CENTRAL Azucarera de Tarlac Inc., which is owned by the Cojuangco family to which President Benigno Simeon Cojuangco Aquino 3rd belongs, is listed. It claims it is also public in its posting on the website of the Philippine Stock Exchange when it is not.
If CAT, which is the sugar central’s stock symbol, is both listed and public, then why were six Cojuangcos elected again to the company’s eight-man board when the family-owned corporate stockholders control a little over 50 percent of 28.255 million outstanding common shares? They also appoint the two independent directors, thus completing their total control of the company’s eight-man board.
Let’s do some computations. If the Cojuangcos own only 50.03 percent of CAT’s voting stock, then, pro rata, they should be entitled to 4.0024 directors. Rounding off the numbers in their favor, the pro rata representation on the board should allow them to elect five members and allocate three seats to public stockholders as holders of 14.118 million CAT shares, or 49.97 percent. The public ownership is what the Cojuangcos listed in the sugar central’s public ownership filing.
As a matter of fact, had there not been a law on the selection of independent directors, the election to the CAT board should give the Cojuangcos only a slight edge of one seat. But the problem is in having a board with an even number of directors. Instead of only one seat advantage, a small percentage gives the majority two seats more, plus the independent directors, which is 20 percent of the number of directors.
The members of the board used to be elected based on the number of voting shares a nominee owned and the proxy votes entrusted to him or her by other stockholders. But if he or she was nominated by a corporate stockholder, he or she got the company’s votes plus the proxies.
Today, the majority stockholder not only in CAT but also in other so-called public companies elect more directors than their holdings would allow them because they hold the power to select and appoint the independent directors. In the case of CAT, the Cojuangcos appointed Renato B. Padilla and Benjamin I. Espiritu, who hold a qualifying share each.
As in the past, the Cojuangcos elected on April 22, 2014 Jose Cojuangco Jr., 268,880 CAT shares; Ernesto Teopaco, 302,464 CAT shares; Marie Therese Reyes-Macmurray, 372,000 CAT shares; Jose Manuel C. Lopa, 217,601 CAT shares; Fernando Ignacio C. Cojuangco, 154,952 CAT shares and Victor Elisa A. Dee, 300,616 CAT shares.
These six directors owned a total of 1.617 million shares equivalent to only 5.721 percent, apparently not enough to get them elected. But as the Cojuangcos’ candidates, they got the votes of 14.177 million CAT shares, or 50.175 percent, held by three corporate stockholders, such as Luisita Trust Fund Inc., 4.734 million shares, or 16.757 percent; Jose Cojuangco & Sons Inc., 7.856 million shares, or 27.804 percent; and Tarlac Distillery Corp., 1.586 million shares, or 5.61 percent.
With the Cojuangcos’ complete dominance of the board, the public, which is listed as owner of 49 percent, has been deprived of representation. Don’t count the independent directors as the representatives of public stockholders because they are also the family’s nominees. As such, their allegiance – or loyalty – is to the majority owners, who, after all, decide that regular and independent members of the board should be paid the same amount of compensation.
Perhaps, because the Cojuangcos own CAT, they should not only control the board but take all the eight seats. After all, being public is a misnomer because no one knows if the sugar central is truly a public company that its owners proclaim it to be. Only the securities specialists of the Securities and Exchange Commission could determine if, based on disclosures, CAT would qualify as both listed and a public company.