Singapore for a handsome profit, that income is not subject to income tax.

Most punters believe this new move is to clamp down on rampant speculation, especially for good property areas like the hitherto District 9, 10, 11 and so on. It has also been an unspoken but relatively known secret that property agents themselves snap up hot property in a bid to “flip” them onto the open market, sometimes even before soft launches. It is no wonder that some hot properties report incredible sales counts just hours after their launches.

Apparently what little news I could gather capital gains tax only applies to a property sold within 4 years of owning it. That means if have have sold a property both within 4 years of owning them, you’re now classified as a speculator and subject to the tax, presumably on your subsequent investments as well. Or something like that. This is the MOF’s words: “An individual who sells a property on or after Jan 1, 2010 will not be taxed on the gains if he has not sold any other property in the previous four years.” Will a capital gains tax clamp down on speculation? Or should speculation be clamped down in the first place? One thing is exceedingly clear, property developers like CDL and CapitaLand have been reaping the profits from any market boom, especially those driven by speculators. It is also a boon for foreign investors who might see it as a tax haven. However the side effect of speculation is that it drives prices upwards, at times out of the reach of most.

To decry such a law would sound somewhat selfish, but at the same time would warrant some inspection, whether it would negatively affect the economy. To advocate this would in my opinion, sound like a case of sour grapes.

On a side note, it is increasingly apparently that in our “recession times” that people are still buying big-ticket items. Perhaps in a bid to capitalise on a potential recovery?

Controlling and monitoring dangerous materials

The 17th July Jakarta bombings that have claimed 8 lives so far reminded everyone in the region that the JI is still alive and terrorising the region. What was most surprising for me was that the bombs were assembled in room 1808 of the JW Marriott prior to the suicide attacks.

This brings to mind the unspoken and unnoticed rule (is it a law?) on the sale of industrial glue. In case you don’t know, if you attempt to buy industrial glue (the good stuff that comes in tin cans like paint) from any neighbourhood or carpentry shop, the shop owner needs to verify the age of the buyer. If you’re underaged the shopkeep can’t sell it to you. This is apparently to curb glue-sniffing, but is an example of the control of “contraband” or “dangerous materials” and the management of minds of the gatekeepers of such materials, the shopkeeps.

The same must be done for other materials of the bomb-making kind in Singapore, to prevent a JW Marriott-style attack. Is ammonium nitrate, a popular bomb component, easily and readily available? Is the sale and import of it heavily regulated and monitored? What about other materials crucial to bomb-making? Certainly things like phones and circuitry needed for bomb triggers can’t really be that well controlled since they have a broader application spectrum, but certainly materials that can be used for making bombs would have a much narrower application and therefore easier to keep tabs on?

Perhaps such controls are already in place to curb such insidious attacks. One thing’s for sure, perimeter checks and border controls can be great on paper but ultimately human beings will segue into complacency. Add on the fact that people will bitch and moan about draconian procedures like bag and body checks especially by those who consider themselves the elevated and privileged, humans will inadvertently start to profile people and skip procedures. From the recent past our history included you only need to be complacent at the exact wrong moment to let the shit hit the fan. It is also fatal to believe that bomb-making knowledge is hard to come by, what with the Internet replete with instructions and videos.

That nothing untoward has happened so far, should not lead us to believe all is in order. The same was probably in the minds of people in the region up until 17th July 2009.