Fireworks at CDL AGM, but shareholders vote strongly in favour of all resolutions

[SINGAPORE] The boardroom tussle at City Developments Ltd (CDL) involving executive chairman Kwek Leng Beng and his son, chief executive officer Sherman Kwek, was purportedly set aside for the greater good of the property group.

But at its annual general meeting (AGM) on Wednesday (Apr 23), there were signs of lingering tensions as a couple of board members resurfaced debate over the appointments of two new directors.

Still, all resolutions tabled were passed comfortably, with support level in the high-90s range.

All were ordinary resolutions requiring approval of more than 50 per cent of the total number of shares represented by votes cast at the meeting.

Some 99.43 per cent and 99.33 per cent, respectively, were in favour of the re-elections of Jennifer Young and Wong Su Yen, the two new independent directors (IDs) who were appointed on Feb 7. Their mode of appointment had earlier been a bone of contention in the high-profile, but brief, boardroom fight at the company.

The Kwek family controls nearly half of CDL’s shares.

Resolutions were also passed at the AGM for the re-election of three retiring IDs – Colin Ong, Daniel Desbaillets and Wong Ai Ai, garnering support from 99.59 per cent, 99.39 per cent and 98.99 per cent, respectively, of total shares represented by votes cast.

The trio were on opposite sides of the conflict surrounding the appointments of Young and Wong Su Yen.

Earlier during the AGM, non-independent director Philip Yeo called on shareholders to vote against Young, Wong Su Yen, Desbaillets and Wong Ai Ai.

Desbaillets and Wong Ai Ai were on the side that opposed CDL executive chairman Kwek Leng Beng, while Ong and Yeo were in his corner in the dispute.

At the AGM, Yeo boisterously expressed his displeasure that the nominations of the two new IDs did not go through the then-nominating committee, drawing loud applause from the floor. Chong Yoon Chou, the chair of the nominating committee at the time, also commented that the whole appointment process was rushed.

A proxy holder at the AGM rose to say that since Kwek Leng Beng last month issued a conciliatory statement that all the directors have decided to cast aside their disagreements and work for the good of the company, “let’s not turn this AGM into a litigation forum; who is right, who’s wrong? It doesn’t matter anymore”.

On the morning of Feb 26, CDL had cancelled an analyst and media briefing for its second-half and full-year 2024 results. This was followed by an announcement from Kwek Leng Beng that he had filed court actions against his son Sherman for an attempted boardroom coup. It triggered a series of dramatic claims and counterclaims.

A fortnight later, the senior Kwek said he was discontinuing his lawsuit against the CEO and six other members of the board. “I will continue in my role as executive chairman and Sherman Kwek will continue as group chief executive officer,” he said on Mar 12. The senior Kwek added that all the current directors, including Young and Wong Su Yen, would remain on the board, and that all board members had agreed to put aside their differences for the greater good of the company and its stakeholders.

A key sticking point in the boardroom battle was that the nominations of Young and Wong Su Yen as IDs did not go through the nominating committee. CDL explained in the corporate governance section of its latest annual report and reiterated last week that while the nomination and appointment of the two directors did not go through the nominating committee then, they were submitted to the full board for consideration and approval.

A major turning point in the boardroom fight was the Mar 4 announcement of the “irrevocable resignation” of Catherine Wu as an unpaid independent adviser to CDL’s hotel arm, Millennium & Copthorne Hotels (M&C). Wu’s long relationship with Kwek Leng Beng had caused the rift within the CDL group.

At the AGM, Yeo, the former chairman of Singapore’s Economic Development Board, also stated that all directors should be appointed unanimously. “(It) should not be a majority director bullying the other minority director.”

Giving his take at the AGM, Chew Sutat, a CDL shareholder and former senior managing director at the Singapore Exchange, said: “If everybody agrees with the same thing absolutely all the time, then that’s known as group think. You don’t have the diversity of views, you don’t have the diversity of ideas, and you don’t have the diversity for the company to potentially achieve its GET strategy and really get the stock price up.”

(GET refers to CDL’s “Growth, Enhancement, Transformation” strategy.)

Chew, saying that the GET strategy has “got a lot of different elements, and it’s not easy to execute”, suggested that CDL sharpen its messaging to investors and come up with a “very clear statement that GET also means to shareholders that there’s a path forward, of regular recycling of capital that comes back as shareholder return”.

He went on to recommend that the group spend some time and maybe a couple of million dollars, on “just getting that narrative right and the shareholder perceptions, what you really want, figured out”. This could boost CDL’s share price and market capitalisation. “You might actually get back into the MSCI Singapore Index,” he said. CDL’s removal from the index in late-May 2024 has been cited by the group as a factor behind its languishing share price.

Chew added: “As a shareholder, I would look to see beyond the strategy and the challenges, how can we proceed forward, and how can we bring new shareholders into a company and prosper together.”

Accepting the suggestion, Sherman Kwek reiterated: “As we start to execute our strategy and accelerate our capital recycling, the more we start to divest and get proceeds back, these proceeds, aside from being used on new acquisitions, can be used for stronger dividend payouts as well as share buyback, which will benefit everyone.”

In 2024, CDL announced over S$600 million in divestments, short of the S$1 billion target, due partly to adverse market conditions.

Also passed at Wednesday’s AGM was the renewal of the share purchase mandate, which would allow the company to buy back up to 10 per cent of its ordinary shares and up to 10 per cent of its preference shares. This received 99.9 per cent support.

Also receiving the nod, with 97.93 per cent in favour, was the renewal of the company’s IPT Mandate to facilitate the company, its subsidiaries and its associated companies to enter into transactions with interested parties, including its controlling shareholder Hong Leong Investment Holdings (HLIH).

CDL directors and the relevant companies within the HLIH group abstained from voting on this resolution.