Time to individualize compensation of top 5 executives

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Emeterio Sd. Perez

Emeterio Sd. Perez

LISTED companies should be required to disclose the individual compensation of their top five executives. The change in the compensation filing should correct whatever misimpression or wrong perception there may be among the public that everybody in the elite five-man group receives equal compensation by dividing the total amounts by five.

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For example, A. Soriano Corp. listed in a filing the following as the company’s highest-paid executives—Andres Soriano III, chairman and chief executive officer; Eduardo J. Soriano, vice chairman and treasurer; Ernest K. Cuyegkeng, executive vice president; Narcissa M. Villaflor, vice president and comptroller; and Joshua L. Castro, assistant vice president and assistant corporate secretary.

This year, Anscor estimated at P94.280 million the pays and perks of the Soriano brothers and three others. The total consists of salaries, P52.980 million; benefits, P3.958 million; and bonuses, P37.350 million.

Because the estimated pays and perks are for Anscor’s top five executives, there is no way to get the individual compensation other than to get the average by dividing P94.28 million by five, and you will get P18.856 million. Definitely, averaging does not work in determining each executive’s gross pay. Somehow, some are paid more than others.

Anscor said in a posting on the website of the Philippine Stock Exchange that it reduced by 8.185 percent the compensation of the Soriano-led five executives to P77.673 million in 2013 from P84.597 million in 2012. It did not say if the salary reduction was a “punishment” for the 9.597-percent drop in the company’s net income to P1.347 billion in 2013 from P1.490 billion in 2012. In 2011, Anscor reported net profit of P995.127 million.

The net profits of the Soriano-owned holding company resulted from revenues of P2.526 billion in 2013; P2.476 billion in 2012; and P2.082 billion in 2011.

The public investors who own shares in Anscor should not envy the Sorianos for their huge, multi-million peso annual compensations. After all, they are only “minimal” stockholders, meaning their participation in the ownership of Anscor shares may be small but it is what makes the family-controlled holding company not only listed but also public.

If the numbers contained in Anscor’s financials suggest how the Sorianos are much luckier than most Filipinos, then the next example should make them look “poorer”. ( Due Diligencer should have used more “blessed” instead of “luckier” but decided not to because this piece is about money.)

Metro Pacific Investments Corp. is the listed flagship of Indonesian-controlled First Pacific group of Hong Kong, although not directly but through layers of ownerships of holding companies which, in turn, hold both common and voting preferred shares.

Since this piece is about compensation, it is not detailing which corporate stockholders own or hold what. Instead, it is sticking by the numbers that should in a way surprise MPIC’s individual public stockholders, who should question the continued election by appointment of independent directors.

Imagine a non-stockholder sitting on the board of a public company in the guise of being independent and enjoying the same privileges as those enjoyed by regular directors.

Back to compensation: In a PSE posting, Metro Pacific placed under “others” the amount of P200 million that its top five executives led by Chairman Manuel V. Pangilinan would have received in 2013. That would be P40 million for each of them!

Of course, Pangilinan and company get the usual salaries and bonuses each year. In 2013, they would have received salaries of P90 million and bonuses of P66 million for a total of P156 million, or P31.20 million each.

Although going by the average won’t be fair to anyone of the top five who may be getting less, let’s add P40 million and P31.20 million and you get what? Would that be P71.20 million for Pangilinan? How about Jose Ma. K. Lim, president and CEO; David J. Nicol, executive advisor; and Robin Michael L. Velasco, vice president for human resources? Of course, they would have probably been paid less than their chairman.

Due Diligencer is showing here the average to convince the five-man regulatory body of the Securities and Exchange Commission that the present disclosure policy should “individualize” salaries, bonuses and other remuneration of the identified top five executives.

Meanwhile, why not also include the members of the board? After all, as investors, the public would probably prefer to know how much their companies are spending for independent directors who, in the first place, are never qualified to sit on the board for not owning enough number of shares to get them elected.

Besides, are independent directors really independent?

esdperez@gmail.com

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