FGV Holdings Bhd (FGV) says its non-executive chairman Dzulkifli Abd Wahab will be provided with a company car instead of an annual RM180,000 car allowance.
It said this followed the appointment of an independent consultant to review Dzulkifli’s remuneration.
FGV said Dzulkifli will get to retain his RM480,000 annual income as chairman, which will include his director’s fee of RM300,000, while the RM180,000 car allowance is converted to “board fees”.
“FGV’s board was advised to replace the car allowance with the provision of a company car as it is not reflective of the market and sectoral norms, as companies generally do not monetise the provision of a company car in the form of allowances,” it said, according to Bernama.
“Pursuant to the advice, the FGV board proposed to provide a company car to the non-executive chairman and maintain the amount of cash accorded to him previously by converting the car allowance of RM180,000 to board fees.
“Hence, there is no increase in the total cash received by the non-executive chairman.”
FGV said Dzulkifli intended to use an existing car owned by a subsidiary firm, instead of purchasing a new one.
There had been outrage among certain quarters over the sharp increase in fees for FGV’s board of directors and chairman, after shareholders gave the nod to raising Dzulkifli’s allowance to RM480,000 from RM300,000 previously.
However, Dzulkifli opted to waive his fees as chairman of the sustainability board, which come up to RM40,000, and the attendance allowance of RM2,000.
The board members also received the nod for a 25% increase in their fees from RM120,000 to RM150,000.
FGV reiterated that its shareholders had approved the resolutions to increase the director fees for its chairman and directors at the annual general meeting (AGM).
It also pointed out that the chairman’s allowances had been halved in 2019 from RM600,000 to RM300,000, while Dzulkilfi did not make use of benefits he was entitled to in 2021, allowances for entertainment, a club membership and a personal bodyguard.
Anger over huge raises for FGV board members
Felda settlers have expressed disgust at the sharp increase in fees for its board of directors and its chairman.
Instead, they said, the funds should have been channelled towards efforts to fulfil its mandate to the settlers.
“The increase in salary and allowances for the chairman and directors as requested of shareholders is obscene,” National Felda Settlers’ Children Association (Anak) president Mazlan Aliman told FMT Business.
At the FGV Holdings Bhd (FGV) annual general meeting on Thursday, shareholders gave the nod to a resolution to raise the allowance of non-independent non-executive chairman Dzulkifli Abd Wahab by 60% to RM480,000 from RM300,000 previously.
The board members also got the okay for a 25% increase in their fees from RM120,000 to RM150,000.
However, Dzulkifli opted to waive his fees as chairman of the sustainability board, which comes up to RM40,000 and the attendance allowance of RM2,000.
Felda owns 81% of the agribusiness company, which reported a RM1.17 billion net profit in 2021.
Mazlan said the money should instead be channelled towards the proposals outlined in the 2019 Felda White Paper.
“In the white paper is a detailed plan for a recovery, how to clear debts and (to re-emphasise) their commitment to Felda,” he told FMT Business.
“The money should be used to fulfil its mandate to the settlers,” he added.
Mazlan pointed out that Felda has seen how its settlers are struggling under the deteriorating economic condition, made worse by the Covid-19 pandemic.
Given that the government has begun to rationalise subsidies, he said, FGV shouldn’t even consider such a resolution at this juncture as settlers are struggling to cope.
“The government should intervene and reverse the resolution. The prices of crude palm oil may be elevated now but it may not last. It could fall to previous levels,” he said.
In 2021, the average price of CPO was RM4,407 per tonne, a 64.1% increase from RM2,685.50 per tonne in 2020. On June 23, 2022, the day the directors were given the raise, the price closed 5.5% lower at RM4,770.50 per tonne from RM5,046 per tonne.
On the subject of board compensation, the Institute of Corporate Directors Malaysia president and CEO, Michele Kythe Lim, believes there is no one-size-fits-all compensation structure.
She pointed out that the more important consideration is finding the right balance between remuneration and performance with heightened stakeholder expectations.
“It is a complex process, as different boards have different key performance indicators. Granted, financial performance is a key factor and one of the most apparent yardsticks of performance but it is not the only measure,” she told FMT Business.
“Ultimately, the larger the scope, team, and complexity of the role, the more performance measures there will be. In such instances, expectations of remuneration will rise in tandem with the expectations and responsibilities – and this will need to be justified by the remuneration committee and the board ultimately,” she added.