This article first appeared in Capital, The Edge Malaysia Weekly on July 8, 2019 - July 14, 2019

“Boss, I think we have a situation next month.”

The CEO looks up from his smartphone, pauses his Korean movie and removes his earphones before motioning for the executive to sit.

“What’s the matter today?”

“The AGM season starts next month and I really suggest we have a meeting to discuss what to do about the situation.”

The CEO’s face displays a faraway look as his lips curve slightly into a half-smile. He loves the AGM season.

“Thanks for reminding me. Time to open the book again, eh, on who has the best spread for shareholders post-meeting.”

Barely catching herself before she does an instinctive eye-roll, the executive forces a smile, picks a piece of paper from the file she is holding, and hands it over.

Her boss quickly skims through the list of AGMs, then nods. “Good, the AGMs for our four major investee companies are all on consecutive days of the same week. Easier to judge the food, then.”

“Before that though, we need to confirm how we will be voting on the resolutions put forward during the AGMs,” the executive reminds him.

He attempts to raise one eyebrow to feign surprise, then gives up halfway. Instead, he gives her a questioning look, with a dash of incomprehension. Internally, the executive sighs again.

“Remember, sir, last year we voted with our 1.5% shareholding to block the directors’ remuneration at the Flowerhorn Grooming Vocations Holdings Bhd because we weren’t satisfied with how the company was doing?”

“Yes, that was a good one,” he begins with a trace of a smile. “I even told the media that we at the Lifetime Pensions & Annuity Perquisites — they call us L-PAP, don’t they? — strongly believe in shareholder activism to protect the interests of our pensioner members.”

The executive gestures to the boxes on the trolley behind her. “We’ve been getting a lot of letters and emails from our members since then. We thought you should read some of them ahead of the AGM season.”

The CEO’s eyes dart quickly to the boxes, then to the paused Netflix screen on his smartphone, then to the executive. He nods in resignation. “But what is the problem? What do the members want?”

“Basically, they want more shareholder activism this year. You see, some of our listed major investee companies are not doing so well, so our vote as the majority shareholder in each will be decisive if we block their pay,” she says.

A horrified look dawns on the CEO’s face. “Block their pay? Why would we do that?”

“Well, we did that with Flowerhorn Grooming Vocations to send a message to the management, and we only had 1.5% there. And we also said openly that the directors’ pay should be commensurate with a company’s current state of affairs,” she replies.

The CEO opens his mouth slightly, clearly trying to say something but no words emerge as he struggles to crystallise his thoughts.

The executive continues: “These four companies I highlighted in the list will be the big decisions for us, sir.”

“Remind me, what issues should we be looking at in these companies?”

She takes a deep breath, then takes out a pencil and starts pointing to each company’s name as she speaks.

“The pharmacy company isn’t so bad, but even though its profits fell last year, it may be harsh to not pay the board.

“But the moneylender is the worst in the industry in a few key metrics and the turnaround hasn’t really brought it around, so that is one where we may consider blocking their remuneration.”

“Also, the yacht-making business chalked up a record loss last year and the share price is also the worst in over a decade, so we may have to block the board remuneration there as well.”

A drop of sweat rolls down the CEO’s cheek. “What about the padi plantation?”

“Oh, they spent almost a billion buying padi land but none of it is very productive so they are spending more money to improve the yields. Meanwhile, they also suffered a big loss last year because of all that and bad rice prices, plus the balance sheet went from cash-rich to sinking with debt with all this spending, sir.”

“My God. Do we really have to? I’m on these boards too!”

“Well, we do strongly believe in shareholder activism, boss.”

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