Ayala Corp.’s multimillion-peso pay and perks for the Zobel brothers

Emeterio Sd. Perez

Emeterio Sd. Perez

IF you are an investor in any of the companies listed on the Philippine Stock Exchange, you would have observed a drastic change in the way Ayala Corp. (AC) discloses the annual compensation of its executives. Finally, the holding company of the Zobel clan has reported the pay and perks of its six highest-paid executives.

Until recently, AC had been consolidating into a single amount the total compensation of 12 executives led by brothers Jaime Augusto Zobel de Ayala, chairman and chief executive officer, and Fernando Zobel de Ayala, president and chief operating officer.

You may wonder what made the AC management decide it was time to give the public a glimpse of how the Zobel-controlled listed holding company has been paying the members of its management team.

Due Diligencer is grateful that the AC management made the task of researching the pay and perks of the Zobels and the rest of their team easier, but would be more grateful if the holding company would adopt the usual “five” for the highest-paid executives and would simply total the amounts received by “all other officers as a group unnamed.”

Yet, it would be more convenient for the public – and of course for Due Diligencer – if AC would report the individual pay and perks of its executives, from managers and up, without exception. After all, what’s the use of a company being public if it is not transparent in its financial disclosures?

In a filing, AC said Jaime and his younger brother Fernando remain on top of the list of six executives who, in 2014, would receive P306 million — P213 million in salaries and P93 million in bonuses. The year’s total of P306 million would translate to P51 million each, but would be 7.27 percent smaller than the previous year’s P330 million, or P55 million each.

Here is the big BUT in AC’s executive compensation filing: At first glance, you might be amazed by the amounts attributed to “all other officers as a group unnamed” for each year: P582 million in 2012 – P396 million in salaries and P186 million in bonuses; P635 million in 2013 — P409 million in salaries and P226 million in bonuses; and P631 million that they are set to receive in 2014 – P436 million in salaries and P195 million in bonuses.

Okay, read the numbers again. This time, consider the footnote in eight points italics below it and you would discern that the amounts were intended for the top six executives and the rest of the management team. As reported, “all other officers as a group unnamed” included “managers and up (including all above-named officers),” referring to the top six listed in the compensation filing.

You then deduct P290 million representing payment for AC’s six top executives in 2012 from the year’s total of P580 million to arrive at the amount of P290 million for all the other executives. The results of your computation should tell you that the elite six-man group got 50 percent and all the rest got the remainder of P290 million. That would be 50-50 sharing with a big twist: only six were to divide P290 million among themselves, including the Zobel brothers.

A company filing showed that AC had 115 employees divided into 75 managers and 40 staff members as of December 31, 2013, against 113 as of December 31, 2010, of whom 68 were managers and 45 wee staff members. Due Diligencer decided not to do any computation to get the average pay of each of the company’s 109 employees so as not to mislead the public about their compensation. It is well known that managers are paid significantly more than the rank-and-file workers.

Of course, you would find AC more generous to the members of its board when it used to pay each of them not more than 10 percent of the prior year’s net income. This compensation policy was changed in 2011 when the board lowered the directors’ yearly remuneration to one percent from the previous 10 percent of the prior year’s net income.

With the shift from “not more than 10 percent to one percent” of net income, AC now pays a director a retainer fee of P1.2 million a year — P200,000 per board meeting attended; P100,000 per audit committee meeting attended; and P50,000 for other committee meetings attended.

By the way, a member of the AC board used to receive an annual retainer fee of P500,000 — P100,000 per board meeting and P20,000 per committee meeting. Needless to say, a director had to be present in these meetings to be entitled to all these perks.

The good news about these numbers is that only non-executive directors are entitled to these fees, a policy that excludes Jaime and Fernando Zobel from entitlement to board pay and perks. After all, aside from being among AC’s six highest-paid executives, they are also members of the board of the holding company’s various units such as Bank of the Philippine Islands, Ayala Land Inc., Globe Telecom Inc. and Integrated Microelectronics Inc.



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  1. I do not mind executive compensation provided that corporate profits and share price are in line with expectations. It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.