Anonymous Letter Sent to NUS and My Response

By Mak Yuen Teen

A few days ago, I was informed by my Dean about an anonymous letter that was sent to the NUS President. The letter is posted below and my response follows.

I would like to state that even though the anonymous letter refers to posts I had made relating to the SPH EGM to consider the spin-off of SPH Media to the new CLG, I do not believe that this letter came from anyone at SPH. I would therefore urge readers not to impute this to SPH.

While I was not satisfied with some of the answers to the questions that I had posed for the EGM and found the virtual EGM to be a disappointing experience, I thought the Chairman chaired the EGM professionally and with patience. I said this in my post on September 10: “To be fair, the chairman and CEO answered quite a lot of questions as best as they could, and some were not easy questions.”

Anonymous Letter

Dear Prof Tan Eng Chye,

Your raging Bull, (Prof Mak Yuen Teen, MYT) in the China Shop has struck again!

This time he has posted three articles in quick succession, one consisting of a list of provocative questions to SPH board on the eve of its EGM to delink its media business, and in the process, casting aspersions on SPH board, Consultants and others. It also calls into question the re-structuring exercise of the Singapore’s Natonal Press system and the good that the Government is doing for our country.

Despite his instigations, the shareholders fortunately voted 97% in favor of the divestment. Instead of accepting this over-whelming good outcome, MYT the bull, saw fit to post his second & third article expressing his disappointment and criticizing both the process as well as the outcome.

In the name of good corporate governance, MYT has posted many articles with a very warped definition of accountability but in the main, crafted to bash directors, listed company managers, SGX or anyone who disagrees with him. MYT is on a mission to self-promote his own ego. Regardless of facts & SGX rules, the only correct corporate governance can only come from his presumptuous self-manufactured versions.

MYT is harmful if he is allowed to continue using his Professorship status to wreck havoc on our well-established corporate governance framework. The University is the ultimate Institution of learning and should encourage wise practices how in essential matters, there should be ‘unity’, in non-essential matters, ‘diversity’. Indeed, in all matters, ‘charity’.

Frankly, we do not see the professors of your political science faculty wantonly maligning politicians in Singapore! The late Mr Lee Kuan Yew was wise to have decided that politics should be confined to registered political parties. In the field of corporate governance, we already have a slew of Govt authorities and other agencies having strict oversight. Do we need a self-proclaimed Vigilante to take pot-shots at all and sundry? This Vigilante in fact has many agendas. He is a shareholder, an academic and also a gun for hire. Indeed, he has been consulting for fees!! If left unchecked, this errant academic can only encourage more of ilk in coming forth to mislead the public at large.

Presumably, due to the tenured nature of professors in the tertiary institutions, NUS has been unable to discipline MYT. At the very least, he should be counselled that in tertiary institutions, professors ought to adhere a regime of self-restraint in order not to degrade the lofty ideals of Universities as well as to set an acceptable standard for students under their ward to emulate.

Yours faithfully,

Per Pro Publico

cc: Prime Minister Lee Hsien Loong, Minister of Education Chan Chun Seng, Minister MCI Josephine Teo, Mg Director Ravi Menon, Chairman SPH Lee Boon Yang, CEO RegCo SGX.

________________________________________

My Response

First, I want to make it clear that this website, Governance for Stakeholders, is a personal website. It was developed and is maintained with my own resources. The website states the following in bold, in both the “About” and “Author Biography” pages: “The views and opinions expressed herein are those of the author(s) and do not represent the views and opinions of the National University of Singapore or any of its subsidiaries or affiliates.”

Posts related to SPH EGM

The posts about the SPH EGM was written as a shareholder. I did not use my designation as an NUS professor or professor in writing the posts. My email to SPH with the list of questions was sent as a shareholder and did not identify myself as a professor.

The first post was a list of questions for the EGM and it opens with: “I am a shareholder of SPH.” As a shareholder, I am entitled to ask questions. This post was made on Saturday, September 4. The EGM was held on September 10. So, it was not posted “on the eve” of the EGM as the letter said.  On the day of the post, I also sent the same questions to SPH by email.  That was 3 days before the deadline for submission of questions. I did not want to surprise the company and wanted to give it enough time to consider my questions.

I posted the questions on my website so that readers can judge for themselves whether my questions are relevant, fair and professional. After the company has posted its answers, it would also allow readers to assess whether the questions were answered, and whether any comments I make about questions not being answered or not satisfactorily answered are fair.

The EGM was to consider arguably the most important decision that SPH shareholders have been asked to approve in its history. My questions were grouped into five areas: A) Conduct of the EGM, B) Appointment of Credit Suisse as Financial Advisor for the Strategic Review and Proposed Restructuring, C) Options for the Media Business, D) Giving Away the Media Business, and E) Recommendation of the Proxy Advisory Firm, Glass Lewis.

Those questions are all my own, prepared after reviewing the various documents published by SPH.

The letter said that I had cast aspersions on the SPH Board, consultants and others. The questions are about why such an important EGM was conducted in that manner; the process and criteria for selecting Credit Suisse to assist with the strategic review  and as financial advisor for the restructuring; whether the lack of competencies of the board and management in the media and advertising industries may have contributed to the poor financial performance of the media business; whether all the options were fully considered; how the decision to give away the media business was arrived at; whether possible tax benefits were explored; and any engagement with or other relationship that the proxy advisory firm has with SPH or Keppel.

I do not see how these questions are casting aspersions on the board.

Questions about relevance of competencies of the board and management

I know several of the directors on the SPH board and have interacted with a few of them personally. They are highly accomplished in their areas of expertise. My question was about the lack of competencies related to the business that SPH Media is in. My posts were not a personal attack on the directors.

I had looked at the top 10 media companies in the world and found that they all had board/management with significant working experience in fields such as journalism, online media or related industries. Board and board committees having the appropriate balance and mix of skills, knowledge, experience and other aspects of diversity is part of Provision 2.4 of the Code of Corporate Governance 2018.  Having at least one independent director with significant experience in the industry a company is in, is a question I have raised with other boards. Several corporate governance scorecards include such a factor. It is also a factor identified by many directors and investors as an important consideration in board composition, based on my interactions with them. Proxy advisory firms such as ISS have on occasions identified lack of relevant industry experience as a shortcoming in boards. For example, in the high profile ExxonMobil case where ISS supported an activist shareholder’s proposal to appoint the latter’s nominee directors to the board, it said: “The lack of unquestionably-independent board members with relevant industry experience remains a significant shortcoming.”

Therefore, it is not unreasonable to ask if the lack of relevant industry experience on the SPH board and management could have contributed to the poor financial performance in the media business. I did not accuse the board of acting inappropriately.

Timing and content of my posts

On the eve of the EGM – September 9 at 7.28 pm – SPH published its responses to substantial and relevant questions and the EGM presentation slides. I carefully reviewed both documents and the next morning at 7.44 am, I made a post titled “SPH: Unsatisfactory Answers”. I explained why I thought some of the answers were unsatisfactory. Readers are free to draw their own conclusions whether they agree with my opinion that the answers were unsatisfactory as they could see my questions. SPH is also free to respond to me if it disagreed with my opinion.

On September 10, I attended the virtual EGM. At 7.36 pm, I posted about my experience which I found to be disappointing. I shared the technical difficulties I faced attending the virtual EGM. I started the process to get in more than 30 minutes before the meeting and by the time I got in, it was 15 minutes after the meeting started. I did not conclude that it was necessarily the problem with the service provider as I wrote:  “I do not know if the problem was with my email system or the system of the service provider supporting the EGM.” But the point is that I did face technical issues and others may have too. I reached out for help from the event support and got a response 29 minutes after I sent out the email. I did not criticise the service provider about the delayed response as they may have to deal with issues faced by other shareholders.

To remind readers, the EGM was conducted through a webcast with “live” Q&A by text chat only (and shareholders were not able to see other questions asked by shareholders). There was no “live” voting. Voting closed 72 hours before the EGM. The responses to the questions submitted before the EGM were posted after the voting closed, on the night before the EGM. In other words, shareholders had to vote before their questions were answered.

On July 1, the Corporate Governance Advisory Committee had issued a statement on expectations for questions and answers and voting in digital and hybrid general meetings. It states: “Singapore companies should start exploring ways to implement live remote voting in order to replicate the interaction of in-person meetings for remote participants. Live remote voting is especially important for shareholder participation when complex matters are being tabled. In such situations, shareholders may need to consider all the information provided up till and even during the meeting, before casting their vote. Therefore, live remote voting will be necessary to facilitate robust shareholder participation.” (emphasis mine).

The guidance also states: “While the capabilities for live remote voting are being built, companies should provide remote Q&A, and pay attention to reviewing and enhancing this mode of interaction to make it fair and effective…In any case, companies should provide transparency about all the questions that have been submitted before and during the meeting, and how they will be addressed.” (emphasis mine)

There is arguably no decision that is more important for SPH shareholders than the one that was considered at the EGM. There was no live voting and shareholders could not see all the questions submitted before and during the meeting. Coupled with the technical difficulties I had faced, I believe it is fair for me to express an opinion that the experience was disappointing.

On July 12, Azeus Systems Holding was kind enough to invite me to attend their hybrid AGM as an observer. I am not a shareholder nor do I have any business relationship with them. Azeus is one of the major service providers in the virtual meeting space in Singapore. I had approached them to better understand the conduct of virtual meetings when I was writing a report on shareholder meetings earlier this year. At its AGM which I attended, all shareholders were able to ask questions, including those participating online both in Singapore and overseas who could ask questions “live” either by text chat or video. Shareholders could also vote “live” from any location. In fact, even observers like myself were allowed to ask questions. Even though there were some technical issues during the AGM, I posted positive comments about my experience on LinkedIn.

As I said earlier, despite my disappointing experience at the SPH EGM, I wrote: “To be fair, the chairman and CEO answered quite a lot of questions as best as they could, and some were not easy questions.”

In my post on September 10, I had also expressed disappointment with the fact that only 23% of the total outstanding shares were voted and I said I believed the virtual format and the lack of live voting would have affected shareholder participation. I did not criticise the outcome as the letter alleged.

In the report which I released in March this year on all shareholder meetings conducted from 2017 to 2020 by issuers with a primary listing on SGX, I found that the median percentage of total shares and public float shares voted both declined in 2020 when most meetings were virtual, after increasing between 2017 and 2019 when all meetings were face-to-face. I also found that in 2020, shares voted were lower for virtual meetings compared to physical meetings. Further, in an online survey of 186 retail investors covered in the report, respondents said that their attendance in 2020 meetings (which were mostly virtual) was substantially lower compared to 2019 when all meetings were physical. They also said they voted in fewer meetings in 2020 compared to 2019. For example, 78% said they voted their shares for at least one company in 2019, while only 38% said they did so in 2020.  The survey also found that 69% preferred hybrid meetings, 28% preferred face-to-face meetings and only 3% favoured virtual only meetings.

We can also observe that the total number of shares voted at SPH November 2020 virtual AGM was just 49% of that for its 2019 physical AGM.

All the above suggest that the percentage of shares that were voted at the EGM would likely have been affected by the way the EGM was conducted. In any case, I was merely expressing my personal belief that shareholder participation was affected. I did not say that this would necessarily have changed the outcome.

On September 11, I made my final post expressing my personal opinion that meetings that were conducted like the SPH EGM disenfranchise shareholders. I related that a SPH shareholder had written to me (that morning) saying that he felt that the impediments that shareholders faced in voting their shares would have discouraged many from voting. This is in line with what I had written the day before and consistent with the fall in shareholder voting with virtual meetings. I also compared SPH EGM with the EGM held by another small overseas company which I happened to be following in writing a case study.

Other comments in the letter

I will now respond to other comments in the letter. In terms of “warped definition of accountability”,  corporate governance is about management being accountable to the board, and the board being accountable to shareholders and other stakeholders.  There is nothing “warped” about shareholders and other stakeholders raising issues and, where appropriate, even criticising the actions of companies or directors. If my definition of accountability is warped, it is unlikely that I would be invited to be involved in committees setting corporate governance codes and best practices, assessing the corporate governance of companies in corporate governance rankings and awards, and conducting training for directors, regulators and other professionals in Singapore and other countries.

I have regular interactions with various stakeholders, including directors, regulators and investors, and have not received feedback that my understanding of corporate governance is misplaced. On the contrary, I regularly receive emails and letters  from directors, investors and other professionals concurring with issues I have raised or positions I have taken. Various professional bodies, including director institutes in Singapore and overseas, regularly invite me to speak at their events or contribute articles to their publications.

While I do question actions of companies or directors, and sometimes criticise, if I believe that there are concerns about corporate governance, I have also helped companies on a pro bono basis. For example, on several occasions, companies have approached me for recommendations for independent director candidates, and where I am able, I will try to help them identify suitable candidates whom I know of, without accepting any remuneration. The final decision is of course for them to make. This in consistent with my public position that companies should cast the net wide in sourcing for independent directors. Companies, directors, investors and other stakeholders also regularly approach me for ad hoc advice, which I freely give. While I do share my personal views and relevant publications on social media, I do not publicise recognition I have received or assistance I have given to companies, directors and other stakeholders as I believe that it would be self-promotional.

The letter said: “Regardless of facts & SGX rules, the only correct corporate governance can only come from his presumptuous self-manufactured versions”. I take great pride and care in ensuring that what I write is factually accurate or fair comment. I am also open to alternative corporate governance practices. For example, in a forthcoming collection of case studies which I edit and which is to be published by CPA Australia, there are four “positive” cases. They do not all have corporate governance practices that I or corporate governance codes consider to be “best practice”. But they appear to have served the companies well. In one case, I engaged with an executive director of the company to understand their point of view. In another case, I engaged with the senior management of the company. These cases are not “commissioned” –  I would never accept invitations to write cases commissioned by companies designed to put them in a good light.  I selected these companies based on my observation of how these companies have acted over the years – and I am not compensated by the companies for these cases. I also retain control over the final content and responsibility for any errors.

I make no apology for expecting companies to uphold high standards of corporate governance. Not all aspects of good corporate governance are captured by SGX rules and mere compliance with the letter of rules does not mean that there is good corporate governance.

As for the comment that I am using my professorship status to wreck havoc on our well-established corporate governance framework, all my writings reflect my personal views. There is room for improvement in our corporate governance framework and I believe I have over the years contributed in some way to improving it, rather than wrecking havoc on it.

The letter writer also suggests that there are government authorities and other agencies providing strict oversight and those who are not associated with these bodies have no role to play. Even our regulators have constantly emphasised that improving corporate governance should not be the sole responsibility of regulators, and that other stakeholders in the corporate governance ecosystem have a role to play.  Our local regulators and the HK-based Asian Corporate Governance Association have specifically recognised me as a stakeholder with a role to play in improving corporate governance in Singapore. Regulators occasionally seek my views before the issue of consultation papers or when considering reforms.

As for the comment that I have many agendas, my only agenda is to help to improve corporate governance, particularly in Singapore, as I believe it is the key to long-term sustainability of companies and a high-quality capital market. I am indeed a shareholder in some companies but the largest stake I have is just 5,000 shares (of a low-priced stock) and most are just a few hundred to 1,000 shares, so there is little for me to gain financially from writing about companies that I am invested in. I do not trade shares for short-term profit. In any case, a number of the companies I bought shares in are companies where I believe there are issues of public interest and the shares were just to allow me to participate in shareholder meetings. Since they are often companies with significant corporate governance and financial issues which often do not improve, I tend to lose money from these shares.

As for “gun for hire” and “consulting for fees”, university rules permit a certain amount of consulting subject to compliance with rules. It also allows academics to accept non-executive director positions in companies, including listed companies, subject to approval.

In order to avoid perceptions of conflicts because of my advocacy work and involvement in corporate governance ratings, I have never accepted a directorship in a listed company. I have declined them on several occasions. I would never accept paid or unpaid assignments to mount a campaign against a company. Everything I write about a company is based solely on my own assessment of the situation. I have on several occasions being offered consulting by companies I have written about and have declined them all as I believe it is inappropriate.

While I do meet with companies, investors, directors and other stakeholders from time to time – as it is an opportunity to share and learn – I would decline if there is a risk of conflict or I believe it is an attempt to exert pressure on me to push an agenda. For example, I would not accept individual meetings with companies trying to gain insights into how to improve their performance in governance rankings I am involved in because I believe it would be perceived to give an unfair advantage to these companies. I would only write after I have objectively assessed the facts and believe that a matter should be brought to the attention of companies, investors and other stakeholders. There have been occasions where I have disagreed with shareholders seeking to remove directors because after objectively evaluating the situation, I did not believe it was in the best interest of the company.

On the comment that “professors ought to adhere a regime of self-restraint in order not to degrade the lofty ideals of Universities as well as to set an acceptable standard for students under their ward to emulate”, I would once again reiterate that the website is a personal website and my posts and articles reflect my personal views.

I would however hope that academics, students and stakeholders would be willing to express different views professionally, so that corporate governance can improve. After all, corporate governance is about diversity of perspectives and the willingness to ask questions and challenge decisions that may not in the best interest of companies and their stakeholders. I have advised my students that if they invest in companies, they should exercise their rights as shareholders. But they should always be professional, including when asking questions at general meetings.

Finally, I would add that if any reader of posts on my website disagrees with something I have written, they are free to contact me. I would like to ask those who write anonymous letters copying various government officials or departments to contact me directly instead at my personal email address at bizmakyt16@gmail.com, so that we can have a healthy constructive discussion which could benefit all stakeholders. I would be happy to post our exchanges online if you are agreeable. If I have made an error, I will swiftly correct it.

To conclude, I would like to provide a recent example of how I responded to feedback about something I had written.

On Sunday August 22, I posted an article titled “Reflections on the Current State of Our Market”. In the article, I mentioned a long list of companies that have run into trouble where I believe poor corporate governance has been a contributing factor. I had wrongly written “Jason Marine” rather than “Jason Holdings”. The following morning, the continuing sponsor informed me about the error and asked if I could rectify it. Within seven minutes, I said I would do it. Just 16 minutes after their email, I had corrected the error.

On August 27 at 8.33 am, I received a message from one of the directors thanking me for the correction and asking if something else can be done to highlight the correction. At 11.30 am, I posted a clarification as follows:

“On August 22, I posted an article titled “Reflections on the Current State of our Market”. The first version of that post mentioned “Jason Marine” as one of the smaller Singapore companies that have had major problems. The following day, I was alerted that I had mis-typed Jason Holdings as Jason Marine. I immediately corrected the error that day.

Today, I received a request from the company as to whether I could issue a separate clarification even though the error had been corrected the day after my  post. I am happy to obliged as it was my error.

Therefore, to be clear, the company that was in trouble is Jason Holdings, and not Jason Marine.”

Later that evening, I received an email from the executive chairman thanking me for making the correction and saying that it was much appreciated. I replied the following day with an  email which stated:

“Thanks for your email. Apology for the error. All the best.”