Corporate Governance

The Board of Directors and Management of Security Bank Corporation are committed to institutionalizing the principles of good corporate governance in the organization in the belief that good corporate governance leads to the sustained creation of long-term shareholder value. The Bank and its subsidiaries are governed by a Board-approved Manual of Corporate Governance last amended in September 2009. Under the Manual of Corporate Governance, the Bank is led by a Board, which is the highest authority in matters of governance and oversight over management of the Bank’s business. The Board establishes the vision, strategic objectives, key policies and procedures for management, as well as a mechanism for monitoring and evaluating management’s performance. The Board is responsible for the long-term success of the Bank, its sustained competitiveness and profitability for the interests of its various stakeholders.

As part of the Board’s responsibility for formulating the strategic business directions of the Bank, in 2010, the Vision Statement was re-crafted and the Mission Statement re-visited in the light of the new Vision Statement. Management’s performance in the implementation of business plans is likewise monitored during the regular monthly meetings.

As part of the Board’s responsibility for the selection and appointment of senior executive officers, the organization was beefed up with the hiring of the key officers including the segment head for Corporate and Investment Banking, head of Marketing Services and Communication, business managers for consumer loan products, Treasury Operations Head, Channel Development head and the Chief Security Officer. Organization structure changes have likewise been implemented, as well as the review of personnel policies and strengthening of benefits to ensure retention and acquisition of key personnel.

The Board is composed of 11 members, three of whom are independent directors. The roles of the Chairman and President/ CEO are separate and clearly defined. The members of the Board are high qualified business professionals with a broad range of expertise. All board members pass through a screening and evaluation process, and all members have attended the required seminar on corporate governance.

The Board meets regularly on a monthly basis. In 2010, the Board had a total of 12 meetings, in addition to the annual stockholders’ meeting and the organizational meeting. All directors attended the Annual Stockholders’ meeting. Attendance to the Board meetings averaged at 96% in 2010, with attendance at 98% over the last 2 years.

Specific responsibilities of the Board are delegated to Board Committees: the Executive Committee, Corporate Governance Committee, Risk Management Committee, Audit Committee, Trust Committee and Restructuring Committee. Independent directors are members of the Corporate Governance, Audit and Executive Committees.

The Executive Committee is the highest credit decision-making body of the Unibank. A total of 47 meetings were called in 2010 with average attendance at 83% (from 45 meetings in 2009 with average attendance at 81%). In addition to approval for loan accounts, industry updates and credit risk reports were likewise tabled for committee discussion.

The Risk Management Committee deliberated and approved various credit, market and operational risk policies, as well as noted various management reports covering credit risk management, market, liquidity and stress testing risk reports for traditional, derivatives and accrual products. The Committee had a total of 13 meetings in 2010 with an average attendance record of 98% (from 12 meetings in 2009 with a 98% attendance record).

The Corporate Governance Committee has oversight over the Bank’s compliance function, evaluation of nominees to the Board and senior management, and development of policies relating to executive compensation. A total of 11 meetings were held in 2010 with attendance averaging at 95% (from 9 meetings in 2009 with 98% average attendance.) During the year, the Committee spearheaded the self-evaluation process covering the performance of the Board as a whole, the members, the Committees and the Chief Executive Officer. The meetings of the Committee likewise covered changes in organizational structure, new officer selection, review of compliance reports, revisions in the Compliance programs, review of the anti-money laundering manual, review of management benefits, and an assessment of the Bank’s corporate governance practices.

Through the Compliance Office, the annual Corporate Governance Scorecard (developed by the SEC, the Institute of Corporate Directors and the Ateneo College of Law) was accomplished. In 2010, Security Bank was a recipient of the Silver Category Award in the Corporate Governance Scorecard for Publicly Listed Companies. The Bank was likewise cited by Corporate Governance Asia as among the Best of Asia in Corporate Governance.

The Board is committed to fully disclose all material information for the benefit of the stockholders. The Bank is in compliance with reporting requirements of various regulatory agencies. Market sensitive information is disclosed to the Securities and Exchange Commission, and the Philippine Stock Exchange in compliance with its Disclosure Rules. All public disclosures are posted in the corporate website as part of transparency to investors.

The Audit Committee activities in 2010 included discussions on the evaluation and retention of the external auditor SGV & Co. as independent auditors for 2010, the plan and scope for the 2010 audit, the external auditor reports and fees, the amendments in the audit rating methodology and the documentation of such changes in the audit manual. The Committee had a total of 5 meetings in 2010 with an average attendance record of 94% (from 4 meetings in 2009 with a 94% attendance record).

The Trust Committee reviewed the performance of the managed accounts, investment outlets for funds, amendments to policies on review of accounts and trust risk policies and the appropriateness of the organizational structure to carry out the plans for the Trust business. The Committee had a total of 4 meetings in 2010 with an average attendance record of 90% (from 4 meetings in 2009 with a 100% attendance record).

The Restructuring Committee is responsible for the approval of the remedial strategy and action plans for accounts, including accounts recommended for write-off, compromise settlements, or with moratorium arrangements. The Committee had a total of 9 meetings in 2010 with an average attendance record of 100% (from 4 meetings in 2009 with a 100% attendance record).

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Corporate Governance

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