Stockbrokers control PSE ownership, but not the board

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Emeterio Sd. Perez

Emeterio Sd. Perez

Ownership profile
Trading participants form the majority stockholders of the Philippine Stock Exchange given that they own 65.715 million PSE shares equivalent to 89.61 percent. This ownership profile has not changed a bit over the years since PSE went public in 2004.

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Apparently, the computation made PSE “too much public,” a description that some may find exaggerated. But it really is.

For instance, the San Miguel Corporation Retirement Fund (SMCRF) is listed as the only principal stockholder owning 7.555 million shares, or 10.303 percent of the PSE equity. This leaves the public and other stockholders with 65.775 million shares.

As of Sept. 30, 2014, the public ownership report showed that SMCRF’s ownership consisted of 15 directors (8,245 shares) and the members of PSE management (51,994 shares). These add up to 7.615 million shares, or 10.33 percent of 73.33 million outstanding shares.

As for the stockbrokers, or the trading participants – they are the unnamed stockholders who owned all PSE shares originally until they were required (or forced?) to give up total control in favor of the outsiders. Their individual holdings are found in the list of PSE’s top 100 stockholders.

Ironically, stockbrokers control the ownership but not PSE board despite the size of their holdings.

Financial strength
PSE’s accumulated retained earnings of P1.19 billion indicate the exchange’s consistent profitability over the years that have enabled it to regularly distribute dividends either in cash or in stock.

As of end-2013, PSE’s retained earnings stood at P1.522 billion, based on the financial report audited by Punongbayan & Araullo.

At the same time, stockholders’ equity also got a big boost from additional paid-in capital (APIC) of P1.01 billion, resulting from an issue of additional shares in 2001 and 2004.

APIC represents the amount of premium over par value in the sale of shares. In the case of PSE, in August 2001, it sold 9.2 million shares at P31.16 each, resulting in APIC of P277.472 million.

In January 2004, it sold 6.078 million additional shares at P120.50 each for P726.321 million of APIC. As a result of the two issues, total APIC topped P1 billion.

Wiping out the deficit
If you happen to have invested in a losing company, you should look at its financials to determine its recovery prospects. The numbers to look for are those pertaining to additional paid-in capital and retained earnings.

Does the company have enough paid-in capital (note to emi: originally filed as “earnings” and corrected to paid-in capital) to erase an accumulated deficit, which appears in financial filings only when continued losses have wiped out retained earnings?

By the way, APIC used to be distributed as stock dividend but the SEC eventually changed that policy. Why should the premium paid by stock buyers be returned to them? The five-person commission then headed by Chairperson Fe Barin decided to abolish the policy.

Executive compensation
The PSE is, perhaps, the most generous employer when it comes to rewarding its management team.

In a compensation filing, PSE said it paid its president and vice presidents and other executives as a group P50.592 million in 2012; P51.133 million in 2013; and as projected, P52.557 million by Dec. 31, 2014. In the three-year period, the group’s compensations (note to emi: changed from pays) and perks amounted to P154.282 million.

A separate posting showed PSE also paid well its key management personnel, meaning, its other officers not covered by the executive compensation package. In 2013, it raised the salaries of its management personnel by 37.271 percent to P86.276 million from P62.851 million in 2012, up 34.995 percent. In 2011, it paid the group P46.558 million.

Oops!
Due Diligencer was reviewing the disclosures posted by the PSE on its website and found the approval by the board of the reappointment of Punongbayan & Araullo “as external auditor for 2013 with a fee of P600,000.” The filing also announced that the board “will recommend their appointment to the stockholders in the annual meeting on 18 May 2013.”

As a matter of fact, Vicente Graciano P. Felizmenio, director of SEC’s market regulation department, approved the release of the disclosure.

Sorry, Mr. Felizmenio, but you acted on a misleading report submitted to your office at 9: a.m. on April 11. At 1:47 p.m. of the same day, PSE rushed a correction that its board has not approved the reappointment of P&A because SGV has reclaimed the PSE account for the year 2014.

esdperez@gmail.com

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1 Comment

  1. Is this situation still a result of the old old fight between the Coquito and the Yuchengco groups?