Study: Cyber directors make big bucks
January 04, 2002 15:01
Date: Friday, January 04, 2002 3:01:56 PM EST
By KATHERINE ARMS, UPI Correspondent
Tycoon Richard Li gave $98.5 million in salaries and share options to directors in 2000, the newspaper said Friday. It was 38.5 percent of directors pay for all Hang Seng Index members director's pay, despite the fact that it was the only company on the index to record a loss.
The survey examined all of the listed companies reports for years ending from December 2000 to June 2001.
PCCW has 17 directors, of which 11 are executive directors who handle the running of the company. Though it reported an $884 million net loss for the year ending December 2000, PCCW also provided the most disappointing returns for shareholders of any Hong Kong stock exchange listed firm. PCCW's share price closed 72 percent down that year.
"PCCW's $768 million ($98.4 million) pay to the end of 2000 was more than 8.5 times the sum HSBC Holdings -- the largest company in the index by market capitalization -- paid its board, and 68 times more than directors of mainland telecoms firm China Mobile received. China Mobile had revenue of more than $43 billion ($5.5 billion) for 2000, compared with $7.29 billion ($934 million) for CyberWorks," said the newspaper.
"I don't know what to say," said one telecommunications analyst in Hong Kong who declined to be identified. "I saw the article in the paper and threw it down in disgust."
Late last year, PCCW announced it would lay off 506 of its 14,000 employees and freeze the wages of those remaining. A letter from Chairman and Chief Executive Richard Li said a pay and hiring freeze would stay in effect for the next year. At the time, the company said it could not rule out further job cuts.
Last month it emerged that PCCW and JP Morgan Chase & Co. were considering the closure of their online brokerage venture 2Cube Securities. The South China Morning Post reported their subscriber base would be sold to a rival online brokerage.
Of the massive payout to directors, $76.5 million was considered profit from share option exercise. In CyberWorks' heady days, its share price reached a stunning high of $3.37 in February 2000 as the company jockeyed to take over Cable and Wireless HKT, Hong Kong's former telecommunications monopoly. Since those days, the share price has plunged more than 90 percent to a close on Thursday at $0.29.
When news of the generous payout to PCCW directors first came to light, many investors were angry but hoped the company would be able to turn itself around.
On Wednesday, PCCW made a deal to extricate itself from an expensive contract providing its Network of the World television, or Now.com with costly content. But analysts in Hong Kong who have viewed Now.com coolly since its launch in 2000 stuck to a cautious approach. Some said they were encouraged that management had moved to cut losses in the company's Internet area.
PCCW signed a non-exclusive agreement with British company Trans World International that will provide Now with sports programming and games. There are whispers that PCCW could be positioning itself to nab the Internet rights to both the World Cup football match to be held in Korea and Japan and the Olympic Games set for Beijing in 2008.
"The World Cup rights would be a boon for CyberWorks," said Chris Chueng an analyst with World Sec International. "Most of the matches will be played during the day and so people in their offices won't be able to watch television. They'll watch it on their computer screens."
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Copyright 2002 by United Press International.
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