Under Chilean corporate governance law, directorships of listed companies must be renewed or replaced every three years. The country’s six Pension Funds companies, grouped into the Asociación AFP Chile, are no exception.
It is their task to nominate Independent Directors for the 19 listed organizations in which they have invested. Amongst these are Chile’s top 10 in terms of market capitalization: leading energy providers Endesa and Enersis, CMPC, specialists in forestry, pulp, paper and tissue, multinational retailer Cencosud, and Copec, Chile’s foremost privately-owned industrial group.
The nominating and hiring process must be conducted by a reputable external executive search firm, and the selection is restricted to the candidates proposed by the firm.
The process is also subject to public scrutiny, and this was particularly the case in 2015, according to Pulso, a leading business newspaper, reporting that the role of the directors chosen to protect pension funds would be more critical than ever, given ten years of cartels operating in a range of industrial sectors, from pharmaceuticals and shipping, to animal feed and tissue paper.
Amrop in Chile was assigned the mandate at the close of 2015, led by Max Vicuña, Managing Partner of Amrop MV Consulting in Santiago. Mr Vicuña previously served as Chairman for Superintendencia de Valores y Seguros (the Chilean Securities and Insurance Supervisor Body). He subsequently acted as representative of Prudential Securities in Chile.
When it came to the profile of the candidates, an increasing number of disqualifying factors had to be taken into account, compounded by the need to define a sharp profile for each of the 19 companies, each reconciling the candidates’ multiple conflicts of interest, and preserving complete impartiality from start to finish.
Secondly, there was a need to introduce new faces and raise the bar for gender diversity. As Max Vicuña told newspaper El Mercurio: “67% of the candidates had not previously been selected by the AFP. In addition, 19% were women; a significantly higher number compared to the current 6% of female directors in the IPSA*.”
Despite the strict laws regarding the individual responsibilities of a board position, the interest of the 256 people identified by Amrop was striking, according to Max Vicuña : “almost every relevant figure was enthusiastic and willing to participate in the process.”
155 candidates were personally interviewed in depth at Amrop’s offices in Santiago, and Amrop presented 58 finalists for the 19 positions, all of which were filled.
Beginning in December 2015, the five month search process concluded after the annual shareholder meetings of each company in late April.
“Both the Pension Funds companies and the Association described the intervention as extremely successful, emphasizing Amrop Chile’s contribution both in terms of new names and the irreproachable way in which the process was conducted. The reception from the business and financial press, the economic sector, and the market in general, has been equally encouraging,” says Max Vicuña.
Amrop already has the next round of hires in its sights, aiming for a higher proportion of women, and continuing the quest for new names. Added to the ever-present challenge of identifying and defining disqualifying factors and the need to keep a firm grip on the process, the complexity is only set to increase.
Max Vicuña has two recommendations for directors looking to be on the radar for independent directorships of these high profile organizations. First, take a more active role in corporate governance activities, and second, be open to taking on the challenges presented by family or unlisted companies.
Amrop advises the world’s most dynamic, agile organizations on identifying and positioning Leaders For What’s Next - adept at working across borders, in markets around the world – offering executive search, board consulting and leadership assessment. With offices in 50+ countries, Amrop is one of the world’s largest retained executive search partnerships.
About Amrop MV Consulting
Based in Santiago, Amrop MV Consulting was founded in 1994 by Max Vicuña. Amrop MV Consulting is one of the pioneers in top Executive Search & Board Consulting in Chile. Throughout the years, Amrop MV Consulting has built a team of leading professionals, among them partners, consultants, researchers and staff.
*The Indice de Precio Selectivo de Acciones (IPSA) is a stock market index composed of the 40 stocks with the highest average annual trading volume in the Santiago Stock Exchange (Bolsa de Comercio de Santiago).