Friday, March 29, 2013

More On Bursa CEO Pay And Lack Of Retail Investors

Posted yesterday: Why Is Bursa CEO Getting Such A Pay Increase?

I have always insisted that because Bursa Malaysia is a listed entity, it is a business and as a business it is profit oriented. The primary focus of a business is to make money. That's the one and only one focus. Make more money.

Which is why I have no doubt that in my mind that despite the stock exchange being made a mockery for letting business delist and relist anyhow and anyway they like, these relisting will continue to happen. That's my flawed opinion and yes, one can despise it all they want but I doubt that Bursa Malaysia will not say NO to a company seeking relisting.

Relisting means more business and more business means more money.

If, in the future, say a company like KFC who was recently taken private, decides to seek listing again, do you think Bursa will say NO?

It's business yo!

Back to the CEO pay issue. On today's Business Times.

  •  Tajuddin defends remuneration

    Roziana Hamsawi Published: 2013/03/29

    KUALA LUMPUR: Bursa Malaysia Bhd chief executive officer Datuk Tajuddin Atan yesterday defended his RM5.5 million remuneration last year, saying it commensurated with the job challenges.

    He said his salary package was evaluated and approved by the board and a consultant firm and it was an agreed package designed on what was needed for him to accomplish.

    He said the last two years had seen Bursa Malaysia's revenue growing, adding that it was not an easy task for him.

    "Operating revenue had gone up by 28 per cent over the last five years compared to an increase in expenses of only 13 per cent. The jump in operating revenue was significant in the last two years. Since you asked me, I can say, 'I think, I did quite well'," he said.

    The issue of Tajuddin's salary package was raised by a minority shareholder at the exchange's annual general meeting yesterday, who queried the difference of RM2 million with his salary in 2011, which was stated as RM3.5 million.

    Speaking after the AGM, Tajuddin, who was former group managing director of RHB Capital, said when he was appointed to lead the local bourse, he was tasked with a number of responsibilities.

    They included preparing the exchange to compete with other regional bourses when the Asean Economic Community is in place by 2015.

    He said last year, Bursa Malaysia made a mark internationally with the listing of two of the world's top 10 IPOs, namely Felda Global Ventures Holdings and IHH Healthcare.

    Last year, it ranked among the top five listings destinations in the world, raising funds from IPOs worth US$7 billion (RM21.7 billion).

    Bursa Malaysia chief financial officer Nadzirah Abd Rashid, meanwhile, said: "The CEO's package is a share grant plan. It is based on a three-year key performance indicators and if not achieved, he will not get the entire package. It is very much linked to his performance."

    She added that the RM2 million difference in salary as stated in the annual report was due to the timing of Tajuddin's appointment as executive director, which began on April 1 2011.

    On a different development, Tajuddin said Bursa Malaysia is confident that the country's strong economic growth will continue to fuel listing interests among local companies.

    As the economy grows, businesses will need capital for growth and will continue to seek different sources of funding which include the equity market.

    Tajuddin said the equity market is still a little overhang, pending the upcoming general election but, "I am certain once this is over, the second half of this year will see the market picking up again".

    "The Malaysian economy has weathered the global slowdown relatively well in 2012 and early indicators for 2013 show positive development, in line with the country's economic prospects and business fundamentals," he said.

    Tajuddin noted that Malaysia's home-grown companies are doing well internationally with nearly 40 per cent of the FBM KLCI companies' revenue coming from abroad.

    He added that 28 per cent of FTSE Asean 40 are Malaysian public-listed companies while three of Asean's top five investment banks are from Malaysia.

    "Last year, we saw foreign investors consistently increasing their stakes in Malaysian public-listed firms and this is good news for our capital market," he said.

    Bursa Malaysia posted a net profit of RM151.5 million in 2012, an increase of four per cent from 2011's performance while operating revenue was up two per cent to RM388.5 million.

    The derivatives market, which did well last year, is expected to continue its performance this year due to increased global visibility of derivatives products, he said.
On theSunDaily:
  • Bursa seeks to boost retail participation
    Posted on 29 March 2013 - 05:38am

    Premalatha Jayaraman

    Tajuddin speaking at a press conference after Bursa's AGM in Kuala Lumpur yesterday. NORMAN HIU/theSun

    KUALA LUMPUR (March 29, 2013): Bursa Malaysia Bhd, which is eyeing moderate growth in all business segments for the financial year ending Dec 31, 2013 (FY13), will introduce more initiatives to boost retail investors' participation in the equity market, said its CEO Datuk Tajuddin Atan (pix).

    The exchange is working to come up with services and products that will bring ease of trading to investors.

    "Among the exchanges, yes, we are the lowest (in terms of) retail participation. This is something that we need to work on very extensively." he told reporters after the group's AGM here yesterday.

    In 2012, retail participation on Bursa Malaysia was about 23% of average daily value traded.

    "Last year, we saw foreign investors increasing their stake consistently (throughout) the whole year. I guess this lag effect is something that our retail participants have always been doing and hopefully with more information they will join or front run these foreign investors," Tajuddin said.

    He said the eRights service launched yesterday, was part of its efforts to create a more facilitative trading environment for retail investors.

    The service will enable shareholders to suscribe to rights issues via the ATM and internet banking facilities of participating banks, similar to the current practice for electronic initial public offering (IPO) applications via electronic share application.

    "We are continuously taking steps to introduce new initiatives for the market with the objective to provide a more facilitative trading environment to attract more investors and issuers, not only within our domestic market but also the region," he said.

    "I may not be able to help you trade but one thing's for sure, the exchange will be there to facilitate with products and services," Tajuddin added.

    Meanwhile, Bursa's growth this year will continue to be driven by stable income from its equity and derivatives segments.

    "If the market continues to be volatile, there will be more interest. The cash cow is still the equity (market)," said Tajuddin.

    He said the exchange, which had several sizeable IPOs last year, has seen a lot of interest in raising funds in the country.

    "It will not be as big as last year, (but) there is enough interest, and applications have been submitted to the Securities Commission and Bursa. Whether they come in or not, it is an issue of timing," he said.

    "The overhang of election holds things (back) a little bit. Hopefully, we will see some traction in the third and fourth quarter of this year," he said.

    Earlier during the AGM, shareholders and the Minority Shareholders Watchdog Group (MSWG) raised questions with regards to Tajuddin's remuneration package that was increased to RM5.5 million in 2012 from RM3.5 million in 2011.

    "MSWG said there was an increase of over 50% but it is not a increase (in real terms). Datuk (Tajuddin) was with us for just over nine months in 2011," said Bursa Malaysia's CFO Nadzirah Abd Rashid.

    Tajuddin was appointed as the CEO of Bursa Malaysia on April 1, 2011.

    Nadzirah clarified that the CEO package includes a share grant plan that is charged up front but only payable should key performance indicators are met.

    "In terms of accounting, we would charge upfront but delivery (is) in three years. In the event that the three-year key performance indicator is not achieved, he (Tajuddin) is not going to get it," she said.

    Bursa also announced the appointment of Datuk Karownakaran @ Karunakaran Ramasamy, Chai Way Leong and Ghazali Darman to the board from March 28, 2013.
Can you see the message in the red bold.

As a listed company, the CEO pay as mentioned in the news article is performance based.

Which means revenue is so important. Look at the headline mentioned in the SunDaily.

That's the focus.

More revenue means more money.

That's all to it.

And I find it so ironic that Bursa cannot understand why retail investors are lacking.

Look at how companies delist at unreasonable pricings. How to be a retail investor? When stock price go down, the retail investor will be holding on to the stock price. The owners, seeing the cheapness in stock prices, only see opportunity for themselves to take the company private and profit from the cheap prices.

Look at MBF's privatisation. Does Bursa really want to know why their minority shareholders are so unhappy?

Look at the quality of the new IPOs. If the companies listed of are of good quality, why do we have companies like Smartag which had reported losses every quarter since listing? 

Look at Astro relisting. Why was it allowed to relist based on a higher earnings valuation? Look at its recent earnings. Earnings were way below than what was suggested in its IPO figures.

Look at another new listing. China Stationary Limited. Company was IPOed at 95 sen. On 21st March 2013, its substantial shareholder dumped shares at 60 sen! Any logic? CSL now? 40.5 sen this morning! Is this what you call a quality new listing?

Look at the nonsensical not fair but reasonable advise given issued. Why is this being allowed? Is Bursa, by not saying anything on these advices, saying that it's ok for minority shareholders to accept offers that is basically not fair?  Who wants to be a retail investor when not fair deals are being shafted left, right and center at them?

Look at how many fraud cases. Is the punishment just? Look at Megan Media! What happened to this multi million dollar fraud case? Will we see justice?

Can I go on?

Yes I can but I won't.

They are so many valid reasons why retail investors do not want to invest.

Bursa, for its part, needs to remind itself that its a stock exchange. Business should never been an issue. And as a stock exchange, Bursa Malaysia needs to protect its very core foundation of its house. A house has to be built on strong foundations and for a stock exchange, the minority shareholders is the very core of the foundation.If the minority shareholders aren't taken good care of by the stock exchange, retail investors will always shun the stock market. It's simple as that.

Why would the retail investors want to invest in shares when the listed companies sees them (retailers) nothing but OTHER PEOPLE's MONEY (OPM)?

Do the listed companies treat their shareholders fairly?

Yes, Bursa, remind yourself you are a stock exchange. Look after the exchange. Make sure you protect your other customers, the minority shareholders, fairly. That's the most important thing. Who wants to invest when they run the risk of being treated unfairly and not being compensated for taking the risk to invest their hard earned money in shares? Once the protection is there, slowly but surely, the retail investors will flow back into the market.