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The resignation of two independent directors from Lian Beng's board was due to differences in opinion over the performance bonus for its executive directors, the firm said on Tuesday.
The two directors had felt that the performance bonus provision should have been computed on the group's profit before tax after taking into account minority interests. This runs contrary to the company's practice of computing it based on group profit before tax, before adding minority interest, said the civil engineering and construction group following a query from the Singapore Exchange.
Based on their view, the former directors - Sitoh Yih Pin and Wan Soon Bee - had requested for the company to revise its computations of performance bonuses for executive directors starting from 1999, when the company got listed. In their opinion, after computing these based on an "after minority basis", adjustments should then be made to the remuneration of executive directors.
The service agreements for the company's executive directors, signed in 1999, stipulate that their performance bonus will be based on the net profits of the group before tax and before extraordinary items in its audited accounts.
Since the company had been consistently using the "before minority interest" basis since and is in line with the terms of the service agreements, its executive directors believe that the performance bonus should be computed on such a basis.
Lian Beng has engaged an independent professional party on this matter, who confirmed that the computation of the 2014 performance bonus for executive directors was in line with the provisions of their service agreement.
Its external auditor has also made no qualifications for the provision of the performance bonus, the group said.