Management Consulting
Aon
Full Credential Description
Aon, in collaboration with FIDE FORUM, conducted a comprehensive study on the remuneration practices of non-executive directors (NEDs) across financial institutions in Malaysia. The study aimed to address the niche issue of varying compensation structures and governance costs associated with different types of financial institutions. The findings revealed that the total cost of governance for board members ranged significantly, from RM 500,000 to RM 3,500,000, influenced by factors such as the type of institution and its asset size. For instance, corporate banks averaged RM 1.2 million, while retail banks averaged RM 1.8 million in governance costs. The tailored solution provided by Aon involved analyzing these compensation practices to help organizations align their remuneration strategies with the complexities of modern governance. The report highlighted that 99% of surveyed institutions offered insurance to their directors, including directors & officers liability and group term life insurance, while 56% provided comprehensive medical benefits. Additionally, 33% of institutions invested in learning and development opportunities for their directors, indicating a commitment to enhancing board effectiveness. Quantifiable results from the study showed a strong emphasis on board diversity, with 87% of boards including at least one woman director and 33% having three or more women directors. Furthermore, the data indicated a healthy mix of experience on boards, with 59% of independent NEDs serving between one to six years, ensuring a balance of fresh perspectives and institutional knowledge. This strategic focus on governance and compensation practices not only aids in attracting and retaining quality directors but also contributes to the overall growth and sustainability of financial institutions in Malaysia.