Mealmix Berhad (Mealmix) is a FTSE Top 100 Index company in the food delivery business with its shares listed on the Main Market of the Bursa Malaysia. The Board of Mealmix consists of a non-executive Chair, three independent non-executive directors, the Chief Executive Officer and the Chief Financial Officer.

The remuneration committee of Mealmix is currently reviewing the remuneration policy which is required to be proposed at the next Annual General Meeting. At the Annual General Meeting last year, 25% of shareholders voted against the remuneration report. The shareholder discontent was focused on three aspects of the performance targets in the current long-term incentive plan. Firstly, the targets have been linked to the share price, which has increased significantly over the last few years but well behind the rest of the food industry. Secondly, some of the performance targets were met as a result of an increase in the size of the business following the acquisition of another food delivery business in which the remuneration committee was not involved. Thirdly, the targets have been focused on financial performance and not on non-financial factors such as employee retention and customer satisfaction.

The Chair of Mealmix, Borhan Nordin, has told the Company Secretary, Helen Tang, that he wants to have a renewed focus on the content of the companys Corporate Governance Report in the companys next Annual Report. Mealmix has not been compliant with two of the Malaysian Code on Corporate Governance (MCCG 2017) during the current financial year:

There was no detail disclosure on bonus and benefits in-kind on named basis for the remuneration of individual directors.

The company only had two (rather than three) members of its remuneration and audit committees for a three-month period during the year because one of its independent non-executive directors unexpectedly resigned with immediate effect. It took three months to appoint a replacement independent non-executive director who could then join those committees, and that appointment was made before the year-end.

REQUIRED:

(a) Discuss how a long-term incentive plan can link executive director pay to long-term performance and the ways in which the remuneration committee could revise the Mealmix long-term incentive plan to better link the executive directors pay to their performance and to prevent rewards for failure (including clawback provisions or downward revaluation of remuneration awards).

(17 marks)

(b) Prepare a note from Helen, the Company Secretary to, Borhan, the Chair of Mealmix explaining the requirements in the Listing Rules and the MCCG 2021 Code about reporting on compliance with the principles and practices in the MCCG 2021, including the impact of Mealmixs non-compliance with a number of the practices in the MCCG 2021.