Cathay Pacific Voting Recommendations
15 May 2003
| Company: | Cathay Pacific Airways Limited (CP) |
| Stock code: | 0293 |
| Meeting type: | Annual |
| Date of meeting: | 14-May-03 |
| Time of meeting: | 16:00 |
| Advice date: | 05-May-03 |
| CCASS voting cut-off | 09-May-03 extended to 13-May-03 VOTE NOW |
| Notice of meeting | Click here |
| Voting method: | Webb-site.com will require a poll, all proxies will be counted |
Note to journalists:
We have up to 4 proxy seats available inside this AGM. Please contact
us if you want one.
| Item | Description | Vote |
| 1 | Declare a final dividend | FOR |
| 2.a | Approve the re-election of all directors in a single resolution (only if passed unanimously) | AGAINST |
| 2.b | If resolution 2.a is not passed unanimously, then | |
| re-elect Robert Ernest Adams | FOR | |
| re-elect Philip N L Chen | FOR | |
| re-elect Henry Fan Hung Ling | FOR | |
| re-elect Peter Lee Ting Chang | FOR | |
| re-elect Vernon Francis Moore | FOR | |
| re-elect Raymond Or Ching Fai | AGAINST | |
| re-elect Jack So Chak Kwong | FOR | |
| re-elect Tung Chee Chen | FOR | |
| re-elect David M Turnbull | FOR | |
| re-elect Tony N Tyler | FOR | |
| re-elect Carl Yung Ming Jie | FOR | |
| 3 | Re-appoint KPMG | FOR |
| 4 | Mandate the directors to repurchase shares | FOR |
| 5 | Mandate the directors to issue additional shares | AGAINST |
| 6 | Mandate the directors to issue repurchased shares | AGAINST |
| 7 | Approve Directors' fees (up to a total of HK$2m) | FOR |
Note: the lack of numbering on the individual election resolutions adds to the confusion that voters may feel.
Reasons AGAINST
Item 2.a
Resolution 2.a would only be appropriate if every shareholder was happy with the list of directors proposed for re-election. As we oppose one of the candidates, we will vote against resolution 2.a, and hence it will not be passed unanimously, and hence resolution 2.b will apply. Frankly, the inclusion of 2.a is a waste of time since on a poll there will almost certainly be some votes against it, so it is almost certain never to pass.
Item 2.b
We are in favour of all candidates except Raymond Or Ching Fai. Mr Or is proposed for re-election as an independent non-executive director, but he has a conflict of interest because he is also General Manager of The Hongkong and Shanghai Banking Corporation Ltd (HSBC), which is a banker to CP. Swire Pacific Ltd (SP, 0019/0087), the 45.8% controlling shareholder of CP, lists HSBC as its only principal banker, and so does associate Hong Kong Aircraft Engineering Co Ltd (0044).
Furthermore:
- James Hughes-Hallett, Chairman of SP and CP, is a non-executive director of HSBC. He first joined the Swire group in 1976.
- Baroness Lydia Dunn, an Executive Director of John Swire & Sons Ltd, the controlling shareholder of SP and CP, is a non-executive Deputy Chairman of HSBC Holdings plc (0005), which owns HSBC. She is also a non-executive director of SP, and first joined the Swire group in 1963.
- David Eldon, Chairman of HSBC, is also an "independent" director of SP. We oppose his re-election too, see Swire Pacific Voting Recommendations.
These cross-directorships between Swire and HSBC constitute a further conflict of interest for Mr Or, so we cannot regard him as independent. This is not a new position for bankers at the airline - he succeeded Chris Langley on 1-Feb-00, who in turn succeeded Paul Selway Swift on 29-Feb-96, both of whom were senior figures at HSBC before retirement. It seems that HSBC has traditionally had a seat on the board of CP, which would be fine if the company didn't claim that the occupant was independent. The same pattern is observed at Swire Pacific.
Regular readers will know that we have opposed "independent" directorships at Hang Seng Bank, Hong Kong & China Gas and Bank of East Asia for the same reasons. We are not alone in this - the New York Stock Exchange has recently submitted proposals to the SEC which frowns upon a company's bankers from being considered as independent directors, and in the UK, the Higgs report on non-executive directors made a similar recommendation that the UK Combined Code on corporate governance be amended to make clear that those whose employers have "material business relationships" with a company should not be considered as independent of that company.
Items 5 and 6
Webb-site.com urges all investors to vote against the general issue mandate for all listed companies, for the reasons explained in Project Vampire, unless they comply with the recommendations set out in that article. The non-pre-emptive issue mandate allows management to choose the shareowners by allotment of shares. This corrupts the governance mechanism. Shareowners should govern management, not the other way around. If a company wishes to raise cash by issuing shares, then it should do so by rights issue.
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