Aon’s report in collaboration with FIDE FORUM’s 2024 Director’s Remuneration Report has shed light on the governance costs and board-related aspects of Malaysia’s financial institutions. The total governance costs of these institutions, which include all board member compensation, vary from $112,442 (RM500,000) to $786,957 (RM3.5m). Different institution types have distinct average total governance costs. For instance, Corporate banks average at RM 1.2M, Insurance companies at RM 0.9M, and Retail banks at RM 1.8M.
One significant finding is the disparity in board chair retainer fees. They are typically 1.3 to two times higher than those of other board members. However, meeting allowances remain uniform across different board roles. The report also delved into compensation for various meetings. A vast majority, 84%, do not compensate for information meetings, while 6% do so for regulatory meetings and 11% for ad-hoc discussions. In terms of benefits, nearly all participants offer director insurance covering D&O liability, group term life, personal accident, and travel, and 56% provide medical benefits. Additionally, 33% present learning and development opportunities.
Regarding board committees, all participants have audit and risk committees as required by Bank Negara Malaysia (BNM). However, only 92% have nomination and remuneration committees, and these are often combined or managed at a group level for subsidiaries. The report further highlights board diversity. A considerable 87% of boards have at least one woman director, with 33% having three or more. The age profile shows that 67% of directors are over 60, with 13% over 80. In terms of tenure, 59% of independent NEDs serve one to six years, and 48% of non-independent NEDs serve one to nine years.
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