THE board of FGV Holdings Bhd needs to thrash out its differences with the shareholders that have led to them voting against remunerating the directors, said Minority Shareholders Watch Group CEO Devanesan Evanson.

FGV’s three major shareholders, Federal Land Development Authority (Felda), Koperasi Permodalan Felda Malaysia Bhd (KPF) and the Armed Forces Fund Board (LTAT) declined to approve the directors’ remuneration packages in yesterday’s AGM that lasted five hours.

Felda holds a 33.7% equity in FGV; KPF, 5.25%; and LTAT, 1.25%.

Devanesan told The Malaysian Insight that the FGV board should engage with the three shareholders to find out what how much they think the directors should be paid.

An EGM can be convened thereafter to seek shareholders’ approval.

“The fact that Felda, FGV’s major shareholder, which holds about 33.7% equity, voted against the resolution is prima facie indication of dysfunctional communication between Felda and FGV. It is uncertain whether Felda had earlier indicated its displeasure over the remuneration to FGV.

“The role of the Felda nominee on the FGV board needs to be re-examined, Did the nominee give a heads-up that Felda was displeased about the proposed remuneration? And if he did, did the FGV board ignore the heads-up and act in a recalcitrant manner? 

“We do not know the answer to these questions. But the dysfunctional relationship must be addressed.”

Devanesan said the FGV board is now likely to be distracted over the matter of its remuneration when it needs to be looking at turning around the struggling company.

In essence, this means that members of the board would have worked for 2018 without pay, he said.

“This is unfair to the directors who are professionals, and who need to spend substantial time turning around FGV which is plagued with old problems and issues.”

Devanesan who attended the AGM, said shareholders had to vote for all or nothing as the remuneration packages for the chairman and directors were bundled together under one resolution.

“It is unfortunate that the remuneration for 2018 was bundled together and shareholders had to vote for all or nothing,” he said.

Even if the directors were to be willing to work without remuneration, he said, they would be demotivated as they would not be paid, he said.

On whether the refusal to pay the board could be read as a vote of no confidence in the members,   Devanesan said it should not as all of the directors were re-elected.

“The chairman has candidly remarked that the shareholders have confidence in the directors but want the directors to work for free. But the truth is there was no avenue for the shareholders to vote for a lower remuneration – you can only either vote ‘for’ or ‘against’ the resolution as drafted. “

The episode, he said, could have been avoided had there been better communication between the major shareholders and FGV.

FGV Holdings Bhd chairman Azhar Abdul Hamid said yesterday at the conclusion of the AGM that it was unprecedented for the shareholders to refuse to approve payment of directors’ fees.

“This is a historic event and the board members are currently discussing what is the most appropriate thing to do; they are looking at the options as to how to resolve this.

The resolutions that were rejected included the payment of more than RM2.5 million in directors’ fees for the financial year ended December 31, 2018; the payment of RM1.18 million directors’ fees payable from June 26, 2019 until the next AGM; and the payment of benefits payable from June 26, 2019 until the next AGM.

The shareholders also declined to approve the payment of meeting allowances of between RM1,000 and RM5,000 to non-executive directors. A resolution to authorise the directors to allot and issue shares pursuant to Section 75 of the Companies Act 2016 was also rejected.

The board is made up of Azhar, Mohd Hassan Ahmad,  Dr Othman Omar, Yusli Mohamed Yusoff,  Mohamed Suffian Awang, Dr Salmiah Ahmad, Dr Mohamed Nazeeb P. Alithambi, Mohd Anwar Yahya, Dr. Nesadurai Kalanithi and Hoi Lai Ping.

FGV reported a net loss of RM3.37 million in the year’s first quarter ended March 31, against a net profit of RM1.13million in the same quarter last year, due to weaker crude palm oil prices.

Revenue declined 8.9% to RM3.28 billion from RM3.8 billion in the  corresponding quarter of the preceding year..

The Malaysian Insight is trying to reach FGV for comment. – June 26, 2019.