Senior Management Remuneration Disclosure in the Malaysian Code on Corporate Governance (MCCG) 2024

The 2024 update to the Malaysian Code on Corporate Governance (MCCG) introduces a recommendation for detailed disclosure of the top five senior management's remuneration. This article delves into the importance of this update, supported by extensive research and practical implementation strategies.

Key Insights

• Transparency and Accountability: Detailed disclosure of senior management remuneration enhances transparency and accountability, allowing shareholders to assess whether compensation aligns with company performance and strategic objectives.

• Stakeholder Trust: Transparent remuneration practices build stakeholder trust and demonstrate the company's commitment to good governance.

Research Findings

• Global Trends: Research by the World Bank highlights that transparent remuneration disclosure is a global best practice, contributing to improved governance and stakeholder trust.

• Alignment with Performance: Studies by McKinsey & Company reveal that companies with transparent and performance-linked remuneration practices tend to achieve better alignment between executive incentives and company goals.

Implementation Strategies

• Develop Disclosure Policies: Formulate clear policies for the disclosure of senior management remuneration, specifying the components and performance criteria used to determine compensation.

• Ensure Compliance: Regularly review remuneration practices to ensure compliance with MCCG recommendations and alignment with best practices.

• Stakeholder Communication: Communicate remuneration policies and disclosures effectively to stakeholders, ensuring transparency and understanding.

Conclusion The recommendation for detailed disclosure of senior management remuneration, as highlighted in the MCCG 2024 update, is a significant step towards enhancing transparency and accountability. By implementing this practice, companies can build stakeholder trust, align executive incentives with performance, and strengthen their governance framework.