Felda puts future of FGV directors in question

THE shareholders of FGV Holdings Bhd today made an unprecedented move by rejecting all three resolutions linked to the palm oil giant’s board remuneration package.

The three main shareholders – namely the Federal Land Development Authority (Felda), Koperasi Permodalan Felda Malaysia Bhd (KPF) and the Armed Forces Fund Board (LTAT) – made the call at FGV’s AGM in Kuala Lumpur, leaving the future of the company’s directors in the balance.

“The irony is that the resolution to be reappointed was passed. In short, the message is (that) we want you to work but we are not going to pay you.

“It seems that all our efforts over the past year are not appreciated. That is our immediate feeling which may be wrong, but that is the feeling,” FGV chairman Datuk Wira Azhar Abdul Hamid told reporters after the meeting. 

Felda, which owns more than two-thirds of FGV’s total landbank, shunned a pay package for its board committees although the amount was no different than the previous financial year.

Felda has a 33.7% stake in FGV, while KPF and LTAT have a shareholding of 5% and 1.25% respectively.

The setback appears to have put a dent on plans to turn around the debt-saddled FGV, which included strategies to recalibrate its focus on its downstream business amid concerns that the company’s land lease agreement (LLA) with Felda will be terminated.

In a recent letter to shareholders, Azhar said FGV could not solely depend on earnings from crude palm oil sales and remain helpless in the face of price fluctuations.

The company should create more value with the products it produces in abundance instead, he noted.

Azhar also expressed his confidence that FGV would do well even if Felda opted to terminate the LLA.

The message did not sit well with analysts who viewed the termination negatively. Clearly, investors are also unimpressed.

However, Azhar declined to attribute the resentment to his letter, and said that he was not aware of the “basis” for the hostile sentiment.

He added that there have been no formal discussions on the LLA thus far.

It was previously reported that FGV was keen to revise the terms of the LLA with Felda.

Under its current terms, FGV must pay a fixed lease payment of RM250 million per year for 99 years. In fact, the company has been doing so since 2012. The RM250 million is paid irrespective of prevailing CPO prices.

At the AGM, Azhar also described the company’s directors as “responsible people” who will now consider all options before deciding their next course of action, including resignation.

“The current board is not there for the director’s fee. It is a board that came in with our eyes open, with full understanding of the challenges in FGV, and we have actually volunteered to go through that hardship of trying to turn FGV around.

“A decision will be made eventually. But I think, we have to do it with a rational mind and make sure that whatever happens going forward is well-appreciated and well-understood.

“Sometimes it is difficult. We try our level best to make people understand but it is difficult when you refuse to understand. It is a challenge that we will have to immediately manage.

“But when the time comes when we are ready, and I don’t think it will take a long time, we will advise you (the press) on our decision,” he said.

Meanwhile, sources have confirmed that Sime Darby Plantations Bhd MD Tan Sri Mohd Bakke Salleh is the primary candidate to replace Tan Sri Megat Zaharuddin Megat Nor as Felda chairman.

Megat Zaharuddin has decided to step down from the role after just 11 months since his appointment on July 27 last year.