The ST should be careful on how they report their facts. Lest they become even more unreliable and independent.
The title of the article states unquivocally that "No bonuses for Temasek staff". Now there is nothing unclear about "No bonuses" is there? Well when you read on you will discover that a Temasek employee's bonus is drawn from a pool that is paid out over a number of years. When the company does well, the pool gets bigger and the individual's share along with it.
Hence when Ho Ching announced "negative bonuses" it could either mean each employee will get no money from the pool, or the value of the overall pool shrinks. With the latter, negative bonuses means less bonuses and not no bonuses.
The reason why i think it is more likely to be the latter is because of Ho Chings own words: "It is a tough challenge to share negative bonuses". You can't share zero but you can share less.
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July 30, 2009
No bonuses for Temasek staff
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_410035.html
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.
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Showing posts with label ho ching. Show all posts
Showing posts with label ho ching. Show all posts
Thursday, July 30, 2009
Sunday, May 17, 2009
Temasek and Bank of America - Are we missing something?
Published first at http://singaporeenquirer.sg/?p=3762In December 2007 – the nascent and uncertain times prior to the eventual global credit meltdown – Temasek Holdings placed a strategic US$4.4 billion bet on troubled US investment bank Merrill Lynch. As markets continued to unravel from the subprime crisis and credit squeeze Temasek nearly doubled down with an increased stake of US$ 3.4 billion in July 2008.
In justification of this tremendous capital injection in uncertain times, and perhaps to calm nervy Singaporeans, Temasek declared “great confidence” in then Merrill Lynch CEO John Thain.
MP Lim Hwee Hua – Singapore's minister of state for finance – announced in parliament that “Because our reserves are invested with a long-term horizon, this long-term orientation will keep us from selling in panic in a market downturn” and that “The downturns also offer opportunities for our agencies to invest in good quality assets at prices that are attractive from a long-term perspective.”
History is cruel and unforgiving as less than a month later, Lehman Brothers went bust; setting off a chain of events threatening to take down giant insurers, banks, motor companies, … etc down with it.
Having already suffered heavy loses on initial investments, optimism sprung eternal when Bank of America bought over Merril Lynch to prevent it from going bankrupt.
The conversion of Merril into Bank of America shares promise some long term recovery given that Bank of America is a much bigger franchise.
Had Temasek sold its stake after the Bank of America takeover in Sep 2008, it could have gained US$1.5 billion, according to an estimate by Ilian Mihov, an economics professor at graduate business school INSEAD in Singapore. The stock price of Bank of America ranged from US$26 – US$37 per share in Sep 2008.
Perhaps Temasek believed in its mantra of having a long term investment horizon and sought to retain the Bank of America stock to earn more than what to them was a measly potential 20% return on investment.
That resolve, or foolishness, was short lived and today it was confirmed that Temasek had sold its entire stake by 31 Mar 09. Choosing instead to increase investments in emerging markets and reduce exposure to developed economies.
Market timing is clearly not a strong suit of Madam Ho Ching. Since the end of March, when Temasek completed the sale (at an average price of US$6.73), Bank of America stock has risen 66 percent (presently it is US$11.31).
US$11.31 is not much compared to the US$37 it could have made in Sep, but its obviously much better than US$6.73.
I’m not an economist but I am well aware of the shortcomings of attempting to time markets. It is often described as a fool’s quest and I therefore can appreciate the long term investing philosophy. So why the sudden abandonment of this philosophy? We will probably never know the real reason.
Meanwhile, we continue to reward incompetence over and over, AND over again.
Am I missing something?
In justification of this tremendous capital injection in uncertain times, and perhaps to calm nervy Singaporeans, Temasek declared “great confidence” in then Merrill Lynch CEO John Thain.
MP Lim Hwee Hua – Singapore's minister of state for finance – announced in parliament that “Because our reserves are invested with a long-term horizon, this long-term orientation will keep us from selling in panic in a market downturn” and that “The downturns also offer opportunities for our agencies to invest in good quality assets at prices that are attractive from a long-term perspective.”
History is cruel and unforgiving as less than a month later, Lehman Brothers went bust; setting off a chain of events threatening to take down giant insurers, banks, motor companies, … etc down with it.
Having already suffered heavy loses on initial investments, optimism sprung eternal when Bank of America bought over Merril Lynch to prevent it from going bankrupt.
The conversion of Merril into Bank of America shares promise some long term recovery given that Bank of America is a much bigger franchise.
Had Temasek sold its stake after the Bank of America takeover in Sep 2008, it could have gained US$1.5 billion, according to an estimate by Ilian Mihov, an economics professor at graduate business school INSEAD in Singapore. The stock price of Bank of America ranged from US$26 – US$37 per share in Sep 2008.
Perhaps Temasek believed in its mantra of having a long term investment horizon and sought to retain the Bank of America stock to earn more than what to them was a measly potential 20% return on investment.
That resolve, or foolishness, was short lived and today it was confirmed that Temasek had sold its entire stake by 31 Mar 09. Choosing instead to increase investments in emerging markets and reduce exposure to developed economies.
Market timing is clearly not a strong suit of Madam Ho Ching. Since the end of March, when Temasek completed the sale (at an average price of US$6.73), Bank of America stock has risen 66 percent (presently it is US$11.31).
US$11.31 is not much compared to the US$37 it could have made in Sep, but its obviously much better than US$6.73.
I’m not an economist but I am well aware of the shortcomings of attempting to time markets. It is often described as a fool’s quest and I therefore can appreciate the long term investing philosophy. So why the sudden abandonment of this philosophy? We will probably never know the real reason.
Meanwhile, we continue to reward incompetence over and over, AND over again.
Am I missing something?
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Also read: http://wayangparty.com/?p=9407
Update: Temasek explains BoA sale - http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_380131.html
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