AON, a leading global professional services firm, in collaboration with FIDE FORUM, a community of board leaders from the financial industry in Malaysia, announced the findings from the 2024 Director’s Remuneration Report. The report explores the compensation practices of non-executive directors (NEDs) across financial institutions in Malaysia, delving into key elements such as board structure, composition, tenure and diversity.
It analyzes the compensation of NEDs and how it aligns with their roles and responsibilities. The report revealed that the total cost of governance – the amount of compensation made to all board members for financial institutions – varies widely. The cost of governance incurred by participants of the survey ranged from RM 500,000 to RM 3,500,000 and is influenced by factors such as institution type and asset size. Larger organisations, particularly those with assets exceeding RM 100 billion generally incur higher governance costs. On average, the total cost of governance by type of financial institution is: The study also found that retainer fees for board chairs are typically 1.3 times to two times higher than those of board members, while meeting allowances are consistent with no distinctions between board chairs and board members. Furthermore, 84 percent of participants do not provide compensation for information meetings, six percent provide compensation for regulatory meetings and 11 percent compensate NEDs for ad-hoc discussions. In addition, 99 percent of the participants of the survey reported providing insurance to their directors, including directors & officers liability, group term life, group personal accident and travel insurance, while 56 percent provided medical benefits including inpatient, outpatient, dental, optical and wellbeing services