Unfair disclosures on bonuses

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LISTED companies should be defined as “owned” and not “controlled” because the 10 percent minimum public ownership (10 percent MPO) required under the rules imposed by the Securities and Exchange Commission (SEC) may even be much less than what their ownership profiles show them to be.

For the sake of the public, the SEC officials should explain what the 10 percent MPO should mean. Should it include insiders’ holdings and those held by companies allied with the same families listed as owners?

Besides, despite the SEC regulation, the public stockholders do not have a say in charting corporate growth because they are only outsiders with no other role than to play the part that has been their destiny from the very beginning. That is, the owners need them for their businesses to stay public. Had they been allowed a nominee to the board, they could have had easier access to material facts, such as the determination of executive compensation.

SMIC’s generosity
If the public were represented on the board of SM Investments Corp. (SMIC), they could have known who among the company’s top five executives got the biggest share of the group’s total compensation of P81 million in 2014. The public stockholders of the listed flagship of the group of companies owned by businessman Henry Sy, Sr. and his family have no way of knowing how much SMIC paid each of them.


Since they have no access to the board, the individual stockholders outside the Sy family can only guess how much Harley Sy, as SMIC president, receives in pay and perks. Will it be fair to divide P81 million by five and conclude that SMIC paid Sy and four others P16.2 million each in 2014?

Aside from Sy, the other four highest paid executives of SMIC since 2013 up to this year are Jose T. Sio, executive vice president and chief finance officer; Elizabeth Anne Uychaco, senior vice president-corporate services; Franklin C. Gomez, senior vice president-finance; and Frederic Dybuncio, senior vice president-investment portfolio.

If P81 million was the total compensation of Sy and company in 2014, how much of this amount went to pay for their individual bonuses? SMIC did not specify the amount but simply mentioned the figure of P12 million. Going by the average, Sy, Sio, Uychaco, Gomez and Dybuncio got bonuses of P2.4 million each. Again, dividing P12 million by five would not be fair to whoever among them got less.

Ayala’s P433-M bonuses
Aside from a salary payout of P199 million in 2013 and P215 million in 2014, which is projected to again increase to P234 million this year, Ayala Corp. also granted its top six executives as a group a total bonus package of P306 million which, including the projected additional P127 million, would amount to P433 million in three years.

Although it would not be fair to all to divide the amounts to get the average, this is the only arithmetic formula to estimate how much each of them would be entitled to receive. The computations show each of them getting a total of P72.2 million, including an estimated P21.2 million that they would have gotten earlier this month.

These annual bonuses should make the Zobels, who own AC, among the country’s most generous employers.

Brothers Jaime Augusto Zobel de Ayala, chairman and chief executive officer and Fernando Zobel de Ayala, president and chief operating officer, are among AC’s six highest-paid executives. The four others are John Eric Francia, Delfin Gonzalez Jr., Solomon Hermosura and John Philip Orbeta, who are managing directors.

More pay and perks
“All other officers** as a group unnamed’ is how the compensation posting of Ayala Corp. defines the pay and perks of the rest of its executives. A footnote, however, explains that the two asterisks refer to “Managers and up (including all above-named officers).”

This should lead the public to only one interpretation: the Zobel brothers and four other highest-paid executives of AC also share from the compensation of “all other officers as a group unnamed” when they are obviously identified in the filing.

Like other listed companies, AC also discloses the pay and perks of the members of its management team but not their individual compensation. In its PSE posting, it said it paid the group P409 million in 2013 and P465 million in 2014 in salaries, and P226 million and P313 million in bonuses, respectively. It estimated the group’s salary package for 2015 at P480 million and the bonuses at P260 million.

The compensation of the seven members of AC’s board is provided for in Section 20 of the company’s by-laws, which entitles each director to compensation that shall not “exceed 1 percent (1 percent) of the net income before income tax . . . during the preceding year.”

In a separate report on compensation, AC also listed at P176 million the “total remuneration” of “five members of management who are not at the same time executive directors.” They are John Eric Francia, Delfin Gonzalez Jr., Solomon Hermosura, Paolo Maximo Borromeo and John Philip Orbeta. More on bonuses in the next piece.

esdperez@gmail.com.

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