The principles and elements comprising the Bank’s Corporate Governance are set forth in its Board Regulations, which govern the internal procedures and the operation of the Board and its Committees and directors’ rights and duties as described in their Charter.
BBVA’s Corporate Governance System is based on the distribution of functions between the Board, the Executive Committee and the other Board Committees, namely: the Audit and Compliance Committee, the Appointments Committee, the Remuneration Committee and the Risks Committee.
The Executive Committee is authorized to execute the Board’s powers of administration over the Company, except where prevailing legislation or the Company Bylaws or Board Regulations reserve such powers to the Board.
The Chairman of the Board of Directors is also the Chief Executive Officer of the Bank, unless the Board resolves otherwise, pursuant to its Regulations, and reasons of corporate interest make it advisable to separate the posts of Chairman and CEO.
The Board of Directors has approved the Corporate Governance Report for 2010, pursuant to the regulations regarding disclosure standards for listed companies. It has also approved the Report on the Board Remuneration Policy presented by the Board’s Remuneration Committee.
Shareholders can find all these documents (the Board Regulations, the Corporate Governance Report and the Report on the Board Remuneration Policy) on the Bank’s website at www.bbva.com, created to facilitate information and communication with shareholders. There is a special direct link to provide easy access to any information considered relevant regarding BBVA’s Corporate Governance System.
Composition of the Board of Directors
The Board comprises a number of seats within the limits established in the Company Bylaws (a minimum of 5 and a maximum of 15) and any resolutions adopted by the Company General Meeting of Shareholders.
The General Meeting is responsible for the appointment of the members of the Board of Directors. However, if a seat falls vacant, the Board may co-opt members.
In any event, proposed candidates for appointment as directors must meet the requirements of applicable legislation in regard to the special code for financial institutions, and the provisions of the Company’s Bylaws.
Bank directorships may be executive or external. Executive directors have been conferred general powers to represent the Company on a permanent basis; they perform senior-management duties or are employees of the Company or its Group companies. All other Board members shall be considered external.
The Board Regulations establish that the Board shall be composed in such a way as to ensure that external directors represent an ample majority over the executive directors, and that independent directors occupy at least one third of the total number of seats.
At present, independent directors hold an ample majority of the Board seats, since ten of the current thirteen Board members are independent.
For independent directorships, the Board Regulations determine certain requirements reflecting those established by the recommendations of the Unified Code of Good Governance and are in line with the latest international standards.
Proprietary directors are external directors who directly or indirectly hold shares accounting for at least 5% of the Company’s capital and voting rights and who represent such shareholders. For such purposes, directors are deemed to represent a shareholder when: they have been appointed to exercise proxy rights; they are a director, senior manager, employee or nonoccasional service provider to said shareholder and/or to companies belonging to its group; corporate documents show that the shareholder deems the director to represent or have been nominated by said shareholder; they are married to or bound by equivalent emotional relationship, or related by up to second-degree family ties to a significant shareholder. To such effects, BBVA does not currently have any proprietary directors.
The above criteria for determining whether a person is a proprietary director will also apply in the event of agreements or pacts between shareholders that oblige those concerned to take concerted action in using their voting rights to adopt a common policy in regard to management of the Company or whose goal is to influence it in a relevant manner.
Appointment of directors
The proposals that the Board submits to the Company’s AGM for the appointment or re-election of directors and the resolutions to co-opt directors made by the Board of Directors shall be approved at the proposal of the Appointments Committee in the case of independent directors and on the basis of a report from said Committee in the case of all other directors.
To such end, the Committee assesses the skills, knowledge and experience required on the Board and the capacities the candidates must offer to cover any vacant seats. It evaluates how much time and work members may need to carry out their duties properly as a function of the needs that the Company’s governing bodies may have at any time. There are no limits imposed on what people may be named a director in the Bank.
Term of office
As established in Article 36 of the Company Bylaws the term of office of members of the Board of Directors shall be three years. Directors may be re-elected one or more times for terms of the same maximum period.
Age limit for directors
BBVA’s Corporate Governance System establishes an age limit for sitting on the Bank’s Board. Directors must present their resignation at the first Board meeting after the AGM approving the accounts of the year in which they reach the age of seventy.
Duties of Directors
Board members must comply with their duties as defined by legislation and by the Bylaws in a manner that is faithful to the interests of the Company.
They shall participate in the deliberations, discussions and debates arising on matters put to their consideration and shall have sufficient information to be able to form a sound opinion on the questions corresponding to the Bank’s governing bodies. They may request additional information and advice if they so require in order to perform their duties. Their participation in the Board’s meetings and deliberations shall be encouraged.
The directors may also request help from experts outside the Bank services in business submitted to their consideration whose complexity or special importance makes it advisable.
Remuneration of Board members
The members of the Board Remuneration Committee will determine the extent and amount of the remuneration, entitlements and other economic rewards for the executive directors of the Bank, so that these can be reflected in their contracts. Its proposals on such matters will be submitted to the Board of Directors. The Committee will propose the remuneration system for the Board of Directors as a whole, within the framework established in the Company Bylaws.
BBVA pursues a policy of absolute transparency. Its Annual Report publishes an itemized breakdown of the remuneration received by each member of the Board every year. This is made available to the shareholders for the Annual General Meeting. It also gives detailed information on the remuneration policy for Board members, which will be submitted to a consultive vote at the Annual Shareholders Meeting.
Conflicts of interest
The rules comprising the BBVA Directors’ Charter detail different situations in which conflicts of interest could arise between the BBVA Group and its directors, their family members and organizations with which they are linked. They establish procedures for such cases, in order to avoid conduct contrary to the Company’s best interests.
These rules help ensure directors’ conduct reflect stringent ethical codes, in keeping with applicable standards and according to core values of the BBVA Group.
Incompatibility
Directors are also subject to rules on incompatibilities, which place strict constraints on holding posts on governing bodies of Group companies, or companies in which the Group has a holding. Non-executive directors may not sit on the Boards of subsidiary or related companies because of the Group’s holding in them, whilst executive directors may only do so if they are granted express authority.
Directors who cease to be members of the Bank’s Board may not offer their services to any other financial institution competing with the Bank or its subsidiaries for two years after leaving, unless expressly authorized by the Board. Such authorization may be denied on the grounds of corporate interest.
Directors’ Resignation
Furthermore, in the following circumstances, reflected in the Board Regulations, directors must tender their resignation to the Board and accept its decision regarding their continuity in office (formalizing said resignation when the Board so resolves):
- When barred on grounds of incompatibility or prohibition as defined under prevailing legal regulations, in the Company Bylaws or in the Director’s Charter.
- When significant changes occur in their professional situation or that may affect the condition by virtue of which they were appointed to the Board.
- When they are in serious dereliction of their duties as directors.
- When the director, acting as such, has caused severe damage to the Company’s assets or its reputation or credit, and/or no longerdisplays the commercial and professional honor required to hold a Bank directorship.
Relations with shareholders and markets
The principle of transparency informs everything the Bank does on the financial markets. The Board Regulations establish that the Board shall disclose any information that may be relevant to investors, and that the information is correct and true. The Board shall ensure that all shareholders have access to information that is substantially identical, within the same amount of time.
