Corporate Governance Model
Banco Santander Central Hispano SA
24 June 2002
SANTANDER CENTRAL HISPANO STRENGTHENS CORPORATE GOVERNANCE MODEL
WITH THE MOST ADVANCED INTERNATIONAL PRACTICES
Anti-takeover measures suppressed. Three new independent Board members named.
Independent Vice-Chairman created and audit and control committee reinforced.
Maximum transparency.
Santander, Spain, June 24, 2002 - Santander Central Hispano chairman Emilio
Botin, addressing the ordinary shareholders meeting here today, announced a
range of far-reaching measures aimed at raising standards of corporate
governance, and which incorporate the most advanced international practices in
this area.
The measures aim at eliminating obstacles to equal treatment and value creation
for shareholders, while strengthening the audit and control committee and
increasing transparency. To this end, the Board has approved new by-laws for its
own activities, with ground rules for organization, functioning and conduct.
Suppression of anti-takeover clauses
With the goal of making fully effective the principles of equal treatment and
objectives of creating shareholder value, the Board has agreed to submit to the
next Shareholders Meeting a modification of the Bank's statutes that annuls the
so-called anti-takeover clauses.
Thus, the limit on the number of votes that can be exercised by a single
shareholder is eliminated, as well as the majority votes required to adopt
certain agreements at the Shareholders Meeting. At the same time, the existing
statutory requirements for eligibility for the post of Board member as well as
that of Chairman and Vice-chairman are eliminated.
Shareholder control is also increased on remuneration packages linked to shares
or share options, as well as any other referenced in any way to the Bank's
shares, by making such schemes subject to approval by the Shareholders Meeting,
regardless of the beneficiaries and not just for Board members and Executive
Vice Presidents, as in the existing statutes.
Three new independent board members named
The Shareholders Meeting has named three new independent Board members: Juan
Abello, Guillermo de la Dehesa and Abel Matutes. As a result, the Board will
consist of 21 members - five executive and 16 external non-executive members, of
which 9 are independent. Guillermo de la Dehesa will join the executive
committee.
In his address today, Botin said: 'I consider it essential that our Board has
members of great prestige and professional achievement, that invest in the Bank,
that do not rely on statutory benefits to earn their living, that have
recognized experience to bring to Board activities. Summing up, that they are
truly independent.'
The new Board norms do not refer to any age limit for Board members. 'Age in
itself is not a determining factor in identifying a potential Board member, or
in the importance to the Company of incorporating a member to its Board,' added
Botin.
Independent Vice-Chairman and audit and Control Committee
The new norms give special importance and autonomy to the Audit and Control
committee, which will consist exclusively of external Board members, with a
majority of independents, one of which will chair the committee. Manuel Soto is
named chairman of this committee, and is also designated independent
Vice-chairman of the Board and coordinator of the independent Board members.
This committee proposes the appointment of the external Auditor, white ensuring
its independence as well as the flow of financial information and internal
control systems. This committee's supervisory powers are reinforced in the
following manner: its chairman will intervene in the General Shareholders
Meeting where company accounts are submitted for approval; the committee will
respond to initiatives, suggestions or complaints made by shareholders; it will
supervise internal audit functions and require as much information as it deems
necessary; the committee or any member can require information of any aspect of
the Company from any executive, employee or unit, which it considers necessary:
and may at its own discretion contract external advice.
Maximum transparency
The Bank is firmly committed to maximum transparency. To achieve this, the Board
has responsibility for providing rapid, precise and reliable information on the
Bank's activities, not only to shareholders but also to stakeholders -
employees, customers, suppliers and supervisory bodies.
Regarding transparency on remuneration, Botin said that 'beyond what is required
I wish to inform shareholders of the income I have received as Chairman in 2001
and which has totalled 1.02 million euros in salary and 1.5 million euros in
bonus. In all, 2.52 million euros. In my case, the contribution made by the Bank
to the internal pension fund in 2001 has been 840,000 euros. I did not receive
any stock options last year.
Audit and other measures
- Internal audit services will report to the Board.
- The impartiality of external audit is reinforced: the audit and control
committee will ensure the independence of the auditor, whose fees will not
exceed 2% of total revenues during the previous financial year, and the partner
responsible must be substituted every 7 years. Consultancy services will not be
contracted with the external auditor.
- A rapid and efficient procedure will give Board members the widest possible
powers to require information and inspect any aspect of the Company.
- An appointments and remuneration committee is created, incorporating the
most advanced principles as regards its composition and functions. It will
comprise only external Board members, with a majority of independents and be
chaired by an independent Board member. This committee will propose the nature
and amount of remuneration of Board members.
- Board members may hire legal, accounting or financial consultants, as well
as other expert advice, and charge this to the Bank.
- Board members will be sent all the necessary information prior to meetings
of the Board.
- Remuneration of Board members will be linked to results of the Company.
- Remuneration packages linked to the short-term performance of the share
price will be avoided.
- List of Board member obligations. The norm includes obligations of
confidentiality, competitive concerns, to abstain and disclose in cases of
conflict of interests, to not make use of Bank facilities for personal interest
nor of information that has not been made public, and to not take advantage of
business opportunities for personal gain.
Second Vice Chairman and CEO Alfredo Saenz also spoke to the Shareholders
Meeting, referring to the fact that last year the Bank increased net
attributable income by 10% to 2,486 million euros, one of the biggest increases
among major international banks and the highest level of profit achieved by a
Spanish company last year. This profit gain was accompanied by a major effort in
balance sheet strengthening, with BIS ratio standing at 12.04%.
- On Argentina, he said 'up till now we have demonstrated our commitment to
the country. And we have set no deadline for remaining there. We hope to
continue working and contributing to the economic and financial development of
Argentina.'
Turning to first quarter results, he said the Group achieved net attributable
income of 670.5 million euros, in line with the objective of a 10% increase for
the year as a whole.
This year, the Group is focused on increasing revenues, an objective that will
be met by intensifying business penetration, optimizing spreads, seeking greater
efficiency in obtaining fees, and seeking new business opportunities. This will
be achieved, he said, while maintaining asset quality and continuing cost
reduction in line with previous years.
'Improved technology is another key objective. The present platform will be
migrated to a new one which will make technology a competitive advantage for the
Group.'
As regards the investment portfolio of the Bank, he said that 'we are present
where we want to be, as is the case in Union Fenosa and Cepsa, and we will
continue as long as we believe we are thereby making the best use of our
capital.'
Finally, referring to Brazil, he said that 'the fiscal and monetary
fundamentals of the Brazilian economy and the proven ability of the authorities
of this country to respond to the challenge will ultimately bring calm to the
markets.'
This information is provided by RNS
The company news service from the London Stock Exchange
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