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KUALA LUMPUR: IJM Corporation Bhd’s chief executive officer and managing director Datuk Krishnan Tan Boon Seng revealed yesterday that he is most likely to step down at the end of next year under a succession plan to make way for his deputy.

The unexpected announcement came after Tan was asked to reconcile revealing a succession plan which may raise concerns among shareholders, especially one involving a successful CEO, to the practice of good corporate governance.

“There is a time when every CEO has to leave and in the case of IJM, there is a time when someone else will take over. From the changes that take place on the board, you can see who the new leaders of the company are,” he said.

IJM’s deputy CEO and deputy MD is Teh Kean Ming. He was appointed to the posts in July last year. Prior to that, Teh was the alternate director to Datuk Goh Chye Keat and Datuk Goh Chye Koon.

Teh was the head of IJM’s properties division from 2001 to 2008 and had been MD of IJM Properties Sdn Bhd since January 2005.

Speaking at a forum on “Corporate Governance Best Practices by Public Listed Companies”, held in conjunction with Securities Commission-Bursa Malaysia Corporate Governance Week, Tan said having a succession plan was part of good corporate governance as it helped with better management.

“The succession system is quite clear. When the time comes, I will have a different role to play. Although I have not made a formal announcement, all my institutional shareholders know because they have been told, that come December 2010, I may not be the CEO, there could be a new CEO, but you will still see me on the board,” he told a rather surprised audience.

The captain of industry joined the company as financial controller in 1983. He was then appointed alternate director, director and deputy MD the following year.

Tan became MD in 1997 and is the longest serving group MD. He was redesignated CEO and MD in February 2004.

“It is a personal philosophy that there is a time to leave and I have been with the company for a long time,” Tan told reporters after the forum.

However, he said he would, if permitted, remain on the board of directors and continue to be a strong contributor to the company to provide continuity and support.

“I will not be off the scene completely but new people will have to take on and move the company forward. The new deputy is already in place and will take over when the time comes,” he said.

He explained that when an executive was brought to the level of an alternate, “you know that there are things planned”.

On another note, Tan said the company was on relatively safer ground now and it intended to return the pay cut that senior management had taken earlier to manage risk amid the global financial crisis.

He said the fear of systemic failure had somewhat subsided and it was beginning to see orders coming in.

“We have a history of being pro-active and the top management took a pay cut. But now we want to give that back as we are relatively out of the worst and we are expected to perform.

“Looking forward, we can see that we have a lot to do. We are getting contracts and we are beginning to see orders,” he said.

Tan said the company’s business had picked up with immediate impact from rising crude palm oil prices and hoped the government’s pump-priming activities would stimulate its construction arm.

“We are rather active now, especially on the manufacturing, plantation and construction side. In a broader context, we are doing reasonably well,” he said.

 

 

This article appeared in The Edge Financial Daily, June 12, 2009.

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