By LYDIA NATHAN / Pic By BLOOMBERG
The average remuneration for each non-ED increases to RM162,000 per annum for the top 300 largest listed issuers on Bursa Malaysia in 2017.
According to professional audit and tax firm KPMG Malaysia, the remuneration amount saw an increase of 33% since its last report in 2013, or 37% increase when the first report was published in 2009.
KPMG Malaysia managing partner Datuk Johan Idris (picture) said there are four factors that have influenced the steady rise in non-ED remuneration.
“The rising expectations, responsibilities and commitment assumed by a non-ED have increased their remuneration, and these are further accelerated against the intensifying demands of globalisation, digitalisation and the pressure for companies to be innovative,” he told reporters at the launch of the report in Kuala Lumpur yesterday.
According to the report, among the factors that played a key part in the increase are time commitment and expertise, disclosure and liability.
“In the face of such market dynamics, non-EDs are expected to be more vigilant and become drivers of businesses. To play a more constructive and forward-looking role, they may have to expend more time and engage onfield to have a more tangible knowledge outcome,” the report stated.
Meanwhile, KPMG Management and Risk Consulting Sdn Bhd manager Krishman John said disclosure from companies is vital for non-EDs across the border to know if they are being paid fairly.
“It becomes a level playing field, and also works as a guideline, so checks and balances are justified,” John said.
To move toward greater transparency, Bursa Malaysia Securities Bhd mandated the disclosure of director’s remuneration on a named basis and by the exact amount for the listed issuer and group level.
The report indicated that prior to the amended listing requirements, only 21% of listed issuers voluntarily disclosed director’s remuneration packages.
While remuneration is said to be based on skills and experience, the report noted that the financial sector distributed the largest chunk of remuneration at RM385,000 per annum.
“The finance sector and government-linked companies (glcs) have a higher bracket because they involve more money, time and good quality skilled people. Glcs are big; they span across the globe,” John added.
Meanwhile, the report revealed from the 1815 non- EDs, 86% of them were male while the remaining 14% were female.
The remuneration breakdown includes 78% in fees, 19% in allowances and the remaining 3% in benefits-in-kind.
The base 78% saw fees between RM70,000 and RM300,00 per annum, while benefits-in-kind includes insurance, leave passage, utilities, and car and drivers.