PEPSI-Cola Products Philippines Inc. bears some good news. To know what it is, download and read the compa-ny’s definitive information statement (DIS), or its 2014 annual report. In both filings, Pepsi-Cola made a surprising disclosure. “The seven directors representing the Lotte Chilsung Beverage Co. and Quaker Global Investments B.V. “have waived their per diem allowance, as well as directors’ fee,” it said. It seems they’ve been doing that since 2010
Together, the two corporate stockholders own a total of 2.36 billion shares, equivalent to 63.88 percent. Individually, Korean-owned Lotte and Dutch-owned Quaker Global hold 1.436 billion shares, or 38.88 percent and 923.443 million shares, or 25 percent, respec-tively.
Who are these seven directors who are giving up their director fees? They are all foreign-ers. Pepsi-Cola only has two Filipinos on its nine-man board, namely, Oscar S. Reyes, who is also president and CEO of Manila Electric Co., and Rafael M. Alunan 3rd.
Of course, the sacrifice made by these directors would mean savings for Pepsi-Cola. To find the history of these nominees’ sacrifice, one should go back to the earliest years when they began their mission of “generosity.” Nobody knows if their respective mother companies – Lotte and Quaker Global – had ordered them to forego their board incen-tives or they do this on their own volition.
2010 pays and perks
Since only the annual reports for 2014 and nothing for the previous years are posted on the website of the Philippine Stock Exchange, Due Diligencer had to dig for more filings and ended up with Pepsi-Cola’s compensation data dating back to as early as 2010.
In 2010, seven directors, who also represented what was then the Guoco Group and Quaker Global Investments, did not collect their per diem allowances and directors’ fees.
What did they lose? That year, Pepsi-Cola paid its directors $1,000 per board meeting attended, $2,000 per audit committee meeting attended and P500,000 in annual direc-tor’s fees. By 2014, only the fee per board meeting attended increased to $1,500 from $1,000. (Note: The board’s compensation data for the years prior to 2010 were not avail-able.)
Computing the fees may be Due Diligencer’s immediate concern just to know how much the seven board members had ceded to the company instead of pocketing them. It won’t be easy to determine the exact amounts of annual savings Pepsi-Cola generates from the uncollected pays and perks. It is up to the public to do their own estimate based on avail-able filings.
In its latest PSE posting, Pepsi-Cola listed the following foreigners as members of its nine-man board this year who do not collect per diem allowances and annual directors’ fees: Yeon-Suk No, chief executive officer; JaeHyouk Lee; TaeWan Kim; Byong TakHur; Mannu Bahatia; Preveen Someshwar and Furqan Ahmed Syed, president.
Incidentally, Yeon-Suk and Ahmed are also among the five highest paid executives of Pepsi-Cola. In 2013 and 2014, as a group they received P89.193 million as salary; P9.981 million as bonus and P5.533 million as “others” in pays and perks. This year, with six more months to go, Pepsi-Cola estimated their salary at P50.364 million and their bonus at P5.881 million.
In the same compensation filing, Pepsi-Cola paid in 2013 “all other directors and officers as a group” a salary of P12.807 million; bonus of P2.454 million and “others” in incentives of P3.20 million. The following year, it increased the amounts to P20.696 million for salary; P4.99 million for bonus and P5.515 million for “others.”
By the end of 2015, Pepsi-Cola said it would have paid the group salary of P16.48 mil-lion; bonus of P2.773 million and “others,” P3.347 million.
P6.5-B retained earnings
Here are the numbers that show how Pepsi-Cola has performed financially. Based on an audited financial filing, as of Dec. 31, 2014, the company had P6.5 billion in retained earnings. This included P810.944 million in net income that resulted from gross sales of P29.807 billion.
In the first quarter of 2015, Pepsi-Cola reported net income of P191.989 million, up 41.122 percent from P136.045 million in the same period in 2014. These profits resulted from gross sales, which grew 13.588 percent to P7.316 billion in the first three months of 2015 from P6.447 billion in 2014.
The board of Pepsi-Cola recently approved dividend payments of P0.066 per share to stockholders as of May 12. This will be distributed starting June 5. The company will hold its annual stockholders’ meeting at 10:00 a.m. on May 29 at Acacia Hotel Manila in Filinvest Corporate City, Alabang, Muntinlupa City.