Board Committees
II. Factual Information about the Boards
(Mostly % of banks responded)
Responses Indonesia Republic of Korea
Malaysia Thailand
Number of surveyed banks 23–26 14 10 10 –13
1. Board size and composition (average) (1) Number of directors or
commissioners
5.5 9.6 9.1 12
(2) Number of executive directors 0 2.6 1.7 4.3
(3) Number of other non-independent directors or commissioners
3.5 0 3 3.5
(4) Number of independent directors or commissioners
(Share of independent directors, %)
2 7 4.4 4.2
-36 -73 -48 -35
2. Board characteristics – Chairperson and CEO (1) Chairperson and
CEO being the same person
Yes 0 79 30 8
Most of the Korean banks; few Thai or Malaysian banks;
none of the Indonesian banks (due to the dual board system)
(2) Controlling shareholder or his/her family members
Chairperson 4 0 30 8
CEO 0 0 40 8
Chairperson 19 36 50 8
CEO 19 21 10
(1) Family members
bank’s affi liated companies
Other 4. Board committees – their existence and composition
(1) Number of banks where the committees are in place
Audit 100 100 100 100
Nomination 38 100 100 85
Compensation 42 71 100 85
Risk management 96 100 100 100
(2) Average number of directors (in the parentheses are average number of independent directors)
Audit 1.9 (1.2) 3.3 (2.6) 3.6 (2.9) 3.2 (3.1) Nomination 3.2 (2.0) 4.7 (3.7) 4.7 (2.8) 3.1 (1.4) Compensation 3.2 (2.0) 5.0 (4.9) 3.7 (2.0) 3.8 (1.5) Risk management 1.0 (1.0) 4.5 (3.4) 4.0 (2.7) 8.1 (0.0) (3) Share of banks where the committee is chaired by an independent director
Audit 88 100 100 100
Nomination 17 27 80 70
Compensation 0 86 70 62
Risk management NA 58 100 0
5. Audit committee and external auditor (1) Two or more of the audit
committee members having accounting or fi nance expertise
100 36 44 92
(2) Using one of the Big Four audit fi rms as its external auditor
75 64 100 85
directors meeting
(1) Typical term for independent directors
13 86 0 9
87 14 100 91
(2) Reappointment decision being based on a serious performance review by the nomination committee
33 50 0 13
8. Selection of outside/independent directors (1) Transparent
(2) Minority shareholders sometimes nominating candidates at the shareholders meeting or prior to the meeting?
17 0 50 0
(3) Cumulative voting sometimes practiced
58 42 10 9
9. CEO evaluation and compensation (1) Performance of
compensation like
Substantially 58 93 40 56
No 29 0 0 33
10. Director compensation and evaluation (1) Outside directors being offered
stock-based compensation like stock options
13 43 20 0
(2) (Outside) director compensation being variable on individual efforts
35 14 90 36
(3) A formal mechanism in place for evaluating the performance of individual outside directors
42 36 90 36
11. Board meeting frequency and attendance (last 12 months) (1) Average number of board
meetings (times)
-25 -13 -13 -11
(2) Board meetings lasting more than 2 hours on average
57 31 10 82
(3) Average attendance rate for board meetings over 90%
78 57 100 80
12. General support for directors and director liability (1) Substantial
(2) A contact person (like corporate secretary) being designated for the support of outside directors
74 69 100 100
insurance for their
personal liability Not covered 52 0 90 0
13. Audit committee (answer only if the bank has an audit committee) (1) Each committee member's
remuneration being approved separately at the shareholders meeting
48 14 90 64
(2) Selecting/recommending external auditor fairly autonomously and conducting a proper review of his work
43 71 10 55
(3) Approving the appointment of internal auditor and fairly closely supervising him
35 86 100 64
14. Does your bank disclose the following information? If yes, by what means?
(1) Self-dealing or related-party transactions
Website 19 64 70 27
Annual
(2) Directors selling or buying shares in their bank
debt repayment
Website 13 71 70 45
Annual
15. How timely and informative are the disclosures?
(1) Semi-annual reports being disclosed
61 100 100 36
(2) Consolidated fi nancial statements being disclosed
91 62 100 91
(3) Website very informative in both local language and English
41 64 80 100
(4) Website not available or not very informative
18 0 0 0
Responses Indonesia Republic of Korea
Malaysia Thailand IC/ED ID/ED ID/ED ID/ED
Number of Surveyed Banks 22/18 14/16 3/7 11/10
(Number of respondent directors/commissioners)
(22/18) (41/12) (4/10) (11/10) 1. Responsibilities of the board:
To whom should the board be most accountable when making corporate decisions (ranking by importance)?
DP: Depositors 3 DP MS CS
FS: Financial supervisory agencies
4 FS FS FS
2. Would you strongly agree on the following statements about the roles of bank directors?
(1) Bank directors basically represent all shareholders, and their primary role is to maximize the benefi ts of all shareholders.
58 55 80 71
(2) Bank directors should take into account the interests of all stakeholders including employees and debt holders like depositors.
68 30 40 76
(3) Bank directors should ensure bank’s safety and soundness even at the sacrifi ce of the shareholders’
interests.
50 50 40 67
3. Do you agree that your board is effective in the following roles and tasks?
(1) Play an important
involved in formulating
long-term strategies Y 47 60 50 33
(3) Establish confl icts of interest including related-party integrity of the bank’s fi nancial reporting by effectively utilizing the work of internal and external auditors
Y+ 63 5 60 71
Y 37 60 40 29
(6) Ensure board members are qualifi ed and independent,
of your bank are truly independent from the CEO or controlling shareholders?
Y+ 48 15 30 57
Y 48 55 50 38
(2) What do you think about the following reasons for "independent directors" not being fully independent from CEO or the controlling owner?
- Because CEO or other directors (or top management) or other or termination of the directorship
Y+ 15 0 0 12
Y 33 57 11 18
- Because of CEO and management team are supposed to be better informed on most issues and have better judgment
Y+ 3 7 0 12
Y 44 43 11 29
5. Who has the strongest voice in the selection or dismissal of CEO and independent/outside directors (ID)?
directors?
(1) Often meeting/discussing with managers (who are not board members) and workers of the bank
63 10 60 38
(2) Often being briefed of the agendas before a board meeting
63 40 10 33
(3) Being permitted to obtain the services of outside legal, fi nancial and other professional advisors at the bank’s expense
58 58 60 33
7. Would you agree on the following statements on director compensation?
(1) There is an
(3) My compensation gives me adequate fi nancial incentive to maximize
(5) Financial incentive is not as important as the social status as a banker.
Y+ 13 0 10 24
Y 15 25 30 38
(1) Do you believe that the fear of personal liability discourages qualifi ed persons from serving as bank directors?
Very often 10 5 40 38
Sometimes 50 30 30 48
(2) Do you believe that some directors act out of fear of personal liability, rather than in the best interest of the bank?
Very often 8 0 0 19
Sometimes 39 30 60 48
9. Priorities for a more effective board: What do think about the following tasks for the purpose of enhancing the effectiveness of the board?
(1) Selecting better qualifi ed, truly independent directors
Y+ 56 65 56 52
Y 38 35 44 48
(2) Separating CEO from the board chair position CEO evaluation by the board
Y+ 44 40 30 43
Y 41 55 60 48
compensation more linked to fi rm performance
Y 41 55 50 38
(8) Better public disclosure of board activity
Y+ 46 25 30 33
Y 41 70 50 43
(9) Having fewer or no board members from the controlling shareholder’s family
Y+ 41 35 10 24
Y 44 55 0 29
10. Whose role do you think is most important among the following entities in improving corporate governance of banks in your country? (ranking by importance)
LS: Large shareholders FS: Financial supervisory agency ID: Independent/
outside directors PS: Professional societies such as accounting and audit
1 FS LS LS FS
2 LS ID ID ID
3 PS FS FS LS
4 ID PS PS PS