AGM Watch: Inappropriate to dish out ESOS to non-exec directors

THE Minority Shareholders Watch Group (MSWG) has chided AT Systemization Bhd over the company’s proposal to allow its non-executive directors to participate in the proposed employees’ share option scheme (ESOS).

The shareholder activism group said it does not encourage the practice of offering ESOS options to independent directors who are required to be impartial at all times.

“Receiving shares under the ESOS may compromise their independence and/or impartiality or at least create such a perception,” justified MSWG.

“Independent directors should be paid a fee that is commensurate with their roles and responsibilities according to the skills and experience they bring to the company. The ESOS scheme, by definition, is meant for employees.”

For the record, AT Systemization will stage its extraordinary general meeting (EGM) at 11am on April 12 (Monday) at Level 18, Menara Lien Hoe in Persiaran Tropicana in Petaling Jaya.

Elsewhere, MSWG is also probing CIMB Group Holdings Bhd at its forthcoming AGM with regard to its return of equity (ROE) which has been lagging the industry peers for years with a record low of 2.1% posted in its financial year ended Dec 31, 2020 (FY2019: 9.3%).

The underperforming ROE has led to a significant decline in shareholders’ value with the banking group’s five-year total shareholders’ return of -23.6% as of Oct 15 last year, according to the shareholder activism group.

“By 2024, CIMB aspires to achieve a cost-to-income ratio of 45% (FY2020: 52.2%) and achieve a ROE that will place CIMB at the top quartile among ASEAN banks with ROE of at least 12%-13% (FY2020: 2.1%),” MSWG pointed out.

“However, some analysts deemed these aspirations as ‘stretched’. What are the catalysts that will enable CIMB to achieve these ambitious targets by FY2024?”

CIMB will hold its fully virtual annual general meeting (AGM) at 10am on April 15 (Thursday) from its broadcast centre at Menara CIMB in Kuala Lumpur Sentral.

Also on the banking industry, MSWG is enquiring from Malayan Banking Bhd (Maybank) as to the outlook of its asset quality in FY2021.

“Will the net credit charge-off rate and level of loan provision remain elevated in FY2021?” asked the shareholder activism group.

This follows revelation that the allowances for Maybank’s impairment losses on loans, advances, financing and other debts doubled to RM4.6 bil in FY2020 from RM2.29 bil in FY2019 on the back of proactive provisioning (after taking into account the weakened macroeconomic variables and weaknesses in certain businesses and corporate accounts).

Moreover, the net charge-off rate has doubled to 88 basis points (bps) for FY2020 from 44 bps in FY2019.

Maybank will stage its virtual AGM at 10am on April 15 (Thursday) from its broadcast centre at Menara Maybank in Jalan Tun Perak, Kuala Lumpur. – April 9, 2021

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