Firms should rethink chairman emeritus role: corporate expert

Bruce Rodriguez, ABS-CBN News

Posted at Jul 13 2021 06:29 PM

MANILA – A corporate governance expert from the International Finance Corporation (IFC) said companies should be very careful in naming a chairman emeritus.

The position is usually an honorific title given to a company's founder or other retired senior executives. But Roman Zyla, regional corporate governance lead at the IFC said the presence of an emeritus chair can be "incredibly disruptive" to the flow of a meeting.

"That meeting is meant, whether it's at the management level, board level or any one of the committee levels, that meeting is meant for the betterment and of the interest and the long-term success of the company not the ego of the founder," Zyla said in a webinar organized by the Management Association of the Philippines (MAP).

While the chairman emeritus role usually has no direct say to the decisions made by the board of directors, Zyla argued someone who holds this position can still sway others' thinking.

"We've all seen this situation in a company where the old founder is sitting and looks over their glasses and all of the sudden everyone's opinions suddenly change."

That's why companies should be careful about how these kinds of roles are brought into the organization, he said.

This also highlights the importance of independent directors in a company especially if it's publicly listed or deals in industries that affected the public, he added.

Lead Independent Director of the SM Investments Corp, Fred Pascual said, "an independent director is able to balance the interest of the various stakeholders."

Likewise, he said, the need for independent directors has been expanding.

"The demand for independent directors has been expanded to include insurance companies and other companies vested in public interest," Pascual explained.

He also noted a trend wherein the newer generations of corporate leaders are now more aware of what the company needs in an independent director unlike how older executives choose based on friendship or networking.

"I think the new crop of CEOs and chairmen are conscious in being able to define the character or characteristics of an independent director that they want to bring in," Pascual added.

Nenet Lavares, independent director at Metrobank and Pru Life UK also shared how board directors shaped the decisions made by local companies in terms of protecting their stakeholders amid the COVID-19 pandemic.

"Most of the directors were uniform in wanting the company more, to reach out more to the employees, to those who are in the countryside, with respect to their ability to get medical attention when needed, with respect with their ability to get the vaccines," Lavares said.

"Here you are at the time of the pandemic, when nobody knows what's out there and you have your board trying to come up with ways and means, working closely with management in order to ensure that all its stakeholders are protected," she added.

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