Malaysia to review CEO-employee pay gap

Malaysia’s finance minister has urged for the fairer compensation for employees in well-performing companies.

Lim Guan Eng said Malaysia is behind countries like Singapore and South Korea in terms of employee compensation.

“If Malaysian companies perform, the contributions of their employees should be duly rewarded,” Lim said. “Hence corporate Malaysia needs to play its part to ensure that Malaysian workers earn a decent wage with good work environment.”

He shared that compensation of employees in Malaysia as a percentage of GDP stood at only 35.2% in 2017, whereas countries such as Singapore and South Korea are well above 40%.

He called upon the Securities Commission (SC) to follow up on its analysis of CEO remuneration with a review of key pay gaps as compared to employees at different levels for next year.

The finance minister said it was obvious from SC’s study that some companies paid their CEOs well despite only having performed reasonably average on the market. The report found that CEOs were typically paid 17 times more than the average worker.

According to Malay Mail, Lim urged Malaysia to steer their companies towards a more sustainable future by adopting sound, ethical, and legal governance as well as financial management policies, including ensuring that pay is aligned with performance.

He also called for more large companies to adopt the practice of making the remuneration of their senior management transparent.

He noted that small and mid-sized firms have “done very well” in adopting fair and best practices such as disclosing the remuneration of members of senior management, which will help stakeholders evaluate pay and performance.

“I expect to see more companies, in particular, large companies adopting this practice this year,” Lim said.