PUBLICLY LISTED firms may have to disclose the exact compensation of each member of their board directors soon, as per the Revised Corporation Code of the Philippines.
A provision in the changes to the country’s Corporation Code implemented through Republic Act (RA) No. 11232 says companies must now disclose the total compensation of each of their directors or trustees.
“Corporations vested with public interest shall submit to their shareholders and the Commission, an annual report of the total compensation of each of their directors or trustees,” according to the Section 29 of RA 11232, which was signed by President Rodrigo R. Duterte into law last February.
This compares to the current practice of disclosing only the total compensation of all the officers and directors of a company.
For instance, SM Investments Corp. (SMIC) only states the compensation of its president and its four highest compensated executive officers. It paid out a total of P100 million in total salaries to these five executives in 2018, and is projected to rise to P110 million this year, according to its information statement filed with the bourse last March.
SMIC also said it paid P328 million in salaries to “all other officers and directors as a group unnamed.” This figure is seen to rise to P355 million in 2019.
The same practice is done at Ayala Corp. (AC). In its latest information statement, AC said its chief executive officer and highest compensated executive officers collectively earned a salary of P303.98 million in 2018.
AC expects the salaries of these officials to rise to P328.30 million this year.
The same section of the Revised Corporation Code states that the total compensation of directors must not exceed 10% of the company’s net income before income tax the year before.
“In no case shall the total yearly compensation of directors exceed ten (10%) percent of the net income before income tax of the corporation during the preceding year.”
Securities and Exchange Commission (SEC) Chairperson Emilio B. Aquino earlier said the law does not require implementing rules and regulations since it is self-executory, but noted they may issue memorandum circulars for some sections.
Sought for comment, SEC Officer-in-Charge for the Office of the Commission Secretary Armando A. Pan, Jr. said they have yet to finalize plans for RA 11232’s implementation.
“Don’t know the plan on this since focus is still on company formation rules. Anyway that requirement is clear,” Mr. Pan said via text.
Officials of the Philippine Stock Exchange have yet to respond to requests for comment on the matter.
The Revised Corporation Code amended the 38-year-old Batas Pambansa Blg. 68. Other salient provisions in the law include the grant of perpetual corporate term for existing and future corporations unless otherwise provided in their articles of incorporation.
The new code also allows the establishment of one-person corporations, where a single stockholder may form a company without a minimum authorized capital stock. — Arra B. Francia