BOV Chairman Gordon Cordina replies on shares owned by directors

BOV Chairman Gordon Cordina

Recently, I have been covering Bank of Valletta and one of my stories about it was that the directors, the Chairman and the CEO own no shares of Bank of Valletta. This basically means that the board of directors and the CEO are not aligned with shareholders’ interests. When I asked BOV Chairman Gordon Cordin about this, this was his full reply:

It is my personal choice to not invest directly in any one equity. Through this choice, I also eliminate any conflict of interest, perceived or actual, in holding shares of institutions at which I serve, and of others which may be in competition with them, or otherwise related to them.

I do not feel that I need to own shares of an institution I am serving as an NED in order for me to act professionally and with integrity and in the best interest of all shareholders.

The above is of course a personal choice and consideration, which should not be interpreted to be judgmental and prescriptive on others. NEDs may of course invest in equities, provided that they follow relevant regulatory requirements and other applicable rules on trading and disclosures.

I find this kind of thinking very bizarre from a chairman of a bank and his reply reads more like the mentality of an employee who is serving his boss for a fixed salary instead of a reply by a chairman. This is not the right way to drive the bank’s profitability and the share price up as basically the board of directors have no direct incentive to do so. Instead, the board of directors adopt the mentality of government employees who are only serving others but face no repercussions for their decisions. Managing people’s money has never been this easy.

Serious directors and CEOs of big banks have skin in the game by owning their shares and that is why they would have no other choice but to be incentivised to work for profitability and drive the share price up. I have never heard of a CEO or a chairman of a big bank that owns no shares in the bank that they run.



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