You bought First Gen shares, maybe directly on the stock market, maybe bundled inside a fund your bank manages without you realizing it. Standard investment. What you did not know, what nobody disclosed to you, was that the company’s largest recent acquisition came with a P24-billion condition tied to one man’s job. You found out from a press release in the middle of a family feud that had nothing to do with you.

That is the situation facing First Gen Corporation’s public shareholders. The cousins are fighting. But the people with the most at stake may not be the cousins at all.

Two clauses, not one

When the Lopez majority accused Federico “Piki” Lopez of embedding a “poison pill” into the First Gen’s P62-billion hydropower deal, most coverage focused on a single clause. That framing shifted on Monday, April 20, when the majority issued a further statement confirming there are two such clauses, not one. First Gen’s own April 15 Philippine Stock Exchange (PSE) disclosure had already confirmed the broader picture.

Clause 1 covers the hydropower stake. First Gen paid approximately P62 billion for a 33% interest in Prime Hydropower Energy Inc., a vehicle controlled by Prime Infra, the infrastructure conglomerate led by Enrique Razon Jr. Under the deal terms, according to First Gen’s own PSE disclosure, Prime Infra can force First Gen to sell that stake at a 25% discount if there is a change in management control. A 25% discount on P62 billion is roughly P15.5 billion. Gone, simply by changing who runs the company.

Prime Infra is a private company and is not bound by the same disclosure and related party transaction rules that govern listed companies like First Gen. Its obligations run to its own shareholders, not to the investing public. First Gen’s obligations are different.

Clause 2 covers the gas stake. First Gen has retained a 40% interest in its gas operations. According to First Gen’s April 15 PSE disclosure, the same structure lets Prime Infra buy that stake at the same 25% discount: approximately P8 billion in additional exposure.

Combined, those are roughly P23.5 to P24 billion in potential losses, both triggered by the same event: the removal of Piki Lopez as chairman and CEO, or his loss of influence over the board and executive committees.

A clause like this is not automatically wrong. If a counterparty is betting billions on a project that depends on a specific leader, writing that into the contract is not unreasonable. Disclosed upfront, it functions as a deterrent: everyone knows the stakes, the board negotiates with eyes open, and shareholders can weigh the risk themselves.

A traditional poison pill defends against hostile outside raiders. These clauses work differently. According to the majority’s April 20 statement, they do not protect shareholders from an outsider. They protect one insider against his own board. For that reason, the more precise term for the rest of this article is “change-in-management-control clause,” or simply “the clause.”

First Gen disputes that framing. The company maintains the provisions were requested by Prime Infra as a reflection of its confidence in Piki’s leadership, were properly approved by the board, and represent standard commercial terms for an infrastructure deal of this size and complexity. Piki’s camp adds that the clause protects not just his position but the integrity of a multi-billion-peso transaction during a critical construction phase. Whether the idea originated with Piki or with Prime Infra, First Gen’s shareholders bear the financial exposure either way.

The majority’s allegation is narrower but sharper: the clauses were never disclosed. According to their public statements, the provisions were presented at a Lopez Inc. board meeting under “other matters,” in a one-hour session. First Gen’s disclosure to the exchange came only after they went public. First Gen disputes the characterization of the disclosure timeline.

A deterrent that nobody knows about is not a deterrent. It is a trap.

Quick recap

For readers joining midway: Lopez Inc. owns 55.66% of First Philippine Holdings (FPH), which owns 67.84% of First Gen, giving Lopez Inc. an effective indirect stake in First Gen of roughly 38%. First Gen is separately listed with its own board. Piki Lopez is chairman and CEO of First Gen, and was president of Lopez Inc. until February 27, 2026, when the Lopez Inc. board voted 5-2 to remove him for cause.

Piki obtained a court order blocking the removal, and he remains in post.

The majority faction, led by cousin Eugenio “Gabby” Lopez III with roughly 71% of Lopez Inc., alleges that Piki structured these deals to insulate his position at company expense. Piki’s camp says First Gen’s board approved everything after proper review, Prime Infra requested the key man clause, and BDO Unibank’s commitment is evidence of institutional confidence, not self-dealing.

That last point brings us to the third instrument.

Then there’s the bank

On April 17, First Gen separately filed a PSE disclosure revealing that BDO Unibank had extended P24.75 billion in committed financing, which the bank can recall if certain conditions are breached, to fund the hydro acquisition. 

Two facilities: P9.9 billion and P14.85 billion. 

The BDO financing comes with its own “Change of Management Control” covenant. According to First Gen’s April 17 stock exchange disclosure, BDO can declare an immediate default if Piki steps down, loses majority influence over  board and executive committees over at First Gen parent holding company, First Pacific Holdings Corp., or if his family’s stake in Lopez Inc. falls below 29.17%. The disclosure quoted BDO describing Piki’s involvement as “necessary, vital and indispensable,” and characterized the covenant as underscoring the link between the group’s financial footing and its leadership.

Key man clauses in infrastructure finance are not unusual. And BDO is not the only institution that has put its weight behind Piki. At his April 17 townhall with First Gen employees, Piki pointed to a roster of global investors who chose to put money into the Lopez group under his watch. KKR, the New York-based investment giant, owns roughly 20% of First Gen. The Macquarie-GIC consortium, a partnership between an Australian infrastructure fund and Singapore’s sovereign wealth fund, owns about 35% of EDC, the First Gen’s geothermal unit. Social Security System, the state pension fund that millions of Filipino workers contribute to, is among the institutional shareholders of FPH.

“They would not be there, and they would not be as supportive if we did not manage our fiduciary responsibilities in the way that we did,” Piki told employees, according to a transcript obtained by Rappler.

These are independent institutions with no stake in the family dispute, making their own judgments. Piki’s camp argues their presence is the strongest evidence that his leadership has earned market confidence, not self-dealing, as described by his cousins.

When you buy First Gen shares on the stock exchange, you depend almost entirely on what the company chooses to disclose publicly. You have no seat at the table, no right to inspect the contracts, no way to ask questions before you invest. The PSE’s disclosure rules exist precisely because of this asymmetry: they are the only window ordinary investors have into what is really going on inside a listed company.

Why the bank is different

BDO does not have that problem. Before extending P24.75 billion, the bank sent its own credit analysts into First Gen’s books. It reviewed the contracts, assessed the risks, negotiated the terms, and decided for itself that Piki’s continued involvement was worth writing into the agreement. It had full information. It had bargaining power. It made a deliberate, informed choice.

That is why the law gives creditors more latitude. The PSE’s disclosure rules were built to protect people who cannot protect themselves: ordinary investors buying shares on a public exchange. A major bank cutting a multibillion-peso deal is presumed capable of looking after its own interests.

The problem the majority is raising is not that BDO had a key man clause. It is that three instruments, including two in contracts with a private party, together constructed a financial architecture that makes removing Piki catastrophically expensive. Public shareholders, unlike BDO, had no way of knowing any of this until a press release forced it into the open.

The majority’s counter-reading focuses on the cumulative picture:

Instrument 1: Prime Infra contract on the hydro stake. Remove Piki, lose P15.5 billion.
Instrument 2: Prime Infra contract on the gas stake. Remove Piki, lose P8 billion.
Instrument 3: BDO committed financing. Remove Piki, risk a P24.75 billion default.

Three separate agreements. Two different parties to the deal. One outcome: removing Piki carries an accumulating price tag. What makes the BDO piece particularly dangerous is that a loan default does not stay contained. According to First Gen’s own April 17 disclosure to the exchange, a Change of Management Control is not just a trigger that lets the bank demand immediate repayment on the hydro financing. It also activates clauses in other loans that automatically trigger if one loan defaults, affecting the outstanding loans of the entire First Philippine Holdings group, the wider Lopez conglomerate that sits above First Gen. 

The exposure does not stop at First Gen’s balance sheet. It travels up the corporate ladder. The majority cousins allege this pattern is not a coincidence. But First Gen says each agreement was properly reviewed and reflects standard commercial practice.

A defense with a ceiling

Piki’s camp raised an argument with real legal weight: as chairman and CEO of a listed company, he is someone legally classified as an insider because of his position. Selectively sharing information that could affect the stock price, not yet known to the public — even with shareholder-cousins — can trigger insider trading liability. Once you list a company, you are no longer just a cousin at the dinner table. You have legal obligations to every shareholder. We covered this argument in detail in the last of my 3-part series, but it is worth revisiting here because of what has changed. It is not a trivial point.

It also has a ceiling.

A signed contract is not a live negotiation. Once the contracts were inked with their P24-billion contingent clauses, those provisions became material facts about a listed company. SEC rules requiring listed companies to report significant deals to the stock exchange within three calendar days of signing mean that deals between connected parties must be reported to the exchange promptly after execution — not months later, and not only after a family dispute forces the issue into the open.

First Gen disputes the characterization that disclosure was delayed. Piki’s camp maintains the filings were made in the ordinary course of governance. But the sequence — majority goes public first, company files days later — is established by the April 15 and April 17 PSE disclosures themselves.

The insider trading shield covers the negotiation room. It does not cover the filing cabinet. Those are two different obligations, under two different sets of rules.

No rule covers this

The disclosure question points to a deeper gap: no provision of Philippine law explicitly prohibits a CEO from embedding personal job-security provisions into corporate contracts. The Revised Corporation Code was built for simpler conflicts, like a director who awards himself a contract, or approves a deal that puts money in his own pocket. It was not written for a CEO who negotiates commercial terms with a third party that happen to make his removal extraordinarily expensive.

The majority Lopez cousins, according to their public statements, are pursuing two legal theories. Think of them as two separate complaints about the same set of facts.

The first is a disclosure failure. SEC rules require listed companies to report significant deals — especially transactions between ‘related parties’ — to the stock exchange within three calendar days of signing. Think of it as the paperwork rule: the obligation to tell the public what you signed, and when. If the disclosures came late, that is a procedural violation in its own right, separate from any question of whether the underlying deal was good or bad.

The second is about the deal itself. The corporate law that holds directors and officers personally liable for self-dealing and conflicts of interest says that when a company officer benefits personally from a deal at the company’s expense, they can be held to account. The key question here is whether Piki personally benefited, in the form of job security, from deal terms that exposed shareholders to P24 billion in potential losses. Think of it as the rule that says: you cannot use your position at a public company to protect yourself at the shareholders’ cost.

Neither theory alone cleanly covers the full allegation. The first addresses whether the forms were filed on time. The second addresses whether the deal itself caused harm. Both are needed to tell the complete story.

First Gen says its board approved everything after “transparent and rigorous evaluations.” If Prime Infra genuinely requested the clause, the self-dealing argument becomes harder to sustain: Piki did not invent the demand, he agreed to a term put on the table by the other side. Piki’s camp argues this distinction matters and that the majority is mischaracterizing a standard deal structure.

Philippine governance rules were built to protect listed companies from outside actors. No rule was written for a provision the majority alleges protects an insider against his own board. The gap is not a loophole. It is an absence.

The missing gatekeepers

That absence raises an immediate structural question: what were independent directors doing?

Independent directors are board members who have no financial ties to the company’s controlling family and no management role inside the company. They are not cousins, not executives, not employees. Their entire job is to represent everyone else — the ordinary investors, the pension funds, the people who bought shares without being part of any inner circle. When a major deal is struck between connected parties, say, a transaction that benefits a controlling family member, the rules require these independent directors to review it closely and approve it, specifically to guard against the family putting its own interests ahead of the company’s. They are the structural check that is supposed to catch exactly this kind of situation. First Gen had them when both contracts were signed.

According to the majority’s public statements, the transactions were tabled at a Lopez Inc. board meeting under “other matters” and discussed in a one-hour session. First Gen says its own board approved everything properly. Piki’s camp maintains the relevant approvals were made at the First Gen board level, where they belonged.

This is where the two-board structure matters. Lopez Inc. and First Gen are distinct legal entities with distinct boards. The majority cousins’ complaint is that they, as controlling shareholders at the Lopez Inc. level, only learned of the clause terms when the matter was presented there, late and briefly. First Gen’s board is a different room, with different directors. It has public investors who are not family.

What neither side has confirmed is whether First Gen’s independent directors reviewed the clauses, clause by clause, before signing.

One hour is not long for a P125-billion transaction. A director under pressure might focus on the headline numbers and miss a contingent clause buried deep in the conditions. That is not necessarily misconduct. It is a structural weakness in governance review. The rules assume that if directors are present, the process is sound. That assumption deserves scrutiny.

The forgotten shareholders

The governance questions raised here extend well beyond the Lopez family itself.

First Gen is listed on the PSE. Its shareholders are not just the Lopez cousins. They are retail investors, pension funds, ordinary people with savings parked in investment accounts. State pension fund SSS, which First Gen itself has cited as a backer of Piki’s leadership, is among them.

Those investors had no vote on whether the company’s largest recent acquisition should come with a P24-billion condition tied to one man’s job. They found out from a press release in the middle of a family dispute.

For any investor who bought or sold First Gen shares between the contract signing and the PSE disclosures, there was a material information gap. They were making decisions without knowing something that could directly affect the value of their shares. Piki’s camp argues no gap existed: the board approved the deal, independent directors were present, and disclosure followed the applicable timeline. The PSE’s disclosure rules exist to prevent exactly the kind of information gap the majority describes. That is not an abstract governance principle. It is the practical foundation of a functioning stock market.

Three possible endings

The Lopez feud will end one of three ways. Which ending it gets depends on whether anyone beyond the cousins decides this is their problem too.

Scenario one: Courts treat this as a family dispute and nothing more. A judge decides who runs Lopez Inc. and, through its ownership chain, First Gen. The clauses survive or get quietly renegotiated as part of a settlement. Life goes on. But the governance gap, the absence of any rule that explicitly covers this situation, goes untouched. The next controlling family can do the same thing, and the question will never be asked out loud again.

Scenario two: The SEC or the PSE issues specific guidance clarifying when clauses like this must be disclosed before a contract is signed, not after a fight breaks into the open. Narrow, but it would close the most immediate gap and give future boards a clear rule to follow.

Scenario three: Regulators go further and write explicit rules that distinguish legitimate key man clauses where a lender or partner genuinely wants assurance that a specific executive will stay involved, from mechanisms that make it very hard to remove a specific person and that primarily serve the executive’s own job security, not the company’s commercial interests.

Key man clauses are not inherently problematic. Piki’s camp makes exactly this point, and is not wrong on the general principle. The question is not whether such clauses should exist. It is whether, in listed companies, they must be disclosed before signing rather than after the fight breaks into the open.

Philippine rules do not yet answer that question cleanly. This case may force the answer. – Rappler.com

Lala Rimando wrote about Philippine business, and managed newsrooms, including Newsbreak, ABS-CBN, Rappler, and Forbes, for over 25 years. She’s now based in La Union, taking care of her mom with dementia, and working on the multimedia biography of the late John Gokongwei.