Linking ESG to remuneration: The case of Top Glove

TOP Glove, the largest glove manufacturer in the world with a primary listing on Bursa Malaysia and a secondary listing on the Singapore Exchange, had a stellar financial performance when the Covid-19 pandemic hit, as it benefited from the huge surge in global demand for gloves.

Its net profit attributable to shareholders grew by 381 per cent from FY2019 to FY2020, and another 340 per cent from FY2020 to FY2021. Its return on equity over the same period increased from 14.4 per cent to 26.0 per cent, and then to 131.3 per cent. It share price surged by 454 per cent between the end of FY2019 and FY2020, and then fell back 54 per cent between the end of FY2020 and the end of FY2021.

While Top Glove's business was thriving, it came under considerable public scrutiny for its labour practices, such as poor living and working conditions of its migrant workers, forced labour practices which led to import bans of its products by the United States, and its questionable handling of a whistleblower complaint. The board was criticised by some influential institutional investors, who voted against the re-election of six independent non-executive directors (INEDs) - although they were nevertheless re-elected.