KUALA LUMPUR: MSM Malaysia Holdings Bhd chairman Datuk Wira Azhar Abdul Hamid will step down from his post on May 31.

The 58-year-old, who was appointed as chairman of the sugar refinery and its holding company FGV Holdings Bhd in September 2017, tendered his resignation as part of an agreement to resolve the issue over directors’ fees at FGV.

The tendering of the resignation “is in line with conditions imposed by Felda as part of the agreement to resolve the recent FGV directors’ fee issue,” MSM said in its stock exchange filing yesterday. Felda, or the Federal Land Development Authority, is FGV’s major shareholder.

MSM said the board will identify a suitable candidate for replacement as chairman before the May 31 resignation date.

The lengthy dispute over FGV’s director fees started in June 2019 when its major shareholders sprang a surprise by voting against resolutions related to directors’ remuneration at a gruelling five-hour shareholders’ meeting. It was reported that for the financial year ended Dec 31, 2018 (FY18), Azhar was to take home RM1.95 million — a third of the total RM5.74 million board remuneration proposed for the year.

Felda, Koperasi Permodalan Felda Malaysia Bhd and the the Armed Forces Fund Board (LTAT) voted against several resolutions, including one related to the payment of directors’ fees, prompting Azhar to observe that their actions were akin to agreeing for the directors to serve but not to be paid.

Another major shareholder of the loss-making company, the Employees Provident Fund, later raised remuneration-related concerns in a letter, especially on Azhar’s remuneration.

Azhar had then proposed for shareholders to waive his director’s fee for FY18, in order for the rest of the board to be able to receive their respective fees, but the idea was met with rejection from its substantial shareholders.

The dispute eventually came to a close last September, when Azhar agreed in taking a 50% pay cut to RM300,000 from RM600,000 previously, besides the reduced payment of benefits payable to him, while the directors’ fees remained the same at RM120,000. The chairman’s revised fee is effective from the start of FY18 until its next annual general meeting in 2020.

Among the new adjustments to the chairman’s benefits are: the removal of the option to use a company car, entitlement to home security, the removal of the option for escort and one escort vehicle, a reduction in the number of personal bodyguards from two to one, the removal of the entitlement to leave passage of RM50,000 per annum, and the removal of his entitlement to one mobile phone every three years.

Benefits payable to the group’s non-executive directors will also be reduced.

The revised remuneration packages entails the reduction of fees payable for FY18 to RM1.1 million, along with RM490,272 in board committee fees.

MSM slips into the red

MSM yesterday also announced its FY19 results, which saw the group slipping into the red with a net loss of RM299.77 million, from a net profit of RM35.66 million in FY18.

Revenue contracted 9.4% to RM2.01 billion from RM2.21 billion, which the group said was due to the reduction in overall volume sold and lower average selling price.

MSM said the loss in FY19 was party contributed by a higher finance cost due to a loan modification and the provision of RM140.55 million for the impairment of plant and machinery.

The decline in performance was also a result of certain extraneous factors such as weakening of the ringgit, as well as stiff competition in the local and export markets, it added.

The FY19 loss came after the group recorded losses for all four quarters of the year.

For the final quarter (4QFY19), the group turned in a net loss of RM40.28 million on revenue of RM516.04 million, amid continuous depletion of its average selling price and decline in export volume. This compares with a net loss of RM10.35 million on a revenue of RM530.85 million in 4QFY18.

MSM said the higher loss was due to lower average selling price, higher refining and higher finance costs incurred for its continuing operations. There was also higher tax expense for the group’s discontinuing operations, which included its rubber, palm oil and mango business.

Going forward, the group said it will prioritise and tighten its focus on the restructuring business towards stabilising and turnaround through sustainable growth strategies.

Shares in MSM closed unchanged yesterday at 79 sen, valuing the group at RM555.35 million.