THE role of independent directors in companies or publicly listed companies are said to be important as they do not have any affiliations, therefore always putting forward the needs of the firm.
“The independent director distinguishes himself because he has no hidden agenda to support, except what is good for the company and all of its stakeholders,” Angelica H. Lavares, independent director at Metropolitan Bank & Trust Co. and Prulife UK said during the virtual forum hosted by the Management Association of the Philippines on Tuesday.
Independent directors are able to exercise their judgments freely, guided by their experiences and insights.
Panelists at the forum also said that independent directors should hold the position of chairperson of a publicly listed company.
“My view is that the chairperson of publicly listed companies should be an independent director because that enables him to remain objective in situations when there are conflicts or there are potential conflicts between parties in the organization,” SM Investments Corp. Lead Independent Director Alfredo E. Pascual said.
Former Independent Director and Board Chairman of Philippine National Bank Florencia G. Tarriela said if the chairperson is also an independent director, it allows for the company’s management to be perceived as independent “and there is credibility immediately.”
Companies are reminded to take the time to nominate and get to know who they are putting on the table to be their independent directors.
“I think a lot of companies engage in what I call supply-driven nominations,” said Roman Zyla, senior corporate governance officer and regional corporate governance lead for East Asia-Pacific at International Finance Corp.
“A company will cast a lookout on the market and say, ‘we can get that person, or that person,’ without often spending enough time reflecting on what the company’s real needs are.”
Firms should take into account what their needs are and what they are looking for in a director to help improve how their company is run, he said.
“Independence is a very subjective thing and yet, it’s a critical thing we need at boards more and more,” Mr. Zyla said. — Keren Concepcion G. Valmonte