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 the Aboitiz core values, which has been institutionalized in the respective Corporate Governance Manuals (Revised Manual) and Codes of Ethics and Business Conduct of  AboitizPower, as well as in their key company policies and protocols. This governance framework applies to the Group as a whole – led by diverse and competent Boards and Board Committees AboitizPower, each supported by capable and accountable management team and empowered team members, united in living the time-honored Aboitiz core values.

AboitizPower has Business Units (BUs) involved in Power Generation, Power Distribution, Retail Electricity Services, and Distributed Energy

Governance Structure  

Board of Directors

The AboitizPower Boards of Directors are at the helm of our Group’s corporate governance journey. Independent from management, they are committed to provide each company a strategic roadmap towards long-term growth, competitiveness, and building a sustainable business that, it is hoped, will thrive for another 100 years. Each Board performs the crucial role of articulating and reviewing each company’s purpose, vision and mission, and strategies to carry out its goals. They ensure that the strategic direction of each company’s businesses are well defined, properly managed, and are aligned with the overall strategic goals of the Aboitiz Group. The AEV and AboitizPower Boards of Directors are at the helm of our Group’s corporate governance journey. Independent from management, they are committed to provide each company a strategic roadmap towards long-term growth, competitiveness, and building a sustainable business that, it is hoped, will thrive for another 100 years. Each Board performs the crucial role of articulating and reviewing each company’s purpose, vision and mission, and strategies to carry out its goals. They ensure that the strategic direction of each company’s businesses are well defined, properly managed, and are aligned with the overall strategic goals of the Aboitiz Group.

The AboitizPower Board has nine members, all of whom come from diverse professional backgrounds. They are composed of egal and finance professionals, engineers, former or current CEO/COOs, auditors, and accountants. Many of them have management experience in the private and government sectors, as well as in multilateral agencies. AboitizPower has three Independent Directors, three Non-Executive Directors, and three Executive Directors.  The Chairman of AboitizPower Board is highly experienced, NonExecutive Directors who are not involved in the Group’s day-to-day operations. They therefore remain focused on refining each company’s longterm strategy. The Lead Independent Directors are highly qualified professionals who are familiar with the operations of each company, and the industries it does business in.

In 2020, the members of the  AboitizPower Boards of Directors were the following:

Commitment to the Corporate Mission, Vision, and Strategy

The directors of AEV and AboitizPower acknowledge the importance of their role to lead and steer their respective companies as profitable and sustainable enterprises. The Board’s role for each company is to represent and protect the interests of its shareholders – the owners of the business – and other key external stakeholders. Guided by the Aboitiz Group’s purpose, brand promise, mission, and vision, the members of each Board, together with key officers and heads of the Strategic Business Units, participate in an Annual Board Retreat and Strategy Refresh. They review and align the corporate initiatives and strategic roadmaps of the Group’s core businesses with contemporary market and economic trends, both locally and worldwide. In 2020, this annual engagement was held in a series of online sessions that began on October 29, 2020.

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.

Board Independence

By virtue of the Manuals and their respective Committee charters, the AEV and AboitizPower ESCG (Environmental, Social and Corporate Governance) Committees were tasked to develop and recommend a set of corporate governance principles, aimed to promote the independence of their respective Boards, including standards and guidelines applicable to the selection, contribution, and conduct of Board members. In 2020, the AEV and AboitizPower Boards were composed of a majority of Non-Executive Directors. AEV has three qualified Independent Directors and five Non-Executive Directors out of its nine Board members. Meanwhile, AboitizPower has three qualified Independent Directors and three NonExecutive Directors out of its nine Board members. In addition, both Boards have each appointed a Lead Independent Director who serves as an intermediary between the Chairman and the other directors whenever necessary.

Board Diversity

The diversity in professional and personal backgrounds (age, ethnicity, culture, skills, competence, gender, knowledge, and expertise) of Board members ensures that no director or group of directors can dominate the deliberation and decision-making process. AEV and AboitizPower can also benefit from the diverse perspectives in formulating sound corporate strategies and advancing towards long-term success. The annual selection process of directors is intended to appoint a diverse mix of highly-competent directors and officers with in-depth knowledge and experience in the core industries where AEV and AboitizPower are involved. Other factors considered are independent-mindedness, ethical behavior, and value contribution.

Recognizing that a sustainable enterprise goes beyond the current generations of leaders, the  AboitizPower Board appointed  Mr. Danel C. Aboitiz as Director in 2018. Danel is part of a new generation of homegrown leaders who add fresh perspectives to each Board’s deliberation. In 2020, the AboitizPower Boards initiated a process to review the profiles of the current Board members, in relation to an ideal profile, to determine their subjective and objective qualifications that are aligned with the long-term strategic direction of the Group. This initiative is meant to identify areas in which each Board can improve in terms of ensuring its members have complementary competencies and skill sets, and to assess the qualifications of potential future candidates to each Board.

Term Limits of Independent Directors 

AboitizPower both comply with the requirements of SEC Memorandum Circular No. 19, Series of 2016, prescribing a maximum term of nine years for independent directors, starting from 2012. In the nomination, selection, and election of the members of its Board, AboitizPower recognize and respect the inviolable statutory right of each shareholder to vote and be voted as a director. AboitizPower intends to retain an independent director who has served the maximum of nine consecutive years, the shareholders of the relevant company shall be advised and provided with meritorious justifications during the Annual Shareholders’ Meeting (ASM) for which the election will take place.

Directorships in Other Listed Companies

The ESCG Committee of  AboitizPower, respectively, selects qualified nominees for election as directors. One consideration is the number of directorships a nominee has in other corporations or organizations. As a corporate practice, AboitizPower directors, including Independent Directors, are discouraged from sitting as directors in more than five publicly-listed companies (PLCs). Executive Directors of AboitizPower do not generally sit on other boards of PLCs outside the Group, unless they have substantial interests in those PLCs or have been elected as independent directors. AboitizPower Manuals require that the CEO and other executive directors shall submit themselves to a low active limit on membership in other corporate boards. In 2020, none of the  AboitizPower directors sat in more than five PLCs.

Nomination, Selection, and Election of Directors

The Aboitiz Group believes that the nomination, selection, and election of directors are the fundamental elements of a well-functioning corporate governance system. AboitizPower follow a formal and transparent board nomination, selection, and election process to ensure that the interests of all shareholders are protected. Any shareholder may nominate a director and independent director. The ESCG Committees of AboitizPower act as the nomination committees and oversee the selection of candidates for their respective independent, executive, and non-executive directors. In determining the right candidates for directors, AboitizPower may use professional search firms and external sources of candidates, including director databases and professional organizations in the Philippines or abroad. The members of the AboitizPower Board comply with the qualifications for directors found in the Revised Corporation Code, Securities and Regulation Code and its Implementing Rules and Regulations, related SEC issuances, and best practices in corporate governance. Considering that AboitizPower are involved in complex and highly regulated businesses, Board members are identified and nominated based on their wealth of experience, in-depth knowledge, wisdom, and capability to contribute to the long-term success of each company. The ESCG Committees of both companies, after rigorous screening of the candidates, provide the final list of candidates for directors to each company’s Corporate Secretary, for inclusion in the ASM agenda. This gives the stockholders the opportunity to assess the background and qualifications of the nominees before the actual ASM. Every year during the ASMs,  AboitizPower shareholders elect their representatives to the Boards by voting in person, by proxy, and – for the first time in 2020 – by voting in absentia. Proxy votes received by the Corporate Secretary of  AboitizPower before the ASM are validated by each of the company’s Proxy Validation Committee. The member of the  AboitizPower Proxy Validation Committees include each of the company’s compliance officer, its principal   both follow a formal and transparent board nomination, selection, and election process to ensure that the interests of all shareholders are protected. Any shareholder may nominate a director and independent director. The ESCG Committee of AboitizPower act as the nomination committees and oversee the selection of candidates for their respective independent, executive, and non-executive directors. In determining the right candidates for directors, both AboitizPower may use professional search firms and external sources of candidates, including director databases and professional organizations in the Philippines or abroad. The members of the Board of AboitizPower comply with the qualifications for directors found in the Revised Corporation Code, Securities and Regulation Code and its Implementing Rules and Regulations, related SEC issuances, and best practices in corporate governance. Considering that  AboitizPower are involved in complex and highly regulated businesses, Board members are identified and nominated based on their wealth of experience, in-depth knowledge, wisdom, and capability to contribute to the long-term success of each company. The ESCG Committees of both companies, after rigorous screening of the candidates, provide the final list of candidates for directors to each company’s Corporate Secretary, for inclusion in the ASM agenda. This gives the stockholders the opportunity to assess the background and qualifications of the nominees before the actual ASM. Every year during the ASMs, AboitizPower shareholders elect their representatives to the Boards by voting in person, by proxy, and – for the first time in 2020 – by voting in absentia. Proxy votes received by the Corporate Secretary of AboitizPower before the ASM are validated by each of the company’s Proxy Validation Committee. The members of the AboitizPower Proxy Validation Committees include each of the company’s compliance officer, its principal accounting officer, and the head of its internal audit team. AboitizPower both follow 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 Revised Corporation Code. A director holds office for one year until his successor is elected at the next ASM, in accordance with the Revised Corporation Code, each company’s by-laws, and the relevant SEC guidelines.

Board Committees

The Environmental, Social, and Corporate Governance Committee (formerly the Corporate Governance Committee) of AboitizPower are responsible for developing and recommending to their respective Board of Directors the appropriate governance principles applicable to the whole Group. The ESCG Committees also perform the functions of the Nomination and Remuneration Committees. In carrying out their duties and responsibilities, the ESCG Committee is supported by the company’s Compliance Officer, Chief External Relations Officer, as well as the Group Chief Human Resources Officer. These officers regularly attend committee meetings to act as resource persons. The chairmen of the ESCG Committees are the Lead Independent Directors.

In 2020, the Board ESCG continued to (1) review and monitor AboitizPower compliance with new laws and regulations (the Revised Corporation Code, various SEC and BIR issuances, among others); (2) review and update the Revised Manual to align with the best practices in the Integrated Annual Corporate Governance Report and the ASEAN Corporate Governance Scorecard; and (3) ensure that the nomination, selection, election, remuneration, and assessment of each company’s directors and officers are aligned with the Revised Manual. In the same year, the committees amended their respective Revised Manuals and Charters to establish a Board oversight and governance framework to promote and integrate the sustainability and corporate governance initiatives of AboitizPower.

The Audit Committee continued to provide oversight over AboitizPower financial reporting policies, practices and controls, and over the internal and external audit functions necessary for making good audit-related decisions. In 2020, the Audit Committee updated its Charter to improve the Company’s control performance by having an adequate and effective control system.

Chaired by independent directors, the Audit Committees are composed of all three independent directors and two non-executive directors. Each company’s Chief Financial Officer and Internal Audit Head, who performs the functions of a Chief Audit Executive, are regular attendees and resource persons at committee meetings.

Sufficiency of Internal Control and Compliance System

The AboitizPower Audit Committees assist their respective Boards in fulfilling oversight responsibilities over their company’s system of internal control. They are responsible for monitoring, overseeing, and evaluating the duties and responsibilities of management, the internal audit activity, and the external auditors as those duties and responsibilities relate to the organization’s processes for controlling its operations. In 2020, the President and Chief Executive Officer, Chief Financial Officer, and Internal Audit Head of AboitizPower attested to the sufficient internal control and compliance system of their respective companies.

Audit and Non-Audit Fees

The Independent External Auditor of AboitizPower is the accounting firm of SyCip Gorres Velayo & Co. (SGV), with Ms. Maria Veronica Andresa R. Pore as current audit partner who has served since 2017. As a policy, the Board Audit Committee makes recommendations to the Board concerning the choice of external auditor and pre-approves audit plans, scope, and frequency before the audit is conducted. Audit services of external auditors for the years 2020 and 2019 were pre-approved by the Board Audit Committee. The Committee also reviewed the extent and nature of these services to ensure that the independence of the external auditors is preserved. The breakdown of the audit and non-audit fees paid by AEV and AboitizPower to their respective auditors are found in the companies’ Information Statements and Annual Reports.

AboitizPower engaged SGV to auditits 2020 and 2019 annual financialstatements. SGV was also engaged to conduct post reviews and other procedures for the purpose of issuing a comfort letter in connection with the issuance of the ₱9.6 bn bonds in 2020 and ₱7.3 bn bonds in 2019. In 2019, the Company also engaged SGV to provide financial and tax due diligence in relation to the Company’s participation in biddings, acquisitions, and other projects.

As a policy, the Board Audit Committee makes recommendations to the Board of Directors concerning the choice of external auditor and pre-approves audit plans, scope, and frequency before the audit is conducted. Audit services of SGV for 2020 and 2019 were pre-approved by the Board Audit Committee. The Board Audit Committee also reviewed the extent and nature of these services to ensure that the independence of the external auditors was preserved. SGV does not have any direct or indirect interest in the Company.

The Risk and Reputation Committee exercise oversight functions over each company’s (i) enterprise risk management and (ii) reputation management, including their respective corporate brands and communication strategies. In 2020, the Board Risk and Reputation Committees updated their charter to continually identify, monitor, and manage the Group’s top risks.

The Related Party Transactions (RPT) Committees of  AboitizPower are composed entirely of independent directors. In 2020, these committees approved the Revised RPT Policy and Charter of each company in compliance with the SEC memorandum circular on Material RPTs. In addition, they continued to review and approve each company’s CFO Guidelines on the Implementation of the RPT Policy, which requires all directors and officers to execute a certification to identify their related parties to be able to identify potential conflicts of interest.

In 2020, AboitizPower updated the RPT Certification for Directors and Officers in compliance with the Bureau of Internal Revenue Regulation No. 19-2020 on the reporting guidelines for the transactions of individuals and juridical entities with related parties. The RPT Committees continued to ensure that related party transactions are taken on an arm’s-length basis and within market rates, with sufficient documentation, and coursed through the appropriate levels of approval. Except for the presence of the AboitizPower CFOs as resource persons, management is not invited to and has no participation in the RPT Committee.

The Executive Committee of AboitizPower were organized in May 2018 and are composed of five regular members, with at least two nonexecutive directors. The committees were formed to assist the Board in the management and oversight of each company’s day-to-day operations and strategic decision–making during the intervening period. between full Board meetings. The President and CEO of AEV and AboitizPower are the chairmen of their respective Executive Committees.

The Cybersecurity Committee of AboitizPower were organized in April 2020. The purpose of the Committee is to carry out the responsibilities delegated by the Board of the Company in relation to its duty to provide strategic direction and ensure the establishment of a system of governance (processes, policies, controls, and management) for the Company and its Strategic Business Units (“SBU”, collectively the “Aboitiz Group’) on matters relating to information security and cybersecurity.

Please click here to view the Committee members and its charters.

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 Environmental, Social and Corporate Governance Committee (ESCG) 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 virtually with the non-executive directors, including the Chairman of the Board ESCG, at Taguig City on July 29, 2020, for their informal discussion of issues.

Nomination, Selection, and Election of Directors

The Aboitiz Group believes that the nomination, selection, and election of directors are the fundamental elements of a well-functioning corporate governance system. AboitizPower follow a formal and transparent board nomination, selection, and election process to ensure that the interests of all shareholders are protected. Any shareholder may nominate a director and independent director. The ESCG Committees of AboitizPower act as the nomination committees and oversee the selection of candidates for their respective independent, executive, and non-executive directors. In determining the right candidates for directors, AboitizPower may use professional search firms and external sources of candidates, including director databases and professional organizations in the Philippines or abroad. The members of the AboitizPower Board comply with the qualifications for directors found in the Revised Corporation Code, Securities and Regulation Code and its Implementing Rules and Regulations, related SEC issuances, and best practices in corporate governance. Considering that AboitizPower are involved in complex and highly regulated businesses, Board members are identified and nominated based on their wealth of experience, in-depth knowledge, wisdom, and capability to contribute to the long-term success of each company. The ESCG Committees of both companies, after rigorous screening of the candidates, provide the final list of candidates for directors to each company’s Corporate Secretary, for inclusion in the ASM agenda. This gives the stockholders the opportunity to assess the background and qualifications of the nominees before the actual ASM.

Every year during the ASMs,  AboitizPower shareholders elect their representatives to the Boards by voting in person, by proxy, and – for the first time in 2020 – by voting in absentia. Proxy votes received by the Corporate Secretary of  AboitizPower before the ASM are validated by each of the company’s Proxy Validation Committee. The member of the  AboitizPower Proxy Validation Committees include each of the company’s compliance officer, its principal   both follow a formal and transparent board nomination, selection, and election process to ensure that the interests of all shareholders are protected. Any shareholder may nominate a director and independent director. The ESCG Committee of AboitizPower act as the nomination committees and oversee the selection of candidates for their respective independent, executive, and non-executive directors. In determining the right candidates for directors, both AboitizPower may use professional search firms and external sources of candidates, including director databases and professional organizations in the Philippines or abroad. The members of the Board of AboitizPower comply with the qualifications for directors found in the Revised Corporation Code, Securities and Regulation Code and its Implementing Rules and Regulations, related SEC issuances, and best practices in corporate governance. Considering that  AboitizPower are involved in complex and highly regulated businesses, Board members are identified and nominated based on their wealth of experience, in-depth knowledge, wisdom, and capability to contribute to the long-term success of each company. The ESCG Committees of both companies, after rigorous screening of the candidates, provide the final list of candidates for directors to each company’s Corporate Secretary, for inclusion in the ASM agenda. This gives the stockholders the opportunity to assess the background and qualifications of the nominees before the actual ASM. Every year during the ASMs, AboitizPower shareholders elect their representatives to the Boards by voting in person, by proxy, and – for the first time in 2020 – by voting in absentia. Proxy votes received by the Corporate Secretary of AboitizPower before the ASM are validated by each of the company’s Proxy Validation Committee. The members of the AboitizPower Proxy Validation Committees include each of the company’s compliance officer, its principal accounting officer, and the head of its internal audit team. AboitizPower both follow 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 Revised Corporation Code. A director holds office for one year until his successor is elected at the next ASM, in accordance with the Revised Corporation Code, each company’s by-laws, and the relevant SEC guidelines.

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.

Virtual Annual Stockholders Meeting

The year 2020 brought with it the challenge of an unprecedented global pandemic. Business activities worldwide ground to a near standstill as governments imposed tight restrictions on travel and social gatherings to control the spread of COVID-19. Faced with these challenges, AboitizPower each held – for the first time ever – a Virtual ASM. Despite the difficulties posed by the community quarantine restrictions, both ASMs were held on schedule, and in a business-as-usual manner, without needing to avail of the ASM extension period granted by the SEC to Philippine Companies. The notices for the 2020 ASM, information statements, and the annual reports were also distributed on time to stockholders, through all available channels, including via quick response (QR) code, electronic mail, publication in newspapers of general circulation, and through each company’s respective websites. Driven by its commitment to practice sound corporate governance and guided by its core value of innovation, AboitizPower were able to provide an accessible and convenient venue for its shareholders to exercise their basic and inviolable right to elect their representatives to the Boards of Directors while remaining in the comfort and safety of their homes.

In 2020 and 2021 ASM,  Aboitiz provided the ASM notice and information on all proposed resolutions, and the rationale and corresponding explanation for each agenda item requiring shareholders’ approval, 28 days before the date of the ASM.

Please click here to know more about ASM-related materials.

Minutes of the ASM

The approved shareholders’ resolutions with a summary of votes, the results of the organizational meetings, and the minutes of the ASM of AboitizPower were disclosed and posted on their respective websites the next day, or on April 28, 2020. The minutes can be accessed in the Investor Relations Section of www. aboitizpower.com.

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.

Each director conducts a self-assessment on the individual and the collective performance of each member of the Board and Board committees. In addition, each director evaluates the performance of their respective Chairman, Chief Executive Officer, Internal Audit Head, Risk Officer, and Compliance Officer. In turn, select key officers of AboitizPower are anonymously asked to evaluate the performance of each of their respective companies’ Board directors.

The assessment forms are prepared and regularly reviewed by the Compliance Officers to elicit relevant and valuable insights on the following assessment criteria: (1) compliance with best governance practices and principles; (2) participation and contribution to the Board and committee meetings; and (3) performance of their duties and responsibilities as provided in the company’s Revised Manuals, Charters, Amended Articles, and Amended By Laws. In addition, AboitizPower directors are evaluated by their respective key officers based on the following criteria: (1) business acumen, (2) independent judgment, (3) familiarity with the business, (4) active participation and effective challenge, (5) professional expertise and network, (6) value contribution, (7) embodiment of Aboitiz core values, and (8) reputation. Assessment results are presented to the respective ESCG Committees as part of the nomination and selection process of incumbent Board members. The Corporate Governance Code and the Revised Manuals requires that at least once in every three years, the conduct of the Board performance assessment must be supported by an independent third party facilitator.

In 2020, AboitizPower engaged the Good Governance Advocates and Practitioners of the Philippines (GGAPP), an independent association of corporate governance practitioners, to support their Board performance assessment exercise. The results of the assessment, as well as the recommendations from GGAPP, were presented and discussed at the ESCG Committee meetings on February 16, 2021.

 

The Board Environmental, Social and Corporate Governance Committee (ESG) ensure that the remuneration for directors and key executives is consistent with the Group’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 their respective companies. The Group engages the services of independent remuneration consultants to determine the compensation, as well as any annual salary increases, for directors, officers, and team members.

Guided by the Aboitiz Compensation Philosophy, factors such as individual and organizational performance, and inflation, among others, are taken into account to ensure that the compensation structure will attract, retain, and engage the best talents to contribute to the success of the business. Each year, the results of the study are presented and discussed during the first meeting of the AboitizPower ESCG Committee.

During its February 18, 2019 meeting, the ESCG 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:

In no case has each Board’s total yearly compensation exceeded 10% of their respective company’s net income before income tax of the preceding year. In 2020, the directors received the following compensation:

During the February 16, 2021 meeting of the ESCG Committee, the Committee 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.

 

Conduct and Attendance at Board and Board Committee Meetings

The AboitizPower Board of Directors are expected to serve with diligence. In order to facilitate their attendance in meetings, the schedule for the regular Board and committee meetings for the upcoming year is approved and circulated to members before the start of the year. Directors are not only expected to attend meetings but to actively participate by providing valuable professional counsel, strategic guidance, and constructive feedback. The timely distribution of meeting materials within five days before each Board or committee meeting ensures the directors’ active participation.

Despite COVID-related travel restrictions in 2020, the AEV and AboitizPower Boards continued to discharge their duties and responsibilities. Board and committee activities remained business as usual. Meetings were conducted through a secure videoconferencing platform that allowed each member to interact and participate remotely. Like in previous years, meeting materials were circulated to Board members through a secure digital platform at least five days before the meeting. Meeting protocols were regularly reviewed and modified for more efficient virtual Board and committee meetings.

Attendance at Board and Committee Meetings

The table below shows the attendance record of AboitizPower directors for the Board and Board Committee meetings in 2020:

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/investor-relations/annual-stockholders-meeting/.

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.

Right to Participate in Fundamental Corporate Changes

As a matter of policy, AboitizPower encourage the active participation of shareholders in corporate decisions, such as amendments to the Articles of Incorporation and By-laws, appointment of auditors, and the approval of audited financial statements, among others. At the ASM, the Board of Directors present and submit to the shareholders the proposed actions for approval. The shareholders are also given an opportunity to ask questions regarding the proposed actions during the meeting. Only upon receipt of the affirmative vote of shareholders representing at least 2/3 of the issued and outstanding capital stock of each company, will such action be considered as duly approved by the shareholders. In 2020, AboitizPower amended their Articles of Incorporation to (1) Article Two: include in the primary purpose the power to act as guarantor or surety for the loans and obligations of its affiliates and associates; (2) Article Four: amend the corporate term to perpetual existence, and (3) Article Seven: amend the features of the preferred shares. The amendment to Article Four was proposed to align with the provisions of the Revised Corporation Code on the perpetual existence of corporations. Meanwhile, the amendments to Articles Two and Seven were proposed to give AAboitizPower the additional flexibility in their capital- and fund-raising activities. The proposals received the affirmative vote of shareholders representing at least 2/3 of the issued and outstanding capital stock of each company. On October 1, 2020, the SEC approved the amendment of the Articles of Incorporation of AboitizPower.

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

As of March 31, 2021

As of December 31, 2020

                                           

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.

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, 2019 and December 31, 2020:

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.

 

The AboitizPower believe that their directors should remain abreast with current industry developments and business trends in order to promote the Group’s competitiveness. It is equally important that all directors are aware of their duties and responsibilities, and provided with all the information needed to discharge their functions.

The AboitizPower Revised Manuals require every director to (i) undergo an initial onboarding session upon first appointment to the Board, and (ii) commit to a continuing professional training program (formal and informal) to be kept updated on recent developments in internal policies, relevant laws and regulations, and various business risks relevant to the Group. The Chairmen of both Boards, with the assistance of their respective Compliance Officer, ensure that directors and key officers comply with these requirements.

On September 9, 2020, the Aboitiz Group conducted, as scheduled, its Annual In-House Corporate Governance Seminar. The seminar was held virtually for the first time and the online platform provided a safe and convenient venue for the Group’s directors and key officers, to listen to and interact with experts from different parts of the globe regarding current and relevant corporate governance issues. The webinar was accredited and the proceedings monitored by representatives from the SEC. In 2020, all of the AboitizPower directors and officers attended a corporate governance seminar in compliance with the SEC’s Code of Corporate Governance.

In 2020, the directors and officers attended the following seminars and learning sessions:

Please click here to view 2011 to 2019 seminars.

 

The Aboitiz Group believes that a balance between business priorities and societal needs is needed for a sustainable future. The Risk Management Team supports the Group’s sustainability efforts by ensuring that we have an Enterprise Risk Management program that helps manage sustainability issues and create shared value for our communities. We are able to accomplish this by utilizing a robust risk management process, creating awareness, and building team member capabilities while maximizing available resources and technologies. The year 2020 underscored the importance of Risk Management in organizations. Our well-established Enterprise Risk Management program, with its Level 4 Risk Maturity rating, backed the Group’s resilience during the unprecedented pandemic. Risk Management will continue to take a full organizational approach, integrating with other business functions to drive a clearer understanding of our risks.

To adapt to the changing environment, we revisited the Financial and Supply Chain Risk Management Frameworks and the Group Risk Management Competencies in 2020. In light of the pandemic, we incorporated many revisions and the enhancements in our risk treatment plans. We also started to formalize the Pandemic Risk Management Framework as a guide for current and future occurrences. In collaboration with our external partners, we continued to build the risk management capability of the organization through e-learnings and other knowledge-sharing sessions on risk topics.

We will continue to collaborate with the Strategy and Reputation Teams for the sustainability and climate risk-related initiatives of the Group; the output will eventually be integrated into the Risk Management Framework. In 2021, apart from our ERM operational activities, we will start setting up our Risk Management and Risk Finance systems. We will also enhance our existing Risk Framework to better support the management of the Group’s top risks and material sustainability issues, including climate-related risks.

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

 

The Aboitiz Group remains committed to support economic growth, social development, and environmental stewardship in the conduct of its businesses. The concept of balance between planet, people, and profit is not a new concept on how the Aboitiz Group operates its businesses. Advocacy and adherence to environmental sustainability and care for stakeholders have always been part of the Aboitiz Way – living the core value of Responsibility.

In 2020, AAboitizPower officially established an ESG governance structure to integrate existing corporate social responsibility, corporate governance, and environmental sustainability programs. The goal is to create an integrated approach in developing, implementing, monitoring, and communicating initiatives and results to the Group’s internal and external stakeholders. The Aboitiz Integrated Sustainability Report outlines the coordinated efforts of the Group’s sustainability stewards and applying ESG principles to improve the Group’s performance on team member engagement and development, corporate social responsibility, customer focus, disaster resilience, carbon emissions reduction, resource efficiency, renewable energy, waste management, financial growth, and financial returns. The Sustainability Reports of  AboitizPower are available for viewing and downloading at and www.aboitizpower. com/ sustainability.

The Aboitiz Group’s governance framework includes the timely, complete, and accurate disclosure of all material information regarding  AboitizPower. Information includes earnings results, acquisitions or disposals of assets, Board changes, RPTs, shareholdings of directors, and changes in ownership. In addition, the Group’s Consolidated Annual and Sustainability Report, which is based on GRI Sustainability Reporting standards, sets out its values and governance model. The integrated report links the Group’s strategy and its commitment to a sustainable global economy. Through the report, the Group is able to measure, understand, and communicate its economic, environmental, social and governance performance. From these, goals can then be set, and change managed more effectively.

In 2020, the Board of Directors of AboitizPower approved the proposed governance framework needed to organize, cascade, manage, and communicate the Group’s ESG in

The Company values the contribution of its clients, business partners, suppliers and other stakeholders as it strives to achieve its corporate mission and vision.  In recognition of the contributions of its valued shareholders, the Company is committed to engage in fair practices when dealing with them.

The Aboitiz Group seeks to outperform its competition fairly and honestly through superior performance.  Every director, officer and employee must therefore always keep the best interests of the Company’s clients paramount and endeavour to deal fairly with suppliers, competitors, the public and one another.  No one should take unfair advantage of anyone through manipulation, abuse of privileged information, misrepresentation of facts or any other unfair dealing practices.

Please click here to view the Company’s Code of Ethics and Business Conduct.