AGM Watch: MSWG grills Nextgreen for offering ESOS to INEDs

NEXTGREEN Global Bhd has borne the brunt of the Minority Shareholders Watch Group (MSWG) for proposing two independent non-executive directors (INEDs) as recipients of the company’s employees share option scheme (ESOS).

In line with better corporate governance, the shareholder activism group said it does not encourage the practice of giving options to INEDs as they play the independent check and balance role (and not an executive role) in the company as well as are responsible for monitoring the option allocation to employees and executive directors.

As such, there is the risk that the INEDs may be fixated with the company’s share price, hence affecting their impartial decision-making which should be made without reference to share price considerations.

“Why is the ESOS extended to the two INEDs (Teh Chau Chin and Tan Meng Chai) since they do not perform executive roles,” asked MSWG who seeks to query the company at its extraordinary general meeting (EGM) which will be virtually held on May 5 (Wednesday) at 11am.

“Shouldn’t the directors’ fee and other benefits they receive supposed to be adequate to compensate the services rendered by them?”

Further to that, the shareholder activism group also probed Nextgreen with the following questions with regard to its ESOS exercise:

  • What are the performance metrics adopted by the ESOS committee to assess the eligibility of INEDs under the ESOS?
  • Who are the members of the ESOS committee?
  • Considering the independent and non-executive role of the two INEDs in Nextgreen, what is their view on the ESOS scheme?
  • Are they keen to accept the shares if the ESOS option is offered to them?

In another development, MSWG also wants to know from the printing and publishing firm as to how much more capital is required to complete its Green Technology Park (GTP) in Pekan, Pahang.

For the record, Nextgreen has been raising fund amounting to RM485.5 mil from investors since 2018 (calendar year) via private placement and private investment to fund the development of the project.

“Excluding the RM10 mil gross proceeds to be raised from this proposed redeemable convertible preference shares (RCPS), how much more capital is required to complete the GTP project?” enquired MSWG. “How does the group plan to raise the required capital?”

Considering the financial condition of Nextgreen and the current low interest environment, the shareholder activism group is also curious if it is feasible for the company to obtain financing from banks instead of raising fund via issuance of new shares to avoid the dilution impact on earnings per share (EPS). – April 30, 2021

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