Li & Fung Voting Recommendations
28 April 2003
| Company: | Li & Fung Limited |
| Stock code: | 0494 |
| Date of meeting: | 12-May-03 |
| Time of meeting: | 12:00 |
| Advice date: | 28-Apr-03 |
| CCASS voting cut-off | 7-May-03 |
| 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 | Adopt the accounts | FOR |
| 2 | Declare a final dividend | FOR |
| 3.1 | Re-elect Henry Chan | FOR |
| 3.2 | Re-elect Franklin Warren McFarlan | FOR |
| 3.3 | Re-elect Leslie Boyd | FOR |
| 4 | Determine the directors' fees (see comment) | FOR |
| 5 | Re-appoint PriceWaterhouseCoopers | FOR |
| 6 | Mandate the directors to repurchase shares | FOR |
| 7 | Mandate the directors to issue additional shares | AGAINST |
| 8 | Mandate the directors to issue repurchased shares | AGAINST |
| 9 | Approve the Share Option Scheme | FOR |
| 10 | Amend the Company's Bye-laws | FOR |
| 11 | Adopt a Chinese name | FOR |
Reasons AGAINST
Items 7 and 8
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.
Comment & warning
The proxy form includes item 4 "To determine the Directors' fees" and invites shareholders to vote "for" or "against". How are shareholders voting by proxy supposed to know what dollar amounts of fees they are voting for? Neither the notice of meeting nor the proxy form specifies any amount. The notice should have stated the amount proposed, as was the case in the HKEx Notice of AGM. We will give L&F latitude on this occasion, because we want the independent directors to be paid fees, but next year, if the proposal is not spelt out in the notice of AGM, then we will recommend against such a vague proposal. It is not sufficient to simply come up with a proposed figure at the AGM, which is presumably what is intended this time. By then, it is too late for absent shareholders to change their vote.
Meanwhile, we call on L&F to rectify this omission, by making an announcement to the Stock Exchange without delay stating what amount the board intends to propose as directors' fees at the AGM. There is still time left to clarify the matter.
Educational note: directors fees are simply the amount paid to individuals as directors. For non-executive directors, that is usually all they get. In the case of executive directors, their other remuneration, such as salaries and bonuses, are not subject to shareholder approval.
© Webb-site.com, 2003
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