Feisty OCBC shareholders put the bank's bosses on the spot yesterday with pointed questions about the chairman's pay and the "cheap" price it received for its Fraser & Neave (F&N) and Asia Pacific Breweries (APB) stakes.
The questions at the annual general meeting appeared to find solid backing among some of the 450 shareholders present, with applause breaking out at some points.
The focus was on the pay structure of chairman Cheong Choong Kong, despite his remuneration being effectively lower now than under the old structure.
Several shareholders criticised what they regard as a lack of transparency over Dr Cheong's new annual fees of $1.8 million.
Dr Cheong was previously on a contract and provided consultancy services in areas such as talent spotting, management development and customer service. The contract ended last June and was not renewed. OCBC paid $2.576 million to Dr Cheong for the 12 months to Dec 31, 2012.
This included his chairman and board committee fees, meeting attendance fees and remuneration under his consultancy contract.
Of this sum, the pro-rated chairman's fees for the second half of the year were $900,000.
One shareholder, Mr Phillip Smith, asked how Dr Cheong's basic chairman's fees of $1.8 million compared with that for OCBC's next highest-paid non-executive director and the industry average.
He argued that a chairman's basic fees are usually two times that of the next highest-paid non-executive board member and asked what was the basis for Dr Cheong's payout being six times that of the next highest-paid non-executive director.
His question drew applause from the crowd. Mr Smith was likely referring to Mr Bobby Chin, who received a total of $272,000 in fees and benefits.
OCBC director Fang Ai Lian, who chairs the remuneration committee, responded, saying that the board values Dr Cheong's contributions.
She said Dr Cheong was at the bank daily and his salary reflects the responsibility, accountability and time spent at the highly complex organisation, adding: "We feel that if Dr Cheong spends more time at the bank, that will benefit shareholders.
"A fixed fee is more transparent than one with a basic and performance fees or share options."
Other shareholders noted that Dr Cheong's new payout was higher than that of other bank chairmen, such as DBS's Peter Seah, who received just under $1 million last year.
However, a shareholder who wanted to be known as Mr Seah said he backed the chairman and directors' fees.
"The total payment for the chairman and directors last year is about $3 million, which is less than 1 per cent of OCBC's net profit," he said.
"If they have helped the bank to outperform others in the industry, I think their pay is justified."
The other contentious issue raised at the meeting, which lasted for almost two hours at Orchard Hotel, was OCBC's sale of its stakes in F&N and APB.
Shareholder Tan Kok Chin told the gathering that "OCBC sold its stake in F&N and APB too cheaply and too quickly".
The comment sparked a great deal of talk among investors.
OCBC sold its F&N shares at $8.88 each and its APB shares at $45 apiece last July.
The eventual buyout offer from Thai tycoon Charoen Sirivadhanabhakdi gave F&N shareholders $9.55 for each share while the APB stock was bought by Heineken for $53 each.
Dr Cheong replied: "OCBC had received an unsolicited offer for the F&N and APB shares at a good price as a package. The price was offered at a premium over the prevailing share price which had already had a run-up before the offer was made."
He added that although OCBC could have solicited other offers, that could have jeopardised the initial offer made, which was at a considerable premium.
Dr Cheong was then asked why a larger special dividend was not paid out to shareholders, given the windfall from the APB and F&N sales.
He replied that OCBC has a policy of reinvesting its profits from non-core businesses into the core businesses. Dividend payouts should also be done on a sustainable basis.
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