EPF wants more say in pay of company directors
Fund ready to voice expectations for executive salary and appointments at companies’ shareholders meetings
MALAYSIA’S biggest pension fund is prepared to use its voting rights to weigh in on the pay of directors at more companies, according to a person with knowledge of the matter.
The Employees Provident Fund (EPF), which manages RM814.4 billion in assets, is ready to voice its expectations for executive salary and appointments by voting at shareholders meetings if talks with the board and management don’t work out, said the person.
That signals wider reverberations across companies that EPF is invested in, after the fund voiced disapproval of Sapura Energy Bhd’s president and group chief executive officer Tan Sri Shahril Shamsuddin’s remuneration.
Prime Minister Tun Dr Mahathir Mohamad has kept his pledge that “heads must fall” after his coalition toppled the previous government that had ruled for more than six decades. The central bank governor had resigned, followed by executives at Petroliam Nasional Bhd, Telekom Malaysia Bhd and Permodalan Nasional Bhd.
“It’s good corporate governance,” said Danny Wong Teck Meng, chief executive officer at Areca Capital Sdn.
“By using the votes, EPF was making the right call.
“It will remind the board and the management of public-listed companies that they have a fiduciary duty to manage the company properly.”
EPF had voted unsuccessfully to oust Shahril at an annual general meeting on July 18. Shahril was paid RM71.92 million, including RM55 million in bonus, for the fiscal year ended January 31 when the company made a RM2.5 billion loss.
This was the first time an institutional fund took an active stance in Malaysia, a local English daily reported, citing Lya Rahman, general manager of the Minority Shareholder Watchdog.
“The EPF was committed to the agenda of promoting strong governance practices in corporate Malaysia, and expects the same to be practised by all its investee companies,” said the fund.
EPF is the biggest investor in local stocks and owns more than five per cent stake in many listed companies, including Sapura and Telekom, as well as power firm Tenaga Nasional Bhd, Malayan Banking Bhd, free-to-air TV operator Media Prima Bhd, and builder Gamuda Bhd.
Its equity investments accounted for 41.6 per cent of its total assets, according to its statement released last month.