FPH Group Christmas Party
SMX Convention Center
17 December 2010

This is my first time to address all of you as the new Chairman of the First Philippine Holdings Group. It is also the first time we are holding a joint Christmas party with this large a number of attendees. We thought long and hard about doing this because the sheer number could reduce the intimacy of the smaller parties we’ve been having each year. The First Holdings group is growing but we must make certain that we do not grow apart. As your new Chairman and CEO, I thought it would be a great way to start celebrating the season under a common roof, sharing more activities that bring us together as a group.

Succession and leadership transitions in the business world are always a most dangerous period in the life of any company. In many of the world’s largest corporations, the handover as it’s called, is just the theater stage behind which many difficult struggles and real emotional dramas play out.

Twenty years ago as I was starting out in FPHC, I read the memoirs of Thomas Watson Jr. entitled: “Father, Son and Company: My Life At IBM and Beyond.” In it he openly reveals the turbulent relationship with his father, Thomas Watson Sr., founder of IBM, and the “terrible fierceness” by which they loved and fought each other from boyhood through their careers at the family‐owned IBM. Thomas Jr. would recall the bouts of depression he suffered as a child, often coming home from school in tears, whenever his substandard schoolwork implied that he could never measure up to dad’s expectations. Growing up he saw his father as a Colossus that made him feel inconsequential, and that he could never deliver on the promise of heading IBM one day. The autobiography is a powerful and moving account of a father dreaming for his son and a son burdened by those expectations. Reading that book gave me a glimpse into the complex psycho‐emotional drama that goes on when a father and son work together.

Wanting to learn more, I sought books that talked about Ford Motor Company founder Henry Ford’s relationship with his son Edsel. Quite disturbingly, all accounts talk about a very destructive relationship between father and son, with Henry Sr. building Edsel up at times and then going out of his way to humiliate him in public. At a time when upstart General Motors was beginning to overtake Ford competitively, Henry Sr. tragically rejected any of Edsel’s attempts to redesign the Model T and modernize the company. The stress on their relationship was such that his only son Edsel became more withdrawn from active management and eventually died of cancer prematurely at the age of forty‐nine.

The mixed feelings and emotions that underscore transitions in a family‐controlled business, or in any corporate succession for that matter, are all too common. Corporate horror stories are all over the place, telling of succession plans that don’t go too well. Of unprepared successors and founders that never come to grips with their mortality or dispensability. So I thought long and hard then. Did I also want to end up like Edsel on my 49th birthday?

Looking back at the smooth transition that transpired last July at FPHC and the Lopez Holdings and Lopez Inc. level, with my Tito Manolo and Tita Presy also taking the chairmanships there, made me feel like these decades of worries were all for nothing. But to be honest, any succession will always be a time for mixed feelings, and I’m sure glimpses of it were noticeable to some of you, most especially in our Tuesday CEO meetings at FPHC where my dad and I would both be present, sometimes looking at each other to see who would chair the meeting. I also recall a tense moment when Beth Canlas asked whether there would be any new directions for FPHC parent company upon which my dad quickly pointed to Nonoy Ibañez saying, “the Parent company means you and me, right Nonoy?” So I said to myself, either he forgot he appointed me Chairman or I just lost my job. On a more recent occasion my brother Cary was giving a report at a CEO meeting on the construction progress of my new FPHC office on the 6th floor saying, “they will be working over the holidays to finish the Chairman’s office and it should be done a bit after the New Year.” At which point my Dad gave him a somewhat annoyed look asking what work was going to be done on his room this time. Cary thought for a moment then uttered tactfully “Uh no that’s for the other Chairman.”

To me the grace by which the transition took place masks many of the heroic and selfless decisions a leader must take, on a professional and personal level as he plans a succession. In fact, management guru Peter Drucker calls this act of passing the baton “The Final Test of Greatness of a CEO.” Knowing the immense fondness my dad has for the FPHC group of companies and all the people who work here, I can only imagine the powerful emotions he feels each day just with the thought of leaving it behind.

That’s why his retirement isn’t one where he simply rides away into the sunset either. When the great women’s rights activist Susan B. Anthony retired from the National American Women’s Suffrage Association in 1900 at the age of 80 after three decades of fighting for the right of women to vote, she told her beloved colleagues that, “I am not retiring now because I am unable mentally and physically to do the necessary work, but because I wish to see the organization in the hands of those who are to have its management in the future. I want to see you all at work, while I am alive, so I can scold you if you do not do it well.” That’s probably a better description of how my dad sees his new role and why in a similar manner, he never fails to remind us that he’ll just be here and he’s not going anywhere. But I know, deep inside, just like other truly selfless leaders, such as Nelson Mandela, Lee Kuan Yew and George Washington, his act of stepping aside while he is still strong and able is just one way to test whether the company he raised and cared for all these years can now stand on its own. Is it “built to last”?

As he hands us the reins, our Chairman Emeritus keeps emphasizing one thing: Make sure our companies last more than 400 years. In the same breath, he’ll say it’s not too difficult because FPHC is already 50 years old next year, and the Lopez group is a revitalized 82. He has steered the ship through tumultuous times these last few decades. Starting with his unforeseen assumption of the leadership responsibility at age 45 when Lolo died and with Tito Geny, the heir apparent, being imprisoned by the Marcos regime. It was a most trying time for him because in one fell swoop our main assets, Meralco Securities Corp. (the holding company owning Meralco and the precursor to FPHC), ABS‐CBN and the Manila Chronicle were all taken over by government. I must have been 15 years old at the time and I still vividly recall how quietly he bore the stresses of that period. He rarely expressed his anger and emotions but once in a while I would hear him express his frustration to my mom saying he felt his hands were tied behind his back or that she should “try to run a much tighter family budget.” But the EDSA revolution came in 1986 and placed him at the helm of an FPHC that was close to bankruptcy. He was already 56 years old when he commenced that second coming at FPHC and that’s why I saw him trying to rescue and rebuild the company with a vengeance. Being so rudely interrupted by Martial Law, he had already lost a big chunk of what anyone would call their normal working‐age years. He was determined to make up for lost time, stay healthy and temporarily stop aging in order to rebuild from the ashes. This turbulent 24‐year period saw the Lopez group rising, then stumbling but always rising again undaunted and predestined like a Phoenix reborn. As a young boy growing up I’d always imagine heroes as charismatic, daring and swashbuckling. Watching him through a lifetime, I now know that genuine courage and audacity can and usually does come cloaked in simplicity and humility. It’s that selfless heroism he personifies that has made FPHC and the Lopez group what it is today. These last few decades were most definitely riddled with our share of crisis and high drama but today, we have a solid and enviable platform of businesses that are second to none and manned by many of the best men and women in the country. It will be up to us to build on the excellent foundation we now have and execute on that strategic promise.

There’s a popular African proverb that says, “If you want to go fast, go alone. But if you want to go far, go together.” With the marching orders of our Chairman Emeritus to go far… four centuries far, we know that we can only carry on that long journey if we do it together. That’s why it’s important that even as we grow, we build a stronger sense of cooperation, coordination, synergy and community among the FPHC companies. It may be a challenge at first because of sheer numbers and our dispersal throughout the country but we must begin with small steps. Steps like this joint Christmas party we’re having tonight; or our 6 FPHC Music Icons and the show choir who make their much-awaited debut performances tonight after some intensive training; or the upcoming move of our various corporate offices to more adjacent locations; or more joint management learning conferences like the one we held with renowned author and Harvard Business School professor Ranjay Gulati; or our CEO’s meetings and strategic conferences. We will see more such activities launched soon that will help us create stronger bonds among one another. It’s only by creating a stronger sense of community among FPHC companies that we can harness and leverage the true power of what we have.

That strength became very real for me just over a month ago when one of our companies, FPIC, went into crisis because of a leak in its pipeline. It was an accident no one wanted to happen but when it did we rapidly marshaled a first‐rate multi‐disciplinary crisis team from various companies in FPHC and the wider Lopez group to augment the very lean organization at FPIC. It was an inspiring show of unity and support for an embattled sub. Something we all can count on and be ready to give in anyone’s time of need. Stanford Economist Paul Romer, named one of America’s 25 most influential people by Time magazine in 1997 is credited with saying that “a crisis is a terrible thing to waste.” It’s true that in a crisis, danger is present but if you attack the problem with integrity and the right mindset, opportunities always appear. Artificial barriers and rules become pliable, priorities become crystal clear, everyone’s paying attention and, all of a sudden, change for the better becomes possible. I know that in the FPIC crisis as in many others we faced in the past, fear and uncertainty is surely in the air. But whenever I enter the crisis team HQ at FPIC’s JMT office I never fail to observe the air of optimism, resourcefulness, teamwork and professionalism of the crisis team. It is still far from over, and we do not underestimate the work that still must be done, but somehow you know in your gut and in your heart that we will emerge stronger from this experience.

In closing, I’d like to leave you with a little tidbit from Japanese history. Not only because Tito Manolo is now the new Philippine ambassador to Japan (Congratulations to him on that) but because the story has relevance to us. I don’t know how many of you saw the movie “The Last Samurai” starring Tom Cruise and Ken Watanabe playing Katsumoto. The latter was a romanticized version of a real Japanese historical leader named Saigo Takamori. Saigo was a six‐foot, 200‐pound Japanese Samurai who helped depose the last of the Tokugawa Shoguns and restored the Meiji Emperor to power in 1868. Saigo was originally part of the Emperor’s cabinet but eventually bolted to lead the so‐called Satsuma rebellion of more than 40,000 trained Samurai in 1877. The rebellion was all about Saigo’s concern that, under the Emperor he helped place into power, Japan was blindly aping the West and modernizing too fast. The Samurai had a vested interest in maintaining themselves as an elite class, with many privileges and time honored traditions anchored on their noble code of Bushido. But the world around them was changing and Japan needed to open up and adapt to the outside world if it wanted to thrive and prosper as a nation. In fact the restoration of the Meiji Emperor is generally credited with laying the foundations for Japan’s rise into becoming a technologically advanced nation. Eventually, Saigo’s Satsuma Rebellion failed and he died along with 40,000 of the toughest Samurai in Japan mowed down by a modern conscript peasant army equipped with the best weaponry the West had to offer. This stubborn refusal to foresee and adapt to the changing world around them was at the heart of why the Samurai, despite their noble code of Bushido, no longer exist as a class today.

I close with this story, because earlier this year we launched an awareness campaign for our Lopez values and credo‐‐our equivalent of the Samurai’s code of Bushido. These values come from a powerful history that give us identity as a family and business group and have kept us on even keel through complex and difficult times. However, as we carry on, unlike the Samurai, we should never fail to recognize that “the future cannot be like the past” and to thrive and prosper through the next 400 years requires that we are anchored through the permanence of timeless values, yet have the foresight to reinvent ourselves and adapt to a constantly changing world.

So I’d like to wish you all a Merry Christmas, God bless you in the New Year and I’m sure you’ll enjoy the great show we have ahead for you this evening. Thank you.