The Employees Provident Fund is the main source of savings for nearly all Malaysians in the private sector.
KUALA LUMPUR: Malaysia’s biggest pension fund is prepared to use its voting rights to weigh in on the pay of directors at more companies, according to a person with knowledge of the matter.
The Employees Provident Fund, which manages RM814.4bil (US$201bil) of assets, is ready to voice its expectations for executive salary and appointments by voting at shareholder meetings if talks with the board and management don’t work out, said the person, who asked not to be named as the process is private.
That signals wider reverberations across companies that EPF is invested in, after the fund voiced its disapproval of Sapura Energy Bhd
.’s President and group Chief Executive Officer Tan Sri Shahril Shamsuddin’s remuneration.
Prime Minister Tun Dr Mahathir Mohamad is keeping his pledge that “heads must fall” after his coalition toppled a previous government that had ruled for more than six decades. The executives at state-linked Petroliam Nasional Bhd., Telekom Malaysia Bhd. and Permodalan Nasional Bhd have resigned.
“It’s good corporate governance,” Danny Wong Teck Meng, chief executive officer at Areca Capital Sdn., said by phone in Kuala Lumpur. “By using the votes, EPF is making the right call. It will remind the board and management of public listed companies that they have a fiduciary duty to manage the company properly.”
EPF voted to unsuccessfully oust Sapura’s Shahril at an annual general meeting on July 18. Shahril was paid RM71.92mil, including RM55mil in bonus, for the fiscal year ended Jan. 31, when the company had a US2.5bil loss.
This is the first time an institutional fund took an active stance in Malaysia, the Edge reported, citing Lya Rahman, general manager of the Minority Shareholder Watchdog.
“The EPF is committed to the agenda of promoting strong governance practices in corporate Malaysia, and expects the same to be practised by all its investee companies,” the fund said in an emailed response to Bloomberg.
The pension fund is the biggest investor of Malaysian stocks and owns more than 5 percent stake in many listed companies, including Sapura and Telekom, as well as power firm Tenaga Nasional Bhd., Malayan Banking Bhd., free-to-air TV operator Media Prima Bhd., and builder Gamuda Bhd.
Its equity investments accounted for 41.6 percent of its total assets, according to its statement released in June. - Bloomberg
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