Aboitiz Equity Ventures Inc. (AEV) will hold its annual stockholders’ meeting at 4:00 p.m. on May 16 at Fairmont Hotel in Makati City. As of March 28, it said it had 5.554 billion outstanding voting shares, of which 4.975 billion, or 89.58 percent, are owned by Filipinos, and 578.821 million, or 10.42 percent, are by foreigners.
Of 4.975 billion Filipino-owned AEV shares, 2.736 billion shares, or 49.25 percent, belong to Cebu-based Aboitiz & Co. Inc. About 11.2 percent, or 622.462 million shares, are held by PCD Nominee Corp. for Filipinos, and 555.312 million shares, or 10 percent, for foreigners.
The Aboitizes, who are AEV’s majority stockholders, nominate the members of the company’s nine-person board, including three independent directors. Up for re-election as regular directors are Jon Ramon Aboitiz, chairman; Erramon I. Aboitiz, president and chief executive officer; Roberto E. Aboitiz, Enrique M. Aboitiz, Justo A. Ortiz, and Antonio R. Moraza. Nominees for independent directors are Stephen T. CuUnjieng, Raphael P.M. Lotilla and Jose C. Vitug.
5 highest-paid executives
As AEV president and CEO, Erramon I. Aboitiz heads the list of the five highest-paid executives of the company. The others are Stephen G. Paradies, senior vice president/chief financial officer/corporate information officer; Xavier Jose Aboitiz, senior vice president-chief human resources officer; Robert McGregor, senior vice president-chief strategy officer; Luis O. Aboitiz, senior vice president; and Susan V. Valdez, chief corporate services officer.
In 2014, they were paid P91.793 million in salaries; P9.315 million in bonuses; and P7.731 million in other compensation. In 2015, AEV raised their salaries to P114.087 million; their bonuses to P11.699 million and other compensation to P11.273 million. This year, AEV estimates their salaries at P125.496 million; bonuses at P12.87 million; and other compensation at P12.40 million.
In a footnote to the compensation filing, AEV said Paradies retired in May 2015. MacGregor made it to the five highest-paid group in the same year.
Well-paid management team
Aboitiz Equity has been paying its executives well. From 2014 to 2016, payment of salaries of the top five executives is listed at P331.376 million. It also showed its generosity in gifting them with bonuses of P33.883 million and other compensation of P31.404 million during the three-year period.
On the other hand, a filing shows AEV has set the following compensation for “all other directors and officers as a group unnamed:” total salaries P213.51 million for 2014 to 2016; bonuses P24.721 million; and other compensation P94.934 million.
The numbers show “all other officers” got more “other compensation” from 2014 to 2016 than the top five.
In an explanatory note, AEV said “all of AEV directors received a monthly allowance of P100,000 except for the chairman of the board, who received a monthly allowance of P150,000.”
Listed companies may not know that they are giving the public a new rule for the market game. It is no longer “buy at low; sell at high. The public should have been told to drop such rule and adopt a new strategy, which is, buy when insiders buy and sell when insiders sell.
To learn the trick, the public may want to check certain entries under ‘equity’ of AEV’s audited financial filing. Their focus this time should not be the amount of retained earnings, which, as a general rule, determines a listed company’s ability to declare dividends, either in cash or in stock.
Why not look at AEV’s treasury stock and turn to Note 13 for the explanation of such entry? In 2014 and 2015, AEV reported P1.178 billion and P1.066 billion “treasury stock at cost,” respectively.
When computed, the results showed AEV bought back 156 million shares at an average price of P7.692 each in 2014. In 2015, its average buyback price was a little bit higher at P7.840 each. These were net of the treasury shares that AEV has reissued or resold to investors.
Aboitiz Equity Ventures scored a big gain from buying back its own shares in the open market. If it paid P7.692 per share in 2014 and P7.840 in 2015, it did even better by selling some of them.
Note 13 of AEV’s audited financial statement reported that “in 2015, 15.7 million shares costing P112.8 million were sold for P885.3 million, while 16.7 million shares costing P116.8 million were sold for P916.8 million in 2014.”
Translation: AEV paid P7.185 per share in buying back 15.7 million in 2015. It grossed P885.3 million, or P56.389 per share when it sold them back before the end of the year.
In 2014, AEV sold 16.7 million treasury shares for P916.8 million, which translates to P54.898 per share, a huge gain from a gross acquisition cost of P116.8 million, or P6.994 per share.
The numbers show just how profitable AEV’s buyback program has been. Has anyone among the public scored similarly good profits by following the company’s insider trades?