Temasek’s Managers to Lead Companywide Pay Cut Amid Recession

By Chen Shiyin

Nov. 22 (Bloomberg) -- Temasek Holdings Pte, Singapore’s state-owned investment company, said its key managers will lead a companywide pay cut1 and that a global recession may extend beyond 2009.

The firm, which oversees $130 billion, said senior management has volunteered to take a 15 percent to 25 percent pay cut. The key managers will provide almost 90 percent of the savings from the companywide cut, it said in an e-mailed response yesterday to a Bloomberg News query.

“The point on the shaky economic outlook is certainly valid as we see the cutbacks by financial institutions around the world,” said David Cohen, an economist at Action Economics. “The opportunistic view is things will bottom out by the middle of next year, but there’s a lot of uncertainty clouding the outlook.”

Temasek, led by Chief Executive Officer Ho Ching, is seeking to cut costs amid a slump in financial markets that has wiped out more than $33 trillion in global stocks this year, hurting the value of its investments. It bought stakes in Merrill Lynch & Co. and Barclays Plc after the credit crisis led to about $966 billion of writedowns and credit losses and more than 170,000 financial job losses worldwide.

‘Short-Term Challenge’

“As a long-term investor, we believe this current crisis will throw up tremendous opportunities,” Robert Chong, Temasek’s managing director of human resources, said in the e- mail. “Yet, we also recognize the short-term challenges and will adjust our actions appropriately.”

Singapore lowered its growth forecast for a fourth time this year and said yesterday the economy may contract in 2009, prompting policy makers to implement more measures to avoid a prolonged slowdown.

Temasek has a controlling stake in six of the city’s 10 biggest publicly traded companies by value, including Singapore Telecommunications Ltd. and Singapore Airlines Ltd. Singapore makes up about a third of Temasek’s assets.

“We anticipate a global recession in 2009 and possibly beyond,” Chong said.

The company, which is wholly owned by the Singapore Finance Ministry, also aims to expand its workforce by 15 percent in the next two years, he added. That’s part of a longer-term plan to have about 500 employees, he said.

Administrative expenses for the group, which includes Temasek’s share of the companies it invests in, rose 6.4 percent to S$8.6 million in the year ended March, making up 10 percent of revenue. Profit doubled for the year to S$18.2 billion ($12 billion) as sales of energy and Chinese banking assets countered slowing returns from stock market investments, Temasek said in its annual report released on Aug. 26.

To contact the reporter on this story: Chen Shiyin in Singapore at schen37@bloomberg.net.