Henderson Land AGM voting advice
21 November 2003
| Company: | Henderson Land Development Company Limited Limited (HLD) |
| Stock code: | 0012 |
| Meeting type: | Annual |
| Date of meeting: | 1-Dec-03 |
| Time of meeting: | 12:00 |
| Advice date: | 21-Nov-03 |
| CCASS voting cut-off | 28-Nov-03 VOTE NOW |
| Notice of Meeting: | Click here |
| Proxy form: | Click here |
| Voting method: | Webb-site.com will require a poll, all proxies will be counted |
| How to vote: | See our voting guide |
Note to journalists:
We have up to 4 proxy seats available inside this AGM. Please
contact
us if you want one. Don't risk getting shut out of the meeting!
| Item | Description | Vote |
| 1 | Receive and consider the accounts | FOR |
| 2 | Declare a final dividend | FOR |
| 3 | Re-elect Colin Lam Ko Yin | FOR |
| Re-elect Leung Sing | FOR | |
| Re-elect Eddie Lau Yum Chuen | FOR | |
| Re-elect Ho Wing Fun | FOR | |
| Re-elect John Yip Ying Chee | FOR | |
| Re-elect Kan Fook Yee | FOR | |
| Fix the remuneration of directors | AGAINST | |
| 4 | Re-appoint auditors | FOR |
| 5A | Mandate the directors to repurchase shares | FOR |
| 5B | Mandate the directors to issue additional shares | AGAINST |
| 5C | Mandate the directors to issue repurchased shares | AGAINST |
| 5D | Increase the authorised share capital to HK$4,200m as and when required | FOR |
| 6 | Amend the articles of association | FOR |
We note that the proxy form fails to separately number the director-election resolutions, adding to the confusion.
Reasons AGAINST
Item 3, last part
The reason for voting against the proposal "to fix the remuneration of directors" is that the proposal is undefined and meaningless - neither the notice of AGM nor the proxy form specifies the level at which the remuneration is proposed to be fixed. It is like proposing to elect a director without saying who the candidate is. As a result, only those shareholders who make it to the meeting will find out what the proposed remuneration is, by which time it will be too late for absent shareholders to send proxy voting instructions. So vote against.
Items 5B and 5C
On 6-Oct-03, HLD announced a placing of new shares representing 5.4% of the existing issued shares at a 7% discount to the then market price of $34.90 per share, raising about $3bn. The shares closed yesterday at $29.80, down 14.6% since the placing, wiping HK$9.3bn off the market value of the company. By comparison, In the same period, the HSI Property sub-index (which includes HLD) has fallen only 11.5% from 15,336.74 to 13,572.11. Stephen Brown, head of research at Kim Eng, speaking to the SCMP, called the placing "ludicrous corporate finance" and said "it shows they have a 1970s approach to balance sheet management." HLD had debt-to-equity gearing at 30-Jun-03 (before the placing) of only 16.8%. The only silver lining (and silver tarnishes easily) is that they promised not to do another placing for 3 months.
Webb-site.com urges all investors to vote against the general issue mandate for all listed companies, for the reasons explained in Project Vampire, unless they comply with the recommendations set out in that article. The non-pre-emptive issue mandate allows management to choose the shareowners by allotment of shares. This corrupts the governance mechanism. Shareowners should choose management, not the other way around. If a company wishes to raise cash by issuing shares, then it should do so by rights issue, and give you the opportunity to maintain your percentage ownership stake in the company.
If your company offers new shares to other investors at a discount, but not to you, then your company is transferring value from you to the new investors. Their gain is your loss. That's why we believe an issue for cash should be done by rights issue, failing which it should be limited to 5% of existing issued shares and a maximum discount of 5%.
This year so far, a majority of independent investors in 10 Hang Seng Index companies: Cathay Pacific, Cheung Kong Infrastructure, China Unicom, CITIC Pacific, Legend, MTRC, PCCW, Shanghai Industrial, Swire Pacific and Television Broadcasts have all voted against the issue mandate. In July, another index member, Johnson Electric, became the first member to modify their mandate to partially comply with the Project Vampire recommendations by cutting the size of the mandate to 5% of existing issued shares. HSBC, as a UK company, also complies.
Their fellow index members would do well to take note of this. After all, we don't mandate boards to buy back shares from chosen shareholders at a premium to market price, so why should they be allowed to issue shares to chosen shareholders at a discount?
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