EPF abstains from voting on FGV directors’ fees resolutions at recent AGM

FGV’s AGM stirred an unexpected outcome after 3 shareholders — Felda, LTAT and KPF — rejected the same resolutions


THE Employees Provident Fund (EPF) had abstained from voting on the three resolutions related to FGV Holdings Bhd directors’ fees at the latter’s AGM recently, according to a source.

FGV’s AGM stirred an unexpected outcome after three shareholders — the Federal Land Development Authority (Felda), Armed Forces Fund Board (LTAT) and Koperasi Permodalan Felda Malaysia Bhd (KPF) — rejected the same resolutions.

Felda owns about a 33.6% stake in FGV, while KPF and LTAT have a shareholding of about 5% and 1.25% respectively. These three shareholders alone account for about 40% of the planter’s total issued shares.

Based on the AGM results, 46.03% or 1.38 billion shares were voted against Resolution 1, 2and3—allrelatedtothe directors’ fees and benefits.

The result also showed that shareholders with about 759 million shares had voted in favour of the three resolutions.

A total of 2.14 billion shares were counted at the AGM or 58.6% of FGV issued 3.65 billion shares, according to Bloomberg data. The EPF has about a 2% stake or 73 million FGV shares.

A source close to the matter told The Malaysian Reserve that the fund had refused to vote for or against the three resolutions. “The EPF abstained on the directors’ fees resolutions. The EPF voted ‘Yes’ for everything else,” said the source who requested anonymity due to the sensitivity of the information.

It was reported that the directors are not being paid for their current work, but are continuing to perform their duties.

Other resolutions related to the appointments of the directors had been endorsed.

The EPF is among the top 30 largest shareholders in the planter. The fund’s CEO Tunku Alizakri Raja Muhammad Alias was reported by The Edge Financial Daily as saying that directors’ fees must be linked to the company’s performance.

Other key shareholders in FGV are Urusharta Jamaah Sdn Bhd, Retirement Fund Inc (KWAP), the Pahang state government, Sabah chief minister and CIMB Bank Bhd.

FGV spent RM5.74 million in directors’ remuneration for the financial year ended 2018, including salaries, board fees, benefits-in-kind and many others, according to the annual report.

LTAT in a statement said it voted against FGV’s directors’ fees to protect the interests of its contributors who are members of the Armed Forces.

“The decision was premised on the fact that LTAT strongly believes in shareholder activism, particularly to protect the interests of our contributors — members of the Armed Forces.

“Given prevailing economic conditions and FGV’s current financial standing, we are of the view that directors’ remuneration should be commensurate with the current state of affairs at FGV and its prospects ahead,” LTAT said in a statement.

FGV posted a net loss of RM3.37 million in the first quarter ended March 31, 2019 (1Q19). For the whole of 2018, the company posted a net loss of RM1.08 billion, largely due to impairments and lower average crude palm oil price.

The group is working for a turnaround, but efforts are now saddled with risks of termination of the land lease agreement (LLA) by Felda.

Under its current terms, FGV must pay a fixed lease payment of RM250 million per year for 99 years, irrespective of prevailing crude palm oil prices.

FGV has a total landbank of 439,725ha and about 351,000ha is leased from Felda under the LLA.