The economic boom is over. With economies of Singapore and many other countries now battered by recession, top executives of Singapore's big companies must bite the bullet by taking pay cuts.

Buckling under the blows of the economic downturn, many Singapore companies have reported falling profits and even losses.

Last year, chief executives of Singapore's 30 listed companies making up the Straits Times index enjoyed pay hikes ranging from 20 per cent to 150 per cent, as revealed in the companies' annual reports.

These large pay increases stemmed principally from a rise in the bonus component, which took up as much as 80 per cent of the CEO's pay package. And the big bonus payouts were the spin-off of an economic boom year with many companies raking in fat profits.

CEOs are rewarded - through pay and bonuses - based on their performance. Their performance are linked to their companies' bottom-line and operational results and their personal leadership effectiveness.

Bottom line is the company's profits and return on investment. Operational results are reflected in the company's capacity to perform effectively, customer satisfaction and company image. Leadership effectiveness shows the CEO's ability to inspire trust through proper communication with the staff and motivating them to achieve company goals and objectives. Also, integrity and fairness are essential traits of good leadership.

During an interview with ABC News in the US, President-elect Barack Obama chided US car executives for being "tone deaf" for recently flying on corporate jets to Washington to beg for bailout money. He was referring to the heads of General Motors, Ford and Chrysler.

Mr Obama hopes to usher in "a return to an ethic of responsibility. If you are placed in a position of power, then you've got responsibility to your workers. You've got a responsibility to your community... your shareholders."

In Singapore's financial sector, press reports say that the CEO of United Overseas Bank, Mr Wee Ee Cheong and CEO of OCBC Bank, Mr David Conner, each pocketed between $6 million and $6.25 million last year. And in the industrial sector, the CEO of Keppel Corporation, Mr Lim Chee Onn, took home even higher pay - earning up to $9 million last year.

There are also founding CEOs/chairmen of smaller SGX listed companies who behaved and acted as if they are still operating their own private companies. For the good of corporate governance and the investing community, independent directors should exercise their moral responsibility in reining in CEOs'excesses.

It is only morally right that CEOs should tighten their belts and accept lower pay now that Singapore has slipped into its first recession since 2001 and bracing itself for even leaner times ahead.

Yes, there are already some good examples being set. CEO Liew Mun Leong of Singapore-based CapitaLand, South-east Asia's biggest property developer, said he will take a 20 per cent pay cut while the salaries of his senior executives will be cut from three to 20 per cent from January 2009. I applaud Mr Liew's move and hope more CEOs will follow his example.

Outgoing Capitaland deputy chairman, Hsuan Owyang summed up the entire global financial crisis in six words - greedy bankers, incompetent boards and compliant regulators.

A director's job, he points out, is to monitor and advise. It is with the monitoring role that directors fell short before the present crisis. He explained:"The job is to check if the CEO is leading the company well, If not, something must be done''.

CEO pay, bonuses and profit sharing schemes should be linked not only to their executive performance but to the performance of their companies as well.

In cases where the companies incurred hefty losses due to bad management and judgment, some CEOs should be given the boot.

I wish independent directors of listed companies can be empowered to play their independent role more effectively and put right what they see wrong in the companies they serve.

And directors of ineffective boards or boards of loss-making companies should also pay a price by slicing off their pay packages.