Creating value by making things less valuable

Sometime in April of this year, I decided to write a piece on a quote by Prince Charles, the heir to the British Throne, which was entitled “ALL THE TIME I FEEL I MUST JUSTIFYMY EXISTENCE.” I felt that the quote was post-worthy because it summed up a fact of life and the fact that a man who didn’t have to worry about money was conscious of that was worthy of my few cents of comment.

The vast majority of us need to work to put food on the table. Work involves justifying one’s existence to a party paying the bills. Business people are always trying to prove that their product or service makes life better for customers. Employees constantly need to prove that they are of a value to the system. In a funny way, this is easier when you’re at the bottom of the food chain. If I take myself as an example, my value to my day-job boss is simple. I am strong enough to lift boxes of documents and I don’t have an issue traveling to industrial estates. To my restaurant job bosses, my value is simple – I’m the guy who brings food from the kitchen to the table.

I’m not terribly well paid because it’s been argued that the value of my job (particularly the night one), because the theory is that anyone can do the job I do, and probably at a cheaper price. Hence, to do the job I do, my value needs to be a little more than just moving dishes from point-to-point. Immigration laws protect me in as much as I have the right citizenship and employers need a certain number of locals on the payroll to hire “exploitable” labour. I also do things like I do my best to push booze sales so that I can tell my employers that I make them enough money to pay myself.

It’s easy for me justify my value because it’s easy to describe what I do. However, its also easy for my employers to remove me. They just need to feel that business has slowed and that they can get someone cheaper. Should that happen, removing me from my sources of income would be fairly easy.

However, it’s a different story as you climb higher up the food chain. What exactly does a CEO or a minister do to justify his or her existence to an organization? It’s hard to pin down the individual at the top’s efforts have a direct effect on anything in particular. However, the argument goes, that whatever people at the top are doing, its exceedingly valuable and the value they provide is something only they can bring and therefore worthy of a lot more pay than whatever people at the ground are making. We’ve used this argument for the longest time in Singapore whenever it comes to talking about government salaries.

The answer that the people at the top “create value,” which means that the rest of us have jobs to go to and therefore get to have a better life than we would have otherwise. In Singapore, the argument goes that we need to have the world’s highest paid ministers because we need to attract super competent people to run the show and we don’t want them to turn corrupt. We also argue that we need to share the brains between the public and private sector so that all sides of the economy benefit.

I’ve argued on many occasions that I don’t disagree with this on the surface. Why should the bright and brainy not enter public service and get well paid for it. Why can’t smart public servants be tapped to run public listed companies if they can deliver value?

Where I do question this policy is on two fronts. Firstly, are we really getting the best and brightest and what happens when they fail to deliver “value.”

Let’s take the “CEO’s” job as an example. Modern management theory has it that a CEO is appointed by shareholders to make them money. In the USA, this has led to the use of stock options, which are supposed to make a CEO’s interest aligned with the shareholders who have hired him (they’re usually men). This has created multimillionaires across the board and whenever someone talks about outrageous pay of CEO’s when compared to the average worker, the retort is that the bulk of the CEO’s pay is from stock options and the CEO is only taking a fair share of the wealth he helped to create for shareholders (which does include mutual and pension funds, which workers invest in).

Since, this has been the standard measurement of people at the top, let’s see if this applies to Singapore’s top brass. Have they created vast amounts of wealth that their American counterparts claim to have done?

Let’s take Mr. Ng Yat Chung, the CEO of Singapore Press Holdings (SPH), who is about to do his shareholders a service by selling the company to another Singapore government-controlled conglomerate called Keppel Corporation (Keppel). When the story broke on 2 August 2021, it was mentioned that the offer by Keppel provided SPH shareholders with a 40 percent premium of the last traded share price of $1.50 per share. The report can be found at: [LINK]

So, it looks like Mr. Ng has done what few imagined would be possible in the current market – he’s delivered “value” or “created wealth” for the shareholders who hired him. As a former Chief of Defense Force (CDF), you could argue that by creating “value” for SPH’s shareholders, Mr. Ng has proven the Singapore government’s point of the need to share “value-creating” brains between the public and private sector.

Unfortunately, if you look at things more closely, Mr. Ng hasn’t exactly done that. When Mr. Ng took over as CEO of SPH in September 2017, SPH’s shares were hovering at around $2.76 per share. At the time of the announcement of Keppel’s take over, the share price was hovering around $1.88 per share. If you look at the chart of SPH’s historical share price, it’s very noticeable that SPH’s share price has been on a gradual decline from the day Mr. Ng took over.

If you look through the share price of SPH in the years that Mr. Ng took over, its very clear that what Mr. Ng has done has been to manage the decline of SPH rather than to create new value adding paths to prosperity for SPH.

One can argue that Mr. Ng was unlucky in the sense that the main business of SPH has been in the print media, which has been on the decline for over a decade. You could argue that it’s just an industry trend and Mr. Ng had bad luck. When the announcement came in May 2021 that SPH would be hiving off its media business into a non-profit company, the government came to his image repairing issue. Our Magically Unconflicted Writer and Enforcer of Laws went as far as to say that there was nothing wrong with governments helping out media businesses: [LINK]

Unfortunately, Mr. Shanmugam is not exactly correct as can be seen by a comparative share price of some other media companies. Take News Corp, owned by Rupert Murdoch, which has seen its share price rise since 2017 when the share price hovered around US13 per share and at the time of writing now trades at around US$23 per share. [LINK]

Of course, News Corp has a variety of businesses and is an international company, so one can argue that its TV and radio business does offset whatever happens in the print business.

However, if you look at another company, whose business is to publish a news paper for a financial centre, you’ll also find that the picture does not favour Mr. Ng’s management of SPH. The New York Times Company Limited, which publishes the New York Times saw its share price go from roughly US$18 per share in September 2017 to roughly US$43 per share in its most recent trade. [LINK]

How did these companies expand and grow in tougher markets, whereas SPH failed to grow and in fact declined in its domestic market? There’s no way Mr. Ng could not have seen that his main flagship product was declining in a three-year period and that he could have taken some remedial action.

Are the people on the top really creating value for the rest of us or are they playing semantics to make us assume that some form of value is being created. It’s a question that we could all do well to consider.


Tang Li

*Although I’ve been based mainly in Singapore for nearly two decades, I’ve had the privilege of being able meet people who have crossed borders and cultures. I’ve befriended ministers and ambassadors and worked on projects involving a former head of state. Yet, at the same time, I’ve had the privilege of befriending migrant labourers and former convicts. All of them have a story to tell. All of them add to the fabric of life. I hope to express the stories that inspire us to create life as it should be.




12 Responses to “Creating value by making things less valuable”

  • Billy ma:

    In many if not most cases, value creation or rather the quantity & quality of values are determine by other parties rather than yourself.

    But in PAP case, they determine the values & they decide on the achievements or attainment of those values.

    This is why PAP has determined that they’d achieved close to 100% of what they’d set out to achieve.

    It’s all their words & that they considered the ultimate conclusion that count.

    Of course we know how PAP shifts goal posts & even adjust the dimensions of the goal posts to accommodate their inconvenience & incompetent levels & shortcomings.

    The Victor decides & writes history.

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  • Sperm oozed out:

    He gave scholarship a valueless name. No wisdom. I pitty his parents

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  • best selling highly ranked:

    //How did these companies expand and grow in tougher markets, whereas SPH failed to grow and in fact declined in its domestic market?//

    how come hor ?? maybe it has all along operated under 158th media standard environment and as a linked-here-and-there organization ??

    HOW to improve, they may have to report (even some investigative reporting ??) into a lot of inconvenient issues and matters in an “independent” manner – not the kind of civic ‘brainwashing’ messages mimicked as news ???

    would they do it and why would they as they are still the best selling highly ranked broadshXt (ownself-blow-ownself-opps-trumpet ???) in the whole of sinkie land ???

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  • opposition dude:

    Let’s get the obvious out of the way about Umbrage Ng first. The guy was appointed purely on the basis that he was a scholar and not because he was a visionary of any sort.

    With that out of the way all he has done is absolutely KOSONG. Like the writer mentioned, SPH’s share price hasn’t gone up since he took over and his 2 massive failures in NOL and SPH are all that he is remembered for in addition to losing his temper at a press conference. Of course none of this will ever be published in the newspaper for obvious reasons but hey, we all have got brains and can analyse for ourselves now can we not?

    And the FACT that netizens pointed out that SPH is a monopoly in the print business not only rubs salt into PAP’s thick skinned hide it also provies countless laughter too!

    I guess when people wise up and have far better things to do like online gaming/shopping, Netflix and all that is when they don’t have the time to read newspapers daily anymore. That, plus the fact that it’s owned by the government makes it a double no no.

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  • MarBowling:

    This Umbrage LJ General Ng Jung-Un is like ex USA President Donald Lame Duck Trump: EVERYTHING HE TOUCHES DIE!

    Understand there is a SOP that top guns must ROTATE every 5 years AFTER squatting in his or her position in those IMPOTENT oops IMPORTANT Coverment establishment or organization! THINK he should consider KICKING himself upstairs to SQUAT as the Indian Chief of SIA!

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  • Shenkoji Buchikonya:

    Perhaps Tang Li should’ve understood…The Mission Statement and single responsibility of corporations, as declared by boards and CEOs is to make a profit for the stockholders. This was precisely the same Mission Statement of Al Capone, who owned all the stock in his organization. He did however occasionally accept a more human responsibility–he sent flowers and sometimes funded pensions for widows of men he had killed.

    The biggest advantage of a conglomerates that it gives an incompetent CEO the excuse to reorganize when he senses he is about to be fired. Depending on the assets of the corporation, he will recommend that more new companies be bought to lessen competition OR many of its own companies be sold off in order to return to core expertise. That will give him at least two years to negotiate much greater compensation and additional value for his golden parachute when the corporation’s stock continues to plunge.

    As advisor in Corporate Acquisition for a number of companies – both private, public and non-profit/governmental – I can say with absolute certainty it is a fool who trusts his for-profit, corporate employer.

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  • #06-195 Ah Lee Baba me 3:

    Print media is sunset industry, as in the sun is at the water surface. Advertising also. When was the last time you bought a paper or glossy?

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  • Emperor, Mandarins, Peasants:

    A conniving Corporation hires a tribe of poor cannibals as labourers at minimum wage, and instructs them as follows: “You have full rights as employees, but you’re not allowed to eat anybody, you hear?”

    Things go well for several weeks and then one day the CEO calls the Tribe into his office. The CEO says:

    “Somebody has been reported missing. Did you eat anyone?”

    The chief of the Tribe checks with his people and replies: “No sir, we have not eaten anybody. It must be a coincidence.”

    The CEO is skeptical, but as he has no evidence he dismisses the Tribe – at rock bottom wages they were a smashing deal.

    Once the tribe is away from everyone else, the chief turns to his groupees and asks: “Okay! which one of you idiots did it?”

    One tribesman puts up his hands sheepishly admitting: “I ate a secretary…”

    The chief smacks the bugger on his mouth and yells:

    “You fool! We’ve been eating middle management for weeks and nobody noticed. Then you had to go and eat someone that works like us!?”

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  • nitrogen:

    pap and all its clan members, especially the paper general class, all play the naked king game.

    only one can be king. and it is the one who has the hands into S$m via pap PA via temasick via gic via ntuc and such gimmicky pap setups approved by pap pliant parleement.

    only one can be king. the one who is able to decide who can get S$m and who cannot get S$m.

    as a side note, Msia najib and wife did not do the right thing. setting up 1mdb is not wise. najib and wife should have set up gimmicky setups such as ntuc PA temasick gic and such. then can remain kingmaker forever, besides having a lot of S$m to spend.

    that is why when we see a decent adult, we know it.

    who is a decent adult?

    simple. as long as not pap, then, decent adult. as long as pap, cannot be decent adult.

    that is why PSP WP are going to dispose of pap soon. because more and more fellow local born realize decent adult trumps S$m.

    we digressed.

    all pap clan members, other than being obedient S$m takers, lack that little bit of thing called grey matter.

    that is why under pap, such crap can exist, such as,

    1, INSIDE 200m is not within 200m

    2, ceca ah nehs create jobs

    3, HDB values go up in pap wards

    4, all schools are god schools

    5, INDIAN is malay for the purpose of selecting a president

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  • Asd:

    I think free rider can’t even make monopoly biz profit useless scholar feast in cook house free

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  • LL lah:

    This topic is interesting “Creating value by making things less valuable” =

    Sama-sama lol!

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  • New world:

    New world order…
    Not gain but more loss better…
    Just look at Grab….and many new Unicorns.

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