When company directors rake in huge incomes in hard times…

Will they take the moral high ground by accepting sharp pay cuts?

Despite knowing they are sometimes voices in the wilderness, some minority shareholders gallantly highlight pertinent issues at the annual general meetings of listed firms. They still do it, even though these meetings are now streamed live.

These minority shareholders are the torchbearers of concern and integrity for these companies. Speaking on behalf of their fellow silent shareholders, they draw the board’s attention to issues and policies, which sometimes catches the directors off-guard.

The board members often try to contain vigilant minority shareholders by offering them either flimsy excuses or evasive replies without addressing the crux of the issue. And they do it unconvincingly too, which I think is an insult to the intelligence of these courageous minority shareholders.

Minority shareholders have asked some pointed questions over the past year. One such question: will company directors take the moral high ground by accepting sharp pay cuts?

A common reply from the board: the directors’ pay is not excessive, as they are paid the industry norm.

This is not a satisfactory response. Do these non-executive directors realise that their annual fees and other income, for mainly attending board meetings, is more than the total yearly income of most full-time ordinary workers? Even the lowest-paid directors might earn over 10 times the average staff salary? Do these directors even care, while viewing the world from their own microscopic vantage point.

Some directors sit on the boards of a few companies and earn sizeable yearly incomes. Many do not have relevant experience or expertise in the industry to show how they can contribute to the company.

There are many intelligent, talented and experienced Malaysians out there who are denied the opportunity to sit on the boards of these companies simply because they lack the connections or are unable to ‘pull any cables’. A grave injustice is inflicted on the bright sparks of society, especially when there is no dearth of talent in Malaysia.

Sometimes I wonder if the company directors who sit on several boards have the moral conscience to discern whether they can give their best to all these companies. It is disgraceful when so many talented people are discriminated against just because of nepotism.

The Companies Act should be amended to prevent individuals from sitting on more than one company board. I know of some directors who can hardly contribute to the company but shamelessly continue to sit as board members. For them, their directors’ pay is their prime concern.

Malaysia, like the rest of the world, faced difficult times last year, arising from the coronavirus outbreak. Thousands lost their jobs, and many others took sharp pay cuts. These people were forced to eke out a living under difficult circumstances. Some even had to depend on NGOs, charities and soup kitchens during these challenging times.

Against this bleak backdrop, many non-independent directors wallowed in hefty incomes.

The directors of large listed firms especially should have taken the moral high ground by doing national service and accepting only a token income. In fact, these directors should have donated much of their pay to NGOs that were helping the unfortunate or assisting our dedicated frontline workers. These frontline workers are the real unsung heroes, working tirelessly daily to serve the people.

After all, many directors are wealthy and some have other sources of income from sitting on the boards of more than one company. Some ex-civil servants who sit on these boards draw a huge monthly pension as well.

I raised my eyebrows as I studied the annual report of a listed company. Two non-executive directors, who are retired civil servants, are paid six-figure directors’ fees annually. They do not appear to have relevant experience. Nor do they offer any expertise to the company based on their personal profiles. As well as being directors of other companies, they are also involved in other organisations.

How can they effectively contribute to this company when they sit on the boards of other firms and are involved in other organisations?

Still, there are some exemplary listed companies that pay fair amounts to their directors. Those companies that pay hefty salaries, fees and other perks to their directors should reduce them to the benchmark set by these model listed firms.

Thanks for dropping by! The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

Our voluntary writers work hard to keep these articles free for all to read. But we do need funds to support our struggle for Justice, Freedom and Solidarity. To maintain our editorial independence, we do not carry any advertisements; nor do we accept funding from dubious sources. If everyone reading this was to make a donation, our fundraising target for the year would be achieved within a week. So please consider making a donation to Persatuan Aliran Kesedaran Negara, CIMB Bank account number 8004240948.
Benedict Lopez was director of the Malaysian Investment Development Authority in Stockholm and economics counsellor at the Malaysian embassy there in 2010-2014. He covered all five Nordic countries in the course of his work. A pragmatic optimist and now an Aliran member, he believes Malaysia can provide its people with the same benefits and privileges found in the Nordic countries - not a far-fetched dream but one that he hopes will be realised in his lifetime
Subscribe
Notify of
guest
2 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments
Gursharan Singh
Gursharan Singh
20 Apr 2021 10.52am

Both the Directors of Companies and Politicians hold power via elections and common that their elections are due to majority of votes received and those voting for them may be their supporters.

Both get 100% control over funds-assets-wealth of thecountry-company-organization to which they are elected to and referred to as TRUSTEES TO MANAGE IN THE INTEREST OF THE STAKEHOLDERS [PUBLIC-SHAREHOLDERS-MEMBERS] even if they may have had the support of just 50%+1.

Worldwide there are periodic resports of suspected/alleged abuse of position/power for persona greed. HIGH REMUNERATIVE PACKAGES TO BE ENJOYED MAY CONTINUE EVEN AFTER RETIREMENT FROM THE POSITION.

Abve may also apply to religions/NGOs/organizations with wealth.

Bless all

loyal malaysian
loyal malaysian
20 Apr 2021 8.41am

Benedict, while we are at it, why not issue a call to our over-bloated Cabinet ?
Those 70+ members in the so called Cabinet should take a pay cut to show they feeling the hardships of those struggling to make a living.