Corporate Watch

Primogeniture: the state of being firstborn of the same parents. In common practice since time immemorial in most cultures, the eldest child, most often specified to be the oldest male offspring, inherits real property and the family business. Is that still so in our culture?
When Henry Sy, Sr., 94 — the richest person in the Philippines and 53rd richest in the world — passed away on Jan. 19, 2019, minds riveted in awe to the estimated net worth of $19 billion that would be inherited and managed by his six children: Teresita, Elizabeth, Henry, Jr., Hans, Herbert, and Harley. Their inheritance was by automatic application of legal succession laws, although the curious question was the actual but masked real succession in corporate management above and beyond appointive top executives and the boards of his many businesses.
Henry Sy’s “SM” is a by-word for Filipino consumers, with its 63 malls all over the country which densely populated communities have come to live and depend on. As of end-2016, it also has 7 malls in China, 43 residential projects, six office buildings, and six hotels.
SM Investments owns 44.3% of the largest domestic bank in terms of assets — BDO Unibank ,Inc. It also owns 19.9% of China Banking Corp. Aside from banking, the group has investments in gaming through Belle Corp. (28%). Belle controls 78.74% of Premium Leisure Corp., which in turn owns 100% of Premium Leisure and Amusement, Inc. — owner of the license for Entertainment City. In 2017, SM Investments acquired a 34.5% stake in Negros Navigation Company, Inc., the parent company of 2GO Group, Inc., marking the conglomerate’s entry into the logistics sector (, June 28, 2017).
Like many family businesses that have grown humongous in the patriarch’s Midas touch, Henry Sy’s conglomerate had been weaned from the founder’s direct “micro-managing” and gradually turned over to professional managers at the highest levels. ShoeMart (SM), a small shoe store set up in 1958 in Carriedo, evolved into SM Department Store, Inc, and branched out into supermarkets, after which the combined department stores and supermarkets became SM Megamall — all run directly by Henry Sy Sr. In the 1990s, these were already too big a group to handle directly by himself and his children, with the participation of long time-friends and other relatives, and SM Prime Holdings under streamlined professional management was listed in the Philippine Stock Exchange. By 2005, the SM Investments Corporation (SMIC) was inaugurated. When Henry Sy, Sr. turned 90 years old, only three of his children were on the board of SMIC: Teresita Sy-Coson as vice chairperson, Henry Sy, Jr as vice chairman, and Harley Sy as president. (, Apr 12, 2014). In April 2017, SMIC appointed longtime chief finance officer Jose Sio as CEO, taking over the post long held by 93-year-old patriarch Henry Sy, Sr. since he founded the group in 1958 (philbizwatcher, Apr. 27. 2017).
But the oldest child in the family, the primogeniture, Teresita “Tessie” Sy-Coson, seems to be the de-facto successor to the business icon Henry Sy, Sr. and his conglomerate. Remember that in November 1972, when he opened SM Quiapo, SM’s first standalone department store, Henry Sr. entrusted his 22-year-old daughter Teresita to run the store (Forbes magazine, retrieved Jan. 19, 2019).
In an interview with Bloomberg, Tessie Sy-Coson said she sits down with her five siblings for lunch every Tuesday to plot the direction of the Philippines’ largest family-run conglomerate. The sessions start at 11:00 and invariably spill over the allotted two hours. “The meetings are not always quiet…the two daughters and four sons get one vote each, and the majority wins in the final decision” (, April 8, 2014). Very democratic and the group decision becomes impersonal and undifferentiated. But of course, the integrator clearly is Tessie, the oldest child, even more definitely now that the patriarch has passed on.
In a study by De La Salle University, “Filipino-Chinese Millennials’ Attitude on Family Businesses Succession (2017), birth order proved to be highly significant as it was in Zellweger, Sieger & Englisch’s (2015) paper that the rule of primogeniture remains to be a common practice in family businesses ( From a survey of Filipino-Chinese millennial successors, sex/gender (e.g., Tessie Sy-Coson is female) was found to be insignificant to the efficient and effective choice of an offspring successor, compared to other significant factors like the order of birth, predecessor’s trust in the successor’s abilities and intentions, personal needs alignment of the successor and rewards from the business (Ibid.).
The significance of the birth order is the built in, “in-house” preparation and pre-conditioning of the other children about the eldest carrying most of the burden of succession, as in, perhaps, Tessie Sy-Coson’s case. There would be less envying, less ambition if the eldest is already perceived to be succeeding, and in her case, Tessie Sy, at 22, was already heir apparent in her early responsibilities in the very young SM stores. The general finding on predecessor’s trust in the successor’s abilities and intentions, being as important to managing and communicating the predecessor’s expectations on the successor, was carefully and instinctively done by the patriarch. Home-grown, self-styled, street-smart Henry Sy, Sr. has shamed academics and other businessmen on effective succession planning.
In the critical human behavior in the family-business scenario (putting aside the “corporate façade” of “professional managers and hired non-family COOs/CEOs” vis-a-vis the family harmony of the COO — “child of the owner”), maintaining the pecking order in the family makes for ensuring peace and order among the siblings in their corporate roles.
Even then, Henry Sy, Sr. was not parochial and did not revolve his business around his family. Perhaps he was wary even before being warned by Harvard management experts that “only 30% of family businesses last into a second generation, 12% remain viable into a third, and 3% operate into the fourth generation or beyond. Even those that do continue often see their value decline significantly when power changes hands at the top” (Harvard Business Review, April 2015 Issue). When he started getting weaker (into his late 80s), he employed professional COOs and CEOs to help run his businesses and to train the third generation.
And so the Sy siblings do as their father did, in succession planning. In 2016, long-time SM Prime president Hans Sy announced “early retirement” and relinquished day-to-day operations to chief finance officer and executive vice-president Jeffrey Lim. Older brother Henry “Big Boy” Sy, Jr. remained chair of SM Prime. The Sys’ Banco De Oro Unibank, has had Nestor Tan at the helm even when BDO was still much smaller. Oldest in the third generation (Henry Sy, Sr.’s eldest grandchild), Hans’ son, Hans “Chico” Sy, Jr., is an Australian-educated engineer handling all the design and construction-related aspects of SM Prime.
Henry Sy, Sr. was a simple, humble man who was known to be most concerned about his family before the material bounty that had changed his life so dramatically — a family man who knew so wisely how to handle his family and how to handle his giant businesses.
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.