By ALIFAH ZAINUDDIN / Pic By TMR

The Employees Provident Fund (EPF) must be clear on what it deems as an “excessive” pay following reports the country’s largest fund is seeking to take on a more proactive role in determining the salaries of top executives at its investee companies, experts said.

Universiti Malaya (UM) Prof Dr Edmund Terence Gomez said although the EPF’s recent disapproval of Sapura Energy Bhd president and CEO Tan Sri Shahril Shamsuddin’s remuneration was warranted, the pension fund has to set a fair value.

“How you gauge what a CEO of a company should get depends on a range of factors including sectors, volume of experience, performance and perks.

“While it is true we cannot pay them excessive salaries, what is the alternative in terms of how you determine their salaries?

“If the benchmark is going to be RM15,000 a month for the chairman at a government-linked company (GLC), you’re not going to get good people to come in,” he told The Malaysian Reserve.

The state-owned EPF, which manages RM814.4 billion worth of assets, is heavily invested in the local stock exchange with shareholdings in many listed companies including Sapura, Malayan Banking Bhd, Tenaga Nasional Bhd, Media Prima Bhd and Gamuda Bhd.

The EPF’s unsuccessful vote to topple Shahril at Sapura’s AGM on July 18 was largely seen as a warning signal to other companies it invests in.

However, Gomez said the EPF cannot have a one-size-fits-all solution by imposing a standard wage ceiling on all its investee companies.

“I agree there must be a cap, but what the cap is, we should leave it to the experts in the respective sectors to decide.”

“Different sectors will define it differently. If you look at the salary scale, you can see the banking sector seems to be getting paid quite a bit, but in other sectors, they are paid much lower,” UM’s Gomez said.

He added that comparisons against other state-owned enterprises in the region are also needed to arrive at a fair figure.

Federation of Public Listed Cos Bhd president Tan Sri Megat Najmuddin Megat Khas said there has to be a “balance” in deciding the wages of professionals at GLCs.

He said executive salaries must be marked against global markets and cautioned that lower pay can have counter-productive effects.

“They have to do a market study first with HR (human resource) companies and deal with it professionally.

“Otherwise, we will end up losing talent if the salaries are not up to mark. It cannot be a short-term view because talent is very mobile and they can go anywhere in the world,” he said.

Last week, former Umno politician and economist Dr Nungsari Ahmad Radhi was appointed as the new chairman of the Malaysian Aviation Commission (Mavcom), where he has agreed to a monthly wage of RM15,000 — 82.35% or RM70,000 less than that earned by his predecessor.

Megat Najmuddin said he is concerned if RM15,000 is viewed as an acceptable salary for GLC heads as the role demands the management of major enterprises in the country.

“If you pay someone RM15,000 to hold a job with that kind of a responsibility, you are probably not going to get the right person. That is my concern,” he said.