Obvious cuts in directors’ remuneration in 2019

by ASILA JALIL/ graphic by MZUKRI

REMUNERATION packages of directors at most major corporations and government-linked companies (GLCs) saw quite a significant reduction of up to 20% last year, with only a handful enjoying moderate increments.

The decline in remuneration reflected policy of the previous Pakatan Harapan administration, which came into power in May 2018, that wanted GLC salaries to commensurate with each entity’s financial performance and low tolerance for exorbitant pay.

Former Prime Minister Tun Dr Mahathir Mohamad said in March last year that the Ministry of Finance was preparing guidelines on the remuneration for GLC directors, after concluding that some remuneration packages for them were “obscenely high”.

The Malaysian Reserve (TMR) had reported that while the average Malaysian CEO earns substantially less than a top executive in the US, the UK or Singapore, there is often a glaring discrepancy between the remunerations paid to GLC heads and the company’s performance.

The policy implemented seems to have had some impact this year. A check by TMR on Malayan Banking Bhd’s annual report showed that its CEO Datuk Abdul Farid Alias received a lower remuneration last year.

The amount dropped by 21.1% to RM7.57 million in 2019, compared to a year earlier, with his salary amounting to RM2.76 million from the total amount. He earned a bonus of RM2.59 million and benefits-in-kind amounting to RM74,986.

In 2018, Abdul Farid took home RM9.6 million with a salary and bonus of RM2.64 million and RM3.3 million respectively. He also received benefits-in-kind of RM39,045.

The country’s largest financial group posted a new net profit high of RM8.2 billion for the financial year ended Dec 31, 2019 (FY19), versus RM8.11 billion recorded in FY18. The higher net profit was lifted by higher net earnings of RM2.45 billion in the fourth quarter.

Based on CIMB Group Holdings Bhd’s financial report last year, its former CEO Tengku Datuk Seri Zafrul Tengku Abdul Aziz earned RM8.54 million including RM8,000 worth of benefits. The amount dropped by 1.7% compared to what he earned in 2018, which was RM8.69 million.

In March 2020, Tengku Zafrul relinquished his position with the banking group as well as his other board positions, following his appointment as the finance minister under the Perikatan Nasional government.

In FY19, CIMB’s full-year earnings fell 18.3% year-on-year (YoY) to RM4.56 billion, while revenue increased 2.4% YoY to RM17.8 billion.

As for RHB Bank Bhd’s group MD Datuk Khairussaleh Ramli, he earned RM4.89 million last year with his salary and other remuneration totalling RM2.76 million. He also received a bonus of RM2.1 million.

This is a marginal increment compared to RM4.51 million in 2018. His salary and other remuneration totalled RM2.72 million then, while his bonus was RM1.75 million.

According to Genting Bhd’s 2019 annual report, its chairman and CEO Tan Sri Lim Kok Thay earned RM151.09 million. The amount constitutes his salaries and bonuses, which totalled to RM110.73 million.

His remuneration, however, declined 17.5% from a year earlier. In 2018, he took home a total of RM183.07 million inclusive of salaries and bonuses amounting to RM127.27 million.

Genting and Genting Malaysia Bhd (GenM) posted net losses for the first quarter ended March 31, 2020 (1Q20).

Genting registered a net loss of RM132.32 million in 1Q20 versus a net profit of RM561.64 million recorded last year.

GenM registered a net loss of RM417.96 million in 1Q20 compared to a net profit of RM268.29 million in 1Q19, primarily due to temporary disruptions to the group’s resort operations worldwide caused by the Covid-19 outbreak.

The amount paid out to IHH Healthcare Bhd’s MD and CEO Dr Tan Lee Seng saw a marginal increase in 2019 compared to a year earlier, totalling RM38.5 million with bonuses and incentives amounting to RM33.6 million. In 2018, Tan earned RM36.17 million with bonuses and incentives amounting to RM31.35 million.

Top Glove Corp Bhd’s executive chairman and founder Tan Sri Dr Lim Wee Chai’s earnings increased 14.3% YoY in 2019. He received RM3.52 million last year with his salaries amounting to RM2.42 million. He also took home a bonus worth RM176,010 and bene- fits-in-kind of RM40,487.

In 2018, Lim earned RM3.08 million with a bonus totalling RM281,905 and benefit-in-kind of RM31,150.

The world’s largest rubber glovemaker is now the seventh-biggest market capitalisation stock on Bursa Malaysia with a market value of RM40.5 billion. On Jan 1, 2020, the company placed 34th, valued at RM12.03 billion.

The increase is mainly due to rising demand for protective equipment during the pandemic.

Data from the Securities Commission Malaysia showed that in 2018, the median CEO remuneration ranged from RM1 million to RM7.98 million across 13 sectors.

Companies with market capitalisation of less than RM40 billion and CEOs earning more than RM10 million were mostly family-controlled companies, while companies valued at over RM40 billion and with CEOs earning less than RM10 million were GLCs.