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GEORGE TOWN: Two accounting experts based in the United Kingdom have called on the government to reveal the salaries and bonuses of directors of all government-linked companies (GLCs) and other state agencies.
They said this will not only reduce the national debt but ensure the bigwigs did their jobs.
Marizah Minhat and Nazam Dzolkarnaini, who are both Malaysians teaching at the Edinburgh Napier University, said the number of GLCs, state and federal, are numerous, with almost all remaining secretive about how much their directors earn.
Marizah said this situation only breeds incompetence and leads to the downfall of the GLCs as the directors received a fixed income, bonuses and stock options with no account how well they are doing.
Marizah and Nazam spoke to a select group of journalists while announcing a research collaboration with the Consumers’ Association of Penang (CAP) and to share their thoughts before the 2019 Budget announcement this Friday.
She said by laying bare the full salaries and benefits of each director, taxpayers can then scrutinise and hold these personalities accountable and ensure they got their money’s worth.
Marizah said this way, GLCs can be pushed to run more efficiently and the savings from pay cuts can be reallocated to serve the poor and build infrastructure such as public transport.
She said GLCs had always been problematic as they were plagued by incompetency and run by directors who received salaries that may be disproportionate with their work and the salaries of other top personnel.
She said the government has more often than not had to bail out GLCs, giving 1MDB as an example.
Marizah said reforms in these GLCs are sorely needed, especially on how they report the salaries of their directors.
She said the directors often received big salaries without taking into account how well they performed and how they managed the GLCs.
On top of that, she added, these directors received bonuses, stock options and “hidden pay” which may not commensurate with their performance.
Marizah said bonuses also go undetected as they may be added to the salaries.
‘Let’s make some noise’
She said based on her research, only 12 executive directors (EDs) of GLCs have declared their bonuses. She said only 34 GLCs released a “conservative estimate” of the pay their directors received.
The salaries of 350 directors, including 38 EDs and 302 non-executive directors (NEDs) of GLCs, were available.
Marizah said for the year ending 2017 only the salaries of 12 EDs were disclosed separately from other pay components (like bonuses or stock options).
As for stock options, a total of 50 million units of shares were given to 24 directors, without stating the value per stock for the year ending 2017.
“Until now, we do not know how much the Khazanah Nasional, Malaysia Airlines Berhad, Malaysia Digital Economy Corporation (MDEC), 1MDB and other GLC directors have been receiving all this while.”
Marizah said all GLCs must detail their directors’ salaries, bonuses and stock options in an itemised format. These should be made available online for public scrutiny.
She said Malaysia should adopt the Directors’ Remuneration Report Regulations used by the UK where all bodies are required to detail their directors’ salaries.
“GLCs in Malaysia have always been problematic. By scrutinising how much their directors are earning, we can increase the pressure on them to perform and ask for pay cuts where necessary.
“We must make some noise, as the new government has not guaranteed changes, let alone fulfilled all promises, as per their own admission.
“While listed companies reveal all the salaries of their directors, government bodies continue to show a consolidated sum on how much they are paying their directors, in a lump sum. That is not right,” she said.
Marizah, who has been studying how much the GLC directors have been earning since 2005, had published an article titled “Executive compensation in government-linked companies: Evidence from Malaysia” in the Applied Economics journal in 2014.
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