SINGAPORE

In a surprising move reflecting the ongoing challenges in the market, Sherman Kwek, CEO of City Developments Limited (CDL), has voluntarily opted to relinquish his long-term incentive grant valued at S$1.35 million for the financial year 2024. According to CDL’s recently released annual report, this decision results in a notable dip in his total compensation, now totaling S$2.97 million—a decrease of 15.4% from S$3.52 million in the previous fiscal year.

Kwek's compensation breakdown reveals that his fixed salary constitutes 33.3% of his total earnings, with 59.6% stemming from short-term incentives and 4.2% from board and committee fees. This marks a shift from FY2023, when his fixed salary made up only 28.1% of his total remuneration. The long-term incentive previously awarded in FY2023 is contingent on meeting specific performance targets over a three-year period, influencing its vested payments significantly.

The compensation of executive chairman Kwek Leng Beng also saw a decline, dropping 13.6% to S$5.97 million from S$6.91 million in FY2023. The company’s financial performance has faced significant headwinds, with a reported profit of S$113.5 million for H2 2023, a steep decline from S$250.8 million in the corresponding prior period, pushing the full-year net profit down by 36.6% to S$201.3 million.

This sharp downturn in profitability primarily stems from the property development segment, which exhibited a staggering revenue contraction of 66.4%, plunging to S$939.4 million from S$2.8 billion year-on-year. In response to these challenges, Sherman Kwek emphasized the importance of prudent capital management and a commitment to strong investment discipline. He stated, "We will strategically deploy funds for new investments while accelerating divestments to recycle capital."

Looking forward, CDL is preparing to launch an ambitious integrated mixed-use development on Zion Road, in collaboration with Mitsui Fudosan. This project will feature two residential towers, each soaring 62 stories tall, housing a total of 706 units, alongside a retail podium and a separate 36-storey tower with 373 serviced apartments.

However, amidst these strategic shifts, controversy has emerged over the appointment of two new directors, Jennifer Duong Young and Wong Su-Yen, whose hurried inclusion onto the board has been criticized as "irregular and hasty." The upcoming annual general meeting on April 23 will be pivotal for shareholders, offering them their first opportunity to address these pressing issues since the announcement of legal action concerning the appointments was dropped.

In light of these developments, Sherman Kwek reiterated his commitment to corporate governance and transparency, ensuring that stakeholder interests will remain a priority as the company navigates the turbulent economic landscape. CDL shares witnessed a slight decline of 0.9%, trading at S$4.48 before the midday trading break on Tuesday, raising questions about investor confidence amid the ongoing restructuring efforts.

Stay tuned for more updates as CDL continues to evolve in these unpredictable times!