The Advisory Council yesterday unanimously approved its economic and financial panel’s recommendation to impose a ceiling on the bonuses of board members of banks and shareholding companies.
Against the committee’s original proposal to fix a cap of six percent, the Advisory Council, after discussions, decided to further trim down the bonuses and set the ceiling at five percent of the net profit of the companies.
The Advisory Council, headed by its chairman, Mohammed bin Mubaraq Al Khulaifi, also made it clear that the maximum bonus of an individual beneficiary must not exceed QR500,000. The Council’s proposal will be sent to the Cabinet for the mandatory approval by amending Article 18 of the Commercial Law (No. 5/2002).
Ahead of submitting its proposal on the bonus ceiling, the panel held several rounds of discussions with top officials of the Ministry of Business and Trade, the Ministry of Economy and Finance, Qatar Central Bank and Qatar Financial Markets Authority. There was a general consensus among the panel members in favour of reducing the largesse given to the board members and executives.
Yesterday’s Council meeting witnessed an hour-long discussion on the Committee’s proposal before the unanimous decision was taken. At the meeting, the report was read out by Fahad Al Khayarin, General Secretary of the Council. Participating in the discussions, all the members agreed that the board members and executives were receiving hefty packages as bonus. The members unanimously argued for adopting austerity measures and called for belt tightening by the top brass.
Prior to the preparation of its proposal, the Economic and Financial panel held five sittings, which were attended by H E Dr Khalid bin Mohammed Al Attiya, Minister of Business and Trade;
H E Yousuf Hussein Kamal, Minister of Economy and Finance and Chairman of Qatar Financial Markets Authority; Sheikh Abdullah bin Saud Al Thani, Governor, Qatar Central Bank (QCB), and Abdulaziz Al Malki, Director, Legal Affairs, QCB.
Sharing his views on the issue, Dr Mohammed Al Attiya agreed on the need for restructuring the bonus packages. He said the Cabinet had already prepared a draft law to amend the commercial law.
He said no one had approached the ministry so far complaining about the performance of the board members. It had come to the notice of the ministry that some of the bonus packages offered to the executives of some companies were bigger than what the directors of those received.
H E Yousuf Hussein Kamal, who also supported the idea of offering a thinner purse to the board members and executives, said it was more important to change the system of selecting board members than to slash their bonus. He said there were some people who had been on the board of directors of some companies for the last 30 years. More qualified people with a strong academic background must come to the boards, he said.
He told the Committee: “There are some listed companies of which 60-70 percent of shares are held by owners, who have a major stake in the company’s decisions. There are also some companies which do not have audit committees. In such cases, the Qatar Financial Markets Authority will have to intervene to set their records straight. Things will improve with the introduction of the government’s corporate governance programme, set to be introduced from October 27, 2010”.
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