NOL: Big payout for big loss?
By Mano Sabnani, Business and Financial Consultant
First published in TODAY
11-12 Jan 2003

Now that the future of one former Government-Linked Company (GLC), Natsteel, is more or less settled, public attention could shift to another loss-making GLC: Neptune Orient Lines. The national shipping line has had a chequered record since it went public in the eighties, reporting profits in good years only to lose its gains in the difficult years.

That record has been maintained even under inspired foreign talent brought in in June 1999. CEO and group president Flemming Jacobs managed to turn the company around in 1999 and 2000, two relative good years for the global economy. However, NOL fell back into the red in 2001, despite Jacobs declared allergy to red ink. For 2002, the company is expected to be wallowing in a deep red pool, carrying losses of at least US$250 million.

The allergy has got to Jacobs and he has left the company at short notice. The interesting part, however, is how much NOL is compensating him for termination and related expenses, including the value of share options. The payout is apparently in accordance with the terms of his contract for an early departure.

Curiously, the payout totals about US$2.5 million. On the other hand, the NOL group is expected to report a loss of around US$250 million for 2002. Jacobs alone appears to account for about 1 per cent of the humongous loss which will weaken NOL's overall financial position considerably. Some wits in the financial district are wondering aloud how much more Jacobs would have got, had NOL made some profits!