S P Setia puts succession plan in place

THE three men seated on the first floor of the spanking new Setia City Convention Centre in Shah Alam — with Setia City Mall in the background — speak fondly of how they had met years ago and how they went on to build S P Setia Bhd into the property giant it is today.

It was a combination of trust and chemistry, a shared entrepreneurial vision and great work culture, they recall.

Their interview with The Edge, however, is not to reminisce about the past, but to talk about the future, albeit one in which central figure Tan Sri Liew Kee Sin will not be present.

Under a succession plan approved by the S P Setia board of directors on March 14, Liew's right-hand man Datuk Voon Tin Yow will become president and CEO of the company while Datuk Teow Leong Seng will be promoted from chief financial officer to Voon's deputy.

Essentially, the No 2 and No 3 men will move up one step when Liew leaves, but when that will take place is not revealed.

Although Liew, under an agreement with S P Setia's controlling shareholder Permodalan Nasional Bhd (PNB), can stay on until March 2015, it is well known that he will not serve until then. Indeed, his close associates expect him to exit within the next one year.

"He has things he wants to do after Setia and he is not going to wait until 2015. That's a long time away," says a business associate.

Liew himself is coy about when he will leave. "I will tell you when the time comes," is his reply despite repeated attempts to get a definite answer out of him.

"For the moment, putting the succession plan in place and explaining it to all the stakeholders is my priority," he stresses.

Elevating Voon and Teow so they can lead the company will help preserve all the values that make Setia what it is today, says Liew, adding that he is glad the board of directors supports the idea. "Our customers, our staff and our shareholders will be happy to see continuity and that the core team is staying on."

Besides Voon and Teow, there is a core team of 300 among S P Setia's workforce of close to 2,000. They are the ones behind many of the company's ideas and the planning and execution of the various projects it has undertaken over the years.

To retain them, a new share scheme called the Long Term Incentive Plan (LTIP) was devised and approved by shareholders at an extraordinary general meeting on Feb 28. It replaces an existing Employee Share Option Scheme (ESOS).

LTIP, which will be in force for five years, allows the company to distribute up to 15% of its issued and paid-up capital to employees. It is the best employee retention plan ever structured by a listed company, says Liew proudly.

"We are the only public-listed company to get approval for 15% of the issued and paid-up capital. Normally, it's 10%. This 15% was my agreement with PNB when I signed the management contract upon the takeover for me to stay on for three years."

Comprising three components, the LTIP includes an ESOS, a Restricted Share Plan (RSP) and a Performance Share Plan (PSP). Where an ESOS is an option to buy shares of the company over a period of time, under RSP, shares of the company are given for free to the staff.

Meanwhile, PSP is for senior staff and will be driven by key performance indicators and other objectives aligned to the group's long- term financial performance and shareholders' value enhancement.

"We want to maintain those in the managerial levels as they will drive us forward," explains Voon.

The staff will be rewarded with one component or a combination of ESOS, RSP and PSP, depending on their position and role in the company.

Liew says the idea behind LTIP is to ensure everyone who has contributed to the group's success over the years, regardless of their rank and position, is rewarded.

"We have to think across the board and ensure everybody is comfortable and if they stay, this is their reward. We have shown concern for our staff's welfare from day one. LTIP has to be implemented properly and with that in line, we will get loyal staff. With that in place, I'm sure Setia will continue to grow and be a strong company, with or without me."

The rationale for the succession plan is to ensure his departure does not affect staff morale and customer perception, he adds. "We are concerned about two things — our staff and our customers. The success of every company lies with its staff. You may have the brightest ideas or the best landbank, but if you don't have good staff, it's not going to work. We will ensure our staff clearly understand the succession planning.

"Secondly, our customers. By nominating Voon and Teow, we are telling our customers that there is continuity, stability and whatever we have promised all these years will be maintained. After all, Voon and Teow have been behind every single thing we have done."

While he has been the face and voice of S P Setia all these years, Liew points out that Voon and Teow have been involved in all the company's major decisions.

Voon is an engineer while Teow is a former banker and their skills complement Liew's vision and drive. Voon and Liew have known each other for close to 30 years and started a property development company called Syarikat Kemajuan Jerai Sdn Bhd (SKJ) together. The company was subsequently injected into S P Setia. In fact, Liew considers Voon his right-hand man.

"The way we work at Setia, when he says something, I keep quiet. So whatever he says is what I say and the staff know it. I cannot dispute him, you know," he laughs.

Teow became part of the high-level trio when he joined S P Setia in 1996 after SKJ became a part of the public-listed company. Teow was working with Citibank, which had financed SKJ's first project in Ampang.

Liew attributes his chance meeting with Teow to good fortune. It got him and Voon the financing they needed and a partner later on in their career.

"The bank took a big risk in lending to us because we were a start-up. At the time, after the oil crisis, it was very hard to get loans. So the pricing had to carry a certain element of profit participation," Teow recalls, pointing out that banks no longer offer such loans.

Teow is the finance guy who deals with the bankers and investors. Voon the engineer is the brains behind the group's many property projects.

One of his notable contributions is when he came up with a plan to link the company's sprawling 4,000 acres in Shah Alam to the New Klang Valley Expressway. Before that, the only access to the area was through Meru in Klang and when the company bought the land for around RM300 million from See Hoy Chan Group, many in the industry were shocked and doubtful about its viability.

That plantation land now houses the Setia Alam and Setia Eco Park community and made S P Setia a property developer to be reckoned with. It is also the pride and joy of the three men.

"Voon and Teow and many others in the team have been with me throughout this journey. I may be the guy who talks a lot, but the actual brains behind it are all the people around me," Liew says. "Setia will continue to do well with them around.

"My job of pushing Setia has come to an end. Now, it's more of consolidation, more of continuity, more of delivering, which they are very good at. Not me."

With the succession plan now in place, Liew says he will focus on overseeing the transition and speaking about it to all the stakeholders over the next six to nine months. This perhaps indicates when Liew is likely to end his 17-year journey with S P Setia.

This story first appeared in The Edge weekly edition of Mar18-24, 2013.

Looking for properties to buy or rent? With >150,000 exclusive listings, including undervalued properties, from vetted Pro Agents, you can now easily find the right property on Malaysia's leading property portal EdgeProp! You can also get free past transacted data and use our proprietary Edge Reference Price tool, to make an informed purchase.