WILL the Securities and Exchange Commission review the compensation tables of listed companies to see if their executives deserve their reported salaries and bonuses especially if they reported annual losses?
Alliance Select Foods International Inc. is one for its officials to look into.
The board of Alliance Select, like other listed companies, decides how much to pay its management team. In 2007, it pegged the amount at P18.549 million for the top five executives and other officers. They raised this by 18.756 percent to P22.028 million in 2008.
Then in 2009, Alliance Select paid its managers and members of the board P35.209 million. This was the year when George Sycip, son of Washington Sycip, joined the company as an independent director, who was eventually appointed chairman of the board.
George was lucky. His and his fellow officers’ compensation even topped by 27.870 percent the company’s estimate of P27.535 million for 2009.
Since then, Alliance Select, so it seems, has adopted the old dictum “charity begins at home” because it paid its managers P38.861 million in 2010; P37.802 million in 2011; P45.120 million in 2012; and P57.925 million in 2013. What a whopping 28.380 percent jump in the last two years!
But the company’s generosity came at time when it has not been performing well financially. In 2011, it recorded a net loss of $996,490, rebounded with a net profit of $582,441 in 2012 but reported its biggest loss of $2.833 million in 2013. If Alliance Select goes on a losing spree, what would happen to its retained earnings, which had already dropped to $1.331million in 2013 from $3.807 million in 2012?
Despite this dismal performance, Alliance Select, courtesy of its board chaired by Sycip the son, hoped to pay its top five officers and others including directors, P34.136 million in salary and P1.415 million in bonus for total compensation of P35.551 million.
Despite its financial losses in 2013 and 2011, Alliance Select paid its top five executives, led Jonathan Y. Dee, president and chief executive officer, and other officers and directors of the company a total of P55.541 million in salary last year. The company even generously rewarded them with bonus of P2.384 million for total pays and perks of P57.925 million.
Alliance Select, which uses the US dollar as functional currency, reported net loss of $2.833 million, which at the exchange rate of P41 to a dollar would amount to P116.153 million. Ranged against this huge loss, the company’s compensation would be equivalent to 49.870 percent.
Putting it another way, had the company not been as charitable as it had shown by the numbers culled from filings, it could have greatly reduced by almost 50 percent, its loss in 2013.
How about the performance of Alliance Select in 2011 when the company’s net loss amounted to $996,490?
Again, computed at P41 to a dollar, the company registered a net loss of P40.856 million but paid its management team P37.802 million.
What do all these numbers tell the public who may have been waiting for Alliance Select to make a dramatic rebound? As posted on the website of the Philippine Stock Exchange, the company, which uses FOOD as its market symbol, hit a 30-day high of only P1.37 on April 23 as it rebounded from a 30-day low of P1.20 on April 4.
But how about those who have been caught holding on to their “hoard” of FOOD shares which they had bought at the stock’s peak of P2 or even higher? Will it mean it is time for them to cut their loss? It really is difficult for the public to decide what to do with their holdings because of the unpredictability of the management’s move since they are never privy to what’s going on inside the board room of Alliance Select.