Meritocracy is no longer a buzzword in the corporate world. It's becoming a key indicator of effective governance, as companies increasingly prioritize expertise and independent judgment in their boardrooms to navigate a rapidly evolving business landscape.
While many companies boast about their board members, SM Investments Corporation (SMIC) is setting a new standard by prioritizing qualifications and independent judgment above all else. This shift in power dynamics is driving a renewed focus on boardroom competence, where expertise and an independent perspective are valued above legacy and connections.
SMIC is championing this global trend, ensuring that board directors are not just prominent names but individuals who make significant contributions to good governance.
The adoption of frameworks such as Merit, Excellence, and Intelligence (MEI) in other parts of the world also exemplifies the growing emphasis on ensuring that board members bring meaningful contributions to their roles. To illustrate this point, SMIC exemplifies this principle through the lens of its independent directors.
Tomasa “Tammy” Lipana, independent director and chairperson of SM Investments’ audit committee, emphasized the importance of qualifications, stating, “A board member should add to the company’s reputation, which is crucial for investors and other stakeholders.” Lipana, a seasoned financial expert, played a key role in strengthening SMIC's financial reporting transparency, which led to a significant increase in investor confidence.
This sentiment is echoed by SMIC independent director Atty. Lily Gruba, who points to the natural diversity within the board as both a product and a clear indication of a healthy meritocracy.
"Ideally," she explained, "the perfect meritocracy is blind to and independent of issues of gender, background, and race, at least where it is not relevant. This is the next level to aspire to in any organization—that it is composed of persons of merit, not just a collection of diverse personalities.”
Gruba's legal expertise has been instrumental in navigating complex regulatory challenges in the retail sector, enabling SMIC to expand its operations while maintaining compliance.
SM’s governance framework exemplifies its commitment to professionalization, accountability, integrity, fairness, sustainability, and transparency. The company has been raising the bar on corporate governance by promoting independent judgment and fostering leadership that aligns with the highest standards.
A landmark decision in 2024 saw the appointment of Amando M. Tetangco, Jr., former Governor of the Bangko Sentral ng Pilipinas, as chairman of the board—the first independent director to hold this position in SM’s history.
This underscores the company’s prioritization of expertise, professionalism, and the value of independent leadership in shaping its future. Tetangco's insights into macroeconomic trends have been invaluable in guiding SMIC's investment strategies during a period of economic uncertainty.
Over 50 percent of SM’s board seats are held by independent directors, exceeding regulatory standards and setting an industry benchmark. Two of these directors are women with extensive expertise in areas such as taxation, corporate law, and mergers and acquisitions, demonstrating a balance between diversity and merit.
Independent directors also lead key committees, including Audit, Corporate Governance and Sustainability, Related Party Transactions, and Risk Management, further ensuring objective independent judgment on corporate affairs.
Completing SM’s distinguished roster of independent board directors are Ramon M. Lopez, former Secretary of the Philippine Department of Trade and Industry (DTI), and Robert G. Vergara, who previously served as president and general manager and vice-chairman of the Board of Trustees of the Government Service Insurance System (GSIS). 1
These initiatives reflect a commitment to fostering performance and competence while upholding high governance standards, meeting investor expectations and societal demands, and helping drive inclusive growth. This commitment to meritocracy is not without its challenges. Unconscious biases can still influence the selection process, and there's always the risk of groupthink. However, by actively promoting diversity and fostering a culture of open dialogue, SMIC is striving to mitigate these risks and reap the full benefits of a truly meritocratic board.
By embracing meritocracy and prioritizing competence at the highest level, SMIC is not only meeting the demands of a changing corporate landscape but also setting a powerful example for other companies to follow.