Business

Wednesday June 18, 2008

Khazanah defends top execs’ pay rise


KUALA LUMPUR: Khazanah Nasional Bhd yesterday defended the proposed salary hike for top officials in government-linked companies (GLCs).

Managing director Tan Sri Azman Mokhtar said salaries paid to top executives of GLCs had to be fair and in line with what such talent was worth not only in Malaysia but also overseas.

His comments, as reported by Bernama, were in response to comments in blogs that Tenaga Nasional Bhd (TNB) CEO Datuk Seri Che Khalib Mohamad Noh and CFO Datuk Izzadin Idris were getting a huge (an unconfirmed 100%) salary increase.

The timing of the proposed salary increment has jolted many Malaysians now experiencing a strain in their monthly incomes after steep rises in fuel, energy and escalating food prices.

Quoting Khazanah’s Blue Book, which details executive compensation and institutionalises salaries, Azman said: “We cannot pay too low, we shouldn’t pay too high but we have to pay enough, and we have to pay fairly”.

Based on the company’s latest annual report, Che Khalib’s total remuneration last year was RM1.1mil, of which RM600,000 was his annual salary.

It is understood that although the total remuneration would have increased over the past few years, the basic salary component of his current contract remains unchanged.

While the current annual package may seem substantial, it might, however, not make him the highest paid person in TNB.

Azman said after much debate four to five years ago, Khazanah had decided on the average principle for basic salaries.

But at the same time, it had also put up a total compensation basis for the salaries, including bonus, as long as it was self-funding, he said.

“The average Malaysian company pays three months’ bonus. What we are saying is that we will pay more, as long as the company and shareholders make much more than that.

“That means value must be created,” he told reporters after attending the opening ceremony of the MIT Sloan Global Entrepreneurship Lab Programme workshop facilitated by Khazanah.

“That is a very important point. It is performance-based, incentive-driven and self-funding. We are not taking money away from anybody but creating more value,” he added.

In fact, Azman said the higher pay was commensurate with the increasing demand for local talent abroad.

“Malaysian talent is in demand from the Middle East, China, Asean and also the US. There is a very serious brain drain issue that we should be aware of. So don’t begrudge our CEOs and the managements.

“If you see them making money, you should celebrate because they have created a lot of value for the companies. Let me assure you that there has been careful calculation on this,” he added.

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