Why spend P30.568M for SEC’s 5-person commission?


Emeterio Sd. Perez

JAIME Augusto Zobel de Ayala, chairman and chief executive officer of Ayala Corp. (AC), used to hold 301,433 AC common shares in the family-controlled holding company. Of the total, he directly owned 39,731 shares as of May 22. At P899 per common share, his total holdings in AC had market value of about P271 million.

On August 24, Zobel sold 79,427 shares at P899 each of 261,702 AC common shares he indirectly owned. The sale grossed him P71.4 million. After the unloading, he was left with 222,006 AC common shares, of which he indirectly owned 182,275 shares. At P899 per share, his remaining AC common shares have marker value of P199.58 million.

Aside from AC common shares, Zobel also holds 543,802 voting preferred B shares with par value of P1 and 20,000 preferred B shares with par value of P100 each.

As the Zobels’ holding company, AC has issued 200 million voting preferred shares, of which Mermac Inc. owns 159.684 million shares, or 79.842 percent, while Mitsubishi Corp. holds 32.64 million shares, or 16.32 percent.

The remaining 7.675 million AC voting preferred shares were distributed among other company insiders led by Jaime Augusto and his brother Fernando with 543,802 shares and 554,983 shares, respectively.

Outstanding capital

In a definitive information statement (DIS), AC reported 867,726,154 outstanding shares in its capital stock. Of the total, 620.726 million were common shares; 20 million preferred B series-1 shares; 27 million preferred B series-2 shares; and 200 million voting preferred shares.

In an explanatory note, AC said common and voting preferred shares are entitled to one vote per share.

In another filing, AC attributed to the public the ownership of 249.785 million common shares, which it said, represented 40.24 percent of outstanding common shares.

The computation was based on AC common shares only. In fairness to the Zobels, the Securities and Exchange Commission has not taken steps to entitle the public stockholders of listed companies to voting preferred shares.

For the sake of public investors, Due Diligencer is including 200 million AC voting preferred shares in the computation. Thus, 620.726 million AC common shares plus 200 million AC voting preferred shares add up to 822.726 million shares.

By dividing 822.726 million AC shares by the publicly held 249.785 million shares will give the public 30.36 percent and not 40.24 percent.

Due Diligencer’s take

Like other listed companies, AC credited the public with ownership that the Zobels do not recognize at all. Have the numbers and the equivalent of 40.24 percent been true, this ownership should have entitled the public stockholders to at least two seats on AC’s seven-person board.

But the public stockholders have not been entitled to that, and still do not merit representation on the board. All they are entitled to are stock or cash dividends that may be declared by the board.

As Due Diligencer has long been suggesting, the percentage equivalent of publicly owned common shares should be translated to at least a board seat, even if only an equivalent of 10 percent of outstanding common shares are held by the public.

As far as SEC officials are concerned, the rule stays and any proposition that contradicts their stand does not deserve any kind of action on their part. The five-person commission of a regulatory authority that is the SEC has even ceased to be assertive and does not stand at all for the protection of investors.

For the information of the public, the SEC does not need a five-person commission. It needs only three commissioners to run it. As a matter of fact, it could even function more smoothly by empowering an executive director to oversee the operation of each of the SEC’s various departments.

The government does not need to spend more than P8 million a year as salary for SEC Chairperson Teresita J. Herbosa and more than P5 million for each of the four commissioners.

Why waste P30.568 million in compensation on a five-person commission? Just asking.



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