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01-06-2011, 07:14 AM
(This post was last modified: 23-10-2013, 03:07 PM by CityFarmer.)
Jun 1, 2011
companies
Small shareholders, board row over directors' fees
By Yasmine Yahya
MINORITY shareholders of CDW Holding yesterday took the rare step of voting, by a show of hands, against a resolution to raise directors' fees substantially.
But they were left angry after a poll was taken and they were outvoted based on the number of shares held.
The directors of mainboard-listed CDW, a Japanese-managed company that makes precision components for electronics products, had proposed to raise the combined fees for its independent directors from $220,000 to $400,000.
In a show of hands, 13 shareholders rejected the proposal, while seven voted to pass the resolution.
CDW chairman Yoshimi Kunikazu then moved to take a poll. Under a poll, the result of a vote is based on the size of the stake represented by each shareholder who places a vote.
With majority shareholders supporting the proposal to raise independent directors' fees, the resolution was thus passed.
Many minority shareholders were then upset as they felt that their votes had been disregarded by the board of directors, and walked out of the meeting.
'Shareholders are disillusioned,' said minority shareholder Mano Sabnani, who attended the meeting. 'Most people there were against the increase, so why not respect their decisions and go back to the drawing board? We felt raising the fees to $300,000 would have been more than enough, but $400,000 was too much.'
But CDW noted that the entire proceedings of the meeting were carried out in accordance with the company's by-laws.
It added that the independent directors' compensation was likely to be a one-off reward, and it will be lowered again next year.
The reason the company had decided to take a poll to pass the resolution was that it wanted to ensure its independent directors were fairly paid for their work in investigating and resolving an accounting irregularity the company's auditors had uncovered early this year, said chief financial officer Phillip Dymo.
In the course of preparing CDW's annual results for the last financial year, auditors had uncovered seven bank transfers of 30 million yuan (S$5.7 million) each between its Shanghai subsidiary and an external company, which took place without the directors' knowledge.
The company's audit committee, which included its four independent directors, was tasked to investigate the situation, recover the funds and implement safeguards in the company to prevent such irregularities from occurring again.
The $400,000 will be split among the four independent directors, including Mr Wong Chak Weng, who retired yesterday. The company plans to appoint one or two more independent directors to its board, who will also get a cut of the new compensation package.
Said Mr Dymo: 'The audit committee sat down for over 20 meetings early this year to discuss the best course of action.
'The fees of $400,000 will ensure that they are duly compensated for their hard work.'
However, some of the shareholders do not quite see it this way.
Commented Mr Sabnani: 'Why are they being rewarded for correcting a wrong that should not even have been there in the first place?
'We feel that this is simply part of their job.'
The Straits Times understands that a few of the shareholders are planning to file a complaint against the company with the Singapore Exchange (SGX).
Said Mr Dymo: 'As a responsible company, what we can do is cooperate with the SGX for any follow-up questions, if they do report it to the SGX.'
CDW shares ended the day down half a cent, at 7.5 cents.
(Not Vested)
companies
Small shareholders, board row over directors' fees
By Yasmine Yahya
MINORITY shareholders of CDW Holding yesterday took the rare step of voting, by a show of hands, against a resolution to raise directors' fees substantially.
But they were left angry after a poll was taken and they were outvoted based on the number of shares held.
The directors of mainboard-listed CDW, a Japanese-managed company that makes precision components for electronics products, had proposed to raise the combined fees for its independent directors from $220,000 to $400,000.
In a show of hands, 13 shareholders rejected the proposal, while seven voted to pass the resolution.
CDW chairman Yoshimi Kunikazu then moved to take a poll. Under a poll, the result of a vote is based on the size of the stake represented by each shareholder who places a vote.
With majority shareholders supporting the proposal to raise independent directors' fees, the resolution was thus passed.
Many minority shareholders were then upset as they felt that their votes had been disregarded by the board of directors, and walked out of the meeting.
'Shareholders are disillusioned,' said minority shareholder Mano Sabnani, who attended the meeting. 'Most people there were against the increase, so why not respect their decisions and go back to the drawing board? We felt raising the fees to $300,000 would have been more than enough, but $400,000 was too much.'
But CDW noted that the entire proceedings of the meeting were carried out in accordance with the company's by-laws.
It added that the independent directors' compensation was likely to be a one-off reward, and it will be lowered again next year.
The reason the company had decided to take a poll to pass the resolution was that it wanted to ensure its independent directors were fairly paid for their work in investigating and resolving an accounting irregularity the company's auditors had uncovered early this year, said chief financial officer Phillip Dymo.
In the course of preparing CDW's annual results for the last financial year, auditors had uncovered seven bank transfers of 30 million yuan (S$5.7 million) each between its Shanghai subsidiary and an external company, which took place without the directors' knowledge.
The company's audit committee, which included its four independent directors, was tasked to investigate the situation, recover the funds and implement safeguards in the company to prevent such irregularities from occurring again.
The $400,000 will be split among the four independent directors, including Mr Wong Chak Weng, who retired yesterday. The company plans to appoint one or two more independent directors to its board, who will also get a cut of the new compensation package.
Said Mr Dymo: 'The audit committee sat down for over 20 meetings early this year to discuss the best course of action.
'The fees of $400,000 will ensure that they are duly compensated for their hard work.'
However, some of the shareholders do not quite see it this way.
Commented Mr Sabnani: 'Why are they being rewarded for correcting a wrong that should not even have been there in the first place?
'We feel that this is simply part of their job.'
The Straits Times understands that a few of the shareholders are planning to file a complaint against the company with the Singapore Exchange (SGX).
Said Mr Dymo: 'As a responsible company, what we can do is cooperate with the SGX for any follow-up questions, if they do report it to the SGX.'
CDW shares ended the day down half a cent, at 7.5 cents.
(Not Vested)
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