Aboitiz Power Corporation (AboitizPower or the Company) and its business units are aligned with the Aboitiz Groups’ inspired purpose which is “To drive change for a better world.”  The Company’s vision “A Better Future” fuels its mission to provide reliable and ample power supply needed by the country; to ensure that supply of electricity is provided at a reasonable and competitive price, and with the least adverse effect on the environment and communities.

The Company has been constantly striving to be the best at operations, maintenance, capacity and supply optimization, as well as project execution, within policies and standards that promote cost efficiency and steady growth, and service levels intended to improve stakeholder engagement.  AboitizPower continues to establish and implement important internal business processes for operational efficiency.

The balance mix of the Company’s portfolio of baseload, intermediate and peaking generating assets has given us a competitive and reliable platform to participate in this space as a market leader and allowed the Company to provide its customers with innovative and relevant solutions to better meet their needs.

As the Company grows, it continues to improve on previous achievements in corporate governance.  In 2018, the Institute of Corporate Directors (ICD) recognized the Company as one of the top performing publicly-listed companies (PLCs) in the Philippines based on the ASEAN Corporate Governance Scorecard (ACGS).

The Group’s corporate governance framework is rooted in its core values and has been institutionalized in the Corporate Governance Manual (the Manual), Code of Ethics, and key company policies and protocols. These include policies on trading, sustainability, and on whistleblowing, as well as on the different Board Committee charters.  These documents are frequently reviewed and updated to align with the best corporate governance practices. The Board of Directors oversee, monitor, and review the effectivity of the Company’s corporate governance framework.

In addition, the Manual,  Code of Ethics, and other policies are continuously disseminated to all team members through various means – during the new hires orientation, HR seminars and trainings, and e-learning courses, among others. Team members also have ready access to these documents through the Group’s internal documents storage system (e-docs) and the Company website.

Governance Structure  

Board of Directors

The Company   believes that compliance with the principles of good governance begins with the Board of Directors.  The Directors’ office is one of utmost trust and confidence. The Board of Directors is expected to act in the best interest of the Company in a manner characterized by transparency, accountability and fairness in the exercise of leadership in directing the Company towards a sustainable growth.  

Directors are drawn from a pool of highly qualified professionals, each with their own subject matter expertise to contribute to the management and operations of the Group.  Each Board has three independent directors and six independent-minded executive and non-executive members, all of whom come from diverse professional backgrounds. They are a mix of legal and finance professionals with management experience in the private and government sectors, as well as multilateral agencies.

The Chairman of the Board is a highly experienced, non-executive director who is not involved in the Group’s day-to-day operations.  As such, he therefore remains focused on refining the Company’s long-term strategy.

Board Committees

The Company has five Board committees: Corporate Governance, Risk and Reputation Management, Audit, Related Party Transactions (RPT), and the Executive Committee.  All three independent directors sit in these committees, except in the Executive Committee.  Majority of the members of the Corporate Governance, Audit, and the RPT Committees are independent directors.  Each committee oversees or implements an important aspect of the Company’s corporate governance framework and has its own charter, which can be viewed at the Company website.

Roles and Responsibilities of the Board of Directors    

The Company believes that compliance with the principles of good governance begins with the Board of Directors.  The Director’s office is one of utmost trust and confidence. The Board of Directors is expected to act in a fully informed basis, in good faith, with due diligence and care and act in the best interest of the Company in a manner characterized by transparency, accountability and fairness in the exercise of leadership in directing the Company’s sustainable growth.  The Company’s Board responsibility is a recurring cycle as shown below:

The Board is actively engaged in discussions of strategic business issues and the directors are consulted for their invaluable inputs through the special strategy board meetings and gatherings with the management teams.  The Board Corporate Governance Committee formalized these gatherings into an annual Board Retreat or strategy meetings in an atmosphere of relaxed, open and intellectual exchange.

As part of its director development program and to ensure that the members of the Board remain up to date with business and legal developments, the Board is provided with regular legal bulletins, and invited to economic and industry-specific briefings and strategy and management conferences within the Aboitiz Group.  All directors, including the Independent Directors, actively participate in corporate governance seminars to further enhance their knowledge and expertise.

The Company’s By-Laws require that the quorum for valid board meetings is a majority of the members of the Board, in accordance with the with the Revised Corporation Code of the Philippines.  As a matter of long standing Board practice, decisions of the Company’s Board are always made with the consensus or vote of all the Company’s independent directors, thus resulting in a unanimous vote of all directors of the Board.

 

 

 

 

 

 

 

 

 

As provided in the Company’s Board Protocol, the Company’s Independent Directors meet at least once a year for an Executive Session. The Independent Directors may also meet periodically in an executive session with no other Director or management present except for the Chairman of the Board Corporate Governance Committee who shall call for and preside the meeting. Topics for discussion during these executive sessions shall be determined by the Independent Directors, but actions of the Board generally should be taken separately during Board meetings. The Independent Directors met with the non- executive directors, including the Chairman of the Board Corporate Governance Committee, at Taguig City on November 23, 2018 for their informal discussion of issues.

For an effective Board, the Company takes serious consideration of the selection of the members of the Board.  It believes that the nomination, selection and election of directors are fundamental elements of a well-functioning corporate governance system.  The annual selection process is intended to appoint a diverse mix of highly competent directors and officers with in-depth knowledge and experience in the core industries or corporate management, financial expertise, audit and governance experiences.  Other factors considered are independent-mindedness, ethical behavior and value contribution of each director. The Company follows a formal and transparent board nomination and election process to ensure the interests of all shareholders.

Directors are nominated by shareholders based on their expertise and professional backgrounds, track record, capacity for strategic thinking, and understanding of the Group’s businesses.  Nominees for directors are submitted to the Board Corporate Governance Committee, to which the Nominations and Compensation Committee has been merged into. The committee ensures that there is diversity in the Board in terms of experience, profession, age and gender.  All directors are elected at the annual shareholders’ meeting (ASM), by personal vote or by proxy. A Proxy Validation Committee validates all proxies prior to the ASM.

The Company encourages active shareholder participation by sending the ASM notice and agenda at least 28 days before the ASM.  The notices, agenda, and the rationale for each agenda item, as well as sample proxies and meeting venue are also made available on the Company’s website.  Comprehensive profiles of the nominees for directors are disclosed in advance to allow shareholders to evaluate them before the ASM.

The Definitive Information Statement (SEC Form 20-IS) is sent to shareholders at least 15 business days before the ASM.  Copies of the Integrated Annual Report are also provided during the meeting with downloadable versions posted in the Company’s website.

Shareholder registration has also gone fully digital.  To register, shareholders are only required to present their valid IDs in order for their information to be pulled out from the shareholder database.  The shareholder will then be requested to check and / or update their personal information for accuracy.

Board members, the CEO, CFO, independent auditors, stock transfer agent and other key officers attend the ASM and make themselves accessible to shareholders.  Questions from shareholders are also encouraged by the Chairman during the meeting.

During the 2018 ASM, shareholders approved and ratified the amendment of the Company’s By-Laws to change the ASM date from the third Monday of to the fourth Monday of April of each year.  The change in the ASM date ensures that the Company’s financial reports and information statements are published within the first quarter following the end of the previous fiscal year, in accordance with best corporate governance practices.  The amendment also clarified that, in accordance with existing laws and regulations, the ASM venue may be held in any city or municipality within Metro Manila. Shareholders and stakeholders were also able to evaluate the conduct of the meetings, including presentations, registration process, venue, as well as food and refreshments.  Suggestions for improvement were evaluated and discussed by the ASM working teams during a post-mortem meeting.

The Board of Directors conduct an annual performance assessment of the Board members and key officers.  The Board members conduct a self assessment of their individual and collective performance, and also evaluate the performance of the CEO, the Internal Audit Head, Chief Risk and Reputation Officer,  and the Compliance Officer.

The directors and key officers are valuated based on the following criteria: compliance with best governance practices and principles, participation and contribution to the Board and committee meetings, and assessment of performance against their duties and responsibilities as provided for in the Company’s Manual, Articles and By-Laws.  Assessment results for the past three years are compared, and these are presented to the Board Corporate Governance Committee and to all Board members.

The Board Corporate Governance Committee ensures that the remuneration for directors and executives is consistent with the Company’s culture, strategy, and business policies.  Remuneration rates are also maintained at a level sufficient to attract and retain directors and officers who are needed to successfully run the company.

AboitizPower ensures that it gives competitive remuneration to its directors and officers, and regularly benchmarks its compensation against another similar-sized Philippine-based companies through the market salary surveys.

The Company engages the services of independent remuneration consultants to determine the compensation, as well as any annual merit increases, for directors, officers, and team members.  Factors such as inflation and consumer price index are taken into account to ensure that the compensation structure will sustain the Group’s competitiveness while also attracting and retaining the best talent.  The results of the study are then presented and discussed during the Company’s first Board Corporate Governance Committee meeting for the year.

During its February 18, 2019 meeting, the Corporate Governance Committee approved the increase the directors’ monthly allowance from PHP180,000 to PHP200,000 for the Chairman, and from PHP120,000 to PHP150,000 for other directors. The committee also approved the increase in the per diem for every meeting attended as follows:

 

Other than the director’s per diem and monthly allowance, there are no other standard arrangements pursuant to which directors are compensated or to be compensated.  Officers are rewarded based on their individual performance and on their ability to execute their duties and responsibilities effectively.

The Board of Directors do not participate in discussions or deliberations involving his/her own remuneration.  Thus, all proposed changes in Board remuneration are approved by the shareholders and disclosed to the public in a timely manner through PSE and SEC disclosures and the Company’s Annual Report (SEC Form 17-A).  The Company believes that the information provided in the disclosures provide sufficient information on director and executive remuneration, while maintaining the privacy of the individuals concerned in compliance with applicable laws and regulations.

 

Board of Directors     

Board directors are expected to serve with diligence.  During 2018, the Company had 13 board meetings, both regular and special meetings.  

The Company discloses the number of board meetings and attendance details of each director through its Annual Report and Definitive Information Statement.  The attendance is then reported to the Board Corporate Governance Committee by way of the Board Performance Report and to the SEC through the filing of the Integrated Annual Corporate Governance Report (I-ACGR).

The attendance of the Directors to the Company’s board meetings in 2018 was exemplary with an overall percentage of 90%. Summary of the attendance record can be seen below.

Board Committees

Board committees usually meet at least twice a year, except for the Board Audit Committee that meets at least four times in a year.  

Members of the Board Committees are duly qualified elected directors of the Company’s Board of Directors as regular members and are assisted by key officers of the Company who sit on an ex-officio basis.  These Board Committees hold meetings at least every quarter to ensure that sound strategies for the Company’s development are reviewed, monitored, executed and achieved.

In 2010, the Board decided that the functions of the Board Strategy Committee subsumed under the functions of the full Board membership.  As as result, the Board regularly holds a special strategy meeting in addition to the strategy sessions at regular board meetings and the informal strategy meetings of the Directors.

The Board also folded in the Board Nominations and Compensation Committee to the Board Corporate Governance Committee.  In 2012, the Board Corporate Governance Committee endorsed the creation of an expanded Board Risk Management Committee into a Board Risk and Reputation Management Committee.  Membership of Independent Directors to both Board Corporate Governance Committee and Board Risk and Reputation Management Committee increased. The Related Party Transactions Committee is composed entirely of Independent Directors.

Summary of the attendance record of the Board committees can be seen below.

Board Audit Committee

Board Corporate Governance Committee

Board Risk and Reputation Committee

Board Related Party Transactions Committee

Board Executive Committee

The rights of shareholders is of paramount importance in the Company’s By-Laws, Code of Ethics and Manual.  The goal is to ensure the protection of shareholder interest and concerns through the free exercise of shareholder rights.  Among the rights of these shareholders, regardless of the number of shares they own, are to receive notices of and to attend shareholders’ meetings, to participate and vote on the basis of the one-share, one-vote policy, nominate and elect Board members (including cumulative voting), inspect corporate books and records, vote in person or in absentia through proxy, receive dividends, and ratify corporate actions.

The Company believes that the rights and interests of minority shareholders are aligned to those of the controlling shareholders, not only in terms of returns on their investments, but also in the sustainability of the Group’s businesses.  The Company ensures timely disclosures to shareholders regarding their respective businesses, and that shareholders receive dividends in accordance with established dividend policies.

The Board Secretariat has adopted certified Board protocols and procedures under the ISO 9001:2015 Management Board and System to ensure the effectiveness of Board and shareholders’ commitments.  This includes coordination with stock transfer agents to ensure appropriate responses to and timely resolution of shareholders’ queries and requests.

Basic Shareholders’ Rights

The Company promotes basic shareholders’ rights by adopting clear and transparent policies which may be found in the Company’s Manual.

Right to Receive Dividends      

During the regular board meeting of the Company held on November 28, 2012, the Board approved a revised dividend policy consisting of an annual cash dividend payment ratio of 50% of its consolidated net income from the previous fiscal year based on the audited financial statements of the Company. The policy changed the previous cash dividend payment ratio of 33% of previous year’s net profits. The Company’s current dividend policy has been in effect since 2013. There are no restrictions that limit the payment of dividends on common shares to stockholders of records as of March 21, 2019.

This is disclosed in the Operational and Financial Information section of the  Annual Report, the Definitive Information Statement, Report of the CFO, and disclosures on the Company website.

The Company pays annual dividends to its shareholders in an equitable and timely manner.  All shareholders are treated equally, receiving an amount of dividends per share that is proportionate to their shareholdings.  The period for payment of dividends is based on the disclosure and trading requirements of the SEC and PSE.

All acts of the board of Directors, corporate officers and management in the previous year up to the date of ASM is duly disclosed with the SEC, the PSE and PDEX, including the declaration of the annual cash dividend.  These acts are submitted to the shareholders for ratification in the interest of transparency and as a matter of customary practice or procedure, undertaken at every annual meeting of the shareholders.

The Company has paid dividends in the following amounts for the last five years within 30 business days from its declaration date pursuant to existing best practices:

Right to Participate in Fundamental Corporate Changes

The Company recognizes and upholds the importance of a genuine exercise of shareholders’ rights in decisions concerning fundamental corporate changes as required for by existing law and regulation and by tis corporate covenants under its Articles of Incorporation, By-Laws, and the Company’s Manual.

Foremost among corporate governance principles established by the Company is its assurance that shareholders enjoy all the rights granted by the Corporation Code of the Philippines.  The Board and management team ensures the promotion of these rights and have been mandated to institute remedial measures to swiftly address any violation or transgressions.

Effective Participation in Shareholders’ Meetings          

The Company strives to maintain a transparent and fair conduct of its Annual and Special Shareholders’ Meetings and ensures that accurate and timely information are available to the shareholders to enable them to make a sound judgment on    all matters brought to their attention for consideration or approval. The Definitive Information Statement and the Aboitiz Integrated Annual Report, distributed prior to and during the ASM, include the highlights and summary of the financial condition of the Company. The Definitive Information Statement filed with the PSE, PDEx and SEC

is prepared with the objective of providing full and accurate information enabling stakeholders to make informed decisions. Shareholders are provided with individual profiles of new and returning directors, as well as a summary of the Board meeting attendance and performance record of its directors. Agenda items are included in the notices with a corresponding rationale.

Approval of Directors’ Remuneration and Per Diem       

The Company has a policy on transparency of compensation for its Directors and key executives, in accordance with SEC rules. Information on the basis of Board remuneration is readily accessible through the Company’s Annual Report, Annual Corporate Governance Report, Board Corporate Governance Committee minutes and its Company website.

The Board Corporate Governance Committee ensures that the Directors’ and executives’ remuneration are consistent with the Company culture, strategy and business policies at a level sufficient to attract and retain Directors and officers who are needed to run the Company successfully. The Company rewards its individual Directors and Officers based on ability to execute their duties and responsibilities. It is the Company’s philosophy to reward officers and employees based on individual performance measured through established Human Resources management metrics.

The Company ensures that it pays its directors and officers competitively by comparing rates with other Philippine-based companies through market salary surveys. Changes in Board compensation, if any, are recommended by the Board Corporate Governance Committee, approved by the Board and affirmed or voted on by the shareholders in a regular shareholders’ meeting.

All proposed changes in Board remuneration are approved by the shareholders and disclosed to the public in a timely manner through PSE and SEC disclosures and in the  Company’s Annual Report. The Company reviews Board remuneration by benchmarking against other Philippine PLCs. It participates in market surveys for benchmark of board remuneration.

Nominations of Board of Directors and the Right to Elect Directors Individually

The Board has a formal and transparent board nomination and election policy. All shareholders have the right to nominate individually the members of the Board. Nominations for the position of a director are received by the Corporate Secretary in accordance with the Company’s By- Laws and the Guidelines for the Nomination and Election of Independent Directors.

Process Followed in Appointing New Directors

The process of nomination is clearly set out in the Company’s Guidelines for the Constitution of the Nomination Committee and the Nomination and Election of Independent Directors, and Manual.  These are available in the Company’s website at https://aboitizpower.com/wp-content/uploads/AboitizPower-Guidelines-for-the-Nomination-and-Election-of-Independent-Directors__.pdf

The Company also discloses the process of electing regular and independent directors in the Definitive Information Statement, copies of which are distributed to the shareholders and uploaded in the Company’s website at https://aboitizpower.com/wp-content/uploads/AP-SEC-Form-2018-20-IS-Definitive-Information-Statement-for-website.pdf The gist of the nominations guidelines is also broadcast to the shareholders every ASM.

Re-Election of Directors

All directors are elected every year. A Board director holds office for one year until his successor is elected at the next ASM in accordance with the Corporation Code of the Philippines, the Company’s By- Laws and the SEC guidelines. Shareholders may nominate board members individually through the nominations process. At the ASM, and in accordance with the Corporation Code of the Philippines, the Company follows the rule of One-Share, One-Vote. Under this rule, any minority shareholder can influence the board composition by individual nomination and by the power of cumulative voting rights. The right to cumulative voting is a statutory right granted by the Corporation Code of the Philippines.

Directors Selection Database

The Company uses professional search firms, external sources of candidates including director

databases, professional organizations  (whether Philippines or offshore) when searching for candidates for nomination of independent directors. The Company uses all available professional databases and information resources for the selection,  whether through professional search firms or other external sources of candidates.

Disclosure of the ASM Results

Shareholder’s resolutions approved during the ASM are disclosed and made publicly available in the Company’s website on the next working day after the ASM.  

Disclosure of ASM Voting Results and Tabulation Procedures   

The exercise of a shareholder’s voting right is encouraged by the Company to ensure meaningful participation in all shareholders’ meetings.  The Board is committed to removing costs and other administrative or practical impediments to a shareholder’s right to vote.

The counting of the shareholders’ votes is done in accordance with the general provisions of the Corporation Code and the Company’s internal procedures.  The Office of the Corporate Secretary supervises the counting of votes through an electronic platform and through the appointed third party vote canvasser/validator.

Voting methods and vote-counting systems employed by the Company are clearly explained by the Corporate Secretary during the shareholders’ meeting to ensure the effective exercise of shareholders’ right to vote. The Company follows the system of cumulative voting for the election of directors, to allow shareholders an opportunity to elect each member of the Board of Directors individually. The Company adheres to the one-share, one-vote policy for the same class of shares.

The voting methods and vote-counting systems employed by the Company during every shareholders meeting are disclosed in the Definitive Information Statements and clearly explained by the Corporate Secretary to shareholders in attendance to ensure the intelligent exercise of the shareholders’ right to vote.

The Company follows the system of cumulative voting for the election of directors, to allow shareholders an opportunity to elect each member of the Board of Directors individually. Other matters are also decided through voting by shares of stock. The Company adheres to the One-Share, One-Vote policy for the same class of shares. Proxy voting is allowed at all meetings and is facilitated through proxy voting forms. In its regular board meeting last November 12, 2010, the Board of Directors of the Company approved the deletion of the notarization requirement of proxy forms to be used in all shareholders’ meetings of the Company. This is to facilitate easy voting by shareholders, in line with the Company’s efforts to promote shareholder engagement and to improve corporate governance practices. The Company makes the results of the votes publicly available the next working day. The minutes can be accessed at  

https://aboitizpower.com/wp-content/uploads/AP-Minutes-2018-05.21.18-Annual-Stockholders-Meeting-1.pdf

Opportunity to Ask Questions, Questions and Answers Raised During the ASM as Documented in the Minutes of the Meeting

The Office of the Corporate Secretary ensures that all minutes of annual and special meetings of shareholders clearly and satisfactorily reflect all matters taken up during these meetings. All shareholders are encouraged and given the right to participate in the meetings. The opportunity to ask questions or raise issues, the questions, answers, issues and motions raised, the agreements and resolutions arrived at, the corporate acts approved or disapproved, and the voting results are reported in the minutes. The Company also discloses to PSE, PDEx and the SEC all the items approved

at the shareholders’ meeting no later than the next business day. The voting results including quorum and summary of resolutions approved are made publicly available by the next working day through the Company’s website under Investor Relations’ page.

At every ASM, the Company ensures the effective exercise of the rights of its shareholders. There are no barriers or impediments preventing shareholders from consulting or communicating with one another, with the Directors and with the Corporate Secretary. Questions raised during the shareholders’ meeting by the shareholders are minuted or documented.

Attendance of the Board of Directors, Management and Committee Members During the ASM

The Chairman and members of the Board of Directors, the President and Chief Executive Officer, Executive Vice President and Chief Operating Officer, the Chairman of the various Board Committees particularly the Board Audit Committee, and the Company Corporate Secretary all attend the ASM of the Company to answer any questions which shareholders may have concerning the Company. Likewise, the Chairman and all members of the Board of Directors, other key officers and the Company’s auditors are present at the shareholders’ meeting to give shareholders the opportunity to interact with the Board and top management on the current state of the Company’s  business and affairs and to ask any questions from the Directors and Corporate Officers. Shareholders and investors are encouraged to ask the CEO or any officer of the Company any questions they may want clarified.

The minutes of the ASM available in the Company’s website also documents the attendance and participation of the Board of Directors, Management and the members of the different Board committees.

Agenda for the Shareholders’ Meeting Rationale and Explanation of Each Agenda Item

The Company provides at least 28 days prior notice of the meeting and information on all proposed resolutions and rationale thereof with corresponding explanation for each agenda item requiring shareholders’ approval in the notices of the ASM. The Company also publishes notices of the shareholders’ meetings in national newspapers of general circulation.

Each resolution relates to only one agenda item, and a brief rationale or explanation for its inclusion in the ASM is provided. The Company does not include any additional and unannounced agenda item in the ASM if not disclosed prior to the ASM.

Voting by Proxy / Voting in Absentia    

The Shareholders may vote in person or by proxy.  Arrangements for proxy voting or voting in absentia are in line with existing rules and regulations.  The Company provides shareholders with a copy of the Proxy form through the following: (1) printed copy enclosed in the Information Statement; (2) digital copy inserted in the CD kit containing the soft files of the Information Statement; and (3) downloadable form the Company’s website.

Voting by Poll

Voting during the ASM is done by poll, under the supervision of the Company’s Corporate Secretary and Stock and Transfer Agent, and validated by the Proxy Validation Committee and an independent third party inspector of votes engaged specifically for that purpose.  The Secretariat also uses an electronic platform to record the votes.

Appointment of Independent Party Inspector to Validate Vote at the ASM       

During the ASM, the Company engages an independent third part to assist with the validation of proxy and counting of the votes.  For the 2018 ASM, Luis Canete & Co., provided the proxy and vote validation functions.

Appointment of Independent Party in cases of Mergers, Acquisitions or Takeovers        

The Board delegates to Management the power and discretion to engage independent parties to evaluate the fairness of the transaction price for the acquisition or disposal of assets, which will depend on the size of the transaction, the jurisdiction(s) involved, and the availability and capacity of expertise in-house. Depending on the factors mentioned, Management then decides whether to engage an independent party to evaluate the fairness of the transaction price.

The Company has a deep bench of competent investment and finance experts who are capable of evaluating the fairness of the transaction price. The Chief Strategy Officer of the Company has a wealth of experience in management, investment banking, and private equity investing, including almost 38 years of experience in energy markets.

Taking into account the size of the transaction and its overall effect on the Company’s businesses and positions, the entire transaction, including the transaction price, is presented to the Board for approval.

Policies and Practices to Encourage Effective Exercise of Ownership Rights         

The Company strives to maintain a transparent and fair conduct of its annual and special shareholders’ meetings and ensures that accurate and timely information should be made available to the shareholders to enable them to make a sound judgment on all matters brought to their attention for consideration or approval. The Definitive Information Statement and the Aboitiz Integrated Annual Report, distributed prior to and during the ASM and available in the Company’s website, include the highlights and summary of the financial condition of the Company. The Definitive Information Statement filed with the PSE, PDEx and SEC is prepared with the objective of providing full and accurate and truthful information enabling stakeholders to make informed decisions. Shareholders are provided with individual profiles of new and returning directors, as well as a summary of the Board meeting attendance and performance record of its Directors. Agenda items are included in the notices and includes a rationale for each agenda item.

The Company continues to exert efforts to extend the communication channels between the Company and the institutional shareholders through its Investor Relations Office and to the nominee registered shareholders through the PCD Nominee Corporation. The Governance and Compliance team reach  out and provide copies of the notice and agenda of the ASM, sample proxy forms, and the Definitive Information Statement prior to the shareholders’ meeting for dissemination to the brokers to ensure that institutional investors are properly represented during the shareholders’ meeting.

As a matter of policy, the Company does not solicit proxies.

The Company promotes a culture of ethical and values-based service, excellence and leadership. We believe that this corporate culture promotes the recognition for employees and officers of their duty to advance the Company’s interests and that of its stakeholders. No employee, officer or director may take advantage of their position or corporate property or information for personal gain.

Employees, officers or directors are prohibited from taking advantage of their position, from taking advantage of access to corporate property and proprietary information for personal gain. They are prohibited from appropriating for themselves, corporate opportunities for sales, purchases of products and services. It is the duty of each director, officer and employee to protect propriety and confidential information.

AboitizPower employees and officers are encouraged to promptly report any potential relationship, action or transaction that may give rise to a conflict of interest to the Human Resources Department or to the Compliance Officer. Directors are under the obligation to disclose any actual or potential conflict of interest to the Chairman of the Board, to the Corporate Secretary, and to the Compliance Officer.

All Directors are also required to abstain or inhibit themselves from any Board discussion or decision affecting their personal, business or professional interests. Legal proceedings involving Directors and Officers that could affect their ability and integrity to serve the Company are required to be disclosed to the Compliance Officer.

The Company adopted the Policy on Conflict of Interest in 2012 to set out the procedures that would ensure the integrity and transparency of all transactions between and among the Company or any of its subsidiaries, affiliates, associates, major shareholders, directors and officers. No issues relating to RPTs or conflict of interests have been raised in the past or in recent years.

The Board and Management of the Company believe that a commitment to proper disclosures and transparency of the businesses elicit the trust and confidence of stakeholders. The Aboitiz Group puts a high premium to its reputation and work at keeping this well-earned trust of stakeholders gained over the years. Pursuant to the Group’s commitment to transparency and accountability, the Company continues to improve its dedicated corporate governance web page on its website which can be accessed at https://aboitizpower.com/corporate-governance/governance-reports-and-scorecards/#previous-corporate-governance-reports .

The corporate website makes available to the public, copies of the annual corporate governance reports, annual reports, company disclosures, investor reports, organizational information, and Board and Board Committee membership, policies such as the Manual on Corporate Governance, Code of Ethics and Business Conduct, minutes of the ASM, Investor Relations Information, and other information relevant to stakeholders. The website serves as a resource center for stakeholders and the public. The Board Secretariat is also fully committed to ensuring full and accurate disclosures of information to shareholders, to the general public and all other stakeholders.

Transparent Ownership Structure

According to the share register kept by the Stock Transfer System, Inc., the Company’s stock and transfer agent, as of December 31, 2018, AboitizPower had 634 shareholders. As of the same period, AEV, another publicly listed holding company, owned 5,664,530,783 shares or 76.98% of the 7,358,604,307 total outstanding and common stock entitled to vote. Of the Company’s total outstanding shares, 1,413,628,428 shares or 19.21% was held by the public. Moreover, the Company’s Directors and Officers owned 133,972,374 shares or 1.82% and the Company’s Affiliates owned 146,472,722 shares or 1.99% of the total outstanding common stock entitled to vote.

Monitoring of Insiders’ Share Ownership      

While the Company encourages stock ownership by employees, to ensure ethical conduct, the Company through its Governance and Compliance Team and Board Secretariat monitors the share ownership of directors, executives and management team through the regular SEC disclosures of beneficial ownership (SEC Form 23-B), and tracking of compliance of the Company’s Insider Trading Policy and Trading Blackout dates.

Identity of the Beneficial Owners Holding 5% or More Shares   

The Company periodically submits to the PSE a public ownership report detailing the extent of ownership of controlling shareholders, including the shareholdings of their subsidiaries and affiliates, and that of the Directors and Management. It submits to the PSE a list of its top 100 shareholders every quarter. It also discloses its top twenty (20) shareholders, including shareholders of record and beneficial owners owning more than five percent (5%) of the Company’s outstanding capital stock, and shareholdings of its Directors and Officers in the Company’s Information Statement sent out to shareholders annually. The Company, however, has no control over outside shareholders who may choose to put their shares under nominee holding companies such as the PCD Nominee Corporation, and is thus unable to make any disclosure on details of that ownership.

As disclosed in the Company’s 2018 Definitive Information Statement, as of December 31, 2018 the identity of the beneficial owners of AEV owning 5% or more are as follows:

Disclosure of Direct and Indirect Shareholders of Major / Substantial Shareholders        

The Company periodically submits to the PSE a public ownership report detailing the extent of ownership of controlling shareholders, including the shareholdings of their subsidiaries and affiliates, and that of the Directors and Management. It submits to the PSE a list of its top 100 shareholders every quarter. It also discloses its top twenty (20) shareholders, including shareholders of record and beneficial owners owning more than five percent (5%) of the Company’s outstanding capital stock, and shareholdings of its Directors and Officers in the Company’s Information Statement sent out to shareholders annually. The Company, however, has no control over outside shareholders who may choose to put their shares under nominee holding companies such as the PCD Nominee Corporation, and is thus unable to make any disclosure on details of that ownership.

Disclosure of Direct and Indirect Shareholdings of Directors and Senior Management

The Company discloses beneficial ownership in the regular filings of Statement of Beneficial Ownership and in its Annual Corporate Governance Report to the SEC, including the trading of Company shares by its directors and key officers.  Non-compliance with the policy may carry criminal and civil liabilities as well as reputational damage to the Company, the Board, the Management and the Office of the Chief Compliance Officer strictly enforce compliance with the Trading Policy.

Based on the Company’s Public Ownership Report which was filed with the SEC and PSE and subsequently posted in the Company’s website, below is the direct and indirect ownership of directors and senior management as of December 31, 2018:

Insider Trading Prohibition       

Insider trading is strictly prohibited under the Code of Ethics and Business Conduct, the Manual, and the PSE and SEC Rules. The Company’s Manual on Corporate Governance prohibits every member of the Company from any misuse of inside information. All team members of the Company are mandated to exercise prudence in handling material non-public information in the course of their work and in relation to the trading or dealing with AboitizPower securities. The Company strictly enforces its trading blackout and insider trading policy to curtail opportunistic dealings in the Company’s shares. Any violations are required to be reported to the Board Corporate Governance Committee.

Reporting of Share Trades                      

While the Company encourages stock ownership by employees, to ensure ethical conduct, the Company through its Governance and Compliance Team and Board Secretariat, monitors the share ownership and share transfer of directors, executives, officers and management team through the regular SEC disclosures of beneficial ownership (SEC Form 23-B), and further monitor compliance through the implementation of the Company’s Insider Trading Policy and Trading Black-out dates.

The Company has an existing policy requiring the Board of Directors to inform the  Office of the Corporate Secretary of transaction related to the purchase and disposal of Company shares within one business day from the date of the transaction. The Company discloses the direct and indirect (deemed) ownership or shareholdings of major and/or substantial shareholders and the details of the subsidiaries, associates, joint ventures and special purpose enterprises/vehicles. The  Company’s Information Statement and Public Ownership Report regularly filed by the Company likewise show the direct and indirect ownership of the Company’s shareholders, which include its Board, the Management Team, and employees.

 

Mandatory seminars are conducted to impress upon and refresh all employees’ awareness and understanding of the Company’s Manual of Corporate Governance and Code of Ethics and Business Conduct, as well as the underlying principles of corporate governance and ethical behavior and conduct for the Company.

In 2011, the Board mandated a Corporate Governance Seminar for all employees. This was followed by a mandate in 2012 requiring all newly-hired employees to attend a new hires’ seminar and an annual Quality Focus seminar which includes an orientation on the Company’s Manual of Corporate Governance and Code of Ethics and Business Conduct.

In 2013, the Company launched its online Corporate Governance E-learning Course for all newly-hired employees. This was taken by all employees through a web-based portal with a standard test, the results of which are reported to management and the Board Corporate Governance Committee.

On July 24, 2014, in compliance with Memorandum Circular 20, Series of 2013 of the Securities and Exchange Commission and in partnership with the Institute of Corporate Directors, the Company held its Aboitiz Annual Corporate Governance Seminar at its principal office in Bonifacio Global City, Taguig City. This seminar was attended by the Company’s Board of Directors and key officers.

On March 25, 2015, the Company conducted its 2015 Aboitiz Annual Corporate Governance Seminar in Taguig City, which was attended by around forty directors and key officer. This seminar was again conducted in partnership with the Institute of Corporate Directors.

On March 28, 2016, the Company together with Aboitiz Equity Ventures, Inc.(AEV) conducted their first In-House Mandatory Corporate Governance Seminar in Shangri-La at the Fort, the Manila. The seminar was attended by over fifty participants composed of AEV and AboitizPower’s Directors and Key Officers.

On March 28, 2017,  The Pan-Asia Risk and Insurance Management Association (PARIMA) held its first regional conference in Manila at the Shangri-La at the Fort Manila, Taguig City, Philippines. This year’s theme is ‘Sustainable, Resilient, & Intelligent Future,’ which aimed to strengthen and educate risk management professionals and key industry players in today’s rapidly changing risk landscape. With more than 270 participants, the PARIMA Manila Conference was a landmark event for the risk professional community (8 hrs). In Aboitiz Group, around 50 delegates composed of some members of the Board of Directors, Risk Managers and Senior Executives attended.

On March 29, 2017, AEV Group Risk Management, in coordination with AEV Governance and Compliance team, organized an Executive Briefing for the Board of Directors and Senior Executives of the Group, with more than 80 participants. The briefing covered three topics such as The 2017 Top Global Risks: World Economic Forum, Millennial Mindset – Risk and Opportunity in the Workforce, and Cyber Security (4 hrs.). The participants were also given an opportunity to raise their concerns during the Q&A portion of the program.

On August 31, 2018, AEV Group Risk Management, in coordination with AEV Governance and Compliance team, organized 2018 Annual Corporate Governance Seminar for the Board of Directors and Senior Executives of the Group, with more than 60 participants. The briefing covered three topics such as Digital Disruption: Reshaping Leadership, Innovation and Risk; Cyber Risk; and Discussion on the Asia-Pacific Risk Landscape 2018 (4 hrs.). The participants were also given an opportunity to raise their concerns during the Q&A portion of the program.

Risk management plays its part in the achievement of the Aboitiz Group’s strategic objectives by creating a culture of measuring and managing risk.

Now on its third year of assessing the risk maturity of the Aboitiz Group, the Group’s average rating is at 3.9 on a scale of 1 -5. This puts the Group at the top 15% of all organizations that participate in the global Risk Maturity Index (RMI) assessment conducted by AON annually. The 2014 assessment was participated by 110 Aboitiz Group team leaders, including board members, C-Suite, key operating team leaders, and risk managers from 16 business units.

See discussion of the Company’s risk management initiatives in the company’s Integrated Annual Report and Definitive Information Statement.