Determinant of Director Remuneration in Malaysia Public Listed Companies

Abstract

Abstract-This study examines the relationships between a family firm, the remuneration committee and director remuneration. The proxies of the remuneration committee are the numbers of committee members. The family firm proxy is a family member, as in the board of directors. The dependent variable (director remuneration) is measured by fees, salary, bonuses and benefit of kin. The sample size of this study is 537 firms listed in Bursa, Malaysia with 1611 panel data from 2007 to 2009. This study finds that there is a significant positive relationship between the remuneration committee and director remuneration, which suggests the effectiveness of the monitoring role of the remuneration committee. Furthermore, findings from this study reveal that there is a significant positive relationship between family firms and director remuneration. This study suggests that family members combine power and control to award better remuneration to the board of directors.

What Determines Executives’ Remuneration in Malaysian Public Listed Companies?

“…According to both firm size proxies Ln (Asset) & Ln (Net Sales Revenue), it can be concluded that managing large type companies, either on asset size or sales scale, leads to more managerial remuneration. This finding is consistent with most of the previous studies (Ibrahim et al 2005;Jaafar & James 2013;Yatim 2013).…”

“…(Coefficient of model 1= -.2161; p <0.01, coefficient of model 2 = -.3088; p <0.1). This finding is in line with results of the study by Jaafar and James (2013) in Malaysian public listed companies. The negative relationship between these two variables is likely due to the agency theory perspective that suggests debt and remuneration as substitute instruments for reducing conflicts between managers and shareholders.…”

“…Consistent with previous Malaysian studies, Jaafar and James (2013) found a positive effect of firm size on executives' remuneration based on the study of 537 firms listed in Bursa Malaysia during 2007 to 2009. Hence, in terms of firm size, increasing in responsibility should be compensated with a higher remuneration package.…”

Corporate Governance: An Overview. From Creation of Value for Shareholders by the Board to the Duality Role of Its Chairperson

“…An effective compensation committee must properly perform its role of controlling director compensation. In the case of family businesses, in search of motivation for long-term success, family members combine power with control to streamline director compensation (Jaafar & James, 2013).…”

Controlling Shareholders’ Networks and Related Party Transactions: Moderating Role of Director Remuneration in Malaysia

“…Generally, the remuneration component involves cash such as fees, salaries, and bonuses, and nonfinancial incentives such as stock options or warrants, properties and other in-kinds (Jaafar & James 2013). Salaries, fees and bonuses are the main components of the remuneration package which should meet the expectation and satisfaction of the directors, failing which they may be induced towards personal conflict of interest (Abdul Wahab & Abdul Rahman 2009; Jaafar & James 2013).…”