Monday, June 23, 2008

Two men, two life stories, and two very different Americas

The two candidates who have emerged from this year’s gruelling presidential primaries as their respective parties’ standard bearer present Americans with a dramatic choice. For all that can be said about their differences in background, experience, political philosophies and prescriptions for the future, it is their profoundly distinct personae that I find most compelling.
Senators John McCain and Barack Obama, each in their own way, tell a story about America, who we are and where we are going. These are their personal narratives.
John McCain’s story has been told and retold in his campaign ads. It is a story worth telling. Though younger than the so-called “greatest generation” – the generation that survived the Great Depression and went on to win the Second World War – McCain embodies their values. The grandson and son of US Navy admirals, he was raised in a culture that emphasised sacrifice, service to one’s country, and found honour in performing one’s duty.
McCain was shot down in his first aerial mission over Vietnam, captured by the North Vietnamese, imprisoned and tortured. When his captors discovered his family lineage, he was offered his freedom. He refused to leave, however, before his fellow POWs were also freed; and so he remained a prisoner for five more years.
McCain left the military life so valued by his family a few years after his release, to pursue another form of public service, running first for the US Congress and then the Senate, where he has served for 21 years.
Merging the values instilled by his military upbringing with those of the American West, which he embraced, McCain is both an independent maverick and a committed conservative driven by a fervent love of his country.

Obama’s story, too, is well-known, and the subject of his eloquently written and best-selling autobiography, Dreams from My Father. His father was a Kenyan immigrant and his mother the daughter of a working class Kansas family. Born in Hawaii, his father abandoned the family when Barack was only two years old.
His mother later remarried and moved the family to Indonesia, where the young Barack attended school before returning to Hawaii to live with his grandparents. There Barack completed high school and won a scholarship to Occidental College in California, later transferring to Columbia University.
Remarkably introspective from a young age, Obama sought to understand himself, his mixed race identity, and the meaning of family and community in a changing America. After graduation, eschewing other opportunities, he devoted himself to public service as a community organiser, working in a depressed neighbourhood in Chicago that had been ravaged by factory closings and the loss of jobs. His mission, as he saw it, was to empower and bring hope to those in this community who most needed change to improve their lives.
After completing law school at the prestigious Harvard University, Obama once again committed himself to public service. He then ran for a state senate post in Illinois, where he focused his energies on building ties between Republicans and Democrats to pass legislation that improved the criminal justice system and expanded health care coverage for children.A talented orator, a gifted organiser, and a young man with a mission, Obama ran and handily won a seat in the US Senate where his gifts and his personality helped him establish an impressive record of bipartisanship in a short period of time, catapulting him into the national spotlight.
These are the narratives, as they tell them, of the two men who will compete for the presidency. Both are compelling, and both are real. And while radically different personal stories, both are authentically American, conveying as they do two distinct images of being American in the 21st century. Both men are patriots, projecting the ideals of freedom and opportunity and service to their country in different ways.
Without wanting to prejudice either, one image is, in fact, more traditional in its self-definition of service and the ideals it projects, while the other more expansive, encompassing a broader vision and global ideals.Both men now share centre stage, having proven their political skills in this difficult campaign. Each will present their competing political solutions to the problems plaguing US foreign policy, the US economy, and the role of government in addressing a myriad social issues. As compelling as these differences will be, and as substantive as the debate over their proposed solutions ought to be, always before the electorate in the coming months will be these two competing narratives and images of what it means to be an American that each conveys.

Dr James J Zogby is president of the Arab American Institute

How Much Should We Pay Our GLC CEOs?

It is a big issue on the 100% increment for certain Malaysia GLC CEOs. The 100% increment could be fair if their current packages are deemed low and they may have performed according to the KPIs. They deserve to have better salaries based on their contributions and talents.

The timing could be wrong when majority of population is in major crisis with escalating costs of living. However, we may have to look into this issue with open mind and heart.

In the UAE, generally salaries are much more higher for most top GLC executives. I do not really know the details but I guess from my own remuneration, these top executives who are mostly from western countries, not to mention those local bumiputeras/Emiratis earn good money. Of course, non-GLCs may give better perks as well.

Therefore, how much should we pay our GLC CEOs?

GLC CEOs’ pay generally lower
KUALA LUMPUR: The rumoured 100% rise in the pay packages of Tenaga Nasional Bhd’s president and chief executive officer (CEO) Datuk Seri Che Khalib Mohamad Noh and chief financial officer Datuk Mohd Izzadin Idris, which has been widely discussed on blogs, has again raised the perennial debate on how much CEOs should fairly receive.
The middle-income group, which forms the majority of society, may never comprehend why the chiefs of the many government-linked companies (GLCs) and non-GLCs should be paid that high.
Like it or not, increasing the salaries of several top-ranked executives at a time when the masses are burdened with increasing costs of living will inevitably cause resentment among the public. The reason is simple, these CEOs are already getting annual incomes most people will not be able to accumulate in a lifetime.
Nonetheless, even among the corporate chieftains, the gap between their pay could be as wide as tens of millions of ringgit. A comparison of executive directors’ pay between the top 10 GLCs listed on Bursa Malaysia in terms of market capitalisation and the top 10 non-GLCs seemed to indicate that the former group’s CEOs generally earned slightly lower incomes, with the exception of a few.

However, this cannot be ascertained for sure because the remuneration of the GLC CEOs was clearly stated in the annual report while for the non-GLCs, it is not so transparent. This was evident in a compilation of 20 such companies. For GLCs, the individual breakdown of income is often presented. In contrast, most of the non-GLCs provided a lump sum in directors’ fees and remuneration, without disclosing the breakdown paid to individual directors.
Among the GLCs, only Bumiputra-Commerce Holdings Bhd (BCHB) group chief executive Datuk Nazir Razak’s 2007 income of RM9.35 million outshone his banking peers. However, Nazir is seen as the very reason why BCHB is among the fund managers’ favourites.
Malayan Banking Bhd (Maybank) former president and CEO Datuk Amirsham A Aziz was paid some RM2.71 million last year, according to its annual report, compared with Public Bank Bhd managing director and CEO Datuk Seri Tay Ah Lek’s RM6.18 million.
Amirsham’s pay was even lower than Public Bank executive director Datuk Lee Kong Lam (RM4.6 million) and AMMB Holdings Bhd group MD Cheah Tek Kuang (RM2.87 million).
Sime Darby Bhd group chief executive Datuk Seri Ahmad Zubir Murshid was paid RM2 million last year (before the mega merger). Without any detailed breakdown, IOI Corporation Bhd and PPB Group Bhd paid a total of RM31.36 million and RM11 million to their respective executive directors.
It is worth noting that family-owned and family–run corporates paid relatively high fees and remuneration to their executive directors. These include Genting Bhd, which paid a total of RM91.73 million, and YTL Corporation Bhd, which paid a total of RM36.4 million. In fact, the Genting group, as in the previous years, paid out the most for its top office-bearers.
Responding to questions on GLC CEO pay, Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar said in a recent function that directors’ remunerations were transparent and disclosed in annual reports. “Let me assure you that there is a careful framework (under the Blue Book that provides guidance on executive compensations).”
Some quarters strongly argued that CEOs should not automatically qualify for pay rise, but should be commensurate with the performance and percentage growth of the companies.
There have been the occasional cases of shareholders rejecting the proposed increase in directors’ fees, but generally, most company officials have had their fees approved.
Last week, Time Engineering Bhd’s directors became the latest to have their proposed increase in fees rejected by its shareholders due to the bad times and that the previous year’s fees of RM228,000 be maintained. Its major shareholder UEM group had initated the pay rise following a survey by an international accounting firm.
Minority Shareholder Watchdog Group (MSWG) CEO Abdul Wahab Jaafar Sidek said minority shareholders were less concerned about the quantum of increase in the remunerations of directors, as long as they contributed to increasing shareholders’ values.
From his personal encounters with minority shareholders, he said these shareholders were more worried about losing good directors than seeing the company forking out more money to pay them high.
“Talents are very important. They are very fluid and can move around. You should not just look at local competition. Talents are in demand in many parts of the world. Their pays must be benchmarked against the similar industry, globally.
“You have to pay well to attract talents. Then, you have to pay well to retain them. Of course, they must perform. If we (MSWG) feel they should be paid higher, we say ‘pay higher’,” he told The Edge Financial Daily via telephone.
Commenting on blogs raising concerns on the purported 100% pay rise for Tenaga’s Che Khalib and Mohd Izzadin, Abdul Wahab said: “You don’t look at the percentage. You have to look at what they (directors) give to the company. You have to reward appropriately.”
“For example, CIMB paid about RM10 million to Nazir last year but shareholders are okay with it because CIMB made a lot of money. In fact, some of the shareholders told me they were afraid that Nazir might leave CIMB,” he said.
He added that MSWG’s survey showed that Tenaga had ranked highly in terms of corporate governance and the revision in directors’ remunerations was timely.
“Good corporate governance includes good performance and conformance. So far, I think it (Tenaga) is performing well, especially in such a difficult environment,” he said.
Last week, Azman had also said any pay increase for GLCs’ top-ranked executives were performance-based, and that such increase was needed to retain scarce talents nowadays.
Abdul Wahab said: “I totally agree with him. Talents help to drive business and company’s growth. You have to compete worldwide.”

by Gan Yen Kuan

Currency Freeze Had Saved Malaysia In The Short Term

The currency trap

There is a lot of talk these days of floating the region's local currencies. I have yet to come across someone knowledgeable in finance or economics who has not thought it is an excellent idea. Is it? I am not so sure.
There are two types of people who love the idea of de-pegging our local currencies to the US dollar. The first are those who are in it simply for greed: Once the currency floats, they can make a bundle of money playing currency market fluctuations by spotting gaps in demand and supply, filling it as the market demands.
The second type of people who would like to de-peg are the idealistic. Our sense of pride in our country and the sense of denigration at not being in control of our fiscal destiny is a powerful driver for such people.

I must admit that until I truly thought about it and considered the shock that our pride may bring to our economies if we de-peg, I fell into this category. Why we should not de-peg?
One of the greatest economical crises that we, people who have been financially active in the last past 20 years worldwide, faced was the 1997 Asian Financial crisis that took down the Asian Tigers.
This happened because these countries decided to focus their economies on exports to grow. They followed all the rules that economic growth dictated that they follow to achieve a sustainable high growth rate.
They aimed high and built like there was no tomorrow. Until the crash, they were the envy of the world.
Their secret to success was to keep on injecting their trade surplus into US dollars either through continuous trade with the US at ever higher rates year on year or through the purchase of US Government bonds. They also educated their people and encouraged national savings. So what happened?
Sadly success, if not tempered, breeds its own downfall. These economies had overvalued stock markets, extremely high property markets and a significant amount of foreign monies pushing these markets ever higher.
As property and stock prices kept rising, cautious and more seasoned investors started to think that the growth was not only unsustainable but worrying. Then the tipping point came and all hell broke loose.
Investors were abandoning these investments in droves. Some legitimately, others for more sinister reasons. Never discount the thought that some governments will sabotage others if they feel threatened.
The natural thing to do when you sell an asset in a different currency is to convert the money back into your own. This meant a great demand on the foreign currency while the local currency was dumped.
This led Malaysia to immediately freeze its currency float, much to the annoyance of the US, to protect its own economy after seeing what was happening to its neighbors.
It saved Malaysia in the short term but they were punished in the long term when the US returned its investments to other states while neglecting the Malaysian market.
We have nearly all the symptoms of the Asian Tigers - a great influx of foreign money into our stocks and property markets; a lively stock market; a white hot property market; double digit economic growth.
If we de-peg we will be asking for trouble. Imagine if liquidity is withdrawn in such a massive quantity from here; what would happen to our economy?
We like to think that we are immune and I am sure that the people in the Asian Tiger countries thought that they were as well.
The main difference was that they had a highly educated population and a good national savings scheme to see them through the crisis. We are just starting both.
Most people think that I am negative when I say or write things. I would too. However, as a businessman, I have learnt that the way to survive is to hope for the best, but plan for the worst.
Mishal Kanoo is the deputy chairman of the Kanoo Group. It is one of the largest family owned companies in the Gulf. The Kanoo family is the 11th richest in the Arab world with a fortune of US$6.1bn.