“Why such a fuss about bank board remuneration?” – Hilmy Cader

I have read with interest and intrigue about the DFT headline on the above subject. The prominence given to it and the underlying tone (including the word ‘boom’), seem to suggest a windfall.

This, in my opinion, is not fair by board directors and reflects a distorted view of the subject. Here are some aspects that must considered in order to give your reader a balanced view of the subject:

• Depositors and shareholders in a bank entrust the board with all of the key strategic decisions, the implications of these decisions can run into hundreds of millions of rupees.
• The current Companies Act places a very high level of responsibility and liability on the board, it also carries severe punishments for non-compliance.
• Ideally, the profile of people you need to serve on the board are those with high shareholding or a high level of proven corporate experience. In both these cases, the opportunity cost for them (of serving on the board) is very high.
• Given all of the above, when you divide the ‘eye-popping’ headline numbers by the numbers of directors and the number of meetings, I feel it is fair.

(For the record, I am neither a director of any financial institution in Sri Lanka, nor of any public quoted company in the country.)