Collapse of government-linked companies not a question of if, but when (2)

When the government appoints former civil servants and army generals with zero private sector experience to head government-linked companies, rest assured it is digging its own grave. Or rather Singaporeans’ since it involves billions in tax dollars. 😦

In the real private sector, non-performing CEOs are given the boot. But when it comes to PAP-appointed ones, the remuneration is increased or they are simply transferred to another GLC to wreak more havoc.

SPH is a classic example of how PAP plans to put the final nail in a GLC’s coffin.

SPH, a media organization, has seen its readership declining since 2009. Despite this, CEO Alan Chan’s remuneration has doubled from less than $1.5 million in FY2009…

..to $2.914 million in FY2016.

If SPH has been able to increase its bottom line through acquisitions, doubling Chan’s pay would have been justified. However, its net income had tumbled by almost 50% since FY2012 and EPS basically collapsed.

Chan has been credited with expanding SPH which is investing in everything except its core business. In the private sector, the objective of acquisition is to improve the bottom line. In Chan’s case, profit after taxation in the year before he became CEO in 2003 was $73 million higher than in FY2016!
To reward an incompetent CEO must have been a big slap in SPH shareholders’ face.

When Chan became CEO in 2003, he was paid less than $1 million.

If Chan’s pay was pegged to his performance, shouldn’t he be getting less than $1 million since profit after taxation in FY2016 was lower than FY2003?

Instead of pegging Chan’s pay to his dismal performance, SPH increased Chan’s pay and reduce costs by shedding almost 10% of employees under the guise of restructuring.
link

How could any company with monopoly status earn lesser profits every year? How could readership have fallen despite the population increasing by more than half a million from 2009 to 2015?
If SPH was even serious about declining readership, it would have ceased disseminating daily propaganda for PAP.

It’s only a matter of time before SPH shareholders demand for CEO Chan’s head to roll but of course this is not going to happen. Instead, Chan has decided to kwai kwai “retire” after earning an estimated $28 million** as CEO. (**average of $2 million over 14 years.)

SPH is a sinking ship but after Chan leaves in September, SPH will be helmed by former paper general Ng who has actually sunk NOL, another GLC.

While SPH chairman Lee Boon Yang has anyhow praised CEO Chan for “steering SPH to greater heights ..”, Singaporeans should only expect appointed-CEO Ng to steer SPH to … great depths.

Former civil servants and army generals are ill-suited to be CEOs of government-linked companies. This is common sense.

Helmed by incompetence, the collapse of government-linked companies is inevitable.

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One Response to Collapse of government-linked companies not a question of if, but when (2)

  1. Stephen says:

    Big question is why are they appointing ex-army guy who gave no experience in finance?

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