By Mak Yuen Teen
“Imagine rushing a child to the emergency room, loudly claiming the child has been bitten by a deadly snake. Doctors, nurses, and specialists scramble. Alarms blare. Chaos unfolds. But after an hour of high drama, someone finally checks… and realises there was no snakebite at all.
The child had merely tripped over their own shoelace and gotten a tiny scratch. Meanwhile, the so-called ‘doctor’—who, it turns out, is actually a snake doctor with no experience treating humans—skipped all the proper checks, caused unnecessary panic, and proudly declared herself the hero. All while the child’s real guardians stood outside the door, completely bewildered, wondering why no one had even asked them before the snake specialist took over the whole hospital.
And just like that, governance was trampled, process was ignored, and shareholders were told to sit down and clap—because, apparently, saving a child from a snake that never existed is now considered best practice.”
This is of course not the snake analogy that was used by Ms Wong Su Yen, one of the two new independent directors (IDs) appointed to the CDL board under highly controversial circumstances, at the company’s AGM on April 23 when she defended her appointment. It is a ChatGPT parody of what she said and it is a plausible alternative scenario.
A recap of the appointment of the two independent directors
CDL provided a detailed description of the circumstances leading up to the appointment of the two new IDs, Ms Wong and Ms Jennifer Doung Young, in its FY 2024 Corporate Governance Report.
The following is a summary based on the company’s account:
- Two IDs, including the Lead ID, introduced and recommended the two candidates for appointment as IDs.
- The curriculum vitae (CVs) of the candidates were circulated to the board on 28 January 2025, together with the CV of another candidate who was previously proposed by the Executive Chairman who had previously been declined by the proposing IDs, who were members of the former NC.
- Invitations were sent to all the directors for separate virtual interviews with the two candidates on 28 January 2025, with different time slots on three different dates made available.
- Separate interviews by the then NC Chairman were later cancelled due to a family emergency he had to attend to.
- The Group CEO arranged his own interviews with the two candidates.
- The proposing IDs were the only members of the then NC who attended the interviews. Interview notes were prepared and circulated to the board.
- The Lead ID requested for a board meeting to deliberate on the election of the three candidates. The board meeting was held on 7 February 2025 and attended by all the directors. At this meeting, the purpose of calling for the full board meeting and the recommendation of the appointments, without first going through the NC, was explained, with reasons of corporate governance concerns as well as meeting diversity targets cited.
- Four of the directors objected to the increase in the board size and the process by which the recommendation was made for the appointments. They also withdrew the nomination of the third candidate proposed by the Executive Chairman (who was presumably proposed to replace the ID who had resigned in December 2024) as they were of the view that the board size should not be increased.
- One of the IDs supporting the appointment of the two remaining candidates requested pausing the 7 February meeting to hold an ad hoc NC meeting, but this was declined by the four opposing directors. No vote was taken for the appointments at this meeting.
- Three of the IDs supporting the appointment of the two IDs proposed during this meeting (with no objections raised) that a resolution in writing be circulated to the directors. A Directors’ Resolution in Writing (“DRIW 1”) was circulated that same day. Five directors voted in support with the other four voting against. The two new IDs were duly appointed.
The company said: “Accordingly, notwithstanding the above deviation from the NC’s terms of reference and the provisions of the CG Code concerning the Appointments, the Company’s position (based on the majority votes of the Board) is that there was a formal and deliberate process adopted in relation to the Appointments and that such process is consistent with the intent of Principle 4 of the CG Code, which states that the Board has a formal and transparent process for the appointment and re-appointment of directors, taking into account the need for progressive renewal of the Board”.
Not so fast.
Usurping the authority of the NC
From the company’s description, the Lead ID and the other ID (“proposing IDs”) initiated the search for the two new IDs, presumably on the behest of the majority or proposing directors. While the company said that “Ms Wong and Ms Young were introduced and recommended for appointment as IDs by two IDs (“Proposing IDs”) one of whom is the Lead ID”, what they did not say is how they were identified by the proposing IDs in the first place.
More importantly, neither they nor the proposing directors had the power to seek to increase the size of the board or initiate a search for new directors without consulting the NC or the board, as the board had delegated this responsibility to the NC and approved the NC’s terms of reference.
If certain directors believed that the board size should be increased and new directors appointed, the proper process is to propose this to the NC. If the NC disagrees, the proposing directors can seek the approval of the board to do so. Alternatively, the directors could also have gone directly to the board and get the board to approve it, bypassing the NC. Based on the account given by the company, neither was done before the proposing IDs initiated a search for the two new IDs.
The two directors acted on their own or on the behest of the proposing directors to undertake responsibilities that the board had not authorised them to undertake.
The company used the reasons of “governance concerns in relation to the role and involvement of Dr Catherine Wu at the relevant time, as well as the belief by the Proposing IDs that the other members of the then NC were not likely to support the proposed appointments of new directors.”
Those governance concerns are based on the views of the proposing directors. Why couldn’t those concerns be resolved by the then existing board? Just because they believed that the other members of the NC were not likely to support the proposed appointments is not an excuse for bypassing the NC without board approval.
This is not just a technicality. Imagine individual directors on boards taking it upon themselves to undertake responsibilities that they are not authorised to do or that have been delegated to various committees or to management, based on what they view as “governance concerns”.
My view is that the proposing directors usurped the authority of the NC when they sought to increase the number of directors and carry out a search for directors, without going through the NC and without being authorised by the board. In my view, they not only failed to comply with the Code, they acted ultra vires.
The rushed process to increase board size and appoint the new IDs
Ms Wong in her analogy seems to suggest that CDL had a really serious governance issue, akin to being bitten by a poisonous snake, and needed to be attended to urgently by a doctor, which presumably is her.
CDL had a 9-member board, after an ID resigned in December 2024. In its FY2023 corporate governance report, when it had a 10-member board, it said: “ Having considered the scope and nature of the operations of the Group, the Board, taking into account the recommendation of the NC, is satisfied that the current size and composition of the Board and Committees provide for diversity in line with the BDP with a good balance of skills, experience, industry knowledge, professional qualifications, gender and age, which serve to support the Company in achieving its strategic objectives and sustainable growth and development.
Nine directors is an adequate board size for companies of any size and complexity if it is properly constituted based on independence, competency and diversity requirements. When I was involved in developing the ASEAN Corporate Governance Scorecard, the managing director of an international institutional investors network shared with the panel that nine directors is an “ideal” board size from the institutional investors’ standpoint.
Why did the proposing directors feel that they need to suddenly increase board size to 11 when 10 directors were considered appropriate and the proposing directors already comprised the majority?
Their appointments were done through the circulation of the candidates’ CVs and virtual interviews, and the entire process took just 11 days between the date they were proposed and the date when they were appointed. How could their suitability be assessed just based on their CVs and virtual interviews? Why were in-person interviews not done?
A proper search and nomination process would take much longer than 11 days. Viewing CVs and conducting virtual interviews would not be sufficient to assess if directors are fit and proper or if they would add value to the board. This is especially true if the existing directors are not familiar with the candidates.
Looking at the profiles of the 11 directors now on CDL’s board, while some have international experience, all are resident in Singapore. As a company with global operations, CDL may benefit more from adding directors who are based in their major markets. A robust assessment of skills and competencies as part of a proper search and nomination process is critical for building an effective board – something that would take much longer than 11 days.
What due diligence was done in such a short period and was there an assessment as to whether the directors are over-committed?
In Ms Wong’s case, the appointment template listed 13 present appointments, including her own consulting and advisory businesses. Her current appointments include directorships in 3 other listed issuers – CSE Global, First Resources and Yoma Strategic Holdings. Her past appointments included two listed issuers – Nera Telecommunications and Pegasus Asia (which listed as a SPAC but then delisted after it failed to find a target).
Was her track record in her past and present appointments in other listed issuers assessed and were checks done with others who have worked with her?
In the case of Nera, the response by the company to one of the questions from SIAS in April 2024 about its total shareholder return (TSR) in the past 10 years included the following statements: “A TSR over a 10-year period would cover the time when Ms Wong Su-Yen served as the chairman (from 30 April 2014 to 23 December 2022) and the short tenures of the two chairmen after her…Nera’s TSR, from 2 January 2014 to 31 December 2023, is -40.85%.”
I find it interesting that the company made explicit reference to Ms Wong’s tenure as its Chairman while disclosing its poor TSR. The company may come across as unfairly trying to attribute blame to Ms Wong by highlighting her tenure as Chairman since the board and management should be collectively responsible, but the Chairman does have a major role to play in steering a company.
The more important point is what due diligence was done before the two new IDs were appointed.
Did the two new IDs fetter their discretion?
There is also the question of what due diligence the two new IDs did before they agreed to be considered and appointed. Good directors will ask what value they can add to a board if invited, not just ask where do they sign.
It is clear in this case that the two new IDs only spoke to the two proposing IDs or the proposing directors, but not the other directors. Did they form a view about the circumstances that the company was facing just from speaking to the proposing directors and accepted their version of the circumstances?
Did they agree to support the proposing directors before they have properly understood the actual circumstances. If so, one could argue that they had fettered their discretion.
Was gender diversity used as a Trojan horse?
I am a strong supporter of gender diversity and was probably the first to call out the lack of gender diversity on listed boards here, about 20 years ago. When I co-chaired the Singapore Corporate Governance Awards organised by SIAS, I proposed that we introduce a Board Diversity Award. I subsequently served as an honorary advisory for an organisation here advocating for greater gender diversity on boards and as an audit advisory committee member of a UN fund focused on women’s rights. I also led the research and helped formulate the recommendations on how to improve gender diversity on listed boards and statutory boards here released by the Diversity Task Force, which formed the basis for the Council on Board Diversity today. Those who work with me know that I would constantly point out lack of gender diversity on committees and boards and push to improve them.
I say all this not to brag about my work but to highlight that I genuinely believe in diversity, including gender diversity. I am also in favour of measures to address biases that women and other minorities may face. However, what I am not in favour of is when the rationale of gender diversity is used to support poor corporate governance.
CDL said that the appointment of the two new female IDs “would also help to fulfil the Board diversity targets”. CDL now has 4 out of 11 female directors, or 36% – above its 2025 target of 25%.
But what cognitive diversity will it have when the two new IDs seemed to have accepted the appointment based purely on what the proposing directors told them?
In this case, gender diversity has been achieved but governance has been trampled on.
Where were the institutional investors?
Before the AGM, I posted on LinkedIn that I believe shareholders should vote against all the directors. I did not say to vote against only the proposing directors or the new IDs standing for re-election. I could not see how the board can be effective given the breakdown in trust and the best outcome to me is to rebuild the board with new – and truly independent – directors.
I was disappointed before the AGM to see that one major proxy advisor’s recommendations for two of its institutional investor clients (which are based on the clients’ voting guidelines) was to vote in favour of the re-election/election of all the directors. It is true that the “family” also voted in favour but that is more complicated because of how those shares are held and voted. The institutional investors will now get the board they deserve – a board dominated by a majority of directors apparently supporting a Group CEO under whose management the company has lost billions of dollars. Is this really what institutional investors want?
What next?
With the directors on the side of the Group CEO now controlling seven out of the 11 board seats and the newly constituted Nominating and Remuneration Committee (NRC) controlled by them, I expect that their next step would be to try to push the other directors out. If these other directors do not resign, the NRC would likely not support their re-election in coming AGMs.
Control of the board will then become absolute or near-absolute and the Group CEO is likely to be further entrenched. The composition of the board, its effectiveness, and I would argue the future of CDL, are in the hands of the family and the institutional shareholders.
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The views expressed in this commentary are the author’s personal views. He is not a shareholder of CDL.
