Composition, Qualification, Diversity, and Independence

As a financial institution bridled with public interest, qualifications for membership in our Board of Directors are dictated by our By-Laws, the Corporation Code and the relevant regulations issued by the Bangko Sentral ng Pilipinas (“BSP”) and the Securities Exchange Commission (“SEC”). Likewise, as a publicly listed company, special care is taken to ensure that the Board’s composition and directors’ qualifications meet the applicable Philippine Stock Exchange (“PSE”) governance regulations, requirements and standards.

Composition. Our 2022 Board consists of 15 directors. Fourteen of these 15 directors are non-executive officers of the Bank, and the one executive director is the Bank's President and CEO. The size of our Board is considered to be appropriate given the complexity of the Bank’s and group operations, the geographical spread of our business and the significant time demands placed on the directors.

Qualification. Our directors are business and civic professionals of significant stature, with a track record of accomplishment in their own right, often independent of our Bank. They deliver a broad range of experience and expertise on subject matters relevant to the governance of present-day universal banking institutions. All members of the Board have met the stringent qualifications of the BSP for directors of a universal bank as well as the requisites of the SEC for directors of a publicly-listed company.

1 Type: Executive (ED), Non-Executive (NED), Independent (ID)
2 Based on Type of Director as of Apr 28, 2022
3 Appointed as Vice-Chairman of the Board in Sep 2022
4 Resigned as of Sep 2022
5 Resigned as of Aug 2022
6 Appointed as member of the Board in Sep 2022

Diversity. Our overriding duty is to maintain a strong, effective board with strong, effective directors in order to create and maintain an atmosphere of constructive challenge and debate. This requires the right balance of expertise, skills, experience and perspectives. Our board, therefore, recognizes and embraces the benefits of having diversity. The Board Diversity Policy, adopted by the board in 2015, sees increasing diversity at board level as an essential element in maintaining sound corporate governance, realizing sustainable and balanced development and achieving strategic objectives.

In this respect, board diversity is considered from varied aspects when designing the board’s composition including but not limited to gender, age, cultural and educational background, geographical location, professional experience, skills, knowledge, and length of service of directors, and other regulatory requirements, etc.

Our leadership model ensures an appropriate balance of power, accountability, and independence in decision-making.

Skills and Experience. The business of banking is not simply a game of numbers, loan and deposit volumes, and money transactions. It is the business of building trust and continually winning that trust even as customer needs and preferences, the industry, products and services, and the regulatory regime seem to evolve overnight. Only a skillfully put together, diverse, and well-composed Board can accomplish the challenge of marrying this underlying sense of purpose with the passion and bias to action needed to move towards that vision.

Apart from the President and CEO, BPI has four former bank CEOs on its Board, at year-end 2021, who not only collectively provide a wealth of technical, banking, and risk management experience but, more importantly, also embody prudent judgment and integrity characterized by sound decision-making and professionalism. As bank CEOs, they are also hardwired to understand what matters in the business and driven to build strategies to win that trust. (Recommendation 1.1, SEC CG Code for PLCs)

Forty percent of the Board are directors of publicly-listed companies that include business leaders at the helm of the country’s top companies and conglomerates. Unchallenged in their depth of understanding and appreciation of what the Bank needs to do to continue its over 170-year legacy as the principal architect of the country’s financial inclusion landscape, they also safeguard its listed status, protect shareholder rights, and strengthen investor relations.

Thirteen percent of the Board are astute professionals who can best assess and evaluate the risk and control policies, processes, and systems of the Bank. Including the four bank CEOs and directors with regulator experience, about 60% of the Board are equipped with specialist and generalist experience, training, and education to guide the most critical functions in the Bank.

Last but not least, a healthy respect and cautious, heedful, and constructive regulatory perspective is also brought onboard by 20% of the directors. One of our independent directors was previously an Assistant Governor of the BSP, crafting policies/regulations on banking supervision and with oversight for on-site examination and off-site monitoring of BSP-supervised entities. Another independent director was a member of the Monetary Board of the Bangko Sentral ng Pilipinas while a third independent director has extensive policy experience in financial markets, international finance and monetary policy, having worked at the Federal Reserve Bank of New York for 14 years and at the Bank for International Settlements (BIS) for 19 years.

Age Diversity. The Board recognizes that age diversity is an important factor to achieving diversity of thought. Its experienced directors bring to the Board the benefit of having seen several business cycles and thus provide unique perspective and insight. The Board also values having younger directors, who may be better attuned to the rapidly evolving environment, particularly when it comes to disruption and digitalization of financial services. But while the business landscape is always changing and finetuning the composition of company boards to include younger directors may help a board stay more relevant, the Board also puts great value on the top two most prevalent skills of board members between the ages of 60 and 79: finance and governance. Ninety-four percent of the directors on the Board fall in this age range.

Gender Diversity. The Board strives to ensure that there is appropriate representation of women, and female Independent Directors. (Recommendation 1.4 of SEC CG Code for PLCs). In 2021, 2 out of 15 or 13% of the Board was comprised of women, which included one Independent Director. Best global practice recommends at least three female directors in a 7-member or larger board.

ESG Involvement. Based on global surveys on the environmental and social profile and vulnerabilities of companies in financial services, the key ESG issues for the banking sector include: Resilience, Business Ethics, Responsible Finance, Financial Product Governance, and Human Capital. Composition of our 2021 Boards show that there is a balanced distribution of our directors with respect to their skills, work experience, background and current involvement, knowledge and understanding of these key ESG issues, and preferences of stakeholders.

The full Board Diversity Policy may be read here.

Measurable Diversity Objectives or Targets. Best practice under the SEC Code of Corporate Governance for Publicly-Listed Companies recommends the establishment of measurable objectives or targets for achieving board diversity. In this respect, the following are the Board’s diversity goals, considered as rolling targets over a 5-year period, that, together with the Board Skills and Expertise Matrix, are reviewed annually and updated as needed:

1. Number of Female Directors on the Board: At least 2
2. Target Number of Independent Directors on the Board: At least 5
3. At least 1 director with knowledge of IT systems and technology governance in the financial services industry.
4. At least 1 director with marketing and customer management expertise.

Progress towards the diversity goals. One or more of the following activities are conducted as part of the regular succession planning and annual board refresh exercises:

• Increasing the number of female candidates to be considered for the shortlist of nominees for the election of the board of directors at the annual stockholders’ meeting.
• Conduct of a regular review of list of retired bank employees for consideration of directorship positions within parent, subsidiaries and affiliates.
• Close coordination within Ayala Group of Companies for information on and shortlisting of independent candidates.
• Liaison and relationship development with regulators for information on possible candidates for directorship.
• Use of professional search firms/industry databases and associations to shortlist candidates.
  

Independence. BPI's board operates with significant independence from its management. Our 2022 board currently has five directors classified as independent or having no interest or relationship with BPI at time of election, appointment, or re-election. Fourteen of the 15-member board, are non-executive directors of the bank who are not part of the day-to-day management of banking operations. Currently, the one executive director is the bank's President and CEO. Historically, our Chairman has also been a non-executive director and is separately appointed from our President and Chief Executive Officer.

At the Organizational Meeting of the Board of Directors following the 2022 Annual Stockholders Meeting, the Board also appointed independent member Ignacio R. Bunye as Lead Independent Director.

As a PLC, BPI not only conforms to the regulatory requirement to have at least one-third (1/3) but not less than two (2) members of its board of directors who shall be independent directors; it, in fact, surpasses it.

The presence of a significant number of independent directors on our 2021 Board, five comprising 33%, is key to fairness and integrity, allowing the Board to strike a balance between public, corporate and all stakeholder interests.

Profiles of the Bank's Board of Directors may be read here.