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Strengthen Remuneration Governance for Better Boards

13 Mar 2019

Kuala Lumpur, 13 March 2019 – The Institute of Corporate Directors Malaysia (ICDM) has successfully concluded their third PowerTalk, which was titled ‘Revisiting the Misconception of Board Remuneration’. Mark Reid, Global Head of Reward, Willis Towers Watsons, highlighted critical factors during the discussion and Directors Debate on whether the remuneration of Boards and Directors are in line with legal duties, responsibilities, and potential liabilities they are subjected to.

“There is no ‘one-size fits all’ compensation structure. Nevertheless, urgent action is needed to strengthen the remuneration governance, one of which is to support the boards’ role in structuring executive compensation. What this also means is that Boards and Directors must be able to clearly articulate the broader conversation around roles, responsibilities and accountability levels. This new thinking is needed to balance remuneration, performance and increased stakeholder expectations to address the growing complexities of compensation strategies. Some of the key trends that we are seeing globally are the increase in remuneration for directors and an unbundling of fees. As an example, in Asia, Hong Kong has seen an overall increase of in compensation in the recent years. Although the levels are still lower than the west, the market saw an overall increase of 15 per cent of the Independent and Non-Executive Directors remuneration. The biggest jump is seen in the mid-cap companies where there was a 26 per cent jump, followed by the 18.6 per cent in the mega-cap. This implies a recognition of the time commitment and responsibilities which needs to be translated to the appropriate compensation levels,” Mark commented.

Michele Kythe Lim, President / Chief Executive Officer of the ICDM added, “Malaysia is in a unique position to adopt and integrate change in our corporate landscape. The recent corporate governance turmoil has brought to fore key questions around the qualification and responsibilities of Boards and Directors in steering companies in the right direction. ICDM is pleased to have Mark here today to drive the conversation around the topic of remuneration, in particular the difference between executive and non-executive directors’ fees despite the same responsibility, liability and accountability. From our perspective, there has to be a mind-shift in the way we think about fair and reasonable remuneration for Boards and Directors, and as a result, the way we need to govern and remunerate talent. Ultimately, Boards and Directors are accountable for significant decisions in the company, and their remuneration should be commensurate accordingly to reflect the scope, skills, experience and contribution of each Director.”


This edition of PowerTalk is co-hosted by Willis Towers Watson, in support of ICDM’s role in advancing advocacy on the subject of board remuneration. The PowerTalk series is a platform for inspiring conversations around local, regional and global board effectiveness. For more information, www.icdm.com.my