PLDT mulls hiking number of independent board members

Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) is considering the possibility of increasing the number of independent board directors from the current three to up to seven, or majority of the directors, to comply with the new listing standards of the New York Stock Exchange (NYSE).

PLDT president and chief executive officer Manuel V. Pangilinan said he had already informed the 13-man PLDT board about the new listing standards. They have two years to study the suggested reforms before deciding whether to comply with it or not. PLDT’s shares are listed in the NYSE.

Pangilinan said the matter of to what extent PLDT should comply will be discussed in the board. "It is not compulsory. If we do not comply, then we have to inform the NYSE. But we have to consider the impact on investors as far as not conforming with these listing standards," he explained.

According to the PLDT chief executive, the reforms would have "profound implications" on PLDT. For one, the NYSE suggests that majority of the board members must be independent directors with no material or commercial relationship among themselves and with the company.

PLDT’s current independent directors include Pedro Roxas, Fr. Bienvenido Nebres and Albert del Rosario. The other board members and the interests that nominated them are as follows: Pangilinan, Napoleon Nazareno, Ray Espinosa, Ricardo Zarate (First Pacific); Antonio Cojuangco (Philippine Telecommunications Investment Corp.); Corazon dela Paz (Social Security System); Taketo Suzuki and Misuhiro Takase (NTT Communications); Lourdes Rausa-Chan, board secretary; and Helen Yuchengco-Dee representing the Yuchengco group.

Pangilinan emphasized that it would be difficult for a board director to have no relationship with each other. "In the context of a developing market, not just the Philippines, it might be difficult to do so. This is a very communal business community. If you define independent in a very prestige way, its difficult to find because nobody has relationship with each other. The test of materiality is to what extent will the judgment of the independent directors be influenced by the company," he said.

The NYSE also suggests the creation of an audit, compensation, and nomination committees wherein members are also independent and recommends that the audit committee must have the ability to propose the hiring and firing of external auditors. PLDT already has audited and compensation committees working with the board.

There is also a recommendation that the chief executive officer and chief finance officer must certify as to the accuracy and completeness of financial statements and any misrepresentation will be penalized.