KUALA LUMPUR: In an unprecedented move, the major shareholders of FGV Holdings Bhd – the Federal Land Development Authority (Felda), the Armed Forces Fund Board (LTAT) and Koperasi Permodalan Felda Malaysia Bhd (KPF) – gunned down resolutions pertaining to the fee payment of its board members at the company’s AGM held here yesterday.
Felda owns about 33.6% in FGV, followed by KPF with 5% and LTAT with 1.25%.
Speaking to reporters after chairing the gruelling FGV AGM for five hours, chairman Datuk Wira Azhar Abdul Hamid pointed out that “it is a historic turn of events for FGV, whereby our Resolution 1, 2 and 3 pertaining to the directors fees, as well as Resolution 12 for directors to allot and issue shares pursuant to Section 75 of the Companies Act, 2016 have been rejected by our biggest shareholders”.
Azhar noted that he and his board members were “clueless” about the basis of the rejection of the said resolutions.
Resolution 1 sought for the approval of FGV shareholders for the payment of RM2.55mil of directors fees for the financial year ended Dec 31, 2018.
Meanwhile, resolution 2 is for the payment of about RM1.18mil, which is a portion of the directors fee payable to non-executive directors from June 26, 2019 until the next FGV AGM in 2020.
“The situation is now in a bind.
“It is also ironic that the major shareholders had no problem in approving the resolution for the re-election of our board members but then refused to approve the payment of their fees,” added Azhar.
While the Employees Provident Fund (EPF), which has a 2% stake in FGV, has also raised its concerns about the high remuneration of the directors in a letter to FGV, especially the payment to the chairman, he pointed out that the EPF had approved all the resolutions at the AGM.
“Having taken that into consideration, I personally volunteered (at the AGM) to waive my own fee to enable all the other directors to be paid as normal.
“However, this move did not create any change in the decision among our major shareholders at the AGM,” explained Azhar, adding that “now I regret doing it, but it has been done”.
Based on FGV’s annual report 2018, the fee payable to Azhar as chairman of the board is RM1.95mil. His renumeration package includes salary of RM415,483.90, chairman fee of RM600,000, annual fee from subsidiaries RM315,000 and benefits in kind of RM313, 244.35.
For now, Azhar said the FGV board members would need time to decide on the next course of action or options to be taken, moving forward.
In a nutshell, the initial message by FGV’s major shareholders (based on the rejection of the resolutions at the AGM) is that “we (major shareholders) want you (FGV board members) to work but we are not going to pay you,” he quipped.
On whether the major shareholders were being fair to FGV board members, he said, “Bear in mind that the board members have worked hard for the past one and a half years to put in proper plans and changes that will positively contribute to the sustainability and profitability of FGV, moving forward.
“(The rejection) totally reflects all the efforts made that have not been appreciated by our major shareholders. Maybe they feel that others can do better,” lambasted Azhar.
He noted that the FGV board members had come in with their eyes wide open and volunteered to undergo the hardship of trying to turn around FGV.
While it is not all about the fees, Azhar said this was more about the journey of the board members trying to craft out the best action and measures for FGV, which has been making big losses.
FGV, which is the world’s largest crude palm oil (CPO) producer, is an important political cog in the government’s machinery.
Since its listing in mid-2012, the journey to transform FGV into a financially-viable and successful outfit has hit several speed bumps.
In recent years, FGV has also been badly criticised for its massive acquisition spree in over-priced and non-value-accretive investments, after gaining RM4bil in proceeds from its initial public offering exercise.
FGV reported a net loss of RM3.37mil in the first quarter ended March 31, 2019, compared to a net profit of RM1.12mil a year ago, largely due to a sharp decline in CPO prices and lower average selling prices in the sugar sector.
It was reported that FGV was now on track to achieve RM350mil proceeds from its divestment of non-core and non-performing assets over the next three years.
In early May, Azhar said the group planned to liquidate and dispose of its 11 non-core subsidiaries over the next 18 months.
By end-2019, the divestment of three non-core assets with an estimated value of RM150mil is expected to be finalised.
“We hope to register some of the value of the disposal of non-core assets by the second or third quarter of this year,” he added.