Lai Sun Garment bets on U Po-chu
Property firm renames 87-year-old U Po-chu as executive director when its peers are unveiling succession plans to ensure smooth transition
While most of Hong Kong's property tycoons have launched succession plans to ensure a smooth transition of their business empires to the second and third generations, not every major developer is following the trend.
Lai Sun Garment surprised the market in November when it announced that 87-year-old U Po-chu, the wife of the group's late founder Lim Por-yen, had been redesignated as an executive director, from a non-executive director, with an annual salary of HK$3.6 million, plus a director's fee of HK$48,000 a year.
By contrast, Cheng Yu-tung, 86, quit as chairman and executive director of New World Development in February, while Li Ka-shing, 84, Asia's richest man and the chairman of Cheung Kong, in May publicly drew up his succession plans and arrangements for dividing his wealth between his two sons, Victor Li Tzar-kuoi and Richard Li Tzar-kai.
U is the mother of the firm's deputy chairman and controlling shareholder, Peter Lam Kin-ngok, and the grandmother of executive director Lester Lam Hau-yin.
"Unlike a non-executive director, the role of executive director involves hands-on operation. It is rare for a listed company to appoint an octogenarian for such a position," said Lee Wee Liat, head of research at BNP Paribas Securities.
Lai Sun Garment, the flagship of Lai Sun Group, used to engage in the garment-manufacturing and distribution business. It later developed and diversified into property development and investment in Hong Kong and on the mainland.
Another analyst, who asked not to be named, said investors might doubt her ability to manage the company. "Whether she has the energy to attend the board meeting is another concern."
Prior to the redesignation, U had already received HK$3.64 million in remuneration, which was considered extremely high for a non-executive director, the analyst said.
At present, the Lam family controls five seats of the nine in the board. Of the nine members, three are independent non-executive directors.
According to Lai Sun Garment's annual report for the year to July 2012, U's remuneration was the highest among seven non-executive and independent non-executive directors who were just receiving HK$96,000 to HK$246,000 a year. During the year, two non-executive director positions became open - 80-year-old Chiu Wai died in October and Jeanny Leung Churk-yin, 46, resigned in September.
The attendance record at board meetings showed U attended just two of six, and the other four were attended by her alternate director and grandson, Lester.
U is also a non-executive director of Lai Sun Development and eSun as well as executive director of Lai Fung. Lai Sun Garment is the ultimate holding company of Lai Sun Development, which is the controlling shareholder of media firm eSun, which in turn is the ultimate holding company of mainland property unit Lai Fung.
U also received HK$4.34 million in remuneration from Lai Fung and HK$591,000 from eSun. At Lai Fung, she just attended three of eight board meetings for the year to July, and was absent in six of eight eSun meetings. Since she did not receive any pay at Lai Sun Development, she attended just one of nine meetings.
Lai Sun Group is positive about U's contribution to the company.
"The move is to recognise [U's] contribution to the group as she has extensive experience in the garment and property industries," said Chew Fook Aun, deputy chairman of Lai Sun Garment.
He said Hong Kong Exchanges and Clearing also encouraged companies to appoint more females and people from different age groups as board members.
HKEx announced that from September this year, all listed companies would have to have more diverse boards in terms of gender, age and background. Companies will have to explain why if they fail to comply.
In 2008, Kwong Siu-hing, the 79-year-old matriarch of the Kwok family, received only HK$120,000 a year when she was voted to replace her eldest son, Walter Kwok Ping-sheung, as chairman of Sun Hung Kai Properties. But Kwong, who owns a 42 per cent stake in SHKP, received a handsome dividend payout from the developer. She stepped down as chairman at the age of 81 in December 2011.
But U, who owns a 30 per cent stake in Lai Sun Garment, needs to wait until next year when the group hopes to start paying dividend.