Suite Talk: Governing into the Future

A topic that keeps coming up on directors’ lists of difficult things to manage is culture.  Corporate cultism has reared its ugly head again in 2022. This phenomenon hinges on the belief that entrepreneurs should be given maximum leeway to run their companies as they see fit. Whether or not CEOs want it to, healthy business cultures can quickly mutate into corporate cults. Many of the businesses we celebrate are walking that narrow path; two notable examples are Apple and Tesla. All of them have developed cult-like followings among their customers, and they progressively promote these habits among their employees as well. Perhaps it is time to focus less on the charisma of corporate leaders and show more healthy cynicism and criticism if such scandals as Enron, FTX and Theranos are to be avoided in the future.

Then there is the unfortunate fact that not everyone has been enamoured of the ESG movement, even though many people, especially investors, have completely committed to an ESG corporate environment. According to a new Corporate Secretary survey, linking sustainability and social criteria to executive compensation is a rapidly emerging, if imperfect, solution that has become much more popular in Europe than anywhere else. How well firms perform on environmental, social, and governance (ESG) or non-financial problems will become a growing concern for company executives when it comes to how their compensation is determined.

In addition, back in January 2022, Bursa Malaysia announced that the tenure of an independent director on the boards of Bursa-listed companies will be limited to 12 years. When a board member leaves, it may be quite disruptive for the organization if there is no plan in place to fill the vacancy. Directors’ efforts and attentions may be diverted from other organizational priorities, the nominating and governance committees may be compelled to hurry to locate a successor, and investors and other stakeholders may begin to question the board’s management skills. Most of these difficulties can be avoided with proactive board succession planning.

These have exacerbated challenges with corporate governance. As boards are expected to implement and convey policies taking into account diversity, equity, inclusion, and climate change – themes that can evoke acts with conviction since they can be emotionally charged. The slow-moving corporate environment has made stakeholders more restless.

*The SIDC reserves the right to amend the programme as deemed appropriate without prior notice