Amara shareholders would have benefited from more detailed disclosures

Property developer and hotel group Amara Holdings has recently experienced a dwindling in its list of independent directors (IDs).

At Amara's annual general meeting (AGM) on Apr 26, a resolution to re-elect Tan Tiong Cheng as an ID was not passed because 110 million shares - representing 77.7 per cent of the shares voted that day - were against it.

At the same AGM, shareholders also shot down a resolution to grant directors the authority to issue shares under the Amara Performance Share Plan. For this resolution, 1.6 million shares voted against and 868,100 shares voted in favour.

But the 1.6 million shares represented 64.5 per cent of all shares voted that day. That was because Amara's chief executive and chairman Albert Teo, executive director Susan Teo and their siblings Teo Kwee Chuan and Corrine Teo, who were all eligible to participate in the plan, abstained from voting on the resolution.

Collectively, they hold 135.7 million shares in Amara. A total of 141.6 million shares were represented in the AGM. The Teos collectively control more than 30 per cent of Amara.

The results of the AGM may raise an important question in the minds of minority shareholders: Why did the company's controlling shareholders vote against Tan's appointment?

After the AGM, Amara issued a notification to the Singapore Exchange (SGX) announcing Tan's cessation as an ID. Tan has also indicated "outstanding material issues" before the remuneration committee (RC), which he chaired.

The issue at hand involves the implementation of a compensation benchmarking report by a consulting firm that was hired to review the compensation of senior management.

In response to queries from SGX, Amara clarified that it does not consider the issue raised by Tan - which relates to an immediate family member of one of Amara's executive directors - as an unresolved matter, as it is still under discussion.

No investigation

No decisions have been made as yet by the RC or the board, the company said, and therefore "there is no investigation being carried out on the issue".

WIth Tan stepping down as ID, and lead ID Foo Ko Hing's resignation effective on Apr 27, Amara presently has one remaining ID - Chia Kwok Ping.

According to an announcement to the Singapore bourse, Foo is resigning due to "preoccupations and personal reasons".

Chia, the only remaining ID, has also indicated his intention to step down from the board, though he will continue to act as an ID until his replacement has been appointed.

The timing of Foo's resignation, which takes place as Chia has signalled his intention to do the same and Tan's description of an "unresolved matter", is curious, to say the least.

Meanwhile, Amara has said that the board is in the process of appointing new IDs and will update shareholders on the appointments in due course.

Tan isn't the only one with questions linked to remuneration. In a LinkedIn post last week, NUS Business School professor Mak Yuen Teen flagged that Amara's annual report lacks transparency in the disclosure of its directors' remuneration.

Instead of listing their salaries by breakdown with their names, Amara simply lists the number of directors earning salaries in broad bands: below S$250,000; S$250,000 to below S$500,000; and S$500,000 to below S$750,000.

Amara said the reason for this disclosure format is that it operates in a competitive industry, where its key management personnel are susceptible to poaching. It also said it wants to "maintain confidentiality" and the "sensitivity of remuneration information".

But surely, other industries are no less competitive. Take the finance industry, for example. DBS has listed the remuneration for each director in its FY21 report.

In addition, Amara's annual report also includes the salaries of 3 of the chief executive's immediate family members - his brother, sister and daughter - in a manner that is vague, only saying their remuneration individually exceeded S$100,000 during the year. Without an indicative range, what those family members are being paid is anyone's guess.

To be fair, Amara was quick to respond to Prof Mak's post and clarify that one family member earns between S$100,001 and S$200,000, while the other two earn between S$200,001 and S$300,000.

But the point could be made that without the prodding, the information may not have been released. And as Prof Mak put it in a subsequent post, "it should have (been) disclosed in this way in the first place".

For that matter, exact details pertaining to the "issue" that Tan and the board could not see eye-to-eye on have also been unclear.

Standstill

As it currently stands, the matter appears to be at a standstill for now. Once Amara appoints new IDs, the RC will be reconstituted to comprise at least 3 directors "who will follow up on the issue until decisions are made by the RC and board", Amara said.

Nonetheless, in the spirit of corporate governance, greater transparency and detailed disclosures would have better served Amara's shareholders.