Leading the pack: Tan beats Cook, Musk and Zuckerberg in the analysis by the WSJ. — Photo from Broadcom Inc
Tan tops list of highest paid executives in the US last year
PETALING JAYA: The highest-paid chief executive officer in the United States is neither Apple’s Tim Cook nor Tesla’s Elon Musk, but Malaysian-born businessman Tan Hock Eng.
Tan, 71, also surpassed Meta Platforms’ Mark Zuckerberg by earning US$162mil (about RM760mil) in compensation last year, according to South China Morning Post, which quoted an analysis by the Wall Street Journal (WSJ) this week.
“Tan, who is a US citizen, is the CEO of semiconductor company Broadcom Inc and has been topping the pay charts since 2006, receiving US$103mil in 2017,” said WSJ.
However, the pay package comes with several conditions, including the company’s stock hitting a certain level by next year. Tan must also remain as CEO for an additional five years, and he will not receive any more equity or cash bonuses during that period.
The semiconductor company’s shares rose 106% over the past 12 months, bringing its total market capitalisation to US$655bil (RM3 trillion).
Tan is also a board member of Meta Platforms, the US-based company that owns Facebook, Instagram and WhatsApp among others.
Tan, who hails from Penang, completed his undergraduate studies in mechanical engineering at the Massachusetts Institute of Technology.
He also has a bachelor’s degree in electrical engineering from the National University of Singapore. He then earned a Master of Business Administration from Harvard University. After returning to Malaysia, he was involved with Hume Industries between 1983 and 1988.
He then moved to Singapore as managing director of venture capital firm Pacven Investment.
He reportedly relocated back to the United States in 1992 and assumed the role of vice-president of finance for PC maker Commodore International.
Goldman Sachs Group Inc should follow up on its apology to Malaysia with a payment of US$7.5bil (RM30.86bil), says Lim Guan Eng.
The Finance Minister said a mere apology from the investment bank over the scandal-ridden 1Malaysia Development Bhd (1MDB) is not enough, unless they pay reparations and compensation.
Lim said Goldman Sachs should understand the agony and trauma suffered by Malaysians as a result of the scandal.
“An apology is not enough.
“An apology with US$7.5bil is what matters.
“At least he (Goldman Sachs CEO David Solomon) accepted that they have to bear and shoulder some responsibility but that is insufficient.
“They have made provisions of around US$561mil (RM2.3bil) but that is not adequate.
“We are seeking US$7.5bil,” he told a press conference here yesterday after announcing the names of the joint lead arrangers for the Samurai bond.
On Thursday, Solomon apologised to Malaysians for former banker Tim Leissner’s role in 1MDB.
Solomon also said it was very clear that Malaysians were defrauded by many individuals, including the highest members of the previous administration.
Asked if Malaysia would drop charges against Goldman Sachs with the US$7.5bil payment, Lim quipped: “US$7.5bil ... then we can discuss lah”.
Lim added that it was very clear who the top government official Solomon was referring to as there could only be one person.
“You worked hand in hand, and there has to be accountability. It also involved a breach in fiduciary duty, and I think the banking industry has this obligation to make good the losses that we suffered.
“I think this is at least an admission.
“If not for the change of government, do you think Goldman will apologise? We’re dealing with the largest investment bank in the world,” he said.
Lim added that he found it distressing that Datuk Seri Najib Tun Razak still refused to admit there was something wrong with 1MDB and the entire exercise.
He also lambasted the former premier for passing the buck to Goldman Sachs, and for being in a state of denial for refusing to admit that Malaysians suffered huge losses due to the scandal.
By Royce Tan The Star
Goldman Sachs CEO apologises for ex-banker’s role in 1MDB scandal
NEW YORK: Goldman Sachs Group Inc chief executive officer David Solomon (pic) has apologised to the Malaysian people for former banker Tim Leissner’s role in 1Malaysia Development Bhd (1MDB) scandal, but said the bank had conducted due diligence before every transaction.
Goldman is being investigated by Malaysian authorities and the US Department of Justice (DOJ) for its role as underwriter and arranger of three bond sales that raised US$6.5bil (RM26.7bil) for the sovereign wealth fund.
US prosecutors last year charged two former Goldman bankers for the theft of billions of dollars from 1MDB. Leissner, a former partner for Goldman Sachs in Asia, pleaded guilty to conspiracy to launder money and violate the Foreign Corrupt Practices Act.
“It’s very clear that the people of Malaysia were defrauded by many individuals, including the highest members of the prior government,” Solomon said on conference call discussing the bank’s fourth-quarter results in a report by Reuters.
Solomon said Leissner denied the involvement of any of Goldman’s intermediaries in transactions with 1MDB.
An attorney representing Leissner did not immediately respond to a request for comment.
Roger Ng, the other charged former Goldman banker, was arrested in Malaysia at the request of US authorities and is expected to be extradited, according to John Marzulli, a spokesman for the prosecution.
The DOJ has said that US$4.5bil (RM18.5bil) was allegedly misappropriated by high-level officials of the fund and their associates between 2009 and 2014.
As part of Goldman’s due diligence efforts, Solomon said the bank sought and received written assurances from 1MDB and International Petroleum Investment Co (IPIC) that no third parties were involved in the first two bond sales.
Abu Dhabi’s IPIC had co-guaranteed the 1MDB bonds when they were issued in 2012.
In the final offering, the Malaysian government itself, along with 1MDB, represented that no intermediaries were involved, he said.
“All these representations to Goldman Sachs have proven to be false,” Solomon said.
Goldman Sachs did not disclose any other information about its involvement with 1MDB, but said the impact on its client franchise had been de minimis. Shares of the bank, which reported strong fourth-quarter results earlier in the day, have fallen over 25% in the last three months, after headlines about its involvement with the sovereign wealth fund emerged.
The Malaysian government said in December it was seeking up to US$7.5bil (RM30.8bil) in reparations from Goldman over its dealings with 1MDB. – Reuters
In an immediate reaction yesterday, former Prime Minister Datuk Seri Najib Tun Razak said Goldman Sachs had to take responsibility because they were appointed and paid by 1MDB to take care of Malaysian’s interests.
“We put up a system, the system was there to take care of our interests, you see.
“So if they fail, then they have to take responsibility, because they were appointed and paid by 1MDB to take care of our interests,” Najib said.- The Star
Essentially, there is little time to shape up MAS before its competitors eat into its share of business. Khazanah should cast its net wider beyond the GLC fraternity and also look globally.
Don't compromise on setting things right for MAS. The airline needs a true blue aviation expert as new CEO
MALAYSIA Airlines (MAS) needs a true blue aviation expert as its new chief executive officer (CEO), and that is something Khazanah Nasional Bhd has to come to terms with.
The time to test the waters by hiring non-airline experts is over.
MAS is like an injured entity that needs to be operated on fast.
The national carrier needs a leader who knows the trade given the complexities of the airline business – someone who can differentiate between a full-service airline and low-cost operation.
The person must not be cajoled into believing that selling seats at the expense of yields is the best business strategy, and at the same time get the workforce to rally behind him to achieve success.
This is critical if Khazanah wants to see returns from its RM6bil investment that will go into saving MAS.
Bear in mind that Khazanah has not recovered the RM7bil investment it had already poured into the airline.
No doubt Khazanah does not want to set a new record for investing RM13bil in MAS without getting anything in return.
To recap, Khazanah had announced a 12-point plan to revive MAS. It will take it private, delist it, transfer the airline into a new company and relist it later.
It will cut 6,000 jobs, focus on regional profitable routes, and hopefully pay market prices for supplies.
To do all that and return to profit in 2017, it needs a new man at the top, someone with impeccable abilities and knowledge of the industry. The obvious choice will be someone from within the company, if there is one.
It will be hard to believe that Khazanah cannot find one person to run the show from the nearly 20,000 employees in MAS.
If that is the case, either the airline’s succession planning is non-existent or absolutely hopeless.
Airlines will normally employ from within the company or from other airlines to fill the top post.
In the case of Singapore Airlines (SIA), it has often been a home-grown candidate that has worked for 20 to 30 years with the airline.
MAS and SIA were formed from the same parent company decades ago.
SIA has become one of the best airlines globally although it grapples to keep its feet on the ground.
The current SIA CEO Goh Choon Phong came on board in 1990, worked 20 years, and became CEO in 2010.
His predecessor, Chew Choon Seng, joined SIA in 1972, and after 31 years became the CEO.
Chew took over from Malaysia-born Dr Cheong Choong Kong. Cheong was a mathematics lecturer in Universiti Malaya before he joined SIA in 1974.
After 29 years with the SIA, he was appointed CEO.
Unlike MAS, SIA has an unbroken record of profitability even through turbulent economic times.
Qantas head Alan Joyce is also a true aviation man, after his stints at Jetstar, Ansett Australia and Aer Lingus.
If no one from MAS can fit the bill, then obviously Khazanah will have to search from within the government-linked company (GLC) fraternity.
But should Khazanah make that compromise again?
Khazanah is said to be talking to several local and foreign candidates. Datuk Seri Shazally Ramly’s name has been mentioned several times although no deal has been hammered out yet.
Essentially, there is little time to shape up MAS before its competitors eat into its share of business. Khazanah should cast its net wider beyond the GLC fraternity and also look globally.
If Maxis Bhd can have Morten Lundal in its payroll, surely MAS can find someone prominent in the airline industry as its CEO, as long as it is willing to make that compromise.
Rob Fyfe, the former Air New Zealand CEO, is someone who has a proven track record in the aviation industry as are some people in SIA and even Cathay Pacific.
Khazanah must get the most capable talent to help MAS recover and for the agency to recoup its investments. Hopefully this will be the last revamp for MAS as nobody can stomach yet another restructuring three years down the road.
Contributed by BK Sidhu Reflections, The Star/Asia News Network
Dave DeWalt is known within Silicon Valley for his technical chops, his charisma, and his business accomplishments, which include reinvigorating security software maker McAfee and selling it to Intel (INTC) in 2010 for $7.7 billion. At 47, he now has bigger ambitions. “Running a big-cap company is considered the crowning achievement in many people’s careers, and I feel that way as well,” says DeWalt.
Such talk makes DeWalt an anomaly. In tech circles, the C-suite at a publicly traded company is no longer the be-all and end-all. Just look at the troubles Yahoo! (YHOO) and Hewlett-Packard (HPQ) have recently had finding new leaders. HP canned former SAP (SAP) Chief Executive Officer Léo Apotheker after just 11 months—then faced a barrage of criticism for replacing him with HP director and former EBay (EBAY) CEO Meg Whitman without bothering to look beyond its own boardroom.
Industry consolidation has created a small number of very large technology companies such as HP, Cisco (CSCO), and Microsoft (MSFT). They’ve stumbled in recent years as disruptive developments like the mobile revolution and the dash to the cloud shake the entire sector. As the job of leading these companies gets tougher, there are fewer talented leaders with the skills—and inclination—to do it. Rather than wait for high-profile CEOs such as Cisco’s John Chambers, Microsoft’s Steve Ballmer, and Research In Motion’s (RIMM) Mike Lazaridis and Jim Balsillie to step down, many potential replacements have decamped for more exciting, and potentially more lucrative, gigs at startups or as investors. “This is the first time in tech history that you have this many companies with CEOs approaching 60 that don’t have any obvious successors,” says John Thompson, vice-chairman of recruiting firm Heidrick & Struggles (HSII).
Consider Cisco. With 62-year-old Chambers now in his 16th year as CEO, many of his most capable lieutenants have given up waiting for their chance to succeed him. The list of departures since 2007 includes former Chief Development Officer Charles Giancarlo (now a private equity partner at Silver Lake), longtime general manager Tony Bates (who jumped to Skype just before it was purchased by Microsoft in May), and former head of the data center business Jayshree Ullal (now CEO of Arista Networks). While the accomplishments of Chambers and other longtime CEOs including Ballmer are undeniable, their long tenure has sapped the strength of the back bench, says Heidrick’s Thompson. Now a common belief is that both companies will need to go outside for their next CEO—not an easy task when the competition for talent includes hot pre-IPO companies such as Facebook. “The people who could possibly do these jobs realize it would be easier to create a new company rather than try to get an old stodgy one to adopt new ideas,” says Trip Hawkins, CEO of game developer Digital Chocolate.
Boards of directors get low marks on recruitment and retention, too. Few give much attention to succession planning until crisis hits, says Jeffrey A. Sonnenfeld, senior associate dean of the Yale University School of Management. New hires such as Bartz and Apotheker are set up for failure as boards prioritize near-term earnings over long-term risk-taking. “We’ve been weeding the qualified people out of the system for the past 15 years,” says Roger McNamee, a longtime technology investor and co-founder of private equity firm Elevation Partners.
Nor have tech companies excelled at developing CEOs. Once executives prove themselves in a given area—say, software engineering—they rarely go through General Electric (GE) -style development programs to get exposure to a business’s full breadth. There are exceptions: Intel and IBM (IBM) are both organized so that top executives get to run multibillion-dollar business units. IBM Senior Vice-President Michael E. Daniels, for instance, runs the $56 billion services business. At Intel, young executives have an apprentice system where they shadow top executives (current CEO Paul S. Otellini spent years carrying Andy Grove’s bags). As a result, both companies have succeeded at finding internal candidates for the top job. But this is not the norm in Silicon Valley, where most companies are organized along strictly functional lines such as marketing. “The tech industry is great at producing technology, but it’s not producing leaders,” says Rosabeth Moss Kanter, a professor of administration at Harvard.
To break the cycle, some tech industry veterans say it’s time for a new approach to choosing CEOs. Forget the old idea of finding an older, well-known operations or sales executive to maximize earnings and soothe nervous shareholders. Too often, those experiments—Dell’s (DELL) Kevin Rollins, Apple’s (AAPL) John Sculley, Yahoo’s Carol Bartz—have failed, says McNamee. Now Old Guard tech companies need to find risk-takers willing to bet big on new visions. That’s hard enough for entrepreneurs such as Amazon.com’s (AMZN) Jeff Bezos. It may be even harder at companies settling into middle age.“Somebody is going to have to take some risks, and bring in younger CEOs for a while,” says McNamee.
To find them, some boards are taking a larger role in succession planning. Egon Zehnder International has been testing a new approach for two years, in which board members use a number of techniques such as mentorship programs to groom internal candidates, says Karena Strella, managing director of the firm’s U.S. unit. The goal is to take some focus off past accomplishments and identify impassioned, adaptable people. Then it’s up to the board to back them, says Thompson. “People forget that it took Steve Jobs seven years to really move the needle at Apple,” he says. “If you used that standard today, he would have been fired long ago.”
The bottom line: Shortsighted boards and the long tenure of some CEOs have led to a succession crisis at big-cap tech companies.
Burrows is a senior writer for Bloomberg Businessweek, based in San Francisco.
