CEO-Designate Of Temasek Holdings

Date: 18 September 2009

Question No. 95 (by Mr Low Thia Khiang):

To ask the Minister for Finance (a) what strategic differences emerged between Temasek Holdings CEO-designate Mr Charles Goodyear and the Temasek Board which led to the decision not to proceed with his appointment as CEO and when did these first surface; and (b) whether the Government is concerned about leadership renewal at Temasek Holdings in view of this development.

Question No. 96 (by Mr Lim Biow Chuan):

To ask the Minister for Finance (a) whether he will explain the reasons why the CEO-designate of Temasek Holdings resigned after such a short stint at the company despite assurances that he had been assessed to share the values of Temasek Holdings; and (b) whether Mr Goodyear was given a 'golden handshake' or paid any bonus or gratuity when Temasek Holdings agreed to his resignation.

Question No. 97 (by Mr Seah Kian Peng):

To ask the Minister for Finance (a) what are the remuneration provisions that govern Mr Goodyear’s discontinuation of service as the CEO-designate of Temasek Holdings; and (b) whether there is a deadline for the search of a new CEO.

Reply by Finance Minister Tharman Shanmugaratnam:

Temasek’s Board has issued a carefully considered statement on the mutual decision that the Board and Mr Charles Goodyear have taken to terminate the leadership transition process at Temasek. It would not be appropriate for the Government to add to the statement, bearing in mind that the Government had no role in the decision by the Board and Mr Goodyear not to continue with the CEO transition. Temasek informed the Government of the decision before it was announced, but the Government was not involved in any way in the decision.

This does not mean that the Government is a disinterested observer of Temasek’s leadership succession. As shareholder of Temasek, the Government has a clear interest in Temasek continuing to have strong leadership, so that it can deliver good returns over the long term.

However, the Government does not directly manage the process of CEO succession. To do so would make the appointment of the CEO a political decision, which it must never be. The decision must remain the responsibility of the Board of Temasek, which oversees the process of leadership succession and decides based on the merits and suitability of any CEO candidate.

Temasek’s Board and current CEO Ms Ho Ching had set about the process of CEO succession review since 2005 not because there was an urgent need to find a new CEO, but because a disciplined system of regular succession planning for its CEO and senior management is essential for Temasek’s future as a professional organisation. It was through this process that Temasek had found Mr Goodyear to be a suitable CEO successor and made the offer for him to join Temasek.

While it is obviously unfortunate that the Board and Mr Goodyear decided that the leadership transition should be terminated, Temasek intends to keep up its processes for CEO succession review and planning as part of its Board discipline.

Temasek’s leadership remains strong, at both the CEO and Board level. They have enabled Temasek to sustain its generally superior overall investment performance over the years, including over the last cycle in global markets that began in 2003. The Board will continue to review succession options, and the Government is confident that it will make its decision to appoint a successor CEO in the best interest of Temasek when a suitable candidate is available and ready. Thus, with regard to Mr Seah Kian Peng’s question, Temasek has no deadline for the search for a CEO successor.

Mr Lim Biow Chuan and Mr Seah Kian Peng also asked if a severance bonus or “golden handshake” was offered to Mr Goodyear. Temasek had no contractual obligation to make any compensation to Mr Goodyear on separation. It was an amicable separation, based on mutual agreement.