By Khairul Khalid
The property developer’s recent decision to pay RM2.7 million a year to its own founder and major shareholder in a short-term advisory role has raised eyebrows. Especially when his CEO daughter gets just RM295,000 a year.
When is a company advisor more than just an advisor? When he also happens to be the company’s influential founder, former managing director and major shareholder like Country Heights’ Lee Kim Yew.
The property developer has recently engaged Lee (who is still its non-executive deputy chairman) as advisor to help with the “group’s strategic business development, specifically on overseas expansion.” He had relinquished his post as managing director in 2007.
According to the company, Lee will be leading expansion into overseas markets such as China and Australia. His connections and experience in these markets are cited as key in the decision to appoint him as an advisor. In recommending his services, the board of directors also praise Lee’s “entrepreneurial and inventive intuition.”
But here’s the kicker.
Lee will be paid RM225,000 a month for two years for his advisory services. To put things in perspective, his own daughter Dianna Lee Cheng Wen who is group CEO of Country Heights earns RM295,000 a year or RM24,583 a month. The company will be forking out RM2.7 million per annum and a total RM5.4 million for Lee’s services.
A company advisor earning almost ten times more than the group’s head honcho? Which begs the question, who is the real leader of Country Heights?
Country Heights’ Lee Kim Yew
“I need a job,” Lee responded wryly when asked about the appointment. But what job specifically? The advisory role does not seem attached with any executive responsibilities. “He will not be involved in the day-to-day operations of the group,” said a company statement.
So how exactly does the company define Lee’s new advisory role to justify his RM5.4 million price tag?
No doubt, the RM225,000 monthly salary is a pittance in relation to Lee’s potential net worth considering the tycoon’s 32% stake in Country Heights that had total revenues of RM253 million in the financial year of 2012.
There have also been strong rumours lately that Lee is planning to take the company private but the fact is that it still remains a public company. Anything that could affect its finances, big or small, should be subject to scrutiny for the benefit of its shareholders.
A rough calculation shows that Lee’s yearly advisory salary of RM2.7 million would amount to approximately 8% of Country Heights’ profit before tax of RM32.9 million in the financial year of 2012. Not a derisory impact on the company’s bottom line. Shouldn’t Country Heights have rationalised an acceptable return on investment for the substantial outlay on Lee’s consulting services?
What would be Lee’s KPIs (Key Performance Indicators) to measure his success or failure as an advisor?
Lee’s advisory tenure is only for two years until the end of 2015, so it would only make sense for the company to set some short-term goals or targets commensurate with the tycoon’s RM295,000 monthly salary. Or at the very least, an estimated increase in the company’s revenues for the two year duration.
However, the company reveals that “the appointment will not have any material effect on its earnings, gearing and net tangible assets for the financial year ending Dec 31, 2014.” So if Country Heights does not expect any significant short-term effects from Lee’s appointment, why are they paying him silly money?
In the announcement, Country Heights highlighted the fact that Lee had been generous in giving the company interest-free loans in the past and foregoing a basic salary in difficult times, especially during the 1997-98 Asian financial crisis.
So is that what this is all about, some kind of circuitous and belated payback for Lee’s munificence?
And what if Lee’s new advisory role conflicts with the CEO’s decisions during the next two years? Will Lee have to get the CEO’s green light before embarking on any overseas projects? Or will the CEO duly rubber stamp any decisions made by the powerful senior advisor? And ultimately who will be held accountable for the financial implications of Lee’s international endeavours?
Will there be sulky faces or catty remarks exchanged between father and daughter at the dinner table?
Lee is 59 years old and probably still has plenty in his locker to contribute to Country Heights. If it is indeed true that this move is only a prelude to Lee’s comeback and taking over full reins of the company again, he should come clean and tell its shareholders what his long-term plans are.
His vague new role of over-compensated advisor only sends mixed signals to investors and could possibly undermine the company’s top management, not least his own daughter who is group CEO.
Lee’s advisory role could also diminish his stature and public image if it is perceived as an easy way to line the pockets of an already wealthy man. Considering that Lee’s reputation took somewhat of a battering last year with the ill-fated Country Heights Grower Scheme (CHGS), he could have taken the high road and generated some much needed goodwill by providing his services for free, or perhaps just a nominal fee.
By putting his money where his mouth is, it would have been a welcome gesture of confidence by Lee. He would then only be rewarded if Country Heights performs and the value of the company’s stock rises. Of course, if Lee delivers and goes on to bag Country Heights lucrative foreign projects within two years or perhaps even beyond, all would be forgotten.
As it stands, Lee’s jarring decision to suddenly saddle the company that he built with an inexplicable and over-the-top consulting expense just seems oddly arbitrary and exploitative.
GRRRRR!
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