Wednesday, February 6, 2013

I want to be an employee of SP Setia

I would love to be an employee of SP Setia, if I can get a job there but if I am an investor (which I am) I may think again. Why?

Well, I leave it late to comment on this but the full proposal came yesterday, and here it is. It is basically a free share award (up to 15%) for the employees which also includes the directors of course. The keywords are "no consideration" and "in recognition of loyalty". If you are to buy loyalty, and that affects the shareholders - then forget about loyalty!


I am not against rewards at all, but reward in a proper manner - cash and remunerations in other forms.

Here are the impact to the shares...According to its current price of RM3.13, the impact can go to as high as RM1.15 billion in value over 4 years - for a property company which is usually heavy with assets? Hello, it is not a services company such as IT, investment banks, pharma research etc...For a property company, land assets, market conditions presides over others. The 15% is on top of salaries and other expenses - fyi! Even for a top investment bank like Goldman Sachs, you know how much investors would jump over a 15% free share award over 4 years? The CEO of Goldman would not dare to come out with a plan like this even...You know when Steve Jobs proposed an option scheme for himself back in 2001 without the approval of the board, the media had a field day when the news appeared in 2006 - that was options, not free shares and it was way below 1% of total Apple's shares - for SP Setia, a property developer, not an Apple - total 15%!


What about its reasoning for the issuance? One of it is to provide valuable incentive to Employees without adversely affecting cashflow.

To me this is nonsense, firstly PNB bought a controlling stake over the property company afraid that it goes to the wrong hands. And it being afraid of the employees leaving, this kind of offer? This basically shows that the company has no understanding and respect over shareholders - minority that is.

If TSL can think that SP Setia is him and he is SP Setia, then that's really wrong!

15 comments:

Kalasou said...

I think he can leave anytime. He do all this maybe which as you said for afraid of the employees leaving. Or in the others side is to benefit his employee (men) loyalty to him not to PNB "sp setia". The glory of Sp setia are built by his intelligent team members. "Take away my factories, my plants, take away my railroads, my ships, my transportation; take away my money, strip me of all these, but leave me my men and in two or three years, I will have them all again" Quote Andrew Carnegie.
But i wont buy sp setia too!

Akagi Shigeru said...

Welcome to the real world ... This is why I don't like SP Setia even though it was the darling of the market. Never like it's CEO. 15 % ... They really think the company belong to them.

hng said...

Is the ESOS share offer to employee and director FOC?!

I thought it should be the ESOS share issue at discount to market price, up to maximum 10% discount. It like alternative to private placement to raise capital to company at discount cap at 10% to market price

ronnie said...

Better to have an above board scheme than say a Transmule style deal

felicity said...

Hi Hng

ESOS is not free...

As for Transmile, it is totally not acceptable - that's fraud. SP Setia is not Transmile but still it should not have done what it is proposing

Big Sea said...

I see Battersea as an Landmark event for SP Setia to expand beyond Malaysia. As a result I bought SP Setia for their future growth beyond Malaysia.

Private Placement dilutes the EPS, now it seems that this Stock Grant plan would dilute the EPS further.

If SP Setia do really needs employee to stay along for next four years for critical projects that would generate even higher growth, then I am fine.

The major concern I have is that Liew Kee Sin do not trust or respect PNB after all and is threatening PNB with resignation

yhtan said...

The key stakeholder that push SP Setia to this level is their team of quality staff, I have no issue against ESOS for free if they achieve their KPI. Tan Sri Liew going to stay for another 2 more years, let’s see what will happen until year 2015.

Unknown said...

ESOS for free ??
I thought only discount 10% something....??

Unknown said...

To my guest, it could indirectly showing that there is a change in management or successor in the plan. Depends on which side we are in. Say as investor, the dilution is definitely killing. On the other side, the new management running the show would demanding higher pay (they might take advantage knowing no second choice on succession plan). Free ESOS is not the way, it should be say 10%-15% discount, would be more acceptable to me.

Unknown said...
This comment has been removed by the author.
hng said...

felicity

If ESOS is no free, than is ok, just have 10% discount is fine.

In fact, i actually like Tan Sri Liew plan for private placement 15% + ESOS 15%, totaling 30% are essentially dilute PNB shareholding, pare down market perception that SP setia is GLC to more institutionalize and wider public spread. Bedise that, it also improve SP setia liquidity and pave way to re-list in MSCI index.

The 15% private placement has issue at 2.94, and i think ESOS should be around these range. The main beneficial for ESOS will be Tan Sri Liew himself. This is because Tan Sri Liew have option to sell back he original stake in SP setia to PNB at 3.95. The cash proceed then can be use by Tan Sri Liew to exercise he ESOS entitlement at much cheaper price at <RM3 and retain him as major shareholder in SP setia on enlarge share capital

hng said...

felicity

If ESOS is no free, than is ok, just have 10% discount is fine.

In fact, i actually like Tan Sri Liew plan for private placement 15% + ESOS 15%, totaling 30% are essentially dilute PNB shareholding, pare down market perception that SP setia is GLC to more institutionalize and wider public spread. Bedise that, it also improve SP setia liquidity and pave way to re-list in MSCI index.

The 15% private placement has issue at 2.94, and i think ESOS should be around these range. The main beneficial for ESOS will be Tan Sri Liew himself. This is because Tan Sri Liew have option to sell back he original stake in SP setia to PNB at 3.95. The cash proceed then can be use by Tan Sri Liew to exercise he ESOS entitlement at much cheaper price at <RM3 and retain him as major shareholder in SP setia on enlarge share capital

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felicity said...

I guess the idea is to protect the employees and could be due to PNB's eagerness to have control over SP Setia, could be political reason.

Teoh said...

A bit late but lets put it this way. When you are leaving as a CEO and you have taken all the money, you can just do three things. One, take everyone with you and start anew, don't care about the people around you or make sure the loyal staffs are well taken care of. TSL is the only CEO I know that have no directorship in other companies. The same goes for the new CEO DVTY and DTLS. He always believe in the value of SPSETIA and never sold a single share of his despite the price ballooning to RM11.00 previously. He is also one that values loyalty to the extent that staff works for him for years. I agree that as a minority shareholders we would welcome a better deal. But having worked for him, he just values his people.