Creating Effective Salary Packages for CEOs

CEOs and key top management staff are enjoying higher total salary packages as more organisations move towards performance-linked incentives and long-term rewards for the compensation mix, said management consulting firm Hay Group Malaysia.

"The era of fixed salaries for firms operating in Malaysia is waning. Bonuses too are seen as incentives which are too short-term focused, whereas longer term rewards are better at driving sustainable value creation for the organisation," said its director Shahrizal Suffian.

He added that CEO total salary benchmarks are not always linked to the organisation's profitability.

"Market reach, customer service levels and other business aims have become more important as firms are embracing a more holistic outlook, recognising profits are positive outcomes when key performance targets are achieved," he said.

Hay Group Malaysia, which has been involved in crafting CEO total remuneration packages for several major organisations have discovered that stock options are not always seen as attractive perks any more.

According to Hay Group Malaysia, the adoption of the International Financial Reporting Standards (IFRS) since 2006 has resulted in stock options becoming an expense item in the reporting of earnings, with an impact on revenue and profit when previously it was seen as "free" rewards that cost the company nothing.

Shahrizal said many companies had stock options in the past but the simplistic formula does not necessarily spur the CEO to drive growth while long-term incentives that are customised to business strategies and takes into account the firm's culture and operating nuances have produced far better results.

How do you craft long-term incentives to spur a CEO to grow the company? He suggested sophisticated profit-sharing models with features like hurdle rates and tiering of profits to trigger rewards.

 He said a retention mechanism should also be included, allowing the firm to better manage its cash flow for example "bonus banking" where CEOs don't get the rewards unless the company's targets are achieved and continuous growth of those targets are also maintained over a set number of years.
"For instance, if the CEO has achieved the targets in the previous five years, the sixth-year bonus can be huge. Conversely, the 'banked bonuses' will be lost if subsequent year targets are unmet," he said.

Shahrizal said a long-term incentive is especially useful for firms seeking to turn around operations and reduce losses as they would otherwise be unable to offer enough to attract top talents. He added that such a strategy would work if the CEO is able to institute the right team behaviour within the firm.

Source: theSUNdaily 05-02-2014

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Malaysia: Global 3rd best for Healthcare services

Malaysia is being rated as third best in the world for healthcare services

The Health Minister, Datuk Seri Dr S Subramaniam gave credit to the boom in the country’s medical tourism sector through strategic investments on good medical facilities and competitive rates compared to other parts of the world.

“Medical tourism has benefited the Government in terms of foreign direct investments and also spin-off effects in the hotel and shopping sectors,” he said.

A study by the American publication International Living rated Malaysia’s healthcare system as the third best out of 24 countries in its 2014 Global Retirement Index, beating Spain, Italy, Ireland and New Zealand among other countries.

The index, which was recently released by the Baltimore-based magazine, praised Malaysia’s healthcare, which scored 95 out of a possible 100 points, as the medical expertise of Malaysian healthcare practitioners is “equal to or better than what it is in most Western countries” according to InternationalLiving.com’s Asia correspondent Keith Hockton.

The top two countries, France and Uruguay, scored 97 and 96 points respectively.

On the methodology of the index’s ratings, the magazine said both the cost and quality of healthcare were evaluated.

Another report in International Medical Travel Journal News reported that medical tourism receipts in Malaysia from foreign patients totalled RM509.77mil in 2011 involving 578,403 patients.

Dr Subramaniam added that Malaysia remained competitive with players like Singapore and Thailand and the focus was to consolidate the country’s position.

He said the key towards improving the overall healthcare sector would be to focus on the preventive and primary healthcare divisions.

Source: theSTAR 11-02-2014

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BP Healthcare: launches Taman Megah Specialist Centre

The Malaysian BP Healthcare Group launched its fifth Specialist Centre in Taman Megah recently on 18th January 2014.

“Originally, we focused on preventive care and our strengths are in diagnostic and laboratory. Over the years, our group expanded so much that we realise that serving patients with only diagnostic and laboratory may not be a comprehensive package,” said the group managing director Datuk Chevy Beh Yen San.

BP Healthcare, he said started about 30 years ago and grew from a humble homegrown brand to a group with more than 70 laboratories, 50 diagnostic centres, 50 dispensaries and pharmacies, 50 hearing aid centres, 50 food and industrial testing centres, five specialist/daycare centres, three dental specialist clinics and an eye specialist clinic.

"We have served more than 35 million customers over the last 30 years and still counting," he said.

Beh said BP Healthcare strives to provide a Wallmart-like experience to the customers and believed that healthcare is a basic needs for everyone.“We are by far the largest healthcare chain in Southeast Asia. Instead of running just like any single outlet that may not have a comprehensive healthcare system, we run as a coordinated healthcare chain," he added.

To meet the current demand for quick and efficient service, Beh said BP Healthcare decided to set up an Online Pharmacy. "A registered pharmacist will be available to communicate with the patients and customers can place orders online. The requested products will then be delivered to their homes," he said.

Source: fzcom 18-01-2014

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MYR at 3.33 against USD by year end: HSBC

Ringgit to hit 3.33 level against US dollar by year-end, says economist  

The Malaysian ringgit is expected to touch the 3.33 level against the US dollar by year-end on the back of the strengthening greenback, said HSBC ASEAN Economist Lim Su Sian. At the end of last year, the local currency was traded at 3.25 against the greenback.

"The ringgit is not the only Asean currency that is weakening against the US dollar as the US Federal Reserve is printing money at a slower pace to strengthen the dollar.

 

"However, we see the ringgit remaining strong as the underlying fundamentals remain strong," Lim told a media briefing on the Economic Outlook 2014, today.

She said another factor for the weakening of the ringgit was reduced intervention by Bank Negara Malaysia. "The central bank let the market price the currency on their own," she added.      

Source: Bernama 23-01-2014

 



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The Horse gallops In: 2014

Chinese New Year 2014: the horse gallops in ... the snake exits ...

The year of the horse begins on 31st January 2014 and will last for 15 days. The diaspora Chinese, all over the globe, will welcome the horse and praying for a better new year.

 

It is also the beginning of the lunar year and begins on a different day each year. Celebrations, stretching over the 15 days, include family dinners, visitations, lion and dragon dances, "ang pows" (red packets with money are given to children and unmarried adults) and feastings.

 

The New Year is also a time of family reunion. Family members, wherever they are, will attempt to be back at the family paternal home for the significant re-union dinner on the new year's eve. The next 15 days will be visiting each other's homes exchanging best wishes and sharing meals/tidbits and catching up with the events of the past and the future.
 

The Chinese calendar does not use numbered years but some Chinese scholars date it from the third millennium BC. According to different opinions, this year of the horse is 4712, 4711 or 4651.


 

 

 

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Malaysia CPI & Food Inflation

The latest figures from the statistics department showed that the consumer price index rose 3.2% in December, more than double the 1.2% a year ago, and up from the 2.9% registered in November. This is the highest level since November 2011.

The faster price rises are, partially, a consequence of a series of subsidy cuts introduced by the Government last year, aimed at reducing the country's high debt burden and fiscal deficit. Like a sequence of toppling dominoes, the 10% rise in petrol pump prices and a 15% hike in power tariffs are rippling to prices of other staples such as vegetables and meat.

 

"This year, 2014 is not going to be as benign as last year," said Nor Zahidi Alias, chief economist at the Malaysian Rating Corporation. "Inflation is going to be a bit hotter, especially in the second half of the year," he added. Hot enough to maybe persuade the central bank to raise its benchmark rate from 3% this year, the first change since mid-2011. Economists are expecting a hike of between 25 and 50 basis points.

A weakening ringgit, down 1.5% since the start of the year and at five-month lows against the dollar, will add to upward pressure on prices through more expensive imports.

Still, most economists expect Malaysia's economy to grow at a robust 5% or more this year, following an expected 4.5-5% growth last year, helped by a brighter global economy that should fuel its vital export sector.
 
Food and transport prices were among those that rose fastest in December from a year earlier, gaining 4.5% and 5% respectively. 
 
Two-thirds of Malaysian households earn less than RM5,000 per month. Consumer debt in Malaysia is the among the highest in Asia at around 83% of GDP.

Surging housing prices in major urban centres like Kuala Lumpur, which aren't reflected in inflation figures, have added to middle-class unhappiness over the cost of living. 
 
Later in the year, the Government is expected to announce a further cut in fuel subsidies, followed at the beginning of 2015 by the introduction of a new consumption tax at 6%.

Source: MalaysianInsider 22-01-2014

 

 

 

 

 

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Excellence Award

Should an "Excellence Award" be given out in an annual Event despite that there is no potential candidate qualified for the Award? This is a "million dollar" question and delimma.

I was invited recently to be a party to a Professional Body's Annual Award Committee and there were mixed views.

There is a view which says "YES. An Award MUST be given out in an Award Night otherwise if there is no Award given out, the Professional Body would deem to have no member of calibre. It would be an utter shame for the Professional Body and the profession". Hmm ... it does not sound right as it lacks integrity and transparency.

However, if there is a necessity to give out an Award for the night, the Award should then be rebrand to something else and NOT an "Excellence Award".

To me if there is no candidate meeting the criteria for the "Excellence Award" then it should not be awarded. If it is to be awarded, it would mean that the Excellence Award is given out to the individual who is only the "best of the mediocre" whereas it should be the best among the best of the "crème de la crèmes".

Criteria set for "Excellence Award" must not be compromised neither should be "watered down" unless there are good and valid reasons like unrealistic criteria been set in the first place.

There should not be any unnecessary external influence in the decision making process as well. If the decision had been made, it should be respected by all! However, should an appeal against the decision of the Awards Committee is necessary, the appeal must follow due process and within the stipulated time frame with good and valid reasons. Using "political" influence to change the Awards Committee's decision is a "no-no".

The "unsuccessful" nominee, who did not win the Award, should also have the courage and the humility to accept the decision of the Awards Committee. This is also a desired value of a leader ie humility. Should the individual desires to seek reasons for the failure to win the Award, the individual could approach the Professional Body for the reasons and attempt for the Award again, wiser this time round, for the following year.











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