Sias urges Great Eastern to address minority investors’ concerns, questions board on performance

THE Securities Investors Association (Singapore) or Sias has urged the board of Great Eastern to “seriously and objectively consider the true purpose of the shareholders’ requests”, as a substitute of avoiding them on a authorized floor.

The assertion on Thursday (Mar 7) is in response to the insurer’s dismissal of minority shareholders’ request to desk three proposed resolutions at its upcoming annual normal assembly (AGM).

Great Eastern’s board mentioned on Wednesday that it has sought authorized recommendation and understands that the request “does not satisfy all of the requirements” for a requisition to be moved on the AGM.

Led by a former remisier named Ong Chin Woo, the minority investor group put ahead three resolutions final Friday to handle the undervaluation of Great Eastern’s shares: to withhold administrators’ charges, to interchange OCBC shares within the share choice schemes of executives with Great Eastern shares, and to nominate an impartial monetary adviser to discover choices to boost shareholders’ worth.

“It is however surprising that Great Eastern has adopted a somewhat legalistic response to the tabling of resolutions by minority shareholders, a move which appears to sidestep the substantive concerns raised by the minority shareholders,” mentioned the investor affiliation.

While Sias agreed with OCBC’s insurance coverage arm on its share value motion relying on many components together with these past administration management, the affiliation highlighted that it’s crucial to handle any persistent underperformance.

“Such discrepancies often signal a deeper misalignment between the company’s fundamentals and its market perception, posing long-term risks to all shareholders.”

Sias famous that it has met with representatives of the minority shareholder group on Wednesday, and understands that these shareholders are “advocating for measures they believe will enhance shareholder value”.

Since the proposed resolutions search to align administrators’ pursuits with these of all shareholders, Sias highlighted the “significant value” in getting a shareholder vote on the three resolutions on the AGM.

“We consider it will be untimely for the corporate to dismiss the tabling of those resolutions outright, particularly based mostly on a authorized technicality.

“Instead, we encourage the board to exercise its discretion based on the spirit of the law to include these resolutions on the agenda for the upcoming AGM,” mentioned Sias.

It additionally inspired the board to think about absorbing the marginal value related to together with the resolutions proposed by the minority shareholders on the AGM, to advertise good company governance practices “beyond mere box-ticking exercises”.

Additionally, Sias instructed that the remuneration committee take into account paying 30 per cent of the present director charges in Great Eastern shares to administrators in lieu of money.

Meanwhile, it posed eight questions on the insurer’s monetary place and efficiency metric.

It requested the administration to make clear the first impression of SFRS(I) 17 adoption on its revenue and loss, monetary place, in addition to embedded worth.

Sias additionally requested the corporate to reveal the overall shareholder return (TSR) developments over the previous three years, 5 years, and since 2015, which additionally roughly correlated with the tenure of the present group chief government officer.

It requested if the board benchmarked the corporate’s efficiency towards peer insurance coverage firms, and what the important thing efficiency standards used within the formal evaluation of the board are, together with the weightages assigned to TSR and return on fairness.

“Similarly, how are TSR and embedded value factored into the performance assessment of the group CEO and key senior management executives, and what are their respective weightages?”

The investor physique famous that the group CEO in FY2022 obtained S$1.9 million in bonuses and S$1.4 million in long-term incentives, out of the overall remuneration package deal of S$4.9 million. Since Great Eastern pays its executives with OCBC shares as a substitute of its personal shares, Sias requested the remuneration committee to reveal the overall worth of OCBC shares and OCBC share choices obtained by the group CEO since his appointment in November 2015.
 
It additionally highlighted a big divergence noticed in share costs between Great Eastern and OCBC over the previous three years, and questioned the board whether it is considered as a priority.

The affiliation furthered questioned the board whether it is actively exploring measures to strengthen the group’s remuneration and incentive practices. This is especially relating to the allocation of OCBC shares to the group CEO, contemplating the function primarily focuses on the enterprise of the insurer as a substitute of its father or mother firm.

“While activism from minority shareholders could also be perceived as unusual and even unwelcome, it’s crucial for boards to evaluate the deserves of proposed resolutions from the standpoint of the issuer and its shareholders as a collective.

“We echo SGX RegCo’s stance and encourage the Great Eastern board to proactively engage with shareholders to address their concerns, regardless of any differences in perspective, thereby facilitating a more transparent and responsive decision-making process,” mentioned Sias.

Shares of Great Eastern have been buying and selling down 0.3 per cent, or S$0.05, to S$18.15 as at 1.44 pm on Thursday.