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| Sunrise gets shareholders’ nod on ED compensation |
| Written by Chong Jin Hun | |||
| Friday, 30 October 2009 11:24 | |||
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At Sunrise’s AGM here yesterday, a “say-on-pay” proposal was discussed and a non-binding advisory vote was cast to gauge shareholders’ sentiment on whether its directors’ salaries were justified. Sunrise executive chairman Tong Kooi Ong said the initiative would promote greater accountability and transparency. To a question on whether the shareholders thought the current compensation for the executive directors was fair, the number of shareholders (present and voted) responding in the positive accounted for 53.06% (holding an 8.2% interest in the company), while 46.94% of shareholders (holding 91.8% interest) said no. To another question, an overwhelming 66.67% of the shareholders (holding 99.97% interest) said they believed the executive directors were underpaid, while 33.33% (holding 0.03% stake) believed they were overpaid. Notably to the last question, 56.12% (holding 99.85% interest) said they would support a 10% rise in the executive directors’ compensation next year, while 43.88% of the shareholders (holding 0.15% interest) disagreed. Speaking to reporters after the AGM, Tong said the “say-on-pay” proposal was “good” because it enabled shareholders to decide on the level of risk a company should take. “We did it because we wanted to set a precedent and I am hoping that this becomes a trend. We believe that there is a need for transparency. I think it will become worldwide soon,” Tong added. He said the proposal, if widely practised, could result in a more efficient capital market in terms of resource allocation and risk taking. “Say-on-pay” is a term generally used to describe the process through which a company’s shareholders are given an opportunity to vote on the compensation for directors. Unless it is required by law, it is usually carried out in the form of a non-binding advisory vote by the shareholders. The compensation committee or the board of directors will in turn review the voting results and take them into consideration when approving directors’ compensation. In Malaysia, there are no laws governing such a practice. According to a Sunrise’s shareholder circular dated Oct 19 this year, compensation for its executive chairman, deputy executive chairman, besides its executive director and chief operating officer, included salary, bonus, benefits in-kind and Employees Provident Fund contribution. On average, every executive director in Sunrise is paid RM720,000 a year or RM60,000 a month. Tong receives RM728,217 in total compensation as executive chairman, while deputy executive chairman Datuk Allan Lim Kim Huat is paid RM728,465. Executive director and chief operating officer Lum Tuck Ming receives RM721,944. To help shareholders make their decisions, the circular provided comparisons of Sunrise’s financials, and what its pays its executive directors, with peers in the local real estate fraternity. While it was ranked high among 30 peers in terms of revenue and pre-tax profit at fourth and fifth place, respectively, Sunrise was ranked at only the 27th and 28th spot when it comes to average compensation per executive director as a fraction of revenue and pre-tax profit, respectively. This article appeared in The Edge Financial Daily, October 30, 2009.
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