Yet, don’t be deceived by the ratio because the definition of “public” as the word applies to listed companies is too vague for the public to appreciate. Should the public comprise only of the individual stockholders outside the majority and the significant stockholders?
If 42.36 percent of the voting shares of Alliance Select really belongs to the public, the company should identify who represents them on the board. Definitely it would not be George Sycip.
With possible confusion over who makes up the public in Alliance Select, the Securities and Exchange Commission (SEC) should review their classification of the ownership profiles of Philippine Stock Exchange (PSE) -listed companies.
Rewards amid losses
As of March 31, 2015, Alliance Select Foods had piled up losses totaling $14.99 million and listed the amount—equivalent to about P674.7 million at P45 per dollar —under the company’s equity. Instead of reporting retained earnings, which suggests a company’s consistent profitability, Alliance reported the amount of $14.99 million inside a pair of parentheses, denoting that it was accumulated deficit.
The irony of it all is that despite its huge losses, Alliance has been rewarding its management team with fat salaries and bonuses that increase every year. From 2013 to 2015, it paid its executives a total of P91.37 million, of which P45.7 million or 50 percent went to its top five highest-paid managers.
Here are the top five executives who are the beneficiaries of the company’s generosity: Raymond K. H. See, president and chief executive officer and director; Elmira A. Nate, chief finance officer; Lisa Angela Y. Dejadina, senior vice president for business development and operational excellence; Grace S. Dogilio, vice president for finance, and Herminia B. Narciso, VP for plant operation. (Note. The company said Nate was appointed only on April 15, 2015. In a previous filing, her first name was spelled with an A as in Almira.)
Alliance Select paid its five highest-paid executives additional perks of P933,000 in 2013 and P891,000 in 2014. This year, their “self-sacrifice” for said reduced incentives would end because in their own estimate, they deserved an increase in their bonuses of 28.7 percent to P1.12 million.
The individual stockholders, who own Alliance Select shares, have something more to worry about their company’s five executives. A compensation filing showed that Raymond K.H. See and four other executives received P19.25 million in salaries in 2013, which dropped 44.3 percent to P10.7 million in 2014.
Of course, the amounts for 2015 were based only on estimates that could go even bigger when the actual numbers are reported next year.
While Alliance Select planned to pay Raymond K.H. See and company much bigger bonuses this year than in 2014, it did not make a similar estimate for the incentives of “all other officers and directors as a group unnamed.” Instead of raising the group’s incentives, it reduced these by 6 percent to an estimated P1.92 million for 2015 from P2.1 in 2014. In 2013, Alliance Select rewarded them with P1.4 million in perks, which it increased by 49 percent to P2.1 million in 2014.
Here are the rest of the numbers for the “others” compensation: Alliance Select cut by 34.9 percent the group’s salaries to P23.4 million in 2014 from P36.4 million in 2013. This year, it estimated their salaries at P25.87 million.
Again, despite all these, Alliance Select is not about to abandon the seven members of its board. As provided for in its amended by-laws, “the board shall receive and allocate an amount of not more than 10% of the Group’s EBITDA during the preceding year. Such compensation shall be determined and apportioned among the directors in such manner as the board may deem proper, subject to the approval of the stockholders representing at least majority of the outstanding capital stock…”
Note the basis of the computation which is “10 percent of EBITDA,” which means Alliance Select is allocating that much of its earnings before income, taxes, depreciation and amortization. This is like overhauling the usual corporate practice of allocating a certain percentage of a company’s income before taxes.
In the case of Alliance Select, it seems it is prioritizing the family-controlled board’s right over the company’s gross earnings by getting their pay and perks before any kind of deduction is made.