F&N CEO Quits Over Differences With Board

Source : The Business Times, October 6, 2007

Chairman to oversee management till successor is found

When Lee Hsien Yang takes over as chairman and non-executive director of Fraser & Neave on Oct 15, he will find himself playing a more hands-on role than he may earlier have anticipated.

Dr Han: Is leaving his post with immediate effect, following several days of rumour and speculation

That is because the blue chip company's chief executive Han Cheng Fong is leaving his post with immediate effect, following disagreements with the board.

No successor has been named but F&N said that pending the appointment of a new chief executive, the board's chairman 'will oversee management of the group'. As things stand, current chairman Michael Fam himself is stepping down just over a week from now to make way for Mr Lee, the former SingTel CEO.

The latest developments unfolded after several days of rumour and speculation over Dr Han's position. He had joined the group seven years ago but was appointed its chief executive only in February last year.

Of late, there had been talk of his disagreements with some members of the board - a point tacitly acknowledged in the statement made by the company to the Singapore Exchange.

'The resignation of Dr Han as a director and the amicable cessation of Dr Han's employment arises from differences of opinion with the board which are unconnected with the financial position or performance of the company or its subsidiaries,' said the statement.

Word in corporate circles is that serious differences have arisen over the past two or three months between the board led by Dr Fam, 79, and the 65-year-old Dr Han who was chief executive of DBS Land until it was taken over by what is now CapitaLand. Before that, Dr Han was permanent secretary to the Ministry of Labour.

The disagreements were so bitter that there was even talk that the two might end up in court. But whatever the differences, both sides stressed that they had little to do with the performance of the company.

In fact, Dr Han painted a rosy picture of the company's future. In a statement of his own, he said: 'As the third-quarter results indicate, we are going to end this year with sterling quality performance. From projects secured to-date in China, Singapore, Australia and the UK, good performances from the beer and soft drinks and beverage businesses, I am confident the next five years promise strong double-digit growth and F&N is likely to achieve a doubling of this year's bottom line performance by the end of the fifth year.'

The booming property market helped to boost F&N's third-quarter net profit by 28 per cent to $97.1 million while net earnings for the first nine months - till end-June - rose 36 per cent to $280.7 million.

For FY2006, the group reported record net earnings before exceptional items of $295.4 million.

Observers pointed out that Dr Fam and Dr Han were full of praise for each other in the 2006 annual report.

In it, Dr Fam said: 'I would like to commend the management and staff, under the strong leadership of Dr Han Cheng Fong, for delivering another set of record profits.'

In turn, Dr Han had said: 'When Dr Fam was appointed as chairman in 1983, F&N's profit was $30 million. By the time I succeeded him as the group CEO in FY05, profits had grown almost tenfold to $271 million. The quantum leap in F&N's profitability was the product of (the) strategies which he pursued.'

Yesterday, the farewell was less effusive. Dr Han indicated in his statement that he had been thinking of moving on for some time.

'Yes, I have been in discussion with several organisations in the last few months and it is likely I will make up my mind on what my future will be after a break in Europe,' he said.

Trading in F&N shares, which were suspended 30 cents up at $5.95 at 11.45 am yesterday pending the announcement, will resume on Monday.

Apart from receiving what could be a sizeable severance package, Dr Han has options for 4.18 million F&N shares and 3.24 million Frasers Property (China) shares which closed at $1.52 yesterday.