OWNERSHIP PROFILE. JG Summit Holdings Inc. is the listed holding company of the Gokongwei family. A public ownership report as of July 15, 2014 listed nine family members as direct stockholders who own a total of 1.5 billion common shares or 21.3 percent of 7 billion outstanding common shares. Businessman John Gokongwei Jr., the patriarch, directly owns 821.5 common million shares or 11.7 percent.
In addition to their individual holdings, the Gokongweis named in its report three corporate stockholders: The Gokongwei Brothers Foundation Inc. holds close to 2 billion common shares or 28.5 percent; RSB-TIG No. 030-46-000001-9 has 1 billion common shares or 14.7 percent; and Ego Investments Holdings Ltd., an affiliate, has 121.9 million common shares or 1.7 percent. (In an information statement, JG Summit said of the bank account on voting the common shares: The securities are voted by the trustee’s designated officers, who are not known to the Corporation.) All in all, the Gokongwei family members, the foundation, the “bank account stockholder” and the affiliate combined have total holdings of 4.6 billion common shares, or 66.2 percent.
FAMILY’S PAPER WEALTH. Since the Gokongweis own and control 4.6 billion common shares or 66.2 percent of the outstanding shares of JG Summit Holdings Inc., their holdings had a market value of P262.6 billion, computed at Friday’s last traded price of P56.50.
(On August 12, 2014, JG Summit paid its stockholders dividend of P0.20 per common share, reducing its retained earnings of P142.8 billion by P1.4 billion. The Gokongweis’ dividend totaled P929.6 million. This cash bonanza must be the reason why Gokongwei Brothers Foundation Inc., which owns 2 billion JGS common shares or 28.5 percent, can financially support the studies of a number of scholars who come from poor families. The foundation got P399.4 million from the holding company’s latest dividend payout.)
Here is the individual paper worth of the Gokongweis, computed at P56.50 per share: John Gokongwei Jr., (821.5 million shares or 11.7 percent) P46.4 billion; JLG &/or Lance Gokongwei, (141 million shares or 2 percent) P8 billion; James Go, (148.7 million shares or 2.1 percent) P8.4 billion; Lance Gokongwei, (668,575 shares or 0.01 percent) P37.8 million; Lance Gokongwei and/or Elizabeth Gokongwei, (234.8 million shares or 3.4 percent) P13.3 billion; Lily Ngo Chua, (74.6 million shares or 1.06 percent) P4.2 billion; Patrick Henry Go, (93,500 shares) P5.3 million; and Robina Gokongwei-Pe, (74.1 million or 1.06 percent) P4.2 billion.
PUBLIC OWNERSHIP. Under the rules issued by the Securities and Exchange Commission (SEC), the public should own at least 10 percent of a listed company’s outstanding common shares. The public ownership report filed by JG Summit with the SEC listed the Gokongweis as the majority stockholders with 4.6 billion common shares or 66.2 percent of 7 billion outstanding common shares, and the public as minority stockholders with 2.4 billion common shares or 33.8 percent.
This ownership profile should make JG Summit “more public” than other listed companies. But like the other so-called public companies, the public stockholders are not represented in the company’s 11-man board. Instead, the Gokongweis appoint two outsiders to comply with the SEC’s rule requiring the “election” of independent directors.
Due Diligencer placed the word “election” inside a pair of quotation marks because, as in other listed companies, independent directors are not really elected but appointed by the majority stockholders. Perhaps the more appropriate word for appointed should be selected.
The selection or appointment of independent directors is not a monopoly of JG Summit, which is only following the SEC rule. Other public companies, listed or not listed, and classified as public under SEC definition, are required to “select” and “appoint” independent directors who are, in reality, nominees of the controlling stockholders. Thus, the publicly owned common shares that are listed and traded thru the facilities of the Philippine Stock Exchange (PSE) have never been represented on the board – not even by the stockbrokers, who should have been elected as the public stockholders’ nominees but have been prevented by the SEC “for alleged conflict of interest.”
If you and I were to closely study the SEC’s prohibition against trading participants, then who among company insiders would qualify for election as members of the board of listed companies? The answer is no one, but the SEC has long shown that its officials are only being true to themselves as pro Big Business.