STOCKHOLDERS of Manila Electric Co. (Meralco) will hold their annual meeting on May 31 to, among others, elect the members of the company’s 11-person board. All, except Napoleon Nazareno, are nominees for re-election.
Nazareno retired on Dec. 31, 2015 as president of Philippine Long Distance and Telephone Co. (PLDT), which also belongs to the group of local companies controlled by Indonesian-owned First Pacific Co. Ltd.
He will be replaced on Meralco’s board by Annabelle Lim Chua, a PLDT senior vice president and treasurer.
Aside from Chua, the other nominees of the Indonesian group for regular directors are Manuel Pangilinan, Ray Espinosa, Oscar Reyes, and Jose Ma. Lim.
Businessman John Gokongwei Jr. and his brother James Go and son Lance Gokongwei will continue representing on the board the family-owned JG Summit Holdings Inc., which holds 169 million Meralco shares, or 15 percent.
Ambassador Manuel Lopez is a director as holder of 2.45 million shares, or 0.22 percent.
Also up for re-election for independent directors are retired Chief Justice Artemio Panganiban and Pedro Roxas.
The members of Meralco’s board hold 13 meetings a year, including the annual gathering of stockholders. For their presence, they are entitled to an allowance of P120,000 for each meeting and P20,000 for every committee meeting.
In 2015, a Meralco compensation filing showed all 11 directors having received P16.76 million for board meetings and an annual meeting, and P2.36 million for committee meetings, for a total of P16.76 million. This would translate to P1.52 million each.
By the way, former Chief Justice Artemio Panganiban has successfully argued against the Securities and Exchange Commission (SEC) that he and other independent directors of all stock corporations are entitled to all the pay and perks due the regular directors.
To be fair to the board and in the spirit of transparency, Meralco detailed the pay of each of the company’s 11 directors as follows:
As Meralco’s only executive director, Oscar Reyes, president and chief executive officer, received P1.44 million in 2015. The others are Manuel Pangilinan, P1.48 million; Lance Gokongwei, P1.67 million; Manuel Lopez, P1.05 million; Ray Espinosa, P1.66 million; John Gokongwei J., P1.42 million; Jose Ma. Lim, P1.4 million; James Go, P1.71 million; and Napoleon Nazareno, P1.41 million. Meralco paid Panganiban and Pedro Roxas as independent directors P1.64 million and P1.88 million, respectively.
Meralco’s generosity is not limited to the board even if some of them end up receiving more than others. Let us look at how well the company treats its management team.
Aside from Reyes, Meralco’s four other highest-paid executives are Alfredo Panlilio, Betty Siy-Yap, Ramon Segismundo, senior vice presidents; and William Pamintuan, first vice president.
As a group, Reyes and company would get this year salary of P155 million or P31 million each. It paid them as group salary of P144 million in 2015 and P133 million in 2014.
The average would be true if the amount would be distributed equally, which may not likely happen. It won’t be surprising if one or two or even three among the five would get even more than the others.
Here are the other details of Meralco’s compensation filing:
This year, the company will distribute P782 million as “performance-based pay,” of which P307 million will go the lucky five most highly-paid executives, or P61.4 million each, again, if evenly distributed. It said “all other key officers, other officers and directors as a group” will divide among themselves P475 million.
Meralco explained the big jump in such additional perk for its executives: 2015 happened to be the last year of the company’s 2013-2015 long-term incentive plan, which rewards deserving executives for a job well done. It paid the top five a “performance-based pay” of P58 million in 2015 and P52 million in 2014.
35 other managers
As of Dec. 31, 2015, Meralco listed 5,660 employees and 39 executives. The latter group consists of six senior vice presidents, six first vice presidents, 26 vice presidents and one corporate secretary.
Since four of these 39 managers are among the five highest-paid executives, the rest of the 35 managers should belong to “all other key officers” who may be entitled to “performance-based pay” of P475 million in 2016 and salary of P270 million.
Meralco paid the 35 managers as a group salary of P239 million and perks of P84 million in 2015, and P208 million and P78 million in salary and perks in 2014.
In the absence of details as to how much each of the lower-ranked managers stand to get in 2016 and were paid in 2015 and 2014, Due Diligencer has to resort to assumptions to give the readers of The Manila Times even a glimpse of estimates.
Assuming Meralco’s 11-person board would get P20 million in 2016, the remaining P455 million of the P475 million projected “performance-based pay” would entitle each of the 35 executives to P13 million each. Not bad for a year of loyal service to Meralco. But that would not be how the company would distribute the P455-million pie.
Incidentally or not, Meralco failed to disclose the salaries of its close to 6,000 workers, who toil hard every day. It did not say whether the benefits that the company provides its management team also trickles down to the rank-and-file workers.
Let us find the numbers for Meralco’s common workers.
Based on a consolidated financial filing, Meralco generated revenues of P258.4 billion in 2015; P266.3 billion in 2014; and P298.6 billion in 2013. Its “cost and expenses” amounted to P234.99 billion, P240.24 billion and P274.5 billion in each of the last three years.
Including other income and minus other expenses, Meralco reported net income of P19.2 billion in 2015; P18.13 billion in 2014;and P17.27 billion in 2013.
Meralco’s expenses for its 5,660 employees consisting of salaries, wages and benefits amounted to P12.42 billion, or 5.3 percent of its “cost and expenses” in 2015; P11 billion, or 4.6 percent, in 2014; and P11.26 billion, or 4.1 percent, in 2013.