Bigger, more profitable. By selling the equivalent of 10 percent of outstanding common shares to the public and listing some of its shares of stock at the Philippine Stock Exchange (PSE), a company grows bigger in capital and, sometimes, becomes more profitable.
If other listed companies did not live up to this perception, then GT Capital Holdings Inc. does not belong to the same league. It is not one to disappoint the public as it has shown it could expand its reach, get more business and generate more profits, which redound to the benefit of stockholders with its ballooning retained earnings.
Retained earnings could be accordingly proportioned between “unrestricted” and “unrestricted” so as not to frustrate the investors who are in the market for dividends.
GT Capital, which is a principal stockholder of Metropolitan Bank and Trust Co., is one listed company that grew bigger after going public in April last year. By the end of 2012, it had retained earnings of P13.9 billion as it net income surged to P8.6 billion in 2012, about 2.50 times its net income of P3.4 billion in 2011.
Executive compensation. As a company expands, it spends more for salaries. GT Capital Holdings is not an exception.
In a filing, it named its five highest-paid executives as follows: Carmelo Maria Luza Bautista, president; Francisco Suarez Jr., chief financial officer; Joselito Banaag, head, legal and compliance; Jose Crisol Jr., head, investor relations and corporate communications and Susan Cornelio, head, human resources.
In the same posting on the PSE website, GT Capital said that it will increase the group’s pay this year to P23.3 million including bonus of P4.7 million, from P21.5 million including bonus of P5.8 million in 2012.
Now for the bog gap: In 2011, the highest-paid executives of GT Capital received only P1.90 million in salary and P590,000 in bonus. However, it did not indicate in its filing if it had the same officers from 2011 to 2013.
GT Capital said that it paid “all other officers as a group” P1.02 million in salary and P260,000 in bonus in 2012; P260,000 in salary and P40,000 in bonus in 2011. This year, GT Capital is increasing the group’s salary to P7.16 million and their bonus to P1.791 million.
Generous increases. As listed in the compensation filing, the five highest-paid officers of GT Capital makes its five top executives multimillionaires by giving them huge salaries. (Averaging the principal amounts may not be fair to those who may be getting less.)
But they are not the only “key management personnel” of GT Capital. The compensation of the top five and “other officers as a group” in 2012 and 2011 disclosed in a filing represented only a fraction of the amounts GT Capital paid “key management personnel” as a group in the last two years as follows: P202.7 million in 2012 and P62 million in 2011. In 2010, it paid them P59.4 million.
What a coincidence! The amounts have dramatically increased last year compared with the amounts in 2011 and 2010. Could this huge compensation adjustment be attributed to getting bigger when going public?
Incidentally, these increases in pays and perks in the last three years included the amounts it paid as post-employment benefits: P7.6 million in 2012, P3.5 million in 2011 and P3.5 million in 2010.
Less board meetings. In contrast, a filing suggests GT Capital could be trying to save on directors’ fees by reducing the number of board meetings to six from “once a month.” It is implementing this drastic change by amending the pertinent provision of its by-laws.
In a letter, lawyer Joselito V. Banaag, vice president and head of legal and compliance division of GT Capital Holdings, told PSE that the required amendment to the company’s by-laws has already been approved by the Securities and Exchange Commission.
Banaag did not say if GT Capital would raise the per diem and allowances of the members of the board when the company starts implementing by-laws provision on six board meetings a year instead of 12.
Could GT Capital keep intact the loyalty of its “key management personnel” including its top five executives to make its stockholders, particularly the small investors, happy? This remains to be seen. Keep watching.