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(UPDATE) 20 listed companies with best governance practices

By Salve Duplito
First Posted 12:03:00 01/30/2008

Filed Under: Economy, Business & Finance

MANILA, Philippines ? The Institute of Corporate Directors (ICD) on Wednesday revealed the top 20 listed companies in its corporate governance scorecard for 2007, besting a total of 138 companies that participated.

The 20 companies are Alaska Milk Corp., Alsons Consolidated Res., Inc., Asian Terminals, Inc., Ayala Corp., Ayala Land Inc., Bank of the Philippine Islands, First Gen. Corp., First Philippine Holdings Corp., Globe Telecom Inc., Manila Electric Co., Manila Water Co., MIC Holdings Corp., Panasonic Manufcturing Phils. Corp., Petron Corp., Philex Mining Corp., Philippine Long Distance Telephone Co., San Miguel Corp., Semirara Mining Corp., and Sun Life Financial Inc.

Jesus P. Estanislao, chairman of the ICD, said the overall score of 65 percent for Philippine listed companies is now at par with Thailand and Hong Kong. The top five, composed of four companies in the Ayala group and PLDT, are almost at par with listed companies in the US.

However, he also said that at 65 percent, the score is still below passing. ?For those of us who went to school, we all know that 65 percent is not something to be proud of. We hope that score will go up to 75 percent next year,? Estanislao said.

The Securities and Exchange Corp. (SEC) has required all listed companies in the Philippines to participate in the annual corporate governance scorecard of the ICD. From 49 in 2005, the number of listed firms who have complied is now at 138, but ICD is pushing for all 249 listed firms to be included in the survey.

Apart from improving confidence in local capital markets, compliance to corporate governance and ethical practices within corporations is also expected to put the Philippines back on foreign investors radars. Estanislao also said good corporate governance practices increase sales and overall performance of the company.

He said he was working on asking a local university to conduct a study to measure the impact of good corporate governance on overall performance.

ICD?s first scorecard was for 2005. Listed firms who participated at that time got an overall score of 54 percent. This score didn?t budge for 2006 but moved up to 65 percent for 2007 despite the increase in companies covered and a big increase in the number of questions asked in the survey to 108 from 86 for the 2006 scorecard.

Estanislao said that the scorecard was fully consistent with the framework used by the Organization of Economic Cooperation and Development (OECD) and adopted its five major categories: rights of shareholders, equitable treatment of shareholders, role of stakeholders, disclosure and board responsibilities.


There were marked improvements in all categories for the past three years, but Estanislao said Philippine companies were still very weak in the role of stakeholders and board responsibilities.

?The Philippines is very good at equitable treatment of shareholders and disclosure, but not in board responsibilities, which is the core of corporate governance,? he said.

Even listed companies in the top 10 were most challenged by board responsibilities, showing the poorest scores in the category, at 71 percent. Those at the bottom of the scorecard got a very poor 31 percent score for board responsibilities, showing the need for independent corporate directors that participate meaningfully in board meetings and are not merely rubber stamp boards of the management.

The scorecard also revealed that companies in the chemicals, information technology and diversified industrials all scored below 60 percent. Property, media, construction, small and medium-scale enterprises and education got scores of 65 percent to 67 percent, while financial institutions, banks, oil and food, beverage and tobacco got scores of 69 percent to 70 percent.

Mining, transportation services, electricity and energy and power companies had 75 to 76 percent scores, while the three listed telecommunications companies that participated got the highest score of 85 percent.

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