Four of the top 10 boards with the highest total non-ED remuneration are made up of 2 family-controlled firms

by SHAHEERA AZNAM SHAH / pic credit: gentingmalaysia.com

SEVEN out of the top 10 highest-remunerated boards of companies last year consisted of family-controlled companies, which also represented the top highest-paid CEO, according to a report by the Securities Commission Malaysia (SC).

However, SC said five of the highest-remunerated boards, namely Genting Bhd, Genting Malaysian Bhd, YTL Corp Bhd, Public Bank Bhd and VS Industry Bhd saw a yearly decline of 23% in its total remuneration value.

“The remuneration of EDs on these boards accounted for an average of 91% of total board remuneration.

“The changes in total board remuneration for these listed companies are largely driven by changes in EDs’ remuneration. This is consistent with the fact that seven out of 10 of these companies are family-controlled companies which tend to have boards with a larger proportion of EDs,” SC said in a report titled “Corporate Governance Monitor 2020” (CG Monitor 2020) released yesterday.

Comparing the changes in the total remuneration value between 2018 and 2019, 52 boards monitored by the commission recorded an increase in payout while 46 boards saw a decline, SC said.

The commission added that the total board remuneration of the companies listed under the FTSE Bursa Malaysia Top 100 Index declined by 11.7% last year compared to 2018.

“The remuneration of EDs and remuneration of non-EDs moved in opposite directions with the former declining by 14.5% while the latter increasing by 6.2%,” it said.

It added that the decline in the level of remuneration was largely driven by a fall in the remuneration of EDs, which fell by 14.5% from RM1.31 billion in 2018 to RM1.12 billion in 2019.

“In contrast, the remuneration received by non-EDs increased by 6.2%, from RM210 million in 2018 to RM223 million in 2019.

“Similarly, the median remuneration of EDs declined by 11%, while the median remuneration of non-EDs saw an increase of 18.2%,” it said.

Despite reporting a decline in its remuneration, Genting and Genting Malaysia remained the top two companies with the highest-paid boards.

As at Dec 23, 2019, Genting’s board remuneration stood at RM172.24 million while Genting Malaysia’s at RM77.8 million.

Genting’s non-ED and ED remuneration was recorded at RM1.81 million and RM170.43 million respectively, while Genting Malaysia stood at RM960,000 and RM76.85 million.

Six of the top 10 boards with the highest total non-ED remuneration were also found to be government-linked companies (GLCs), the SC report noted.

Six out of the top 10 boards with the highest total non-ED remuneration were also found to be a government-linked company (GLC), the SC report noted.

The six GLCs are Malayan Banking Bhd, CIMB Group Holdings Bhd, Sapura Energy Bhd, Sime Darby Plantation Bhd, Telekom Malaysia Bhd and Axiata Group Bhd.

The other four companies are made up of two family-controlled firms — AMMB Holdings Bhd and PPB Group Bhd, and IHH Healthcare Bhd and Public Bank Bhd.

The remuneration of the GLC CEOs was found to be relatively lower than other CEOs in the top 100 companies surveyed for the study.

“Not with standing an increase, non-ED remuneration still receives overwhelming approval from shareholders, including major institutional funds which collectively hold a substantial proportion of shareholdings,” SC said in the report.

The report also revealed the top four sectors with the highest median in board remuneration, which are the industrial products and services at RM11 million, telecommunications and media at RM10.8 million, property at RM8.5 million and plantation at RM8.5 million.

According to the report, there were 937 total issuers last year, excluding those who were in the LEAP Market with 5,117 directors holding 6,241 board positions.

About 41% of the directors were executives while the remaining were holding directorial positions.

4,670 or 91% of the directors of listed companies were Malaysian nationals, followed by 154 Singapore nationals, 49 from Taiwan and 46 from China.

SC said the gender diversity on boards continues to improve, with 165 of the listed companies compared to 145 last year achieved the 30% target of having women representatives on their boardroom, while a number of mid-cap and small-cap companies have formally adopted the target into their diversity policies.

Last year, women accounted for 21% of new board appointments with 41% of the women directors were below 50 years old and 11% were below 40 years old, the report noted.