$2.7m bonus clawback hits SembMarine CEO
THE brutal downturn in the energy industry has taken a severe toll on the bonus payments of key executives at rig builder Sembcorp Marine.
The company's 2015 annual report noted that a $2.7 million bonus was clawed back from president and chief executive Wong Weng Sun, whose total pay package came to $1.79 million.
He earned $4.32 million in 2014, including a $2.4 million bonus, although he may not have taken this amount home given the company's remuneration policy.
Temasek Holdings, which owns 49.5 per cent of SembMarine parent Sembcorp Industries, said senior management receive cash payouts of no more than a third of the bonuses they have already racked up, if the balance is positive.
The retained balances remain at risk of clawbacks in the future, it added.
This appears to be the first bonus clawback Mr Wong has experienced since taking over as SembMarine president and chief executive in 2009, based on a search of the company's annual reports.
SembMarine told The Straits Times yesterday that it was not able to respond to queries.
Five other executives also suffered bonus clawbacks, ranging from $472,000 to $989,000 last year.
"Bonus clawbacks in the oil and gas sector are another illustration of the unprecedented headwinds buffeting the industry," said Stefanie Yuen Thio, joint managing director of TSMP Law Corp.
"The market saw clawbacks for top executives in the global financial sector following the financial crisis of 2008, and this may well be the oil and gas sector's 'Lehman Brothers moment'."
Lee Suet Fern, managing partner of Morgan Lewis Stamford, noted that "when the industry is down, bonus clawbacks are unsurprising".
Sembcorp Marine's full-year net loss came in at $289.7 million last year from a net profit of $560.1 million a year earlier.
Marine engineering companies around the world have had trouble replenishing their order books while existing orders have been deferred or cancelled, the firm said.
SembMarine made provisions of $801 million on rig-building contracts and share of losses in other associates and non-operating items in the fourth quarter.
Meanwhile, the heads of Keppel Corp and SembMarine's parent, Sembcorp Industries, fared better, partly because these are more diversified businesses.
While their total remuneration packages were lower this year, they kept their bonuses last year.
Keppel chief executive Loh Chin Hua's package came to $6.73 million last year, including a fixed salary, performance-related bonuses and share awards. This compared with $7.25 million a year earlier.
The total remuneration of Tang Kin Fei, group president and chief executive of Sembcorp Industries, came to $4.45 million last year, including a $1.54 million bonus. In 2014, he earned $6.17 million, including a $3.04 million bonus.
"This reflected the impact of a weaker performance by SembMarine, partially mitigated by the utilities business," a company spokesman said.