BOC Hong Kong voting advice
20 May 2003
| Company: | BOC Hong Kong (Holdings) Limited (BOCHK) |
| Stock code: | 2388 |
| Meeting type: | Annual |
| Date of meeting: | 29-May-03 |
| Time of meeting: | 15:00 |
| Advice date: | 20-May-03 |
| CCASS voting cut-off | 26-May-03 VOTE NOW |
| Notice of meeting | Click here |
| Voting method: | Webb-site.com will require a poll, all proxies will be counted |
| How to vote: | See our voting guide |
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.a | Re-elect Li Zaohang | FOR |
| 3.b | Re-elect He Guangbei | FOR |
| 3.c | Re-elect Shan Weijian | FOR |
| 3.d | Fix the remuneration of the directors at HK$200,000 per director and authorise the directors to vary it (see comment) | FOR |
| 4 | Re-appoint PriceWaterhouseCoopers | FOR |
| 5 | Mandate the directors to issue additional shares | AGAINST |
| 6 | Mandate the directors to repurchase shares | FOR |
| 7 | Mandate the directors to issue repurchased shares | AGAINST |
Reasons AGAINST
Items 5 and 7
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.
If your company offers new shares to other investors at a discount, but not to you, then your company is transferring value from you to the new investors. Their gain is your loss. That's why we believe an issue for cash should be done by rights issue, failing which it should be limited to 5% of existing issued shares and a maximum discount of 5%.
BOCHK has a free float of only 23.14%, so full use of the 20% issue mandate could enlarge the number of shares in public hands by 86%. The annual report contains a special section on Corporate Governance which states:
"We have established a sound corporate governance framework with reference to the international 'Best Practices'..."
Well, the international best practice when it comes to non-pre-emptive share issues for cash was set by the UK, and BOCHK does not rise to that level, but stays with the much lower minimum standard allowed by the HK Listing Rules, or what we call the "code of worst practice". Recently, a majority of independent investors in 5 Hang Seng Index companies: Cathay Pacific, Cheung Kong Infrastructure, China Unicom, CITIC Pacific and Swire Pacific have all voted against the general mandate. Their fellow index members would do well to take note of this.
Comment
Item 3.d relates to the fees of individuals as directors but not any other payments they may receive as employees. In fact, only one of the directors of BOCHK is an executive director, the CEO, so the others just get the director's fee.
We encourage companies to seek shareholder approvals of directors' fees, as this removes the possibility of a company paying its independent directors more in return for a favourable opinion on say, a connected transaction. So the first part of this resolution, to fix the fee at $200,000 per annum, is sensible. The second part, which authorises the directors to vary it, is not. What is the point of asking shareholders to approve a specific amount if you are then going to vary it at will?
© Webb-site.com, 2003
Organisations in this story
Sign up for our free newsletter
Recommend Webb-site to a friend
Copyright & disclaimer, Privacy policy