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Published on April 29, 2008

Achara Deboonme

achara_d@nationgroup.com

The Nation

It was a lively meeting as shareholders packed the conference room at the Amari Atrium Hotel on Phetchaburi Road. Excitement was added as minor shareholders conveyed their displeasure about the proposed dividend payment.

ITD offered 6 satang per share as a dividend, which accounted for 25 per cent of earnings per share of 24 satang, even though the company has a policy of paying out up to 40 per cent of earnings in dividends.

This caused an uproar among shareholders. They complained that last year the company omitted dividend payments, because of losses, so this year it should help the shareholders, who see limited gains in share prices. They asked for a dividend of 10 satang a share.

After insisting some of the earnings must be reserved for future expansion, including bidding for suburban train projects, the management, led by Premchai Karnasuta, kept silent.

Failing to receive a satisfactory answer, some shareholders walked out to enjoy the food outside the conference room. Witnessing the delay, chairman Chatrachai Bunya-ananta exercised his right to call an end to the meeting. He decided to raise the dividend to 7 satang. Disgruntled shareholders tried to negotiate for 8 satang, and it was finalised at 7 satang.

What does this tell you?

It shows the clash between management and minor shareholders. It's natural for minor shareholders to cash in on everything possible, while the management must look to the future. Without sufficient funds, ITD in particular could not come up with financial guarantees to convince government officials of its ability to complete concession projects. Then both major and minor shareholders would be deprived of possible future gains.

It also shows that small shareholders can win battles against management, which normally includes major shareholders. But for their rebellious act, all ITD shareholders would have had to accept a dividend payment of 6 satang. At 7 satang, the dividend accounts for 29.2 per cent of earnings.

Luckily, ITD this year hosted a food buffet outside of the conference room, compared with the plates of cookies and coffee and tea of past years. Or else the shareholders may have found it hard to kill time while waiting for management's decision.

Other companies may be thinking: should we or should we not offer food?