PAY REVIEW
After a period of stagnation and decline, the job market for senior finance executives in Asia looks to be picking up steam.
By Justin Wood

When Pek Yew Chai, was appointed president and CEO of Singapore Computer Systems (SCS) in 2003, he knew he was taking on a difficult challenge. In particular, many of the world's largest IT services companies - the likes of IBM, EDS and HP - were investing heavily in Asia. And while SCS was no small fry, what with offices in nine countries and annual sales of S$467 million (US$275 million), it was nonetheless proving tough to stand up to these behemoths.

"It was time for SCS to move to the next level," recalls Pek. "If we wanted to compete against the big boys we needed to be as efficient as they were and provide services that matched the best in the market."

Pek's first move was to hire a world-class CFO. "I needed to beef up our management bench strength," explains Pek.

Up until then, the company had made do with a group financial controller, but with SCS's evolving environment Pek wanted somebody with more than just accounting and control skills. He was looking for someone who could manage all aspects of the company's finances and combine that role with investor relations, corporate communications, strategic planning, and business development. In short, the CFO needed to be commercially minded. The candidate also had to be able to handle complexity, for SCS has various business lines. And the CFO would need to be adept at change management, for one immediate challenge was to stitch together a tangle of disparate reporting systems that had piled up through SCS's rapid expansion.

Pek began his search in June and on November 28 announced the hire of 49-year-old Chia Sin Cheng, at the time the finance director of Yongnam Holdings, a structural engineering company. Chia's mandate is simple, says Pek. "We want to benchmark ourselves against the biggest and best in the field and [Chia's] job is to make sure we measure up."

The situation at SCS is far from unique. Across Asia, say recruitment consultants, more companies are strengthening their financial management to fend off growing competition and expand into new markets. The result is a much revitalized job market for CFOs after a string of quiet years. Salaries have yet to rise in response to growing demand, but for senior finance executives with the right resumZ¹s, 2004 could prove exciting..

Market Rebound

Of course, it isn't only the threat of competition that is leading companies to invest in better financial management. The gathering global recovery is proving to be just as much of a spur.

"Suddenly growth is back and many firms are looking at their CFO and asking whether he or she is the right person to lead the company forward for the next five years," says Guy Day, managing director in Hong Kong of Ambition, a recruitment company.

"The skills companies wanted from their CFOs during the downturn - cost-cutting, reengineering, accountancy, control, and systems implementation - are still a prerequisite," adds Day, "but with the economy improving, companies are also looking for a bit extra, perhaps M&A experience, certainly leadership and the ability to contribute to strategy."

And with recovery, notes Alice Au, managing partner in Hong Kong for executive search firm Heidrick & Struggles, come buoyant stockmarkets. "A lot of companies want to get listed and are looking for CFOs who can help them with that," she says.

This especially applies to companies that received private equity funding since the Asian crisis, observes Au. Now that they are in better shape - and valuations have improved - investors are looking for a way out. Flotations are the preferred route, and that has led to strong demand for CFOs with listing experience. Still, even a solid track record of raising capital might not be enough to secure the plummiest positions, cautions Au. With China at the top of most people's minds, "CFOs who speak Mandarin are in greatest demand of all," she says..

Earnings Consensus

Unfortunately for CFOs, recruitment consultants agree that despite a more buoyant market for senior finance executives, base salaries are largely staying flat. Graham Hollebon, managing director in Singapore for recruitment company Michael Page, reckons CFO salaries will rise by no more than 3 or 4 percent this year. Still, that's a turnaround from the falling salaries of the past two or three years. In a sign of positive things to come, Hollebon notes that last December saw his company's best-ever month since starting business in Singapore in 1996.

"People are starting to move again," he grins.

But while base salaries may be stuck in the doldrums, recruiters report that the variable component of a CFO's salary is getting bigger. "The trend is to move towards performance-based pay," says Ambition's Day. "CFOs who perform well stand to make a lot more money this year even though their base salaries have been static."

Of course, there are always exceptions to the rule. In India, where the economy is roaring ahead, some finance chiefs are enjoying bigger salary rises than they've seen in years. Namrita Jhangiani, a consultant in the Mumbai office of Egon Zehnder, a company of headhunters, sees two sorts of companies in India: one is largely domestically focused, the other is looking to compete on the international stage. While salaries at the former are still low by international standards, pay at the latter has risen rapidly to match that found in the US and Europe.

Indeed, adds Jhangiani, salaries have risen so far that many Indians based overseas are coming home, lured not only by the prospect of decent pay, but also by an exciting economy. Take the case of Sumant Sinha. Up until 2002 he worked as a senior investment banker in New York, but when Sinha was approached to be CFO of Birla Group, he leapt at the chance of helping to prepare one of India's biggest conglomerates to do battle on the international stage."

Wage Guage

So for those CFOs looking to benchmark their own careers, what sorts of salaries are currently available? In a bid to answer this question, CFO Asia conducted a poll of its readers in mid-December, asking them to reveal their "on-target" salaries, a figure which includes not only base pay but also the expected value of cash bonuses and stock awards.

To ensure the survey's accuracy, respondents were asked not only what their job title was and how much they earned, but also how much revenue they were personally responsible for. Thus, while the finance chief of a multi-billion dollar business and the chief accountant of a small subsidiary may have the title "CFO", our survey helps to separate such positions according to the size of the operations they manage. As expected, CFOs, controllers, and treasurers with greater revenue responsibility earn more than their counterparts overseeing smaller businesses.

Long-time readers of CFO Asia will note that this year's survey represents a departure. Our previous looks at compensation were joint efforts between headhunting consultants, who provided the research, and CFO Asia. This year, we polled our own readership, garnering 356 responses, rather than a third-party list, on the principle that the magazine's subscribers represent the best cross-section of senior finance professionals in the region. As a first try with this approach, we can offer no year-on-year comparison. We will, of course, provide such analysis in 2005, and also widen the survey to include data allowing comparison between business sectors and additional markets.

One reason to do so is to track the disparity in pay reported by readers in key Asian markets. Our second table, "North-South Divide," reveals that, as far as all-in pay is concerned, geography is destiny. It shows that CFOs with revenue responsibility of US$100 million to US$500 million earn salaries of around US$190,000 in Hong Kong, but that figure drops to US$143,000 in Singapore, and to US$103,000 in India. In a second example, the table also shows how the salaries of financial controllers with revenue responsibility of US$10 million to US$50 million vary in a similar way.

As for sectors, it appears that banking, financial services, and technology companies pay their finance teams more handsomely than most. And interestingly, finance staff working in Asia are best off working for non-Asian companies - perhaps in a regional role for a Western multinational.

How long will this last? With companies like SCS shopping for world-class talent to address multinational competition, Asian companies may soon find themselves paying global rates for global skills. This can only be good news for Asia's home-grown CFOs.

Justin Wood is managing editor of CFO Asia in Singapore.