The Board is responsible for ensuring and adopting an effective succession planning program for directors, key officers and management to ensure growth and a continued increase in the shareholders’ value. This includes adopting a policy on the retirement age for directors and key officers as part of management succession and to promote dynamism in the corporation.
The Bangko Sentral ng Pilipinas (BSP) believes that adoption of a policy on retirement for directors and officers, as part of the succession plan, will aid to promote dynamism and avoid perpetuation in power. 1
This policy is guided by the principle that on a bigger perspective, the Bank is able to reinvigorate the composition of the Board and provide it with members who collectively possess vitally needed skills set, leadership qualities, integrity & experience to help the Bank achieve its strategic goals.
As a matter of policy, a director shall remain in the Board of the Bank for as long he/she remains to be fit and proper2 for the position of a director, in accordance with the requirements of the Manual of Regulations for Banks (MORB)3.
The director shall continue to be mentally and physically fit to discharge his duties and responsibilities, which includes, physical attendance and active participation in the Board/Board Committee meetings by being able to contribute in a meaningful way through inputs and insights during the discussions4. The director shall also ensure that he/she regularly attends the Board meetings, as set forth in the Bank’s Corporate Governance Manual and the rules of BSP.
The director has the burden to prove that he/she possesses continuing fitness or qualification for the position. The annual self-assessment process is one of the means by which a director can assess his fitness to discharge his responsibilities.
If the director no longer has the required fitness, he/she shall inform the Board of his intention to retire or refrain from seeking re-election. The Corporate Governance Committee shall take cognizance of the director's decision to retire, and take appropriate steps to ensure a smooth transition of the change in board composition.
1 BSP Circular No. 969 (Series of 2017), Enhanced Corporate Governance Guidelines for BSP-Supervised Financial Institutions, Section X143.1.d (3), (page 14).
2 Whether a person is fit and proper for the position of a director, the following matters must be considered: integrity/probity, physical/mental fitness; relevant education/ financial literacy/training; possession of competencies relevant to the job, such as knowledge and experience, skills, diligence and independence of mind; and sufficiency of time to fully carry out responsibilities.
3 MORB, Section 132, Qualifications of a director
4 Under the Bank’s CG Manual on teleconferencing and video conferencing, should attend at least fifty percent (50%) and shall physically attend at least twenty five percent (25%) of all Board meetings every year.
