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Singapore Press Holdings Limited - MANAGEMENT REPLY: How much is Mr Alan Chan incentivised by CEO share awards?

7/2/2014 – Singapore Press Holdings CEO, Alan Chan Heng Loon, has been awarded 173,100 ordinary shares worth S$697,000, as part of the company's CEO remuneration plan.

The January 13 announcement confirms Mr Chan now holds a 0.06% equity interest in the company.

Before this share award, Mr Chan had a 0.05% equity interest.

SPH's share price was S$4.02 on January 14, 2014.

Its Net Asset Value was S$2.19, as seen in its 4QFY13 results.

Mr Chan joined SPH as Group President in July 2002, and was named CEO on January 1, 2003.

He manages the Group's portfolio of businesses, which includes print, broadcasting, internet, outdoor advertising, telephony and properties.

Looking at page 70 of the 2013 annual report, Mr Chan is paid an annual salary of S$2.9 mln, of which 32.62% is the base salary; 32.92% is share-based; 33.29% in variable or bonus; and 1.17% as benefits in kind.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Our back-of-the-envelope calculation shows Mr Chan is entitled to S$968,835.60 in shares a year.

Having been awarded S$697,600 worth of shares so far this year, Mr Chan is entitled to another S$271,235.60 worth of shares.

The details of the CEO's Share Performance Plan were circulated to shareholders in late 2006, ahead of a vote which was passed on December 5, 2006.

Unfortunately, this announcement is no longer available on the SGX website, and the company did not accede to our enquiry for more details.

So, we were left with trawling the SPH website for clues.

It has a publicly-accessible media section, and in the year 2006 there are two notices regarding the Share Performance Plan.

The first was in relation to the calling of the shareholders meeting.

But the closest we come to finding out from this document what the details of Mr Chan's key performance indicators (KPIs) are is this phrase under Resolution 3 (c) (ii):

"…the Directors of the Company be and are hereby authorised … to modify and/or alter the SPH Performance Share Plan from time to time, provided that such modification and/or alteration is effected in accordance with the provisions of the SPH Performance Share Plan, and to do all such acts and to enter into all such transactions and arrangements as may be necessary or expedient in order to give full effect to the SPH Performance Share Plan;"

It goes on to say under Resolution 3 (d):

"…the Directors of the Company be and are hereby authorised to grant Awards in accordance with the provisions of the SPH Performance Share Plan and to allot and issue from time to time such number of fully paid-up Ordinary Shares as may be required to be allotted and issued pursuant to the vesting of Awards under the SPH Performance Share Plan."

This was further clarified in an announcement on November 17, 2006:

"Currently, performance targets are aimed at sustaining free cash flow growth and delivering long-term shareholder value. These are measured based on operating parameters relating to revenues, circulation sales, productivity, margins, expenses, customer satisfaction, and performance of the Company's total shareholders' return as compared to the Straits Times Index and to the Company's cost of equity. The performance targets are to be satisfied during the prescribed performance period."

We have no insights what the "operating parameters" are.

Question
Question

1. What performance or other criteria does the CEO of SPH have to meet to receive the share awards?

The statement goes on to say:

"Subject to the performance targets being met, a participant will only be entitled to all of the shares which are the subject of an award upon expiry of the prescribed performance and vesting periods, which are currently intended to range in total from 3 to 4 years from the time the award is made."

Question
Question

2. What are Mr Chan's biggest achievements in the past couple of years?

(Total number of questions in the full story: 4)

We have sent these questions to the company to invite them for an on-camera interview, and/or seek their written response.

Management Reply:I am afraid we wish to opt out of this interview. Thanks for your understanding. Cheers

Management Reply:Apologies, we wont be replying these questions


Key financial ratios

Key ratios
Key ratios


The ticks and crosses below indicate whether the stock meets the following value investing criteria.

Price-book: 1.85x - "Price is what you pay, value is what you get" - Are you getting more than you pay for?

Yield: 3.74% - Does the stock pay a risk premium over fixed deposit rates?

Cashflow: (S$233.9 mln) - "Profit is opinion, cash is fact" - Is the company generating cash?

Total cash & equivalents: S$133.6 mln - Does the company have cash?
Source: Reuters

Does the company have an internal auditor?
Management: Singapore Press Holdings Ltd was ranked 15th in the Governance & Transparency Index, with a score of 83 points.

Major shareholder(s):
10.08% - DBS Nominees Pte Ltd
9.56% - Citibank Nominees Singapore Pte Ltd
5.04% - HSBC (Singapore) Nominees Pte Ltd
2.89% - United Overseas Bank Nominees (Private) Limited
2.31% - DBSN Services Pte Ltd


Consensus recommendation

Analyst survey by Reuters
Analyst survey by Reuters


Consensus call: UNDERPERFORM
Price target: S$4.10

Sources & further information

Sources
Sources


2013 Annual Report
Jan 13, 2014 Announcement: Disclosure of Interest/Changes in Interest of Director/CEO


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