Hajah Fatimah et al./ Elixir Mgmt. Arts 34 (2011) 2535-2542 2535 Introduction The Malaysian Code on Corporate Governance (MCCG) was launched in March 2000 to provide a set of principles and best practices for companies on corporate governance. The Code is the product of an industry-led working group, established under the support of the Finance Committee on Corporate Governance. The revamped exchange Listing Requirement (issued on 22 January 2001) brought the Code into full effect by requiring mandatory disclosures on the state of compliance with the Code by listed companies. Board of directors are more accountable for their responsibilities to both the corporation’s shareholders and stakeholders. Therefore, as the main implementer or of an organization, the reward system should also mainly be decided by the same group of people. Hence, this study is to see how internal corporate governance practices could curb the agency problem that may occur in the organization, mainly in the public listed companies in Sarawak. According to a survey conducted in 2005 by independent brokerage and research house CLSA Ltd., Malaysia gets top ranking (nine on a scale of 10) for having the most rules and regulations for corporate governance in Asia but is rated average for enforcement (scale of 3.5). This result proved that Malaysia is excellent in having hypothetical system but there is a grim setback where our enforcement of the said system is concerned. Relating to the above there has not been a study being done on Sarawak public listed companies where corporate governance and executive compensation are concerned. For this reason, there is a need for the researchers to study the enforcement component focusing the Sarawak based companies as issued by the Malaysian Code of Corporate Governance. This will give us an insight as to where the Sarawak companies stand and be able to evaluate the quality as opposed to the overall performance in practices of Corporate Governance of Malaysian stock market, especially in the context with its parent, Malaysia where research usually is focused on. Therefore, our main objective in this research is to find the relationship between internal corporate governance in Sarawak and the executive compensation. Our analysis contains nine independents variables as our proxy to represent the performance, size and managerial controls of the companies. Shleifer and Vishny (1997) state that corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. How do the suppliers of finance get managers to return some of the profits to them? How do they make sure that managers do not steal the capital they supply or invest it in bad projects? How do suppliers of finance control managers? Junichi (1998) says that corporate governance should include the function of making determinations regarding company behaviour, the function of adjusting and fine-tuning the relative relationship with stakeholders, and the function of monitoring management activities and results. When corporate governance incorporates these three functions, the actual governance and control itself of each function can stimulate an internal ‘self-cleansing’ process in regard to ethics, and if this is the result, then this will in turn stimulate increased efficiency. A definition by the Finance Committee on Corporate Governance in Malaysia in the Report on Corporate Governance (2002) states that: “Corporate governance is the process and structure used to direct and manage the business and affairs of Tele: +6012-8569036,+6016-8957238,+6019-8887898 E-mail addresses: fatimahb@sarawak.uitm.edu.my, kjusoff@yahoo.com,azilawati@sarawak.uitm.edu.my,thalany@sara wak.uitm.edu.my,dayangmilianna@sarawak.uitm.edu.my,yatiehai@s arawak.uitm.edu.my,aizas@sarawak.uitm.edu.my © 2011 Elixir All rights reserved Executive compensation, company performance, size and managerial control of public listed companies in Sarawak Hajah Fatimah Bujang 1 , Kamaruzaman Jusoff 2, *, Azilawati Banchit 3 , Thalany Kamri 3 , Dayang Milianna Abang Naim 1 , Muliati Aba Ibrahim 1 , Aizimah Abu Samah 4 1 Faculty of Accountancy, Universiti Teknologi Mara Kampus Samarahan, Jalan Meranek 94300 Kota Samarahan, Sarawak, Malaysia. 2 Faculty of Forestry, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia. 3 Faculty of Business Management, Universiti Teknologi Mara Kampus Samarahan,Jalan Meranek 94300 Kota Samarahan, Sarawak, Malaysia. 4 Academy of Language Studies, Universiti Teknologi Mara Kampus Samarahan, Jalan Meranek 94300 Kota Samarahan, Sarawak, Malaysia. ABSTRACT In corporate governance, the executive compensation appears to be the controversial issue among the stakeholders as well as the shareholders. This study is to find the relationship between executive compensation and the company performance, size and managerial controls in Sarawak. Using all 22 public listed companies in Sarawak, data in annual reports from 2004 to 2006 were gathered. The result showed that there is a weak positive relationship between executive compensation with the company performance (ROS) and size (sales), while no relationship was found between the executive compensation and the managerial control. © 2011 Elixir All rights reserved. ARTICLE INFO Article history: Received: 16 March 2011; Received in revised form: 23 April 2011; Accepted: 28 April 2011; Keywords Corporate governance, Executive compensation, Company performance, Managerial controls. Elixir Mgmt. Arts 34 (2011) 2535-2542 Management Arts Available online at www.elixirpublishers.com (Elixir International Journal)