MPIC’s P308.049-M incentive for MVP and company in 2016

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Emeterio Sd. Perez

METRO Pacific Investments Corp. (MPIC) claims it is Filipino because it is controlled by Filipinos. As of June 30, it showed in a public ownership report (POR) only two principal stockholders, namely, Metro Pacific Holdings Inc. (MPHI), holding 13.223 billion common shares equivalent to 41.967 percent of 31.508 billion outstanding common shares, and GT Capital Holdings Inc. with 4.9 billion common shares, or 15.552 percent.

Also as of June 30, MPIC said 15 directors owned 70.855 million common shares, or 0.22 percent. Antonio A. Picazo is the only outsider mentioned in the POR. As the company’s corporate secretary since 2006, he has accumulated 301,001 common shares.

In the same POR filing posted on the website of the Philippine Stock Exchange (PSE), MPIC credited the public with 13.312 billion common shares, or 42.255 percent.

This ownership profile makes MPIC a Filipino company. As implemented by the Securities and Exchange Commission (SEC) based on the governing provision of the Constitution, a 60-40 company (60 percent Filipino – 40 percent foreign) company is considered 100 percent Filipino.


(Note. Due Diligencer recomputed the number of shares attributed to each stockholder.)

Top 100 stockholders

As of June 30, MPIC reported MPHI as its biggest stockholder, owning 13.223 billion common shares, or 41.94 percent. It credited PCD Nominee Corp. as record holder of 8.754 billion common shares, or 27.76 percent, for foreigners, and 8.182 billion common shares, or 25.95 percent, for Filipinos.

GT Capital, an investment company controlled by businessman George Ty and his family, held 1.3 billion common shares, or 4.12 percent.

In its POR, Metro Pacific reported only the holdings of the members of 15 members of the board, two principal stockholders and one outsider who is the company’s legal counsel. The number of common shares owned by each stockholder, including the members of the 15-person board may not tally at all because some of their holdings were held by PCD Nominee acting as record stockholder in their behalf.

This is the only explanation why in the company’s top 100 stockholders’ list, GT Capital held only 1.3 billion MPIC common shares, or 4.12 percent, while in the POR, it owned 4.9 billion common shares, or 15.552 percent.

Information statement

Listed companies provide their stockholders information statement, which is posted first as preliminary information statement (PIS). When finalized, it becomes a definitive information statement (DIS).

As the public investors’ source of information, PIS is, more often than not, incomplete for it does not include the audited financial statement (FS). It becomes definitive or DIS when the financial statement becomes available, as it has already been filed with the Bureau of Internal Revenue.

In the case of MPIC, the company is believed to be a member of the Indonesian-controlled First Pacific Co. Ltd. of Hong Kong. However, it attached in its DIS the public ownership report and the top 100 stockholders’ rankings, apparently to show that the company is not a unit of First Pacific, which would have made it an Indonesian company.

In the same DIS for 2017, MPIC listed Manila Electric Co. and Philippine Long Distance Telephone Co. among its major businesses in the Philippines. Being a Filipino company by the definition of SEC under Chairperson Teresita Herbosa, it continues to diversify and expand its operation.

Due Diligencer’s take

As MPIC chairman, Manuel V. Pangilinan (MVP) is among the company’s five highest paid executives. In 2015, he, along with Jose M. K. Lim, president and chief executive officer; David J. Nicol, chief finance officer; Maida B. Bruce, vice president-controller; and Albert William Pulido, VP-investor relations; received P83.272 million in salaries; P73.154 million in bonuses; and P27.533 million “other” pays and perks.

The total executive compensation of MPIC’s highest paid executives surged in 2016 when MVP and company were paid P308.049 million in other pays and perks, plus salaries of P92.725 million and bonuses of P70.219 million. That’s a total compensation of P470.993 million, which would translate to an average of P94.199 million each.

This year, MPIC estimated the salary of MVP and the four other executives at P104.947 million; their bonuses at P69.964 million; and other compensation at P9 million.

The question is, why the sudden increase in the compensation of the elite five led by MVP?

Public investors who may be holding MPIC common shares could find the answer in the footnotes to the compensation. The company calls the P308.049 million increase as the result of MPIC’s long-term incentive plan (LTIP).

Here is what the filing says about the more than P300 million other pays and perks: “LTIP expense for the years Dec. 31, 2016, 2015 and 2014 amounted to P533 million, P568 million and P440 million, respectively.”

In the audited financial statement, MPIC said it presented these compensations as “personnel costs” under “general and administrative expenses.”

MPIC added in the same PSE posting: “LTIP liability as at Dec. 31, 2016 and 2015 amounted to P763 million and P1.184 billion, respectively, and is presented under ‘accounts payable’ and ‘other current liabilities’ and ‘other long-term liabilities’ account in the accompanying consolidated statements of financial position.” No need for elaboration.

esdperez@gmail.com

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