This article first appeared in The Edge Malaysia Weekly on January 11, 2021 - January 17, 2021

US-based global investment manager BlackRock Inc’s vote against the re-election of six independent directors at Top Glove Corp Bhd’s annual general meeting last week has once again put the role of independent directors in the spotlight.

The world’s largest asset manager voted against the re-election of the six, as it holds the view that the board had failed in its oversight responsibility relating to Top Glove’s migrant workers’ health and safety.

With only 1.61% interest in Top Glove, BlackRock failed in its bid. But its action should serve as a reminder to independent directors of their role as a check and balance on the board and management. 

Top Glove has been garnering attention for its record earnings and soaring share price. However, revelations about its treatment of its migrant workers amid the Covid-19 pandemic have led to it being criticised.

As the board of directors is responsible for protecting and managing shareholders’ interest in a company, questions remain over whether the independent directors at Top Glove have done enough based on recent eyebrow-raising incidents. After all, if not the independent directors, who in the company is in the best position to speak out against unethical practices, wrongdoings or corporate exercises that are advantageous only to the controlling shareholders?

While BlackRock has tried to exercise its rights as a shareholder, have other institutional shareholders that have adopted environmental, social and governance (ESG) investing policies voiced their concerns to the management? If they have not, their claims of ESG awareness will be found wanting. 

While the six independent directors continue to sit on Top Glove’s 12-member board, investors have not been forgiving. The stock is down 38% from its peak of RM9.36 in late October 2020 to close at RM5.80 on Jan 7. It has lost about RM26 billion in market value during the period.
 

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