Boards should be 'independent of management,' Temasek says

Temasek Holdings said company boards should be independent of management, responding to a Standard Chartered Plc statement that the Singapore investment firm abstained from voting for some board members in May.

“To provide effective oversight of management on behalf of all shareholders, we advocate that boards be independent of management,” the state-owned investment company said in an e- mailed statement today. “We do not support excessive numbers of executive members on company boards.”

Temasek, the London-based bank’s biggest shareholder, raised concern over Standard Chartered’s governance plan and is pushing it to hire more independent directors, a person with knowledge of the situation said this week, asking not to be identified because the matter is private.

“We are keen to see boards which have the appropriate composition and strength to provide effective oversight of management, and will vote accordingly at shareholder meetings,” Temasek said in today’s statement. “We promote sound corporate governance in our portfolio companies, and support the formation of high caliber, experienced and diverse boards to guide and complement management leadership.”

Temasek declined to back the re-election of the non- executive directors at the bank’s annual shareholder meeting in May to register its unhappiness, the Wall Street Journal reported yesterday, citing people close to the matter.

The investment company’s withholding of the vote at the shareholder meeting relates to a misinterpretation of U.K. corporate governance standards, Doris Fan, a Hong Kong-based spokeswoman at Standard Chartered, said in an e-mail yesterday. “Temasek have assured us that their abstention does not imply any criticism of the individuals concerned, nor Standard Chartered’s performance or strategy,” Fan said.

EXPERIENCE, DIVERSITY
Standard Chartered, Britain’s second-biggest bank by market value, appointed four non-executive directors as part of a plan started a year ago “to enhance the experience, depth and diversity” of the board, it said last week.

Temasek has talked to potential buyers of its 18% stake in the bank in recent months, the Financial Times reported on Sept. 25, citing people close to the matter. There were no discussions under way at the time, according to the report.