THE Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) should guide the public on the use of “proxy” and “nominee” by defining these two words. Who holds the proxies of the shares held by the public, particularly those lodged with PCD Nominee Corp.? Who are the nominees to be voted by whoever is holding the proxy shares?
As has often been used and abused, the public stockholders own so much of the outstanding voting shares as projected in public ownership reports. Yet, none of them get elected to the board because of one stumbling block: the independent directors. Ironically, their voting shares are used in the election, but none of them get to be even nominated, even if they were to be denied a board seat by the majority.
In short, there has never been a fight for proxy votes among the stockholders of listed companies that are pretending to be public. It seems stockholders’ meetings are usually guided by prepared scripts.
For this reason alone, the SEC and the PSE should explain to the public why outsiders who cannot even claim to be among the public stockholders become nominees, and eventually assume directorships without the benefit of election. Worse, as independent directors, some of them, if not all of them, even insist on availing themselves of the same pay and perks that regular directors enjoy.
In the absence of definitions for “proxy” and “nominee,” here is a poser: Is Emilio S. De Quiroz as president of the Social Security System (SSS), a holder of proxy votes or an SSS nominee? Certainly, with his managerial experience as a former executive of the Ayala group controlled by the Zobels, he has a lot to contribute to the boards of listed companies.
But first, the public should be told if De Quiroz is an SSS nominee or simply a holder of proxy votes. If it is the latter, then he would have to cast the proxy votes on nominees. Whatever the answer is (which may or may not be forthcoming from the SEC and PSE) here are two listed companies to which the SSS head may have proven himself to be a big asset.
SSS in Belle
Since September 2010, De Quiroz has been a member of the 11-person board of Belle Corp. a listed company, representing SSS members whose contributions were used to buy 370.5 millin Belle shares, or 3.5 percent. At P3.39 per share, which was the stock’s last trading price on Monday, SSS members’ holdings in Belle had a market value of P1.25 billion.
In Belle, SSS’s co-stockholders are in good company because businessman Henry Sy, Sr. who, together with his family, is the company’s majority stockholder. The SM Group, which the Sys control, owns 5.46 billion Belle shares, or 51.77 percent. These are held by Belle Shares Holdings Inc., 2.6 billion shares, or 24.7 percent; Sysmart Corp., 1.6 billion shares, or 15.4 percent; and SM Development Corp., 695 million shares, or 5 percent; and SyBase Equity Investments Corp., 5.46 million shares, or 5 percent.
As the protector of SSS members’ interest in Belle, De Quiroz deserved to be among “all other officers and directors as a group unnamed” who received a salary of P10.7 million and bonuses of P1.33 million in 2013 and a salary of P20.9 million and bonuses of P1.7 million in 2014. This year, Belle estimates the group’s salary and bonuses package at P22 million and P1.8 million, respectively.
2 nominees in UBP
De Quiroz, along with Eliza Antonino, also represents the fund’s members in the 15-person board of the Union Bank of the Philippines (UBP). Thru SSS, workers in the private sector own 148 million UBP shares, or 14 percent. At P61 per share, SSS members’ UBP shares are now worth P9 billion.
While SSS is only a significant stockholder, the top two stockholders are classified as principal stockholders. Aboitiz Equity Ventures Inc. and The Insular Life Assurance Ltd. own 496.7 million UBP shares, or 47 percent, and 171.6 million UBP shares, or 7.2 percent, respectively.
While Belle did not have any explanatory note regarding its directors’ pay and perks, UBP had this to say on the board’s compensation:
“The non-executive director receive only per diems of P80,000 for each attendance in meetings of the board and P40,000 for committee meetings while the executive directors, chairman of the board, who is also its chief executive officer, and the president, who is also the chief operating officer, receive only P3,000 and P1,500, respectively for each attendance in board meetings and P3,000 for committee meetings.”
UBP has a reason for the lower fees it pays the chairman and the president. Being insiders, it said “the executive officers receive salaries, bonuses and other standard benefits that are already included in the amounts stated above.” It is referring to the compensation that UBP pays the members of its management team.
This year, the compensation of UBP’s five highest-paid executives that include the chairman and CEO, the president and COO, and three other senior officers would total P217.9 million while their bonuses would reach P54.5 million based on the bank’s estimate. Last year, the bank paid the group P205.57 million in “aggregate compensation” and bonuses of P51.4 million.