Are private firms more generous than government?

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AB Leisure Exponent Inc. (ABLE) is a wholly owned subsidiary of Leisure & Resorts World Corp. (LRWC). In a recent filing dated August 24, it reported its acquisition of 200,000 LWRC shares in two blocks of 100,000 shares each, at P4.58 per share and P4.57 per share per share, respectively.

The additional acquisition increased ABLE’s holdings in its listed parent company to 21.767 million shares, or 1.814 percent, from 21.567 million LWRC shares, or 1.797 percent.

(Note. The public ownership report placed the percentage equivalent of 21.567 million LWRC shares previously owned by ABLE at 1.8 percent.)

In a public ownership report (POR) as of June 30, LWRC listed one individual and two corporate stockholders with 366.108 million shares, or 30.513 percent.


As the company’s single biggest individual stockholder, Alfredo Abelardo Benitez owned as of cut-off date 134.841 million shares, or 11.238 percent, which LWRC rounded off to 11.24 percent.

Grandshares Inc. owned 10 million shares, or 10 percent; and Zoraymee Holdings Inc., 111.267 million shares, or 9.273 percent.

At LWRC’s closing price of P4.55 on Friday, the holdings of the three significant stockholders had a market value of P1.666 billion. By the same token, 37.645 million shares, or 3.14 percent, attributed to 11 directors were worth P171.284 million.

Financials

In an audited and consolidated financial filing, LWRC reported P2.691 billion in retained earnings for financial year 2016. It said only P449.537 million, or 16.705 percent, belonged to it.

As shown in the same financial statement, LWRC grossed P10.888 billion in 2016, up by 17.454 percent from P9.27 billion in 2015. It was also a huge 40.881-percent increase from revenues of P6.58 billion in 2014.

Of P10.888 billion in revenues in 2016, LWRC said electronic and traditional bingo contributed P4.512 billion and P2.331 billion, respectively, or a total of P6.843 billion. Bingo revenues accounted for 62.849 percent of the total.

In the same financial filing, LWRC said that of P10.888 billion revenues, it paid the government “franchise fees and taxes” of P4.692 billion, or 43.091 percent, in 2016; P3.947 billion, or 42.575 percent, in 2015; and P2.748 billion, or 41.76 percent, in 2014.

LWRC did not report its payouts for electronic bingo but did have the amount for traditional bingo: P1.602 billion in 2016; P1.614 billion in 2015; and P1.141 billion in 2014.

In footnotes to the audited financial statement, LWRC said “ABLE and its subsidiaries pay Pagcor 50 percent of its revenues less payouts as franchise fees.”

Compensation

As LWRC’s filing in 2016 showed, it has only ABLE as subsidiary, which, in turn, owns a number of units. But it is able to compensate its top managers more than what Pagcor pays its top officials.

In 2016, the Commission on Audit reported that Pagcor paid two chairmen and chief executive officers P6.388,771; three presidents and chief operating officers, P4,846,378; as well as one senior vice president, five vice presidents and two chairmen of the nine-person board.

As Pagcor chairman and chief executive officer for six months, Andrea Dizon Domingo received P2.059 million, of which P478,624 was her basic salary. The rest went to her pays and perks, according to the Commission on Audit.

Cristino L. Naguiat Jr., Domingo’s predecessor appointed by former President Benigno Simeon Aquino 3rd, received less basic pay of P476,016 but was paid more in other pays and perks.

His compensation for six months in 2016 totaled P5,209,480. The total included allowances of P1,788,138 and bonus, incentives and benefits of P2,936,325.

Top taxpayer

Due Diligencer lifted some data from the postings of the Bureau of Internal Revenue (BIR) to show the huge discrepancy between the compensation of government officials and workers and those in the private sector.

The data obviously point to the need for the government to adjust the salaries of civil servants. Any pay increase may not mean much to top officials but could raise the morale of ordinary government workers.

To approximate the compensation paid by private companies to their top executives, Due Diligencer used data on their tax payments.

Businessman Jacinto Ng, who owns a biscuit company, was the top taxpayer as of Jan. 22, 2016 based on
taxable year 2014, when he paid P280,107,497. He could have generated an income of P875,445,303.

(Note. Due Diligencer computed the taxable income based on taxes paid because BIR’s table did not disclose it.)
On second place was Emmanuel Dapidran Pacquiao who paid BIR P210,305,927 for taxable year 2014. His taxable income could have amounted to P657,315,397.

Vicente See Ong, who was at the tail end of BIR’s ranking of top 500 taxpayers, paid P7,163,097, which could mean a taxable income of P22,494,053.

Due Diligencer’s take

The compensation of Pagcor’s top officials is included here to show how the private sector has left behind the government in executive compensation.

A definitive information statement showed that LWRC paid its top five executives P29,215,425 in compensation, and bonuses of P2,115,218. Including what the company defined only as “other annual compensation” of P425,000, the group received a total of P31,755,643.

The amount translates to an average of P6,351,128, which, however, is not how the total is divided among the top five executives.

For 2017, LWRC said it estimated at P32.5 million the pays of its top five executives – basic salary of P30 million; bonuses of P2 million; and other annual compensation of P500,000 for a total of P32.5 million, or P6.5 million each.

The difference between the compensation of Pagcor as regulator and that of LWRC and its units may not be much, taking into account the numbers presented here. However, when compared with the salaries and other pays of private companies, the government appeared less generous.

Won’t it be timely for the government to adjust the compensation of public servants near the level of what private companies pay their executives? Just asking.

esdperez@gmail.com

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