ON May 21, Alfredo de Borja, an independent director of Ionics Inc., bought 1.6 million Ionics shares at P0.60 each. Before the acquisition, he already directly owned 14 million Ionics shares.
De Borja bought Ionics shares two days after the price fell 3.2 percent from P0.62 on May 19.
Because he is a member of Ionics’ 11-person board, did Borja, as an “independent” insider, make good in his trade? He did not. On May 22, Ionics, which hit a 30-day high of P0.64 on April 7, traded at P0.59 throughout the session, meaning from opening to closing. His stock choice even dropped some more by 8.3 percent on May 26 when it opened at P0.58, the session’s high, and closed at its 30-day low of P0.55. As a result, he incurred a paper loss of P800,000 on 1.6 million Ionics shares.
De Borja incurred said paper loss despite Ionics’ net income of $684,000 in the first three months of 2015, which was 11.6 times its net profit of $59,000 in the same period in 2014. Its profitability enabled it to accumulate retained earnings of $12.9 million.
Jose Emmanuel Jalandoni, a senior vice president of Ayala Land Inc., bought 729,680 ALI shares at P9.74 each under the company’s employees stock ownership plan. The acquisition increased his ESOWN shares to 4.7 million—equivalent to 0.03 percent of ALI’s outstanding shares—which his filing described as “subscribed and unissued until fully paid.”
What does ESOWN mean to the public? If you are among ALI’s small stockholders, you might have wished you were an insider who, as such, is qualified to buy ALI shares at a huge discount.
Consider this: On May 18, ALI peaked at P41.40, which was P3.10 higher, or 8 percent, than its month-low of P38.30 on April 30. Even at ALI’s low of P38.30, Jalandoni’s newly subscribed 729,680 ESOWN shares at P9.74 each would put him ahead by P28.56 per share, or 74.6 percent.
Of course, the public could not blame Jalandoni and other ALI managers who availed themselves of the company’s stock option. After all, they and the company’s rank-and-file workers are responsible for ALI’s consistent profitability that resulted in retained earnings of P67.55 billion. Is ALI ripe for extra dividends either in cash or in stock?
Generous pay raise
The 15 members of the board of Union Bank of the Philippines have proposed and approved increases in their pay and perks, which were eventually ratified by the bank’s stockholders.
It may be safely assumed that the bank’s three independent directors participated in the board’s deliberations on the regular directors’ new compensation of P120,000 per board meeting and P60,000 per committee meeting attended. “The P80,000 per diem for the director who is the chairman or acts as the presiding chairman of a board committee is unchanged,” UBP said in a posting on the website of the Philippine Stock Exchange.
These pay increases indicate the board members’ lavish generosity to themselves. As ratified by UBP stockholders, a UBP director’s new fees of P120,000 per board meeting and P60,000 per committee meeting translate to a 50-percent increase from P80,000 and P40,000, respectively.
Apparently, UBP’s 15 directors did not forget the three independent directors among them, who used to receive the same per diem as their regular counterparts, by fixing their annual remuneration at P1.7 million.
Since the 15 members of the board of UBP were to benefit from their own generosity, they were sure to get what they had wanted because of the generosity of their respective employers.
As stockholders, Aboitiz Equity Ventures Inc., with 496.7 million UBP shares, or 46.9 percent, has eight nominees; The Insular Life Assurance Co. Ltd., 171.6 million UBP shares, or 16.21 percent, two nominees; and the Social Security System, 148 million shares, or 13.99 percent, also two nominees.
With UBP’s three significant stockholders combining for 12 nominees, three seats are reserved for the independent directors that they agree among themselves to nominate and appoint. (Note: Independent directors are not elected.)
The members of UBP’s 15-person board who stand to gain much from their own generosity are Justo Ortiz, chairman and CEO; Vicente Ayllon and Jon Ramon Aboitiz, vice chairmen; Victor Valdepenas, Erramon Aboitiz, Luis Miguel Aboitiz, Juan Antonio Bernad, Sabin Aboitiz, Mayo Jose Ongsingco, Emilio de Quiroz Jr., Eliza Bettina Antonino, Stephen Paradies, directors. The three independent directors are Carlos B. Raymond Jr., Reynato Puno and Francisco S.A. Sandejas. De Quiroz, president of the Social Security System and Antonino, a commissioner of the Social Security Commission, are SSS nominees.