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Listed companies: Lower targets, higher salaries
One of the controversial issues in listed companies nowadays is that while the companies have set lower business targets for 2009, they are paying higher bonuses to boards of directors.
The Saigon Commercial Joint Stock Bank (SCB) was one of the few banks which got high profit and paid high dividends in 2008 (12%). The pay for the four members of the bank’s board of directors was VND1.2bil instead of VND800mil as previously set, while the dividend was lowered to 12% from the previously set level of 16%. In the 2009 plan, the expected pay for the four members is VND3bil.
As for Bibica (BBC), a confectionary producer, the pay for the six members of the board of directors was 1% of pretax profit. In 2008, BBC got the pretax profit at VND22.9bil, which means that the board’s members got VND229mil.
The pay has been raised to 1.5% of the pretax profit to be applied in 2009 (the number of members of the board of directors has increased from six to seven).
A paradox exists that the suggested bonus levels for 2009 for many companies prove to be even higher than those of 2008 while business goals have been lowered.
A series of companies prove to be very cautious when setting their business plans. DPM, a fertiliser and chemical company, has set modest goals: total turnover VND5,815bil, pretax profit VND1,084bil, post tax profit VND990bil, and dividend 13%. All the targets prove to be lower than those of 2008: lower by 11% in turnover, 38% in pretax turnover, 30% in post tax profit, and 7% in dividend.
Similarly, TSC, an agriculture materials company, is only striving to obtain the pretax profit of VND60bil this year, or just 73% of the implemented figure in 2008. HRC, a rubber company, has set the turnover target just equal to 55% of last year, while DPC, a plastics company, has set the modest goal of VND3.8bil, or 72% of last year’s implemented figure.
Managers of the companies have been trying to persuade shareholders to accept lower targets, saying that the economy in 2009 is forecast to meet a lot of difficulties.
However, the problem lies in the fact that while profit targets are lower, the companies’ expenses are expected to go up and the pay for the boards of directors is expected to increase.
DPM in 2008 paid VND2.4bil to the board of directors and board of supervisors, while the figure is expected to climb to VND3.53bil in 2009.
Similarly, the pay of HRC for the board of directors and board of supervisors was VND184.8mil, equal to 0.2% of profit. Meanwhile, the company plans to pay 0.35% of profit to the boards in 2009.
In 2008, the post-tax profit of Domesco was 2% lower than in 2007, but the company’s leadership still asked shareholders to approve the plan on extracting 15% of the post tax profit for the bonus fund.
In fact, experts say, managing businesses and helping them exist and develop in the crisis storm prove to require big efforts from the boards of management. If the boards of management succeed, a demand for higher pay will be quickly accepted.
However, they said that the pay and bonuses for boards of directors and boards of management need to be made public and the policy needs to fit businesses’ operation situations.
VietNamNet, TBKTVN
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