Shahril says he's willing to quit remuneration committee

KUALA LUMPUR: Sapura Energy Bhd president and group CEO Tan Sri Shahril Shamsuddin, while defending the group's corporate governance, said he is willing to leave the group's remuneration committee to appease shareholders perturbed by his "excessive" pay package.
"I don't have an issue with that. If the board sees fit, I can just come in and advise. To me, my conscience is clear because when they decide (the pay), I am not there. After that, it goes to an independent board and these are people of good standing," he told SunBiz in an interview that lasted nearly two hours.
According to Sapura Energy chairman Datuk Hamzah Bakar, Shahril was not involved in discussions over his remuneration despite being in the committee, which recommends proposed remuneration packages that are subject to approval by the board.
"I chair the committee. Every time it comes to his portion, he has to leave. The reason why we need him in the remuneration committee is that the committee looks at remuneration of senior management. So, without his input, we only have the written report which, as you know, is not always sufficient," he said.
Hamzah said the potential, succession and nuances related to the senior management's performance has to be verbalised in order for the remuneration committee to assess the value of each individual of the senior management team, while the final decision is made by the board, after considering the recommendations made by the remuneration committee.
Besides Shahril, the other two members of the remuneration committee are Hamzah and independent non-executive director Mohamed Rashdi Mohamed Ghazalli.
Shahril said all the committees, including the remuneration, audit and nomination committees, report to an independent board and he expressed disappointment over certain quarters suggesting that the company does not have good corporate governance.
"Perhaps we turn the question around; if we did not have good corporate governance, how did we become a global company?" he questioned.
Last week, the Minority Shareholder Watch Group (MSWG) expressed concern over Shahril's "excessively high" remuneration package and urged shareholders at the AGM to vote against the re-election of two independent directors as well as payment of directors' fees and benefits.
However, all resolutions were passed at the AGM, including the re-election of Shahril as a director.
Hamzah, who explained that the bonus was based on the group's performance in FY17, said that Shahril's remuneration includes a compensation for the losses he suffered when Sapura Energy's share price fell.
Due to a covenant that its 14 banks have on a RM16 billion refinancing package, Shahril cannot reduce his stake to below 10% and must remain as CEO of the group, a move considered by the board as "equal to a personal guarantee".
"When the loan was taken, the share price was at RM4 but early this year, it fell to below RM1. That works out to RM1.8 billion actual loss … looking at the kind of loss suffered by him, the board considered how to compensate him," he said.
As for the RM43.4 million and RM12.5 million paid for intellectual property rights, trademarks and branding fees, independent non-executive director Gee Siew Yoong said the amount is based on valuations done by Brand Finance and PwC.
She said PwC recommended an annual fee ranging from 0.73% to 2% of the year's revenue and that the RM43.4 million is equal to 0.73%. Brand Finance had recommended an annual fee of 0.84% of the year's revenue.
On its relationship with EPF, Shahril said it is the board and management's duty to continue to convince and show the company's progress.
"I think many people have forgotten that we've just gone through three years of the toughest time in the industry and we're still here. Does that not say something about the company, in its resilience, in its processes, in its resolve to manage the downturn and crisis?" he questioned.
Over the past three years, Sapura Energy's stock has tumbled 76% due to the oil price rout. It closed 0.9% higher at 59 sen yesterday on 60.05 million shares done.