BOV imposes a 70-year age limit on board members

BOV shareholders and other members of the public who reach the age of 70 will no longer be eligible to sit on the bank’s board of directors, not even if they are elected through the AGM, according to new rules approved by Malta’s largest bank controlled by the government.

The controversial decision, which did not go down well with many of the bank’s shareholders, was approved last week through a resolution changing the bank’s Memorandum of Articles and Association.

The changes also include an increase in the remuneration of part-time non-executive directors, who will see their annual basic honoraria bumped up to €30,000 a year, while that of the chairman, currently economist Gordon Cordina, getting €95,000 a year for his part-time role.

Through these changes, BOV continued to strengthen its hold on the board. Prospective candidates will now have to pass an internal nominations committee hurdle overseen by the chairman.

Non-executive directors will not be allowed to sit on the bank’s highest decision-making body for more than three consecutive terms of three years each or a total of 12 years in the past 15.

While these changes were approved by the AGM, in which the government controls 25% of the votes, many shareholders vented their opposition to such measures.

Criticising the lack of democracy in the bank’s running, shareholders claimed that the bank was throwing away the experience of elderly directors with years of experience.

They also insisted that shareholders should be allowed a free hand to elect whoever they wanted, not those selected by the nominations committee.

No election for the two vacancies on the BOV board was held during last week’s AGM as the nominations committee presented only two candidates, equal to the number of vacancies on the board.

Bank sources noted that the two new directors, Christian Bonnici West and Jonathan Spiteri, are two university academics lecturing in the same faculty as the bank’s chairman, Gordon Cordina.

When asked to explain the reasoning behind the 70-year-old limit, a bank spokesman said it was due to “the ever-increasing demands and complexity of the role.”

“Statutory retirement ages apply in most other top roles in business, and often at levels that are below 70 years. Consideration is also made for the number of board meetings held by the bank (69 board and committee meetings in 2023 of approximately three hours duration each), the preparation required ahead of every meeting, and the highly technical items discussed.”

The bank denied the board was being controlled by the chairman.

“The Nominations committee is enshrined in the bank’s articles of association and has a key role in assessing the individual and collective suitability, diversity, and composition of the bank’s board of directors. The nominations committee comprises three independent non-executive directors, who all carry an equal vote,” the spokesman said.

The government nominates two members of BOV’s board, including the chairman.

Apart from Gordon Cordina, who was confirmed to continue in the top post, the government selected Anita Mangion, the daughter-in-law of former Labour Minister Charles Mangion, to represent it on the board.