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Sapura Energy shareholders vote for re-election of directors despite MSWG’s concerns

KUALA LUMPUR: Majority shareholders of Sapura Energy Bhd pushed through resolutions to re-elect independent directors and payment of directors' fees and benefits, despite the Employees Provident Fund (EPF) throwing its support behind the Minority Shareholder Watchdog Group's (MSWG) call to reject the resolutions for failing to keep president and CEO Tan Sri Shahril Shamsuddin's pay package in check.

MSWG openly urged shareholders to vote against the re-election of two independent directors, namely Mohamed Rashdi Mohamed Ghazalli and Datuk Muhamad Noor Hamid, as well as the payment of directors' fees and benefits up to RM5.6 million.

EPF, a substantial shareholder of Sapura Energy with a 5.21% stake, voted against the resolutions and even went a step further to vote against the re-election of Shahril.

Shahril was paid a bonus of RM55 million for the financial year ended Jan 31, 2018 (FY18). The company also paid RM43.4 million and RM12.5 million to Sapura Holdings Sdn Bhd and Kencana Capital Sdn Bhd respectively, as intellectual property rights, trademarks and branding fees in the same financial year.

MSWG general manager Lya Rahman said the company's board of directors have not been performing their fiduciary duties in safeguarding the interests of shareholders as the issue of excessive remuneration has been ongoing for several years.

“We recommended to all shareholders to vote against the re-election of the independent directors as well as the remuneration of the directors. We don't have the opportunity to vote against the CEO's remuneration but that's what we can do to show to the directors, look here, what we want you to do is be serious in looking into our grievances,” she told reporters after the AGM today.

Shareholders holding 81.7% of voting rights voted for the re-election of Shahril, 54.4% for Mohamed Rashdi Mohamed Ghazalli, 76.6% for the re-election of Datuk Muhamad Noor Hamid and 73.2% for the payment of directors' fees.

In a letter to the company prior to the AGM, MSWG highlighted concerns over the bonus payment to Shahril despite the group's pre-tax loss of RM2.32 billion for the financial year ended Jan 31, 2018 (FY18). In addition, there was no dividend payment recommended for FY18.

It also asked the company to justify the payments made to Sapura Holdings and Kencana Capital respectively.

According to its annual report, Shahril's total remuneration amounted to RM71.9 million, of which RM55 million was in the form of a bonus. In its response to MSWG, the company said that the bonus payment was based on the group's performance and achievements for FY17 as measured by the key performance indicators set by the board.

It said the board is satisfied that its decision made on the bonus at that time commensurated with Shahril's performance and contributions for FY18, and highlighted his voluntary salary reduction for the third year running.

Lya, who opined that the response was non-committal, disagreed that Shahril's performance commensurated with the remuneration and added that excessive remuneration has been an issue on a yearly basis.


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