The oldest directors and the longest board tenures in Asia work in Philippine companies as owners and their trusted advisers to retain their steady reins in their industries like banking, property, and retail giants. According to Bloomberg's compiled data from more than 5,200 listed companies, corporate directors in the Philippines sit on boards for an average 10.6 years which is more than four years to the average of 6.5 years in the Asia-Pacific region.
The average age of the board members in the Philippines is at 65.4 years which is the highest in Southeast Asia. It is higher compared to the regional average of 58.7 years.
Most families owned companies in the Philippines retains their control over a conglomerate even after it goes public because they let their founders and their relatives stay on boards for decades while independent directors are typically handed a minority role.
Aon Hewitt, LLC managing director for Southeast Asia Boon Chong Na, said that one of the major concerns for a family business is losing control. Once you start having a lot more independent directors, the chemistry changes at the board level.
According to Alex Cabrera, chair of PwC in Manila, most of the companies in the Philippines with the longest board tenures are mostly led by well-known families which are neither a cause of surprise nor concern.
Cabrera added that it's common practice for owners to stay on as long as they're able. Owners usually delegate management posts to their children for training before giving them the directorships. This ensures that the family relinquishes control over the company. Cabrera also said that they could even step down as chair but still act as chair emeritus of the board and family members are so used to working with the veterans. According to him the detailed knowledge of the veterans in the business makes them well-placed to map out a strategy, and their clout gives them the buy-in to pursue it.
The 2016 PwC survey reported that six of 10 companies don't meet the benchmark which was already set low compared with the global best practice goal that independent directors fill at least 50 percent of board seats.
Warren Chen, Asia-Pacific research head at Institutional Shareholder Services Inc. in Singapore said that board independence is even more important in markets dominated by families in order to strengthen oversight, risk control and company performance in the long run. He said that in family-controlled firms, inevitably you will have long-tenured directors. It would be good to have independent directors with shorter tenures and fresh views to bring balance to the board.
