DESPITE all the fanfare by local securities bodies about protecting the interests of minority shareholders, the issue of directors' remuneration remains in no man's land. Three years have passed since minority shareholders at Evergo Holdings complained to the stock exchange and Securities and Futures Commission about the large and contentious payments to directors. Salaries, bonus payments and allowances totalling about $45 million were paid to four members of the Lau family for managing Evergo. After-tax profit for the year was $110.5 million. Unfortunately, there has been little progress, if any, on protecting minority shareholders in these cases. Things had a familiar ring last week when the $115 million remuneration paid to directors of Sincere became the ''new'' controversy. The crux of the issue is that remuneration should be in line with comparable companies in Hong Kong and should reflect the company's performance. While local financial professionals concur that greater corporate governance should be imposed on directors' remuneration, the question is how to achieve such a goal. Solicitor Leslie Simon, an Evergo shareholder, maintains that directors' remuneration is essentially a conflict-of-interest problem. He said: ''If one simply left matters to the directors and paid no heed to the conflict, it is open to the directors to pass over the profits of the companies in their entirety to the directors by way of remuneration.'' Mr Simon believes that if directors can vote at board meetings and recommend payouts to themselves, then vote these payments through at company general meetings, the conflict lingers on. Like the rules governing connected transactions, he says remuneration should be considered at a special meeting where shareholders would not only be able to attend but also to vote. At such meetings, the directors and their associates should not be entitled to vote their shares on the proposed resolution, he says. ''If the directors are so convinced that their remuneration is 'proper and reasonable' and if they feel sufficiently confident in their achievements over the past few years, surely they will feel confident enough to put the case to the independent shareholders,'' he says. It has been argued that the present regulatory environment is sufficient to protect minority shareholders. A minority shareholder can bring an action under the Companies Ordinance if directors' remuneration is deemed unreasonable. However, can the ordinary investor with only a few shares be realistically expected to consider a time-consuming and expensive court action? As to whether directors' remuneration should be subject to an independent vote, the British jurisdiction is worth looking at. Proposals have been made about giving shareholders the chance to determine matters such as directors' pay at general meetings, but UK authorities do not see how these suggestions can be made workable. The Cadbury Report, the blueprint for corporate governance in the UK, says the general meeting provides a forum for shareholders to make their views on such issues as directors' benefits known to their boards. The view is that a director's remuneration is not a matter which can be sensibly reduced to a vote for or against. Were the vote to go against a particular remuneration package, the board would still have to determine the remuneration of the director concerned. It is believed shareholders can play a more practical governance role by influencing board policies rather than by seeking to make details of board decisions subject to their votes. The report also recommends that separate remuneration committees be set up, consisting wholly or mainly of non-executive directors and chaired by a non-executive director, to recommend to the boards the remuneration of the executive directors in all its forms, drawing on outside advice as necessary. Executive directors should play no part in decisions on their own remuneration, it says. However, Hong Kong stock experts reject the idea of remuneration committees, which they think would not fit into the local context. Unlike UK companies which are mainly controlled by outside institutional investors, Hong Kong companies are mostly family-run. As such, it would be difficult to find an independent remuneration committee to decide on the subject. It may take some time before local watchdogs come up with suggestions on rules to remedy the problem of directors' remuneration. Further changes to the rules for disclosure are urgently needed. They include disclosing directors' total emoluments and those of the chairman and highest-paid director, and giving separate figures for their salaries. Performance-related elements and the criteria on which performance is measured should also be explained. The accounts of a company should also be required to show particulars of all directors' emoluments in respect of a company and its subsidiaries.