A TALE OF TWO BONUSES
By Courtney Siu

PCCW directors were stingy with bonuses this year, and for good reason. At a time when most Hong Kong-based companies were thriving, the telecommunications provider reported dismal results for 2006 – profits fell 21.5% from HK$1.59 bn in 2005 to HK$1.25 bn. Indeed, bonuses were slashed for all but two directors. Among those who had their bonuses cut: managing director Jack So, whose pay dropped 25% compared with 2005. Hanging on to his bonus was PCCW CFO Alex Arena, who received his bonus of HK$8.83m in addition to his salary of HK$11.48m.

Evidently, So took his pay cut hard, quitting soon after he received the news. Why was the CFO rewarded when the MD was not? PCCW hasn’t offered an explanation, but Kenny Tang, a director at Tung Tai Securities, said in an interview with the Australian Financial Review that PCCW controlling shareholder Richard Li may want more control over daily management of the company.

Whatever the case, the company seemed ready for So’s decision: immediately after So’s announcement, PCCW promoted Arena to managing director and Susanna Hui from finance director to CFO.

Arena was apparently not held responsible for the overall performance of the group, but instead rewarded for the businesses under his watch – which are becoming the mainstay of the PCCW stable. Aside from running the company’s day-to-day operations, Arena has also led the company’s two most promising divisions – Now Broadband pay TV and PCCW Mobile. Both businesses posted losses for 2006 but Now, in particular, showed promising growth: it installed 38% more boxes than in 2005 and sales rose 71%. Now also won exclusive rights to broadcast English Premier League football, and is making a big marketing push for sports channel viewers.

How will Arena fare as PCCW’s new boss? It will certainly be a change for him. Aside from his time running the company’s mobile and cable TV operations, he doesn’t have much experience heading up a large business. Arena, 56, was a senior civil servant with the Hong Kong government before joining Li’s private investment vehicle, Pacific Century Group, in 1998. He was a special policy advisor from 1997 to 1998, and from 1993 to 1997 he was a member of Hong Kong’s Broadcasting Authority and Director-General of Telecommunications at the Office of the Telecommunications Authority of Hong Kong. He also served in the Australian Telecommunications Authority for four years. He has an MBA from Melbourne University in Australia. He does have one other significant advantage, of course: the trust of Richard Li.