Lian Beng's executive directors were awarded an additional $2 million last year under a method of computing bonuses that its former independent directors are disputing. The civil engineering and construction group revealed this figure yesterday in a filing to the Singapore Exchange as the row over bonuses continues.
Last Friday, the group's two independent directors - Member of Parliament Sitoh Yih Pin and former minister of state Wan Soon Bee - resigned. Mr Ko Chuan Aun, the president of property and entertainment company KOP, and Mr Low Beng Tin, the managing director of OEL (Holdings), were appointed as their replacements.
The focus of contention is on the way the bonuses for executive directors Ong Pang Aik, Ong Lay Huan and Ong Lay Koon were calculated. The firm's method is to calculate the bonus based on profits before minority interest, whereas the former independent directors are arguing that it should be based on net profits, after minority interest, which is usually a smaller figure.
Yesterday, Lian Beng argued that "the management has contributed the same efforts in managing partially owned subsidiaries as if they were 100 per cent owned by the company". So, it is "fair and reasonable" to include the entire profit or loss of its subsidiaries when computing the bonuses, confirmed the current remuneration committee made up of the newly appointed independent directors.
The firm noted: "The executive directors have understood that the computation of their performance bonus was... in line with the service agreements since 1999, regardless of whether partially owned subsidiaries were profitable or loss-making." It added that this has been the case for the firm over the past 16 financial years, "without any change or adjustment".
While the difference between the methods in 2014 comes to $2 million, the difference for 2013 is much smaller. The three executive directors would collectively have made $64,000 less in 2013, based on profits after minority interests.
Lian Beng also revealed that it sought the opinions of corporate risk advisory firm RSM Ethos, which confirmed that its computation of executive directors' performance bonus was in line with the directors' service agreements.
It earlier mentioned that "an independent professional party" had confirmed this, without disclosing the name of the firm.
Lian Beng also confirmed that its external auditor has reviewed the management's computation of performance bonus based on "before minority interest" basis, and noted that it has applied the formula based on the net profits before taxation and extraordinary items.
Lian Beng's share price closed at 52.5 cents yesterday, down 2.78 per cent.