This article first appeared in The Edge Financial Daily on June 28, 2019

KUALA LUMPUR: The remuneration that FGV Holdings Bhd’s board gets has become the talk of the town, sparking debates about whether the directors’ pay is justifiable.

At FGV’s 11th annual general meeting (AGM) on Tuesday, its controlling shareholders — the Federal Land Development Authority (Felda), Koperasi Permodalan Felda Malaysia Bhd (KPF) and Lembaga Tabung Angkatan Tentera (LTAT) — voted against the resolutions on the proposed board remuneration for the financial year ended Dec 31, 2018 (FY18).

The dissatisfaction appears to be directed at the plantation group’s non-executive chairman Datuk Wira Azhar Abdul Hamid, who was the highest-paid board member in FY18 with RM1.949 million payable as his remuneration package — one-third of the total proposed board payout of RM5.74 million.

On Wednesday, Felda NGOs National Council (MPNF) chairman Datuk Mazlan Aliman reportedly said the proposed RM1.95 million pay for Azhar, or the total of RM5.74 million to the board members, was relatively high for a company that suffered a loss of nearly RM1 billion last year.

Based on the group’s annual reports, Azhar’s FY18 pay is not the highest among FGV directors since the group’s listing in 2012, nor is the total RM5.74 remuneration for the board in FY18 — unchanged from FY17 — the highest over the years.

This raises the question of why the three shareholders, with a combined shareholding of 40.16% in FGV, did not voice similar concerns before.

FGV shareholders approved a board remuneration of RM6 million in FY15, and its highest of RM7.58 million in FY16.

As for Azhar’s FY18 remuneration, it included a director’s fee of RM600,000, an annual fee of RM315,000 from subsidiaries, benefits-in-kind amounting to RM313,244.35, and a salary of RM415,483.90. It should be noted that Azhar also served as interim chief executive officer (CEO) for three months from Oct 24, 2018 to Jan 23, 2019.

Stacking his director’s fee against the rest of the group’s non-independent non-executive directors reveals that he made slightly more than double their combined RM299,506.

In comparison, the non-independent non-executive director who earned the second-highest fee was Datuk Ab Ghani Mohd Ali, with a director’s fee of RM90,082, followed by Datuk Siti Zauyah Md Desa’s RM88,438.

FGV’s second-highest paid top executive in FY18 was former CEO and president Datuk Zakaria Arshad, who relinquished his post on Sept 19, 2018.

Zakaria’s pay of RM1.536 million was 26.8% of the board’s total payout. His remuneration package included his CEO salary of RM1.49 million, a bonus of RM206,880, and benefits-in-kind of RM216,824.45. But he did not earn any director’s fees although he was a board member.

Zakaria was also the highest-paid director in FY17 with a total pay of RM1.668 million — though his salary then was lower at RM1.25 million, as was his bonus of RM86,912.50.

Meanwhile, among the independent non-executive directors, the highest fee paid per person in FY17 was RM120,000 — which was the amount paid to five of the nine independent directors, namely Datuk Mohamed Suffian Awang, Datuk Dr Salmiah Ahmad, Dr Mohamed Nazeeb P Alithambi, Datuk Mohd Anwar Yahya and Dr Nesadurai Kalanithi.

Mohd Anwar was the highest-paid independent director, with a total remuneration of RM305,811.98, followed by Mohamed Nazeeb at RM287,394.98 and Mohamed Suffian at RM262,671.98.

Interestingly, the individual who took home the all-time highest annual pay among FGV directors was former non-executive chairman Tan Sri Isa Samad, who received RM2.673 million in FY16, comprising a RM560,000 director’s fee, annual fees from subsidiaries of RM595,000, benefits-in-kind of RM1,418,088.28, and other benefits of RM100,000.

It should be noted that when Isa was FGV chairman, he was also the chairman of Felda Investment Corp Sdn Bhd, Felda as well as 39 subsidiaries under Felda and FGV.

Isa, who is currently facing criminal breach of trust and bribery charges involving over RM3 million in Felda, was also the second-highest paid FGV director in FY17 after Zakaria, having taken home RM1.484 million for a six-month service prior to his resignation on June 20, 2017.

Isa’s record pay was followed closely by former CEO and executive director Datuk Emir Mavani, who took home RM2.278 million in FY15, comprising a salary of RM1.28 million, bonus of RM106,965, annual fees from subsidiaries of RM537,106, benefits-in-kind of RM297,721, and other benefits of RM53,000.

Emir also received RM2.047 million for the same role in FY14, which compares with RM1.248 million which he received in FY13 following his appointment on July 15, 2013.

While the three controlling shareholders voted against the board’s remuneration packages at Tuesday’s AGM, they nonetheless approved the directors’ re-election.