Individualize executive compensation

Emeterio Sd. Perez

Emeterio Sd. Perez

PUBLIC investors are helpless when listed companies fall. Despite this, they don’t deserve even a semblance of sympathy from either the Securities and Exchange Commission or the Philippine Stock Exchange. They could only grieve over the loss of their money in certain listed companies but could comfort themselves with the thought that, anyway, they had made good in other stocks.

Who, for instance, among SEC officials and PSE managers even read the executive payrolls of listed companies that report losses and piled up deficits? Of course, reading them and scrutinizing why so huge compensation for the chairman who may be at the same time the president or chief executive officer may be out of the question.

Instead, inside the SEC’s meeting room, the five members of the government’s securities regulatory body appeared to have expressed curiosity about the identities of the incorporators of new companies. Have they not been made aware of the pays and perks that listed companies post on the PSE website?

The public must be told that the same lists of compensation are furnished the SEC. Perhaps, Chairperson Teresita Herbosa and the four other commissioners don’t even bother to find time to peruse public disclosures. So did their predecessors.

Who propose what?
Because the boards of listed companies are controlled by only few insiders, the public don’t know much about the goings-on inside the boardrooms. Neither the SEC nor PSE would expand the rules on full disclosure by requiring the postings on the PSE website of the agenda taken up during meetings.

For example, who among the members of the board of a listed company proposed the management compensation? Who among them suggested an annual increase of their executives’ pays and perks?

These are basic information but which continue to be hidden from the public. As a matter of fact, it would have lived up to its billing as securities regulator if the SEC would require the disclosure of the proponents of basic salaries and additional compensation. It is not enough that the public are told through PSE postings that the top five were paid so much in a given year, The same applies to the pays and perks of “all other executives as a group unnamed.”

It is not fair to those among the top five and the rest of the members of the management team who may have been paid much less than the owners who are also among the highest paid executives. To play it fair, the SEC and PSE must require the full disclosure of the amounts listed companies pay their managers. In other words, it may be time to individualize the basic salaries and bonuses of the top five executives and those of the other managers.

Reporting in US$
This suggestion applies especially to listed companies that have been reporting huge loses every year like Alliance Select Foods International Inc., which uses US dollar for functional currency instead of Philippine peso.

In a three-year period, Alliance Select said it would have paid its five highest-paid executives and the other members of its management team P106.222 million divided into salaries of P101.841 million and bonuses of P4.381 million.

Dividing the compensation by year, Alliance Select said it paid the top five P10.723 million in 2014; and P12.998 million in 2015. It estimated the amount for 2016 at P16.64 million.

In addition, Alliance Select also paid them bonuses of P891,000 in 2014; P268,000 in 2015; and (estimate only) P300,000 in 2016.

From 2014 to 2016, Alliance Select paid “all other officers and directors as a group unnamed” salaries of P61.48 million and bonuses of P2.922 million for a total of P64.402 million of which salaries totaled P61.48 million and bonuses P2.922 million.

More public?
Alliance Select portrays itself as being more public than other listed companies by crediting the public with ownership of 794.213 million shares, or 31.77 percent.

This is big ownership if the public were to read only the public ownership report (POR). The percentage should have entitled the public to at least two board seats. It means nothing but only a wise play of numbers in the POR.

Why not instead read and reread the PSE posting on the seven members of the company’s board? From the list, the public would know that they are being taken for a ride by the majority owners.

Yet, there must be something in Alliance Select that the public don’t know and are not being told about. No one knows what it is but the election of a new director reflects that “something” that is known only to insiders.

For why would Joseph Peter Y. Roxas join the board of Alliance Select if he does not know this “something” that would save Alliance Select from huge loses that had accumulated to a deficit of $21.952 million.

Isn’t it about time to open the books to the public for closer scrutiny of the financial performance of Alliance Select? Will the SEC help the public?


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