Stmt re Governance Principles
Banco Bilbao Vizcaya Argentaria SA
5 July 2002
Principles of Corporate Governance of
Banco Bilbao Vizcaya Argentaria, S.A.
BBVA's Board of Directors assumes the importance for major institutions to have
a system of corporate governance which establishes principles which guide the
structure and functioning of its corporate bodies in the interest of the Company
and its shareholders.
BBVA, as a consequence of its international vocation and its vocation to assume
the practices commonly accepted in the design of the corporate governance of
major listed companies, has adopted a specific system of corporate governance
which, taking into consideration its broad shareholder base, rests essentially
on a Board composition in which independent Directors constitute an ample
majority.
In order to safeguard equilibrium in the composition of its corporate bodies,
BBVA, within the principles of its system of governance, has decided to rely on
executive Directors, since their participation adds value to the formation of
its corporate will, the vision of the independent Directors thus being completed
with the vision of those who perform executive duties of the highest level,
through their dedication and knowledge of the Company's business and activity.
In the Bank's structure, there are two corporate bodies in a strict sense: the
Board of Directors and the Standing Committee, both formed by an important
majority of independent Directors.
This is complemented with other Board Committees for a better implementation of
the functions which this corporate body must carry out, and thus the Audit and
Compliance Committee and Remuneration Committee, formed by Directors who must be
independent Directors.
On the other hand, its status as a financial institution advises strengthening
the function which the Board of Directors must carry out as the party
responsible, in last instance, for the periodic review of the Bank's risk
strategies and policies. The Board is therefore supported by a specific Risk
Committee servicing such purpose.
The rights and duties of the Directors, a consequence of ethical principles and
conduct, as well as the performance of their duties, constitute, through the
Director's Statue, an essential element which must form part of BBVA's system of
governance.
Consequently, the Board of Directors establishes the following as basic
principles of the system of corporate governance of Banco Bilbao Vizcaya
Argentaria, S.A.:
One:
BBVA's Board of Directors constitutes, pursuant to the Corporate Bylaws,
the natural body of representation, administration, management and
control of the company. In such regard, it is responsible for reviewing
and guiding the corporate strategy, the most important action plans,
risk policies, annual budgets and plans, as well as establishing
objectives, monitoring the implementation thereof and their attainment
at the corporate level, and supervising the principal capital
assignments, divestments and acquisitions.
At least two-thirds of its members must be independent Directors. The
maximum number of Board members must not exceed 18. The pertinent
proposals for resolutions presented to the Company's General
Shareholders' Meeting will be formulated pursuant to such criteria.
The Standing Committee, as the body to which the Board delegates the
exercise of its powers for the adoption of decisions on administration
and management of the company, must also be formed by a majority of
independent Directors.
Two:
A Director appointed as a consequence of his special tie to any
significant shareholder of the Entity may not be considered an
independent Director.
Nor may the following be considered as independent Directors, those who:
• Hold or have held in the last three years Senior Management positions
at the Group.
• Members of the auditing firm which is or has been the Company's
auditor, unless three years have lapsed since they have ceased to be the
auditors.
• Those who have a material relationship with the Company, whether
directly or as partner, shareholder or officer of other entities which,
in turn, have such relationship with the Group, and which may hinder
their independence.
• And those affected by other circumstances which, in the judgement of
the Board of Directors, may hinder their independence.
Three:
For the supervision of both the financial statements as well as the
exercise of the function of control of the BBVA Group, the Board of
Directors will have an Audit and Compliance Committee, which shall be
vested with the competencies and resources necessary for the exercise of
this fundamental function within the corporate sphere.
It will be formed exclusively by independent Directors, who may not be
members of the Bank's Standing Committee, with the dedication, capacity
and experience necessary for carrying out their duty. Its Chairman must
also have experience in financial management and knowledge of the
accounting procedures required by the regulatory bodies of the sector.
This Committee will have specific regulations, approved by the Board of
Directors, which will determine its functions, and will establish the
procedures to enable it to comply with its mission.
Four:
In order to assist the Board of Directors with matters related to
remuneration, the Board will have a Committee whose Members must all be
independent Directors, which will be responsible for proposing the
remuneration system for the Board as a whole, evaluating the
responsibility, dedication and incompatibilities which are required of
the Bank's Directors, the members of this Committee determining the
extension and amount of remuneration, rights and compensation of an
economic content of the Company's Chairman, Chief Executive Officer and
executive Directors.
This Committee will also analyze proposals for pluri-annual incentive
plans which affect the Bank's Senior Management and, in particular,
those which may be established in respect of the value of the share, and
will be made aware of the fundamental aspects relating to the general
salary policy of the Bank and of the members of the Steering Committee.
Five:
For the analysis and periodic monitoring of risk management within the
sphere of the attributes of the Bank's management bodies, the Risk
Committee is created. Formed by a majority of independent Directors, it
will have the function of analyzing and evaluating proposals on the
Group's risk strategy and policies, the approval of which is vested in
the Bank's Standing Committee, as well as monitoring the degree of
adequacy of the aggregate risks assumed, approving transactions within
the system of delegation to be established in each case, and verifying
that the Group is equipped with the means, systems, structures and
resources which pertain to the best practices of the market in this
area.
Six:
The qualification of the persons proposed to be appointed as members of
the entity's Board of Directors, which is the responsibility of the
General Shareholders' Meeting or the Board of Directors, in case of a
vacancy, shall be evaluated by the Standing Committee, considering the
personal and professional conditions of the candidate, as well as the
needs which the company's governing bodies may have from time to time.
Seven:
The Director will be required to attend the meetings of the corporate
bodies and Committees of which he forms part, except for just cause, and
participate in the deliberations, discussions and debates thereof, with
regard to the matters which arise at such meetings.
He will have sufficient information so as to be able to form a criterion
with respect to the matters which pertain to the Bank's corporate
bodies, and the latter will establish the channels and procedures for
the effectiveness thereof.
The Bank's Director, in performing his duties, will be subject to the
duty of secrecy, and may not utilize, to his own benefit, nor provide to
third parties, any data and information received in the performance of
his duties.
Independent Directors will be appointed as members of the Bank's Board
Committees for a three-year period, and may be successively re-elected.
Eight:
The members of the Board of Directors will be subject, for the
performance of their duties, to a set of ethical principles and rules of
conduct, established in the Bank's Director's Statute, which shall
necessarily regulate:
• The resolution of conflicts of interest which may arise between the
Director and his relatives, and those of the Bank and its Group.
• Cases of incompatibility for the exercise of the function of Director,
which shall include the holding of positions on the Boards of Directors
of investee companies.
• The consequences which derive from significant changes occurring in
the professional situation of the Directors, or in the nature by virtue
of which a Director has been appointed as such.
• The cases in which the Director must place his position at the
disposal of the Board, through the formalization of the pertinent
resignation in the event that the Board so resolves, as a consequence of
the breach of his obligations, or when, due to his conduct, a serious
damage to the net worth or reputation of the Entity may be caused.
• The age limit for being a Director of the Bank, which is established
at age 70, although the Chairman must depart from his position at age
65, and the Chief Executive Officer at age 62, without prejudice to
staying on as Directors.
• The incompatibility for forming part of management bodies or belonging
to the senior management of other financial institutions, when the
Director has ceased to hold Director-status, as well as for the
rendering of services to the latter in the conditions which are
determined.
Nine:
For the best knowledge of the Bank's organization and activity, there
will be a specific Committee, formed by all Directors, to which the
Group's executive area will periodically present those subjects which,
due to their importance or status as current events, are deemed to be
able to contribute towards the continued formation of the Director for
the best performance of his duties at the Company.
Ten:
The Bank's System of Corporate Governance is conceived as a dynamic
process, which must be analyzed periodically in function of the
evolution of the Company, of the results occurring in the implementation
thereof, of regulations which may be established, and of recommendations
made on the best practices of the market adapted to the corporate
reality. Its evaluation is entrusted to the Bank's Standing Committee,
which will evaluate the performance of the functions characteristic of
the Directors, and the operation of the Board and its Committees on the
whole, issuing an annual report to be presented to the Board of
Directors.
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