Asti clarifies circumstances surrounding retrenched CEO's S$1.4m entitlement

MAINBOARD-LISTED Asti Holdings 575 : 575 0% said that clerical errors and omissions in its corporate governance report released in May 2021 have led to the confusion surrounding the payment of S$1.4 million to Michael Loh Soon Gnee in relation to his retrenchment as chief executive officer.

In a bourse filing on Thursday (Dec 30), the semiconductor manufacturing services company clarified that the entitlement Loh received is in compliance with S168(1A) of the Companies Act and its own remuneration policy, even though it was higher than the total amount of remuneration of close to S$1.3 million that he received in FY2020.

This is because the company had previously mistakenly paid Loh only 1 month of annual wage supplement instead of 2, as stipulated in his employment contract.

Therefore, the S$1.4 million paid out to him factored in the 2 months of AWS that he was entitled to and does not exceed the threshold stipulated within the Companies Act.

Another point of contradiction was a previous statement in the company's Corporate Governance Report dated May 14, 2021 that stated there are no termination, retirement or post-employment benefits provided for in the employment contracts with its directors, CEO or top 5 key management personnel.

The company said that Loh's employment contract on Aug 8, 2020, did contain a clause on termination benefits and that the company had not updated the report due to an "inadvertent oversight".

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In a blog post on Dec 23, professor of accounting at the NUS Business School Mak Yuen Teen had questioned why Loh was "contractually entitled" to an aggregate of S$2 million as part of his termination, while the board had agreed to pay him some S$1.4 million instead.

He had also noted that the S$2 million contractual termination payment in Asti's case is "not fair and not reasonable" since he observed that the norm for such senior positions would be about 3 to 6 months of remuneration instead of a more than a year's remuneration.

Furthermore, Mak had questioned if the S$1.4 million entitlement that he was paid exceeded the threshold stipulated under the Companies Act.

Asti had dismissed Loh after he spent more than 8 years as chief executive at the company amid an ongoing retrenchment exercise. He will stay with the company until Dec 31 and continue to act as its chairman thereafter.

Asti's shares closed down 3.6 per cent or S$0.001 at S$0.027 on Thursday.

READ MORE: 

• Asti's move to retrench CEO with S$1.4m entitlement questioned
• Asti CEO retrenched amid 'difficult period' for company