More independent execs needed?
By: Neil Jerome Morales
July 7, 2011
TOP LISTED companies in the local bourse have just met the bare minimum in terms of fielding two independent directors to protect shareholder interest, an Asian Institute of Management survey of the 100 largest firms found.
Only six of the top 100 listed companies had four or more independent directors in 2009, compared to 10 companies in 2008, the report released yesterday stated.
Furthermore, only one firm had a board 50%-60% composed of independent directors versus three companies in 2008.
The study also found that independent directorships among the 100 listed firms continue to be dominated by men with only 6% of the 173 independent board seats occupied by women.
“No Top 100 Company had more than one woman independent director,” the report stated.
Securities and Exchange Commission (SEC) Chairman Teresita J. Herbosa, commenting on the low number of independent directors, said: “It is difficult to find persons who are independent, not conflicted and with suitable expertise.”
“Basically, the results could serve as basis for the possible amendments to the laws on corporate governance,” Ms. Herbosa said at the study’s launch.
For instance, the SEC wants to amend the minimum number of independent directors in the board, the number of directorships that an independent director can hold, the length of service and also compensation of the independent directors.
“If the board is dominated by independent directors, they evaluate acquisitions more objectively,” Ms. Herbosa said.
Rex C. Drilon II, president of the Institute of Corporate Directors, for his part said: “Once the business community becomes more aware that good corporate governance increases our competitiveness as a country, they will be happy with compliance.”
“Companies who are perceived to practice good corporate governance get a premium in terms of valuation and there is a good correlation in terms of corporate performance,” Mr. Drilon added.