KUALA LUMPUR, Oct 30 — Scheduled reviews for company directors are crucial for companies to stay on top of their remuneration practices, ensuring better governance and their alignment with industry and market standards, said Bursa Malaysia chief regulatory officer Julian Hashim.

He said companies are encouraged to standardise their disclosures to include all components such as board fees, allowances, benefits-in-kind and other emoluments for boards, plus salary, bonus, other allowances or equity for senior management.

“The imperative for enhanced transparency is crucial to attaining more precise company and industry benchmarks,” he told a media briefing on the Malaysian Board and Senior Management Remuneration Practices Report 2023 today.

Ultimately, he noted that this will lead to more equitable compensation for directors.

“There is a key challenge of having adequate compensation whether you overpay too much or too little to a director. So, I think that’s important because you want to attract the right person, the right talent to come in,” he said.

Meanwhile, the president and chief executive officer of the Institute of Corporate Directors Malaysia (ICDM) Michele Kythe Lim said it is imperative to recognise that fair remuneration is not just a matter of financial compensation.

“It’s a cornerstone in the construction of effective and capable boards and leadership teams as well as motivating them for future success. The lack of transparency in remuneration practices we found during our research is a matter of concern, she added.

She said lack of transparency erodes trust and confidence, not only within the organisation but also among stakeholders and may not align with the demands of stakeholders who want accountability, fair play, and ethical practices.

Based on the findings from the report, she pointed out that one of the issues faced by companies was the fragmentation of information related to remuneration practices. “To address this, we must work towards a future of consistency and standardisation in reporting,” she said.

In collaboration with Bursa Malaysia Bhd and Willis Towers Watson (WTW), the report summarises the review of 176 of Malaysia’s top 300 publicly listed companies’ data and 193 completed survey responses, relating to their respective board and senior management remuneration practices.

The review sets out to understand three key factors, namely the prevailing industry practices; remuneration levels by industry and company size and quality of disclosure.

This article was first published in Selangor Journal on 30 October 2023.