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

Tuesday, 24 April 2012 00:28 - - {{hitsCtrl.values.hits}}

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.)