Independent directors: How can they create value?

THE Management Association of the Philippine sponsored a webinar on “Governance Champions: How Can Independent Directors Create Value?” It was my privilege to be a panelist together with Fred Pascual, lead independent director of SM Investments Corp., Atty. Nenet Lavares, independent director of Metrobank, and IFC’s Roman Zyla, ably moderated by ICD Trustee JJ Moreno.

My journey as a board director started when I joined government service as Undersecretary of Finance. Coming from Citibank, I was alternate director of then Finance Secretary Jose Pardo in the boards of LANDBANK, PDIC and the BSP Monetary Board. It was in BSP that I became “fully” aware of the board member’s role when Institute of Corporate Directors (ICD) Jess Estanislao and ADB’s Arvind Mathur presented about corporate governance and the board members’ responsibilities. I realized that a board member cannot just be a “wallpaper” or a plant box in the room, but rather should be active and ask questions especially on critical issues, given the heavy responsibilities involved. A director’s loyalty is to the company and should always act according to the company’s best interest to enhance shareholder value.

I joined as a PNB director in 2001 as a government nominee, and, five years later was approved by the BSP as an independent director (ID), meaning I am independent of management, free from any business or other relationships, and not part of the day-to-day management of PNB. I was an independent director/ chairman for the next 15 years and I stepped down in April this year, with the BSP nine-year term limit for IDs counting from 2012.

Independent directors are critical in boards and play an important role, especially in banks, where IDs chair the Risk, Audit and Compliance, Corporate Governance and Related Party committees. Independent directors with their detached judgment, outside experience and objective view are expected to improve corporate credibility and governance standards.

What are tips for IDs? Here’s a few:

A. Know your role, which is mainly to be involved in the policies and general direction of the company and to leave the day-to-day operations to management.

B. Prepare and know the agenda and topics to be discussed. Ask questions to clarify issues. It is very important to have good knowledge of the company’s operations to make decisions on Board issues.

Provide time and energy. No matter how competent, if you have no time or don’t speak up, you will not be effective. Very critical in banks as IDs are working directors with committees they chair and members of.

C. Continuous learning and improvement — “reskill, upskill.” Know latest developments and trends. There are webinars going on and many are even free.

Network. Hold memberships in associations. FINEX, MAP, BAIPHIL, PCCI, and if you’re a woman, FCC, Business Women, Women in Finance, etc.

D. Be an advocate or a champion for ESG (Environment, Sustainability, Governance). For example, to make a mark in corporate governance, what better way for publicly listed companies to show this than through the ASEAN Scorecard? Happy that PNB was recognized with three Golden Arrow Awards in the 2019 ASEAN Scorecard.

Can one ID create value? It’s very challenging. This was a topic among the panelists. An ID can initiate the idea and follow through, but still you need the support of the rest of the board and of course the  management to implement. Communication is important to have everyone on same page for the value you’re trying to create and teamwork is key.

Indeed, the ID’s role is critical in this volatile, uncertain, complex and ambiguous “new normal” world, especially for an ID without any agenda other than the company’s interest and who wants to make a difference!

On another note, Weedibles Weedicinals Plus Edible Flowers and More, a book collaboration between the Agricultural Training Institute (ATI) and Flor’s Garden, was recently launched with Agriculture Secretary William Dar, former Health Secretary Jaime Galvez Tan, ATI Director Alfredo Aton, Deputy Director Ana Mula, ATI 4A Director Pia Cosico, Doc Olan Maningas and Planters Products’ President Mat Maderazo, among others. The book aims to help familiarize everyone with weeds that are useful, edible and have health benefits. Copies may be requested from ATI’s QC information office and the e-book is available on the ATI 4A website.

(The views expressed herein do not necessarily reflect the opinion of these institutions.)


Flor G. Tarriela was the first chairwoman of the Philippine National Bank. She was the first and only independent director chairwoman in the commercial banking industry. She is a former Undersecretary of Finance and the first Filipina vice-president of Citibank N.A.  She is a trustee of FINEX and an Institute of Corporate Directors fellow. A gardener and an environmentalist, she established Flor’s Garden in Antipolo, an ATI Accredited National Extension Service Provider and a DoT Accredited Agri Tourism Site.