Stop trades by company insiders
Credit to Author: EMETERIO SD. PEREZ| Date: Thu, 30 May 2019 16:15:56 +0000
Philippine Telegraph and Telephone Corp. (PT&T)reported capital deficiency of P714,206,501 as of Dec. 31, 2018, down P8,639,987,444 from P9,354,193,945 as of June 30, 2018.
The company arrived at this capital deficiency as follows: share capital of P10,935,991,894 plus revaluation surplus of P102,102,000 plus accumulated actuarial loss on retirement benefits of
P14,898,232 equals P11,052,992,126 minus unrealized valuation loss on equity investments of P306,945 equals P11,052,685,181.
When P11,052,685,181 is applied to accumulated deficit of P11,966,891,682, the result is P714,206,501, PT&T’s capital deficiency as of Dec. 31, 2018 as audited by Alas, Oplas & Co. CPAs.
As of June 30, 2018, PT&T reported capital deficiency of P9,354,193,945, which could similarly be computed as follows: P2,224,255,313 plus P102,102,000 equals P2,326,357,313 minus P278,901 equals P2,324,545,199. Applying this to accumulated deficit of P11,678,739,144, PT&T would end up with capital deficiency of P9,354,193,945.
Sale
Republic Telecommunications Holdings Inc. sold 560 million PT&T common shares to Menlo Capital Corp. for P264,877,979, which translates to P0.473 per common share. The sold PT&T common shares represent 70 percent of outstanding, according to a filing.
When computed, it is 70 percent of 800 million listed PT&T common shares, which are equivalent to 37.333 percent of 1.5 billion outstanding PT&T common shares.
Company execs
Jose Luis Santiago was chairman of PT&T’s board, and, at the same time, president and chief executive officer; Maureen Virginia Santiago, executive vice president; Arturo T. Falco, senior vice president and comptroller; Gerardo R. De Leon, SVP and chief finance and admin officer; Pedro R. Santos, SVP for network engineering and technical services; and Alicia A. Arogo, vice president-treasurer.
A footnote showed Jose Luis Santiago and Maureen Virginia Santiago retired on Aug. 10, 2017; Falco, May 31, 2018; De Leon, June 30, 2018; Santos, Dec. 31, 2017; and Arogo, Aug. 10, 2017.
Highest paid
As a six-person group, the two Santiagos and four others used to be PT&T’s highest paid executives until 2018 when Menlo came in.
In 2017, they were paid salaries of P12.12 million; bonus of P360,000; and “other annual compensation” of P864,000. In 2016, they received P11,855,267 ; bonus of P360,000; and “other annual
compensation” of P864,000.
In a compensation filing, PT&T listed the following highest paid executives under the new owners, who took over the Santiagos: Jaime G. Velasquez, president and chief executive officer; Miguel
Marco A. Bitanga, treasurer and chief operations officer; Renato B. Garcia, executive vice president; Alfredo T. Divino Jr., chief finance officer; Concepcion D.S. Roxas, chief people officer; and Patrick Vincent G. Pena, GM, fixed broadband.
In 2018, they were paid salary of P20,063,300; bonus of P1,179,058; and “other annual compensation” of P450,000.
In a filing, PT&T said it did not pay its six-person board for the year ended Dec. 31, 2018.
Market performance
PT&T common shares were last traded on Dec. 9, 2004. The stock opened trading at P0.310, hit a high of P0.330, its closing price, and dropped to a low of P0.310. It recorded a 30-day high of P0.490 and a month’s low of P0.310.
Like other listed stocks, PT&T common shares have not been traded heavily. On Dec. 4, 2014, the stock recorded a volume of only 20,000 PT&T common shares despite having listed 800 million common shares of 1.5 billion outstanding PT&T common shares.
SM Investments Corp, for instance, reported having listed its entire outstanding common shares. Of 1,204,582,867 outstanding SM common shares, only186,520 common shares, or 0.155 percent, were traded on May 27, 2019. The stock recorded a 30-day high of P977 and a month’s low of P877 per share.
Due Diligencer’s take
Whether or not all the outstanding common shares are listed, only a few of them are traded each day. The problem, though, is how this affects the ownership of public investors whose holdings are at least 10 percent of outstanding.
This is especially true when a company buys back its own shares. Again, it is the public ownership that is adversely affected by this exercise. Will officials of the Securities and Exchange Commission (SEC) look into the possible violation of the 10-percent minimum public ownership rule?
The SEC is empowered to impose the rule on companies listed on the Philippine Stock Exchange (PSE). As the regulatory authority, it should have disciplined company executives who are engaged in trading their own company’s common shares.
Again, as the regulatory authority, the SEC should have by now gone after those violating the market rules. For example, the commission should have reviewed the transactions of company insiders, who are either buying or selling shares issued by their own companies.
Because of their position, insiders enjoy a very big advantage over the public. Reviewing the matter is the responsibility of SEC officials, particularly the five-person commission.
Being SEC officials, they alone can exercise their power over listed stocks. Will they start reviewing the ownerships of the members of the board? Just asking.
esdperez@gmail.com
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