• Tan ‘losing’ P70.405B of his P215-B wealth in LT Group

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    perez

    Capital structure. LT Group Inc. is the listed flagship of the group of companies controlled by businessman Lucio C. Tan. It has 10.821 billion issued and outstanding shares of which Tangent Holdings Inc., which Tan wholly owns, holds 8.046 billion, or 74.40 percent.

    LT Group listed in a filing that Philippine nationals own 2.620 billion shares, or 24.21 percent, while foreigners hold 8.201 billion shares, or 75.79 percent, a confusing ownership profile because the foreigners are limited to owning 40 percent of LT Group.

    But a separate disclosure showed Tangent, which is listed as Filipino, holds 8.046 billion LT Group shares, or 89.589 percent of 8.981 billion outstanding shares.

    Tan’s P215-billion wealth. By consolidating his businesses under one roof—except Philippine Airlines Inc.—businessman Tan made it easier for the public to compute his wealth.

    LT Group, being both public and listed company, is covered by the full disclosure rule of the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange.

    As the 99.99-percent owner of Tangent Holdings Inc., which holds 8.046 billion LT Group shares, Tan effectively controls the equivalent of 74.40 percent of LT Group outstanding shares.

    At the stock’s high of P26.75, Tan’s LT Group holdings had market value of P215.239 billion.

    Incidentally, the value of Tan’s LT Group holdings also suffers as the stock market keeps falling. At LT Group’s month’s low of P18, he would be “poorer” by P70.405 billion.

    ‘All in the family’. A filing describes the family relations in the 11-man board of LT Group. It said, “Mr. Lucio C. Tan, chairman, is the brother of Mr. Harry C. Tan. He is also the father of Mr. Lucio K. Tan Jr. and Mr. Michael G. Tan. Mrs. Carmen K. Tan is the wife of Mr. Lucio C. Tan and the mother of Mr. Lucio K. Tan Jr.”

    The other members of the old board were Juanita Tan Lee and Wilson T. Young, who are both regular directors as Tan’s nominees; and Antonino Alindogan, Wilfredo Sanchez, Florencia Tarriela and Peter Ong, who are the company’s independent directors.

    In the recently concluded annual stockholders’ meeting, lawyer Estelito P. Mendoza joined the board as a regular director. His election reduced the number of LT Group’s independent directors to three from four. Ong was not been reelected.

    Executive compensation. As chairman of the board, businessman Lucio C. Tan is one of the four highest paid executives of LT Group. The others are Michael Tan, president; Nestor Mendones, deputy finance officer, and Ma. Cecilia Pesayco, corporate secretary.

    As a group, Tan and company received P8.520 million in salary; P710,000 in bonuses and P3.399 million in other pays, and perks in 2011; P6.341 million in salary; P534,150 in bonuses and P2.175 million in other pays and perks in 2012. This year, the company estimated their salary at P6.976 million, bonuses at P587,565 and P2.392 million in other pays and perks.

    In the same compensation filing, LT Group said that it pays each director an allowance of P30,000 a month, per diem of P25,000 per meeting and P15,000 for every committee meeting. It also reported that “all other officers and directors as a group” received P7.325 million in 2011 and P10.580 million in 2012. This year, the group would get P11.638 million.

    P49-billion retained earnings. Financial filings showed how profitable LT Group is. As of March 31, 2013, the company has piled up retained earnings of P48.664 billion, which is 5.418 times its outstanding capital of P8.981 billion.

    With its huge surplus, it may be time for the Tan-controlled board to be more generous to its stockholders including themselves. With its present retained earnings, LT Group may already be keeping an amount in violation of the SEC rules that require companies to declare as dividends the amount in excess of 100 percent of their unappropriated retained earnings.

    LTG is one of the more profitable listed companies. In the first quarter of 2013, its profit soared 53.526 percent to P5.80 billion from P3.778 billion in the same period in 2012.

    esdperez@gmail.com

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