Board Committees

Governance  >  Annual Corporate Governance Report  > Board Committees

1) Number of Members, Functions and Responsibilities

Provide details on the number of members of each committee, its functions, key responsibilities and the power/authority delegated to it by the Board:

Committee No. of Members Committee Charter Functions Key Responsibilities Power

Executive

Dirctor (ED)

Non-executive

Director (NED)

Independent

Director (ID)

Executive 2 1   Yes

The Committee, in accordance with the authority granted by the Board, or during the absence of the Board, shall act by majority vote of all its members on such specific matters within the competence of the Board of Directors as may from time to time be delegated to the Executive Committee in accordance with Corporation’s By-Laws, except with respect to:

  1.  Approval of any action for which shareholders’ approval is also required;
  2. Filling of vacancies on the Board or in the Executive Committee;
  3.  Amendment or repeal of By-Laws or the adoption of new By-Laws;
  4. Amendment or repeal of any resolution of the Board of Directors which by its express terms is not so amendable or repealable;
  5. Distribution of cash dividends; and
  6. Exercise of powers delegated by the Board exclusively to other committees, if any.
Audit 0 1 2 Yes

Assists the Board of Directors in fulfilling its responsibility for oversight of the organization’s corporate governance processes, with the following particular duties:

  1.  Regularly reports to the Board on the results of the audits conducted by the independent and internal auditors, the integrity of the company’s financial statements, the appropriateness and effectiveness of the systems of internal controls, risk management, and governance processes.
  2.  Recommends the appointment or re - appointment of the independent auditors; reviews and approves all audit, audit -related, and permissible non -audit services provided by the independent auditors to Ayala and the related fees to ensure that their independence is not compromised.
  3.  Reviews and approves the Internal Audit Charter to ensure the independence and effectiveness of the internal audit function; ensures that the internal audit function is adequately resourced and all its activities are performed in accordance with the International Standards for the Professional Practice of Internal Auditing.
  4.  Reviews and approves the overall scope and plans for the respective audits of the company’s internal auditors and independent auditors, and the results of their assessment of the company’s internal controls and overall quality of the financial reporting process.
  5. Reviews the quarterly and annual financial statements and all related disclosures with Management and the independent auditors.
  6. Reviews and assesses the adequacy of the Audit Committee Charter at least annually, requesting Board approval for proposed changes.
  7. Conducts self-assessment to evaluate the effectiveness of their performance as against the requirements of its Charter and in accordance with the SEC Memorandum Circular Number 4, Series of 2012.

Reports annually to the Board of Directors describing the committee’s composition, responsibilities and how they were discharged, and any other information required by law; confirms annually that all responsibilities outlined in its charter have been carried out.

Risk Management and Related Party Transactions 0 1 2 Yes

The Risk Management and Related Party Transactions Committee of the Board of Directors is established by the Board to provide assistance in fulfilling the Board’s oversight responsibilities in relation to risk governance. The assistance includes ensuring that Management maintains a sound risk management framework and internal control system, and identifies and assesses material risk exposures, In addition, the Committee:

  1. Promote s an open discussion regarding risks faced by the Corporation, as well as risks faced by its subsidiaries that may have potential impact on the Corporation’s operations, and ensure s that risk awareness culture is pervasive throughout the organization.
  2. Reviews and discusses with Management the Corporation’s risk governance structure and adequacy of policies and processes for risk identification, assessment and mitigation.
  3. Reviews and recommend s to the Management the Corporation’s levels of risk appetite and risk tolerance, and risk exposure allocation for approval by the Board of Directors.
  4. Reviews the Corporation’s risk profile on an ongoing basis and re -evaluate the likelihood of occurrence, severity of impact of risk exposures, and any mitigating measures affecting those risks.
  5. Monitors the implementation of the Corporation’s risk mitigation plans and other risk management activities with the assistance of the risk management function.
  6. Reviews and discusses risk management -related reports and issues raised by the Management, internal auditors, external auditors, legal counsel and regulators that impact the Corporation’s risk management framework.
  7. Reviews disclosures regarding risk contained in the Corporation’s Annual Report and other publicly -issued statements.
  8. Reviews the objectivity, effectiveness and efficiency of the Corporation’s risk management function in the context of the Corporation’s size, scale, complexity and scope of operations.
  9. Secure s independent expert advice on risk management matters where considered necessary or desirable.
  10. In coordination with the Audit Committee, ensure s that the 35 Corporation’s internal audit work plan is aligned with risk management activities and that the internal control system considers all risks identified in the risk assessment process.
  11. Determines the advisability of, and review and evaluate the terms and conditions of any material or significant related party transactions and their required reporting disclosures.
  12. Perform s other activities related to this Charter as requested by the Board.
Nomination 0 0 3 Yes
  1.  Review and monitor the structure, size and composition of the Board and make recommendations to ensure compliance with applicable laws, rules and regulations as well as the Corporation’s By -laws and Manual of Corporate Governance
  2. Encourage the selection of a mix of competent directors, each of whom can add value and contribute independent judgment to the formulation of sound corporate strategies and policies;
  3. Ensure that all nominations to the Board are fair and transparent, and that all nominees are qualified in accordance with the By -laws, Manual of Corporate Governance and relevant laws, rules and regulations;
  4. Review and evaluate the qualifications of persons nominated to positions which require appointment by the Board, and provide guidance and advice as necessary for appointments by the Chairman or President to positions below Managing Director;
  5. Review succession plans for members of the Board and senior executives (from group heads to the Chief Executive Officer);
  6. Assess the effectiveness of the Board’s processes and procedures in the election or replacement of Board members and in appointing officers or advisors, and develop, update and recommend to the Board policies for considering nominees for directors, officers or advisors; and
  7. Perform such other duties and responsibilities that may be delegated to the Committee by the Board from time to time.
Personnel and Compensation 0 2 1 Yes
  1. Establish a formal and transparent procedure for developing a policy on executive remuneration and for fixing the remuneration packages of corporate officers and directors, and provide 36 oversight over remuneration of senior management and other key personnel ensuring that compensation is consistent with the Corporation’s culture, strategy and control environment;
  2. Designate the amount of remuneration, which shall be in a sufficient level to attract and retain directors and officers who are needed to run the Corporation successfully;
  3. Develop a form on Full Business Interest Disclosure as part of the pre-employment requirements for all incoming officers, which among others compel all officers to declare under the penalty of perjury all their existing business interest or shareholdings that may directly or indirectly conflict in their performance of duties once hired;
  4. Disallow any director to decide his own remuneration during his incumbent term;
  5. Provide in the Corporation’s annual reports, information and proxy statements a clear, concise and understandable disclosure of compensation of its executive officers for the previous fiscal year and the ensuring year;
  6. Review the existing Human Resources Development or Personnel Handbook, to strengthen provisions on conflict of interest, salaries and benefits policies, promotion and career advancement directives and compliance of personnel concerned with all statutory requirements that must be periodically met in their respective posts;
  7. In the absence of a Personnel Handbook, cause the development of such covering the same parameters of governance stated above.
Finance 2 1 1 Yes
  1. Responsible for reviewing and evaluating the financial affairs of the Corporation from time to time.
  2. Conduct an annual financial review and operations review prior to each annual stockholder’s meeting.
Inspectors of Proxies and Ballots 3* 0 0 Yes Has the power to pass on the validity of proxies submitted by the stockholders for the annual or special meetings.

* Officers of the company who are not members of the company’s Board of Directors.

2) Committee Members

(a) Executive Committee

Office Name Date of Appointment No. of Meetings Held No. of Meetings Attended % Length of Service in the Committee
Chairman (ED) Jaime Augusto Zobel de Ayala May 10, 1996 None* N.A. N.A. 20
Member (ED) Fernando Zobel de Ayala May 10, 1996 N.A. N.A. 20
Member (NED) Yoshio Amano** April 30, 2012 N.A. N.A. 4

*The was no actual meeting held in 2016. The actions of the Executive Committee were taken by written consent (electronic or digital format) by majority of the members of the Committee.

**Replaced by Keiichi Matsunaga on April 21, 1017.

(b) Audit Committee

Office Name Date of Appointment No. of Meetings Held No. of Meetings Attended % Length of Service in the Committee
Chairman (ID) Xavier P. Loinaz April 3, 2009 4** 4 100% 7
Member (NED) Yoshio Amano*** April 20, 2012 3 75% 4
Member (ID) Ramon R. Del Rosario, Jr. April 16, 2010 4 100% 6

* In 2016

** The Audit Committee also had a joint meeting with the Risk and Related Party Transactions Committee on March 3, 2016. It also passed a resolution on the appointment of the audit engagement partner starting calendar year 2016 on March 30, 2016.

***Replaced by Keiichi Matsunaga on April 21, 2017.

Disclose the profile or qualifications of the Audit Committee members.

Xavier P. Loinaz, Filipino, 73, Independent Director of Ayala Corporation since April 2009. He is also an Independent Director of Bank of the Philippine Islands, a publicly listed company. He also holds the following positions: Independent Director of BPI Family Savings Bank, Inc., and BPI/MS Insurance Corporation; Trustee of E. Zobel Foundation; and Chairman of Alay Kapwa Kilusan Pangkalusugan and XPL Manitou Properties, Inc.; and Vice Chairman of XPL MTJL Properties, Inc. He was formerly the President of the Bank of the Philippine Islands (BPI) from 1982 to 2004. He was also the President of Bankers Association of the Philippines from 1989 to 1991. He graduated with an AB Economics degree at Ateneo de Manila University in 1963 and took his MBAFinance at Wharton School, University of Pennsylvania in 1965.

Keiichi Matsunaga, Japanese, 53, Independent Director of Ayala Corporation starting April 2017 is the General Manager of Mitsubishi Corporation Manila Branch. Currently, he is also a member of the Board of Directors at MC Diamond Realty Investment Phils., MC Oranbo Investment, MC Cavite Holdings, Inc., FMT Kalayaan, Inc., Isuzu Philippines Corporation, Imasen Philippines Manufacturing, Kepco Ilijan Corporation and Robinsons Convenience Stores Inc. (MiniStop). He is not a director of any publicly listed company in the Philippines other than Ayala Corporation. He entered Mitsubishi Corporation after graduating from the Faculty of Law at Waseda University in 1988 and has since held various leadership positions. .

Ramon R. del Rosario, Jr., Filipino, 72, Independent Director of Ayala Corporation since April 2010. He holds the following positions in publicly listed companies: President and Chief Executive Officer of Phinma Corporation; Chairman of Trans-Asia Petroleum Corporation; and Vice Chairman of PHINMA Energy Corp (formerly TransAsia Oil and Energy Development Corporation). He is the President and Chief Executive Officer of Philippine Investment Management, Inc.; Chairman of Araullo University, University of Iloilo, University of Pangasinan, Cagayan de Oro College, Southwestern University, United Pulp and Paper Co., Inc., Microtel Inns and Suites (Pilipinas), Inc., Microtel Development Corp., Trans-Asia Power Generation Corporation, Trans-Asia Renewable Energy Corp., CIP II Power Corp.,One Subic Power Generation Corp., Fuld & Co., Inc., Fuld & Co (Philippines), Inc. and Paramount Building Management & Services Corp.; Vice-Chairman of Phinma Foundation and Phinma Property Holdings Corp., director of Union Galvasteel Corp. and other PHINMA-managed companies; Chairman of The National Museum of the Philippines, the Makati Business Club, Philippine Business for Education, the Philippines-US Business Council, and the Integrity Initiative; Vice-Chairman of Caritas Manila and Ramon Magsaysay Award Foundation; and Trustee of De La Salle University. Mr. del Rosario graduated from De La Salle College in 1967 with a degree in BSC-Accounting and AB Social Sciences Magna cum Laude and from 38 Harvard Business School in 1969 for his Master in Business Administration. He has managed Phinma since 2002 and brings with him a wealth of experience in leading a diversified conglomerate.

Describe the Audit Committee’s responsibility relative to the external auditor.

  1. Review the performance and recommend the appointment, retention or discharge of the Independent Auditors, including the fixing of their remuneration to the Board of Directors. In case of resignation or cessation from service of an independent auditor, ensure that there is a process for reporting in the annual and current reports the reason for cessation from service, and the date thereof, of an independent auditor. A preliminary copy of the said report shall be given by the corporation to the independent auditor before its submission.
  2. Ensure the rotation of the lead engagement partner at least once every five (5) years and consider whether there should be a regular rotation of the audit firm itself.
  3. Review and pre-approve the Independent Auditor's plans and ascertain the basis for their risk assessment and financial statement materiality, including the scope and frequency of the audit. In this regard, the Committee shall discuss with the Independent Auditors, before the audit commences, the nature and scope of the audit, and ensure cooperation when more than one professional service firm is needed.
  4. Monitor the coordination of efforts between the external and internal auditors. The Committee shall ensure that the internal and external auditors act independently from each other.
  5. Review of the reports of the Independent Auditors, where applicable, and ensure that management is taking appropriate corrective actions in a timely manner, including addressing control, governance, and compliance issues.
  6. Conduct a separate meeting in executive session, with the external auditors to discuss any matter that the committee or auditors believe should be discussed privately, including the results of the audit, year-end financial statements, the quality of management, financial and accounting controls.
  7. Review and approve the proportion of audit versus non-audit work both in relation to their significance to the auditor and in relation to the Corporation's year-end financial statements, and total expenditure on consultancy, to ensure that non-audit work will not be in conflict with the audit functions of the independent auditor. The amount of both audit and non-audit work of independent auditors shall be disclosed in the annual report.
  8. Ensure that the independent auditor has unrestricted access to all records, properties and personnel to enable performance of the required audit.
  9. Review with the independent auditor any problems or difficulties, including any restrictions on the scope of the independent auditor's activities or on access to requested information and any significant disagreements with management. The review may also include discussion of any proposed accounting adjustments that were "passed' or not recorded.
  10. Review of the independent auditor's evaluation of internal accounting controls. Independent auditors shall provide feedback to the Audit Committee on their observations of internal control weaknesses arising from statutory financial audits. Independent auditors should highlight findings which are disputed by Management or where Management has not agreed to implement remedial actions that would rectify the identified weaknesses.

(c) Nomination Committee

Office Name Date of Appointment No. of Meetings Held* No. of Meetings Attended* % Length of Service in the Committee
Chairman (ID) Ramon R. Del Rosario, Jr. April 18, 2011 4 4 100% 5
Member (ID) Antonio Jose U. Periquet April 20, 2012 4 100% 4
Member (ED) Fernando Zobel de Ayala** March 26, 2004 2 2 100% 11
Member (ID) Xavier P. Loinaz*** April 15, 2016 2 100% 0.66

*In 2016

**Until April 2016.

***Elected on April 15, 2016.

(d) Personnel and Compensation Committee

Office Name Date of Appointment No. of Meetings Held* No. of Meetings Attended* % Length of Service in the Committee
Chairman (ID) Ramon R. del Rosario, Jr. April 16, 2010 3 3 100% 6
Member (NED) Delfin L. Lazaro March 30, 2007 3 100% 9
Member (NED) Yoshio Amano** April 20, 2012 3 100% 4

* In 2016

**Replaced by Keiichi Matsunaga on April 21, 2017.

(e) Others Provide the same information on all other committees constituted by the Board of Directors:

Finance Committee

Office Name Date of Appointment No. of Meetings Held* No. of Meetings Attended* % Length of Service in the Committee
Chairman (NED) Delfin L. Lazaro April 16, 2010 17 16 94.12% 6
Member (ED) Jaime Augusto Zobel de Ayala April 29, 2012 16 94.12% 4
Member (ID) Antonio Jose U. Periquet April 18, 2011 17 100% 5
Member (ED) Fernando Zobel de Ayala April 15, 2016 13 10 76.92% 0.66

* Actual meetings in 2016 and during incumbency of the directors.

Note: Nine out of the 17 meetings of the Committee were via electronic/digital means. In 2016, the committee passed 11 resolutions and the corresponding per diem were paid to the non-executive and independent directors.

Committee of Inspectors of Proxies and Ballots

Office Name Date of Appointment No. of Meetings Held* No. of Meetings Attended* % Length of Service in the Committee
Chairman Solomon M. Hermosura April 16, 2010 2 2 100% 6
Member Catherine H. Ang April 11, 2014 2 100% 2
Member Josephine G. De Asis April 19, 2013 2 100% 3

* In 2016

Risk Management and Related Party Transactions Committee

Office Name Date of Appointment No. of Meetings Held* No. of Meetings Attended* % Length of Service in the Committee
Chairman (ID) Antonio Jose U. Periquet September 1, 2014 4 4 100% 2
Member (ID) Ramon R. del Rosario, Jr. September 1, 2014 4 100% 2
Member (NED) Yoshio Amano** September 1, 2014 4 100% 2

* In 2016

**Replaced by Keiichi Matsunaga on April 21, 1017.

3) Changes in Committee Members

Indicate any changes in committee membership that occurred during the year and the reason for the changes:

Name of Committee Name Reason
Executive None  
Audit None  
Nomination None  
Remuneration None  
Finance Committee None  
Committee of Inspectors of Proxies and Ballots None  
Risk Management and Related Party Transactions Committee None  

4) Work Done and Issues Addressed

Describe the work done by each committee and the significant issues addressed during the year.

Name of Committee Work Done Issue Addressed
Executive

Passed and approved the following resolutions:

  1. Incorporation of, and investment of up to PhP500Mn into, a new Philippine company in partnership with Austrian OEM KTM AG (“KTM”)
  2. Delegation of authority and appointment of attorneys-in-fact for CFAM assets
  3. Equity Infusion into Ayala education for its capital requirement, 2016 Operation expenses and equity contribution into APEC Schools
  4. Authorized signatories for FlexBen claims and other employee reimbursement 41
  5.  Issuance of Ayala fixed rate bonds
  6. Additional equity infusion into Ayala Healthcare Holdings, Inc. to fund its operation expenses and additional pilot clinics
  7. PhP200 Million voting preferred shares dividends rate re-pricing
  8. Investment in preferred shares and authority to buy voting preferred shares of Ayala Land, Inc.
  9. Investment by AC Energy Holdings, Inc. in UPC Renewables Asia III Ltd.
  10. Establishment of AC Energy Offshore and equity infusion into AC Energy Holdings, Inc. for initial funding of AC Energy Offshore
  11. Infusion of AC International Finance Limited to AC Energy International Holdings Pte. Ltd.
  12. Backstop of Sithe Global Power LP’s equity commitment for GNPower Dinginin Ltd. Co.
  13. Additional infusion into Ayala Automotive Holdings Corporation for the KTM Business
  14. Lease of Amorsolo-Dela Rosa, Makati Lot to Ayala Land, Inc. or any of its Subsidiaries
  15. Availment of PhP10Bn Revolver Facility from BDO
  16. Sale of up to 100% interest in Ho Chi Minh City Infrastructure Investment Joint Stock Company
  17. Authorized signatories for Bureau of Internal Revenue and Home Development Mutual Fund Payments
  18. Investment by AC Energy Holdings, Inc. in Monte Solar Energy, Inc.
  19. Sale of 100% of the Corporation’s interests in Vinaphil Technical Infrastructure Investment Joint Stock Company to Ho Chi Minh City Infrastructure Investment Joint Stock Company
  20. Appointment of Mr. Jose Rene Gregory D. Almendras as Managing Director of the Corporation and President and Chief Executive Officer of AC Infrastructure Holdings Corporation
  21. Incorporation of and infusion of equity into HCX Technology Partners, Inc.
  22. Investment in BF Jade E-Services Philippines, Inc.
  23. Implementation and execution of standard settlement instructions
  24. Optional redemption of AC PhP10 Billion 5.45% bonds due 2019
  25. Investments in Merlin Solar Technology, Inc. and Qflex
  26. Upgrade of money market limit of Security Bank Corporation
  27. Lease of land and billboard/advertising space within the MuntinlupaCavite Expressway (MCX) Right-of-Way
  28. Increase in the limit and tenor of investment in ING Bank, N.V.’s Yield Enhancement Products
  29. Additional infusion into AC Energy Holdings, Inc. for the acquisition of Chevron’s Geothermal Assets
  30. Additional equity infusion into Ayala Healthcare Holdings Inc. for the Funding of Pharm Gen Ventures Corp.
  31. Transfer of Ownership of Integrated Micro-Electronics, Inc. within the AC Group of Companies
  32. Issuance of PhP10 Billion Ayala Fixed Rate Bonds
Audit
  1. Reviewed and approved the quarterly unaudited consolidated financial statements and the annual audited consolidated financial statements of Ayala Corporation and Subsidiaries, and the annual Parent Company Financial Statements, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, with management, internal auditors, and external auditors, SGV & Co.;
  2. Discussed with external auditors the matters required by applicable Auditing Standard and required communication with the Audit Committee;
  3. Discussed and approved the overall scope and plans for the respective audits of the Company’s internal auditors and external auditors, and the results of their assessment of the Company’s internal controls and overall quality of the financial reporting process;
  4. Discussed the reports and updates of the internal auditors to ensure adequacy of its resource and all its activities are performed in accordance with the International Standards for the Professional Practice of Internal Auditing;
  5. Reviewed and approved all audit, audit-related, and permissible non-audit services provided by the external auditor to Ayala Corporation and the related fees, and concluded that the non-audit fees are not significant to impair their independence;
  6. Recommended the appointment of SGV as the Company’s external auditor for the year 2016, including the new lead Engagement Partner to comply with SEC’s 5-year rule, and the approval of the audit fees of SGV based on their performance and qualifications; 
  7. Recommended the inclusion of the audited consolidated financial statements in the Annual Report for the year ended December 31, 2016 for filing with the Securities and Exchange Commission and the Philippine Stock Exchange;
  8. Reviewed the existing Committee Charter; and
  9. Conducted a self-assessment to evaluate the effectives of their performance as against the requirements of its Charter and in accordance with the SEC Memorandum Circular Number 4, Series of 2012.

Integrity of the Company’s financial statements, the financial reporting process; and the systems of internal controls.

 

 

 

 

Performance of the Company’s internal audit function and independent auditors

 

 

 

 

 

Independence and performance of external auditors

 

 

 

 

 

Governance and disclosure

 

 

 

 

 

Effectiveness and performance of the Committee

 

Nomination
  1. Reviewed the qualifications of all persons nominated to positions requiring appointment by the Board; and
  2. Approved the final list of nominees for directors for election at the 2016 annual stockholders’ meeting after ensuring that all nominees to the Board have met all the qualifications and none of the disqualifications as set forth in the Corporation’s By-Laws, Revised Manual of Corporate Governance and the rules of the SEC.
Remuneration
  1. Approved the performance bonus, merit increase of the employees of the Corporation; and
  2. Approved the 2015 and 2016 Employee Stock Ownership Plan (ESOWN).
Finance Committee

Approved the following:

  1. Additional equity infusions and advances to wholly-owned subsidiaries of the Company;
  2. Purchase of shares of member companies of the Ayala Group (e.g. Globe and ALI);
  3. Participation of AC Infra in the pre-qualification bid for LRT6 and NAIA Project;
  4. . Funding plan of the Corporation including shelf registration of PhP20 Billion Fixed-rate Bonds and execution of loan agreements with BTMU and Mizuho;
  5. Lease of Makati lot to ALI for micro-apartment;
  6. . Backstopping of Sithe Global’s equity commitment in GNPower Dinginin by way of loan;
  7. Sale of 100% of the Corporation’s Interests in Vinaphil Technical Infrastructure Investment Joint Stock Company to Ho Chi Minh City Infrastructure Investment Joint Stock Company;
  8. Revision of the Charter of the Finance Committee to give the Committee oversight function over the capital allocation process between the Corporation and its directly-held subsidiaries and affiliates, for endorsement to the Board.
  9. Incorporation of and Infusion of Equity into HCX Technology Partners, Inc.;
  10. .Upgrade of Money Market Limit of Security Bank Corporation;
  11. .Transfer of ownership of Integrated Micro-electronics, Inc. within the Ayala Group of Companies
Risk Management and Related Party Transactions Committee
  1. Ensured that Management maintained a sound risk management framework and internal control system and identified material risk exposures and their impact to the Company’s objectives.
  2. Reviewed the objectivity, effectiveness and efficiency of the Company’s risk management function as evidenced by:

    i. The Chief Risk Officer, as supported by the Group Risk Management Unit, led the overall review of the Company’s risk management process which focused on the enhancement of the output from the bow-tie analysis and risk interaction mapping performed in the previous year. Furthermore, the Group Risk Management Unit partnered with the Corporate Strategy Unit in the Company’s annual risk assessment exercise and mapped the eleven risks to the five vision pillars of the Company to better understand which risks may impact the achievement of business objectives. Risk management was also institutionalized as part of Key Result Areas (KRAs), as each employee was tasked to identify how their specific roles and functions can contribute to the five vision pillars and how risk management can help them guarantee the delivery of their identified contribution. Such exercise promotes collaborative management of important risks and highlights the employees’ value in the risk management process. 44

    ii. The Management showed a great deal of support, Managing Directors can make themselves available to discuss their respective risk management plans and to answer any question raised by the Committee.

  3. Noted the other programs such as the implementation of an ERM dashboard and the establishment of the Corporation’s Business Continuity Management System by the Group Risk Management Unit designed to create risk awareness, as well as to strengthen the organizational resiliency of the Organization. On a group-wide scale, a risk tolerance and insurance optimization studies were executed with the facilitation of an external consultant to assess the risk retention capacity and enhance the risk transfer strategy of the Group.
  4. Approved the Business Continuity Management Policy.
  5. Determined the advisability of, and reviewed and evaluated the terms and conditions of any material or significant related party transaction, the threshold of which is set to whichever is lower of Php50,000,000.00 or 5% of total assets of either party and their required reporting disclosures. The Chief Finance Officer, through the Controllership or Corporate Finance and Assessment Management Unit, reported and disclosed any related party transactions.
  6. Revisited the Risk Management and Related Party Transactions Committee Charter to ensure that proper coordination with Audit Committee existed and that the output of the enterprise risk management process was an input to the annual risk-based planning of the Internal Audit Unit.

5) Committee Program

Provide a list of programs that each committee plans to undertake to address relevant issues in the improvement or enforcement of effective governance for the coming year.

Name of Committee Planned Programs Issue to be Addressed
Executive The Executive Committee, in accordance with the authority granted by the Board, or during the absence of the Board, shall act by majority vote of all its members on such specific matters within the competence of the Board of Directors as may from time to time be delegated to the Executive Committee in accordance with the Corporation's By-Laws.
Audit

a. Review and approve the quarterly unaudited consolidated financial statements and the annual audited consolidated financial statements of Ayala Corporation and Subsidiaries, and the annual Parent Company Financial Statements, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, with management, internal auditors, and external auditors, SGV & Co.;

b. Discuss with external auditors the matters required by applicable Auditing Standard and required communication with the Audit Committee;

c. Discuss and approve the overall scope and plans for the respective audits of the Company’s internal auditors and external auditors,and the results of their assessment of the Company’s internal controls and overall quality of the financial reporting process;

d. Discuss the reports and updates of the internal auditors to ensure adequacy of its resource and all its activities are performed in accordance with the International Standards for the Professional Practice of Internal Auditing;

e. Review and approve all audit, audit-related, and permissible non-audit services provided by the external auditor to Ayala Corporation and the related fees, and concluded that the non-audit fees are not significant to impair their independence;

f. Recommend the appointment of the Company’s external auditor for 2016 and the approval of their audit fees based on their performance and qualifications;

g. Recommend the inclusion of the audited consolidated financial statements in the Annual Report for the year ended December 31, 2016 for filing with the Securities and Exchange Commission and the Philippine Stock Exchange;

h. Review the existing Committee Charter; and

i. Conduct a self-assessment to evaluate the effectives of their performance as against the requirements of its Charter and in accordance with the SEC Memorandum Circular Number 4 Series of 2012.

Integrity of the Company’s financial statements, the financial reporting process; and the systems of internal controls.

 

 

 

 

 

Performance of the Company’s internal audit function and independent auditors

 

 

 

 

 

Independence and performance of external auditors

 

 

 

 

Governance and disclosure

 

 

 

 

 

Effectiveness and performance of the Committee

 

Risk Management and Related Party Transactions

To carry out its Board Oversight responsibilities in relation to risk governance and related party transactions approval, the Committee:

  1. Promotes an open discussion regarding risks faced by the Corporation, as well as risk faced by its subsidiaries that may have 46 potential impact on the Corporation’s operations, and ensures that risk awareness culture is pervasive throughout the organization
  2. Reviews and discusses with Management the Corporation’s risk governance structure and adequacy of policies and processes for risk identification, assessment and mitigation
  3. Reviews and recommends to the Management the Corporation’s level of risk appetite and risk tolerance, and risk exposure allocation for approval by the Board of Directors
  4. Reviews the Corporation’s risk profile on an ongoing basis and reevaluate the likelihood of occurrence, severity of impact of risk exposures, and any mitigating measures affecting those risks
  5. Monitors the implementation of the Corporation’s risk mitigation plans and other risk management activities with the assistance of the risk management function
  6. Reviews and discusses risk management-related reports and issues raised by the Management, internal auditors, external auditors, legal counsel and regulators that impact the Corporation’s risk management framework
  7. Reviews disclosures regarding risk contained in the Corporation’s Annual Report and other publicly-issued statements
  8. Reviews the objectivity, effectiveness and efficiency of the Corporation’s risk management function in the context of the Corporation’s size, scale, complexity and scope of operations
  9. Secures independent expert advice on risk management matters where considered necessary or desirable
  10. In coordination with the Audit Committee, ensures that the Corporation’s internal audit work plan is aligned with the risk management activities and that the internal control system considers all risks identified during the risk assessment process.
  11. Determines the advisability of, and reviews and evaluated the terms and conditions of any material or significant related party transactions and their required reporting disclosures
  12. Performs other activities related to the Charter as requested by the Board
  13. . Regularly reports to the Board updates in all actions initiated by the Committee
  14. Reviews the Charter annually
  15. Conducts annual self-assessment with respect to the fulfillment of its functions and responsibilities as mandated in this Charter.
Nomination

Annually, the Committee oversees the selection and nomination process for the Board of Directors of the Company to ensure that nominees to the Board are qualified for election in accordance with the By-laws, Manual of Corporate Governance and relevant laws, rules and regulations.

The Committee also reviews annually the succession plans for members of the Board and senior executives (from group heads to the CEO).

The Committee also provides assessment on the Board's effectiveness in directing the process of renewing and replacing Board members and in appointing officers or advisors and develop, update as necessary and recommend to the Board policies for considering nominees for directors, officers or advisors.

Remuneration The Committee annually approves the performance bonus, merit increase and stock options of the employees of the Corporation.
Finance

The Committee annually reviews and approves the Corporation’s dividend policy and recommends dividend actions to the Board of Directors.

The Committee will review the financial terms of mergers, acquisitions, or other strategic investments, as well as divestitures of any material operations of the Company for the coming years and make the appropriate recommendations to the Board of Directors.

The Committee oversees Corporation’s Treasury activities such as but not limited to policies with respect to cash flow management, policies with respect to investment of the company’s cash, and policies with respect to financial risk management, including the use of derivatives.

The Committee approves Letters of Parental Guarantee and/or Letters of Comfort and Awareness between the Corporation and its subsidiaries except for those issued in the ordinary course of business or in compliance with law and court orders.

The Committee reviews and evaluates the financial affairs of the Corporation from time to time and carry out such other duties as may be delegated to it by the Board of Directors from time to time.

Inspectors of Proxies and Ballots

Annually, the committee ensures that only proxy forms received at least seven days before the meeting will be validated for the year’s annual stockholders’ meeting.

Guided by SRC Rule 20 on Proxy Voting, the committee will validate the proxy forms five days before the actual stockholders’ meeting.

All validated proxies will be tabulated and registered in the system.

 

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