Corporate Governance - the Board's Role

Manila Bulletin, October 5, 2011 | Go to article overview

Corporate Governance - the Board's Role


MANILA, Philippines - I finally attended the 5-day Professional Directors Program (PDP) of the Institute of Corporate Directors. Among my classmates were retired military officers (Gen. Ramon Farolan, Diosdado Domingo and Cardozo Luna of Apslai, Romeo Lustestica), government officials (SSS Commissioner Malonzo Ibarra, DAR USEC Tony Parungao), and big business (Solomon Hermosura of Ayala, Jasmine Oporto of Aboitiz Equity, Jose Ejercito of Unilever Korea, Rey Bacarro of Ascent Associates) among others. Discussions were even livelier as former SEC Chairman Fe Barin was our classmate.

What are some principles of corporate governance? These are independence, fairness, accountability, transparency, ethics long term sustainability, social responsibility.

What is the Role of the Board?

The proposition is "The Success or Failure of Corporation depends primarily, but not exclusively, on the Board." The Board is responsible for the corporate Charter:

MISSION VISION & VALUES.

The Tricker Model presents the role of the Board both on short term/long term basis and from an internal/external point of view. Basically, the board's role is to establish strategic directions, to formulate policy, monitor financial and non-financial performance and set up a system of accountability for management to achieve higher performance standards individually and collectively ICD expanded the Tricker Model and included ethics (the Board is the "conscience of the corporation"), corporate governance culture and promote social responsibility.

The boards time and attention should be focused on strategic directions which is forward looking and policies concerned with long term sustainability. These needs Intent as usually time is spent on routine and transactional matters. How do you guard against this?

STRATEGIC TOPICS

In addition to the regular topics, what are some strategic issues for the Board? Suggested topics that can be scheduled each month/for the year are: Human Resources issue, Risk Management, Audit and Compliance, Market and Marketing Issues, Strategy and Business Plan, Industry Liberations or Next Year Budget Planning, Corporate Governance and Corporate Social Responsibility, Expansion Plans, etc. It is also suggested that the Board held an annual retreat among directors with a few senior management to discuss strategic issues.

"GAME CHANGERS" IN CORPORATE GOVERNANCE IN THE PHILIPPINES

The Maharlika Board (MB). The MB will be an elite group of publicly-listed companies committed to much higher standards of corporate governance aligned to regional best practices. In a chat with Hans Sicat, PSE President, criteria for the MB is separation of Chairman and CEO, the minimum three (3) independent directors, duly accredited directors and 30% public float among others. …

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