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The ongoing Meralco proxy fight between the Lopez-led
management and Winston Garcia representing GSIS can be a good
thing.Ever willing to be a spectator to a controversy and a good
boxing match, Filipinos are interested in how the confrontation will
work out.I certainly hope that, as the controversy unravels, more
Filipinos will become aware of the important role that corporations,
especially the big ones, play in our daily lives.More critically, I
hope that citizens can begin to ask questions like:Are corporations
truly partners of the national government in national development
and the spreading of the benefits of capitalism as envisioned by the
Corporation Code?Are corporations merely the cash machines of
shareholders, particularly the wealthiest families of the country?
Are corporations being managed in the best long-term interest of the
corporation and its stakeholders?These are the fundamental questions
of corporate governance.
Already, the issues which the
Meralco case has surfaced should keep many business schools and the
public busy for months to come.The initial attempt by Meralco to
invoke a purely legal defense of their practices did not deflect
questions that go into the ethical aspects of the company’s
governance.Legal compliance is one thing but good corporate
governance calls for higher moral considerations.How much profit is
justified for a public utility, especially during difficult times
for consumers?How should a public utility manage its costs knowing
that these affect the prices they pass on to consumers? How high
should executive compensation be?How much of the profits should be
shared with shareholders as dividends? How much transparency in
records should be practiced by the company, especially for
inquisitive directors?
To be fair to Meralco, these
questions should be answered by all other entities in the power
supply chain.They all affect the price of electricity in the country
and should be equally concerned about doing what’s right for the
consuming public while being sustainable as corporate entities.I
don’t think that it serves public enlightenment to single out only
one company.I’m as willing as anyone to give the benefit of the
doubt to the directors and executives of Meralco, seasoned and
professional as I presume they all are.But the questions above must
be answered and their answers will be revealing in showing the
governance mindset at Meralco and, perhaps, in other corporations as
well.
Of course, the involvement of a
large government institutional investor such as GSIS adds an
additional flavor to the whole controversy.Institutional investors
speak with a loud voice in any country with shareholder capitalism
in place.But because of their size, they have to be unusually
careful in using their influence, mindful always of the good of the
corporation and its stakeholders.The personality, media style and
Malacañang links of Winston Garcia are guaranteed to get
everyone’s attention but it would be prudent for him to use his
considerable clout as a shareholder activist very carefully in
pushing proper reforms at Meralco.One can have good intentions but
still overdo things.For example, would a radical change in
management at Meralco really improve things for consumers or lead to
greater instability in the company and, thereafter, deteriorating
service?Should Garcia pursue more constructive dialogue within the
board and resort less to using the sound-bite-hungry media, given
the complexity of the corporate governance issues involved?
Ultimately, the Meralco proxy
fight involves issues bigger than the Lopezes, Garcia or even Malacañang.The
directors of the company should use their collective judgment in
steering the company towards fulfilling what should be its
mission:to be a sustainable power distributor in the service of the
development needs of the Filipino people.
Dr. Ben Teehankee is the Sen.
Benigno Aquino Jr. associate professor of corporate social
responsibility and governance at the Ramon. V. del Rosario Graduate
School of Business, College of Business and Economics, De La Salle
University-Manila.He may be e-mailed at teehankeeb@yahoo.com.
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