NOT that Due Diligencer is taking up the cudgels for stockbrokers who trade in shares listed on the Philippine Stock Exchange.
Rather, this piece is intended to justify a suggestion made a long time ago that the exchange’s more than 200 or so trading participants who are also PSE stockholders get themselves elected directors of listed companies. After all, they are more qualified to represent the public investors for whom they buy and sell shares than the independent directors who should not have been given any kind of role at all on the boards of public companies.
Of course, the appointment of independent directors is provided for by law. Whatever law or rule it is, the question is this: Do independent directors deserve seats on the board when they hold only nominal shares?
Traditionally, the minority board nominees get elected by the number of shares they own along with the number of proxies from the public, the reason for what used to be proxy wars. This is not true anymore. As practiced, the majority stockholders ratify the selected nominees chosen by their allies and compensate them well.
For example, the Zobels, who control the Ayala group of companies, pay their companies’ directors at least P1.20 million a year but increased the amount in the last two years—P28 million in bonuses in 2012 and 2013. In addition, they gave the board members per diems of P15.390 million in 2012 and P15.140 million in 2013.
The Philippine Long Distance Telephone Co. is another generous company. It pays each of its 13 directors P200,000 per board meeting attended and additional “remuneration” such as per diem of P32 million in 2013 and P35 million in 2012. It estimated at P36 million the board’s compensation in 2014. Computed, the amounts translate to P2.462 million meeting fees per director in 2013 and P2.692 million in 2012.
If only SEC chairperson Teresita Herbosa and the four SEC commissioners would review the rule or the law, then they would probably see something wrong with the selection of independent directors. If they would look at the compensation tables of listed companies, they would see a conflict of interest that would not make independent directors truly independent.
Why should independent directors demand the same remuneration as that enjoyed by duly qualified regular directors?
It is time the present members of the SEC’s five-man regulatory body stop the practice of selecting or appointing independent directors. If they would not, then they should lift the prohibition against stockbrokers from getting elected to the board of listed companies.
The argument against stockbrokers being directors of listed companies is the much-abused phrase “conflict of interest”. What conflict are these critics talking about when stockbrokers could act more independently for the public than some of today’s independent directors who even demand their share of the allocations under a company’s executive stock option?
Who cares about independence if you are well-compensated and even qualify to buy ESOP shares at a discount?
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Due Diligencer has been receiving emails from tenant farmers of Hacienda Luisita airing their helplessness and grievances against the Cojuangcos in their fight for their right as agrarian reform beneficiaries.
I have only one advice to these tenants who are up against the presidential family that owns Tarlac Development Corp. which, in turn, is the sole stockholder of Hacienda Luisita. Be patient. You can’t expect to get help from government because the president is himself a Cojuangco. Why would he fight his own family?
These tenants should not see any hope of assistance from the Department of Justice because the secretary is a presidential appointee. Will Secretary Leila de Lima fight her master? Like the independent directors in this piece, she could not betray her benefactor by investigating the grievances of the hacienda farmers.
Be patient. In less than three years, this country will have a new president. Hopefully, the next administration would not be allied with the present Malacanan chief occupant.