governance

Corporate Governance Report

Board Matters

Board Matters

Governance  >  Annual Corporate Governance Report  > Board Matters

I. BOARD OF DIRECTORS

COMPOSITION OF THE BOARD

The following are the directors of the Corporation, classified in accordance with the Revised Code of Corporate Governance for publicly listed companies and SEC Memorandum Circular No. 16, series of 2002:

Director’s Name  Type [Executive (ED), Non-Executive (NED) or Independent Director (ID)] If nominee, identify the principal Nominator in the last election (if ID, state the relationship with the nominator) Date first elected Date last elected (if ID, state the number of years served as ID)* Elected when (Annual /Special Meeting) No. of years served as director
Jaime Augusto Zobel de Ayala ED Mermac, Inc. Maria Angelica B. Estacio May 1987 April 26, 2019 Annual Meeting 32
Fernando Zobel de Ayala ED Mermac, Inc. Maria Angelica B. Estacio May 1994 April 26, 2019 Annual Meeting 25
Delfin L. Lazaro NED N.A. Maria Angelica B. Estacio January 2007 April 26, 2019 Annual Meeting 12
Keiichi Matsunaga NED Mitsubishi Corporation (MC) Maria Angelica B. Estacio April 2017 April 26, 2019 Annual Meeting 2
Ramon R. Del Rosario, Jr. ID N.A Maria Angelica B. Estacio (not related to Mr. Del Rosario) April 2010 April 26, 2019 (Served as ID for 6 years from April 2012) Annual Meeting 9
Xavier P. Loinaz Lead ID** N.A Maria Angelica B. Estacio (not related to Mr. Loinaz April 2009 April 26, 2019 (Served as ID for 6 years from April 2012) Annual Meeting 10
Antonio Jose U. Periquet ID N.A Maria Angelica B. Estacio (not related to Mr. Periquet) September 2010 April 26, 2019 (Served as ID for 6 years from April 2012) Annual Meeting 8

*Reckoning of the cumulative terms is from 2012, in connnection with the SEC Memorandum Circular No. 9, series of 2011.

**Lead ID since April 2017

Ms. Ma. Angelica B. Rapadas  is a minority stockholder of the Company.

Profiles of our Board of Directors:

Jaime Augusto Zobel de Ayala, Filipino, 60, Director of Ayala Corporation since May 1987. He is the Chairman and CEO of Ayala Corporation since April 2006. He holds the following positions in publicly listed companies: Chairman of Globe Telecom, Inc.,   Integrated Micro-Electronics, Inc. and Bank of the Philippine Islands; and Vice Chairman of Ayala Land, Inc. and Manila Water Company, Inc.  He is also the Chairman of AC Education, Inc., Ayala Retirement Fund Holdings, Inc., AC Industrial Technology Holdings, Inc., AC Ventures Holding Corp., AC Infrastructure Holdings Corporation and Asiacom Philippines, Inc.; Co-Chairman of Ayala Foundation, Inc. and Ayala Group Club, Inc.; Director of Alabang Commercial Corporation, Ayala International Pte. Ltd., AC Energy, Inc., Ayala Healthcare Holdings, Inc., Light Rail Manila Holdings, Inc.  and AG Holdings Limited; Chairman of Harvard Business School Asia-Pacific Advisory Board and Endeavor Philippines; and member of the Harvard Global Advisory Council, Mitsubishi Corporation International Advisory Committee, JP Morgan International Council, Global Board of Advisors of the Council on Foreign Relations, Asia Society International Council, University of Tokyo Global Advisory Board, Singapore Management University Board of Trustees, and Eisenhower Fellowships Board of Trustees. He was the Philippine Representative to the Asia Pacific Economic Cooperation (APEC) Business Advisory Council from 2010 to December 2015. In 2007, he received the Harvard Business School Alumni Achievement Award, the school’s highest recognition. He was a recipient of the Presidential Medal of Merit in 2009 for enhancing the prestige and honor of the Philippines both at home and abroad.  In 2010, he was bestowed the Philippine Legion of Honor, with rank of Grand Commander, by the President of the Philippines in recognition of his outstanding public service. In 2015, he received the Order of Mabini, with rank of Commander, for his vital contributions during the Philippines’ hosting of the Asia Pacific Economic Cooperation (APEC) Summit.  In 2017, he was recognized as a United Nations SDG Pioneer for his work in sustainable business strategy and operations.  He graduated with B.A. in Economics (Cum Laude) at Harvard College in 1981 and obtained an MBA at the Harvard Graduate School of Business Administration in 1987.

Fernando Zobel de Ayala, Filipino, 59, Director of Ayala Corporation since May 1994. He is the President and Chief Operating Officer of Ayala Corporation since April 2006. He holds the following positions in publicly listed companies: Chairman of Ayala Land, Inc. and Manila Water Company, Inc.; and Director of Bank of The Philippine Islands, Globe Telecom, Inc. and Integrated Micro-Electronics, Inc.; and Independent Director of Pilipinas Shell Petroleum Corporation. He is the Chairman of AC International Finance Ltd., Liontide Holdings, Inc., AC Energy, Inc., Ayala Healthcare Holdings, Inc.,  Automobile Central Enterprise, Inc., Alabang Commercial Corporation, Accendo Commercial Corp. and Hero Foundation, Inc.; Co-Chairman of Ayala Foundation, Inc. and Ayala Group Club, Inc.; Vice-Chairman of ALI Eton Property Development Corporation, Aurora Properties Incorporated, Vesta Property Holdings, Inc., Ceci Realty Inc., Fort Bonifacio Development Corporation, Bonifacio Land Corporation, Emerging City Holdings, Inc., Columbus Holdings, Inc., Berkshires Holdings, Inc. and Bonifacio Art Foundation, Inc.; Director of LiveIt Investments, Ltd., AG Holdings Ltd., AC Infrastructure Holdings Corporation, Asiacom Philippines, Inc., Ayala Retirement Fund Holdings, Inc., AC Education, Inc. and AC Ventures Holding Corp., Honda Cars Philippines, Inc., Isuzu Philippines Corporation, and Manila Peninsula; Member of the Philippine-Singapore Business Council, INSEAD East Asia Council, World Presidents’ Organization; and Chief Executives Organization; Chairman of Habitat for Humanity’s Asia-Pacific Capital Campaign Steering Committee; and Member of the Board of Trustees of Caritas Manila, Pilipinas Shell Foundation, and the National Museum.   He graduated with B.A. Liberal Arts at Harvard College in 1982 and holds a CIM from INSEAD, France.

Keiichi Matsunaga, Japanese, 54, Non-Executive Director of Ayala Corporation starting April 2017. He is the General Manager of Mitsubishi Corporation Manila Branch. Currently, he is also the Chairman of International Elevator & Equipment Inc.; President of MC Diamond Realty Investment Phils., MC Oranbo Investment, MC Cavite Holdings, Inc., FMT Kalayaan, Inc.; and Director of Century City Development II Corporation (CCDC II), Isuzu Philippines Corporation, Kepco Ilijan Corporation, Trans World Agro-Products Corp., Japanese Chamber of Commerce & Industry of the Philippines (JCCIPI) and The Japanese Association Manila, Inc. (JAMI). 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, 74, 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 PHINMA Energy Corp. and PHINMA Petroleum and Geothermal, Inc. 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.,  PHINMA Power Generation Corporation, PHINMA Renewable Energy Corp., One Subic Power Generation Corp., PHINMA Microtel Hotels, Inc. and PHINMA Hospitality, Inc.  He is Vice-Chairman of Phinma Foundation, Inc. and Phinma Property Holdings Corp., Director of Union Galvasteel Corp. and other PHINMA managed companies; Chairman of The National Museum of the Philippines and Philippine Business for Education; and Vice-Chairman of Caritas Manila and Philippine Business for Social Progress (PBSP). He is a former chairman of the Ramon Magsaysay Award Foundation and Makati Business Club, where he remains a Trustee. Mr. del Rosario graduated from De La Salle College in 1967 with degrees in BSC-Accounting and AB Social Sciences Magna cum Laude and from Harvard Business School in 1969 for a Master in Business Administration degree. He has managed Phinma since 2002 and brings with him a wealth of experience in leading a diversified conglomerate.

Delfin L. Lazaro, Filipino, 73, Non-Executive Director of Ayala Corporation since January 2007. He holds the following positions in publicly listed companies: Director of Ayala Land, Inc., Integrated Micro-Electronics, Inc., Manila Water Company, Inc., and Globe Telecom, Inc. His other significant positions include: Chairman of Atlas Fertilizer & Chemicals Inc., Chairman and President of A.C.S.T. Business Holdings, Inc.; Vice Chairman and President of Asiacom Philippines, Inc.; Director of AC Industrial Technology Holdings, Inc., AYC Holdings, Ltd.., Purefoods International Limited and Probe Productions, Inc. He graduated with BS Metallurgical Engineering at the University of the Philippines in 1967 and took his MBA (with Distinction) at Harvard Graduate School of Business in 1971.

Xavier P. Loinaz, Filipino, 75, Independent Director of Ayala Corporation since April 2009 and Lead Independent Director since April 21, 2017. He is also an Independent Director of the 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; 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 MBA-Finance at Wharton School, University of Pennsylvania in 1965.

Antonio Jose U. Periquet, Filipino, 58, Independent Director of Ayala Corporation since September 2010. He is the chairman of BPI Asset Management and Trust Corporation, the Campden Hill Group and Campden Hill Advisors, Inc.  He also sits as an independent director of the Bank of the Philippine Islands, ABS-CBN Corporation, DMCI Holdings, The Max's Group of Companies, The Philippine Seven Corporation and the Albizia ASEAN Tenggara Fund.  Mr. Periquet is a trustee of Lyceum of the Philippines University and a member of the Dean's Global Advisory Council at the University of Virginia's Darden School of Business.  He graduated with an AB Economics degree at Ateneo de Manila University in 1982 and took his Masters of Science in Economics at the Oxford University, UK in 1988 and Masters in Business Administration at University of Virginia, USA in 1990.

 

CORPORATE GOVERNANCE POLICY THAT THE BOARD HAS ADOPTED 

It is the duty of the directors to promote shareholders rights, remove impediments to the exercise of shareholders rights and provide effective redress for violation of those rights. The directors shall encourage the exercise of shareholders’ voting rights and the resolution of collective action problems through appropriate mechanisms. They shall be instrumental in reducing or eliminating costs and other administrative or practical impediments to shareholders participating in meetings and/or voting in person. The directors shall pave the way for the electronic filing and distribution of shareholders information necessary to make informed decisions subject to legal constraints.

As mandated by the Board Charter, the Board of Directors establishes the vision, strategies, key policies, and procedures of the company, and the mechanisms to monitor, evaluate, and improve management performance. The Board leads the review of the company’s vision and mission every year, revisits the group's corporate strategy and monitors its implementation. In 2015, the Board reviewed a refreshed vision statement of the company. As a result, the company adopted a new vision statement that is available in the company website.

The Board also reviews and ensures the adequacy of internal control mechanisms and risk management process for good governance, and the proper implementation of the company’s Code of Conduct and Ethics. The Board also promotes and enhances shareholders’ rights.

 

FREQUENCY OF REVIEW AND APPROVAL OF THE COMPANY'S VISION AND MISSION STATEMENTS

The Board reviews and approves the vision and mission at least once a year, as part of the review and approval of the Company’s strategy as recommended by Management. The Board and Management also revisit the Company’s vision and mission as part of the budget review process.

On September 22, 2015, the Board reviewed the mission and vision statements of the Company. As the result of that review, the Company adopted the following new vision statement that has been published in the Company website.

 

VISION STATEMENT:

We will be the most relevant, innovative, and enduring Philippine-based business group, enabling shared value and prosperity for the many markets and stakeholders we serve

 

The following is the Company’s mission statement:

Ayala Corporation, a holding company with a diverse business portfolio, has a legacy of pioneering the future. Founded in 1834, it has achieved its position of leadership by being values driven, goals oriented, and stakeholder focused. Anchored on values of integrity, long-term vision, empowering leadership, and commitment to national development, we fulfill our mission to ensure long-term profitability, increase shareholder value, provide career opportunities, and create synergies as we build mutually beneficial partnerships and alliances with those who share our philosophy and values. With entrepreneurial strength, we continue to create a future that nurtures to fruition our business endeavors and personal aspirations.

 

In 2018, the Board has reviewed and affirmed the appropriateness of the vision and mission statement of the company.

 

DIRECTORSHIPS IN OTHER COMPANIES 

WITHIN THE GROUP

Director’s Name Corporate Name of the Group Company

Type of Directorship (Executive, Non-Executive, Independent). Indicate if director is also the Chairman.

Jaime Augusto Zobel de Ayala

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank of the Philippine Islands

Chairman, Non-Executive Director

Integrated Micro-Electronics, Inc.

Chairman, Non- Executive Director

Globe Telecom, Inc.

Chairman, Non-Executive Director

Ayala Land, Inc

Vice Chairman, Non-Executive Director

Manila Water Company, Inc.

Vice Chairman, Non-Executive Director

Alabang Commercial Corporation

Non-Executive Director

Ayala International Pte Ltd.

Non-Executive Director

AC Energy, Inc.

Non-Executive Director

Ayala Group Club, Inc.

Co-Chairman, Non-Executive Director

AC Education, Inc.

Chairman, Non-Executive Director

Ayala Retirement Fund Holdings, Inc.

Chairman, Non-Executive Director

Asiacom Philippines, Inc.

Chairman, Non-Executive Director

LiveIt Investments Limited

Non-Executive Director

AG Holdings Limited

Non-Executive Director

Ayala Healthcare Holdings, Inc.

Non-Executive Director

AC Industrial Technology Holdings, Inc.

Non-Executive Director

AC Venture Holdings Corp.

Chairman, Non-Executive Director

AC Infrastructure Holdings Corporation

Chairman, Non-Executive Director

Ayala Foundation, Inc. 

Co-Chairman of the Board of Trustees

Fernando Zobel de Ayala

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AC International Finance Limited

Chairman, Non-Executive Director

Ayala International Holdings Limited

Chairman, Non-Executive Director

Ayala Land, Inc.

Chairman, Non-Executive Director

Bank of the Philippine Islands

Vice Chairman, Non-Executive Director

LiveIt Investments, Ltd.

Vice Chairman, Non-Executive Director

Globe Telecom, Inc.

Non-Executive Director

Integrated Micro-Electronics, Inc.

Non-Executive Director

Manila Water Company, Inc.

Non-Executive Director

Asiacom Philippines, Inc.

Non-Executive Director

AG Holdings Limited

Non-Executive Director

Ayala International Pte. Ltd. 

Non-Executive Director

Accendo Commercial Corporation

Chairman, Non-Executive Director

Ceci Realty, Inc.

Vice Chairman, Non-Executive Director

Vesta Property Holdings, Inc.

Vice Chairman, Non-Executive Director

Columbus Holdings, Inc.

Vice Chairman, Non-Executive Director

Emerging City Holdings, Inc.

Vice Chairman, Non-Executive Director

Fort Bonifacio Development Corporation

Vice Chairman, Non-Executive Director

Bonifacio Land Corporation

Vice Chairman, Non-Executive Director

AC Energy, Inc.

Chairman, Non-Executive Director

AC Infrastructure Holdings Corporation

Non-Executive Director

Alabang Commercial Corporation

Chairman, Non-Executive Director

Aurora Properties, Inc.

Vice Chairman, Non-Executive Director

Automobile Central Enterprises, Inc.

Chairman, Non-Executive Director

AC Industrial Technology Holdings, Inc.

Chairman, Non-Executive Director

Liontide Holdings, Inc.

Chairman, Non-Executive Director

Ayala Group Club, Inc.

Co-Chairman, Non-Executive Director

Ayala Retirement Fund Holdings, Inc.

Non-Executive Director

Ayala Healthcare Holdings, Inc.

Chairman, Non-Executive Directors

Ayala Foundation, Inc.

Co-Chairman of the Board of Trustees

AC Education, Inc.

Non-Executive Director

AC Venture Holdings Corp.

Non-Executive Director

ALI ETON Property Development Corp.

Vice-Chairman, Non-Executive Directors

BPI Asset Management and Trust Corporation

Non-Executive Director

BPI Foundation, Inc.

Chairman of the Board of Trustees

Hero Foundation, Inc.

Chairman of the Board of Trustees

Bonifacio Art Foundation, Inc.

Vice Chairman of the Board of Trustees

Berkshire Holdings, Inc.

Vice Chairman, Non-Executive Director

Delfin L. Lazaro

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AYC Holdings, Ltd.

Chairman, Non-Executive Director

Purefoods International, Ltd.

Chairman, Non-Executive Director

A.C.S.T. Business Holdings, Inc.

Chairman, Non-Executive Director

Globe Telecom, Inc.

Non-Executive Director

Ayala Land, Inc.

Non-Executive Director

Integrated Micro-Electronics, Inc.

Non-Executive Director

Manila Water Company, Inc.

Non-Executive Director

AC Industrial Technology Holdings, Inc.

Non-Executive Director

Asiacom Philippines, Inc.

Non-Executive Director

Xavier P. Loinaz

 

 

 

Bank of the Philippine Islands

Independent Director

BPI Family Savings Bank

Independent Director

BPI M/S Insurance Corporation

Independent Director

Antonio Jose U. Periquet

 

 

 

 

Bank of the Philippine Islands

Independent Director

BPI Capital Corporation

Independent Director

BPI Family Savings Bank, Inc.

Independent Director

BPI Asset Management Corporation

Independent Director

 

IN OTHER PUBLICLY-LISTED COMPANIES OUTSIDE THE GROUP

Director’s Name Name of Listed Company Type of Directorship (Executive, Non-Executive, Independent). Indicate if director is also the Chairman.​

Antonio Jose U. Periquet

 

 

 

 

 

ABS-CBN Corporation

Independent Director

ABS-CBN Holdings Corporation

Independent Director

DMCI Holdings, Inc.

Independent Director

Philippine Seven Corporation

Independent Director

Max’s Group of Companies, Inc.

Independent Director

Ramon R. del Rosario, Jr

 

 

 

Phinma Corporation

Executive Director

Trans-Asia Petroleum Corporation

Executive Director

PHINMA Energy Corp. (formerly Trans-Asia Oil & Energy Dev’t. Corp.)

Executive Director

Fernando Zobel de Ayala

Pilipinas Shell Petroleum Corporation Independent Director

 

RELATIONSHIP WITH SIGNIFICANT SHAREHOLDERS OF THE COMPANY

Director’s Name Name of the Significant Shareholder Description of the relationship
Jaime Agusto Zobel de Ayala Mermac, Inc.

Mr. Zobel is an officer and a stockholder of Mermac, Inc.

Fernando Zobel de Ayala  Mermac, Inc.

Mr. Zobel is an officer and a stockholder of Mermac, Inc.

Keiichi Matsunaga Mitsubishi Corporation

Mr. Matsunaga is the General Manager of Mitsubishi Corporation-Manila Branch

 

DIRECTORSHIP LIMIT

To ensure that our Directors devote adequate time and attention to their duties, we encourage our Independent Directors and Non-Executive Directors to hold no more than five (5) board seats in publicly listed companies (PLCs), and our Executive Directors to hold no more than two (2) board seats in PLCs outside our group. These limits may be waived by the Board at its discretion provided the interests of our stockholders and stakeholders are not prejudiced. The Board may also allow Executive Directors to hold directorships that are necessary or desirable in the pursuit of the Corporation's business.

SHAREHOLDINGS IN THE COMPANY

Name of Director Number of Direct shares* Number of Indirect shares / Through (name of record owner)* % of Capital Stock

Jaime Augusto Zobel de Ayala

 

Common-39,731

Voting Preferred-543,802

Common (through ESOWN subscription)- 260,456

Preferred B (through PCD) – 20,000

0.09845%

Fernando Zobel de Ayala

 

Common- 53,189

Voting Preferred-554,983

Common (through ESOWN subscription)- 253,128

0.09814%

Delfin L. Lazaro

 

Common - 1

Voting Preferred-258,297

Common (through ESOWN subscription)- 32,091

Common (through PCD Nominee)-1,683

0.03328%

Keiichi Matsunaga

Common-1 None 0.0000%

Xavier P. Loinaz

Common-126,614 

Voting Preferred-65,517

None 0.02189%
Ramon R. Del Rosario, Jr.

Common-1

None 0.0000%
Antonio Jose U. Periquet Common-1,200

Preferred B (through PCD) – 400,000

0.04571%
TOTAL 1,643,336 967,358 0.29747%

 

 

II. CHAIRMAN AND CEO

Chairman of the Board Jaime Augusto Zobel de Ayala
CEO/President Jamie Augusto Zobel de Ayala (CEO)/ Fernando Zobel de Ayala (President)

 

Among the checks and balances laid down to ensure that the Board gets the benefit of independent views are:

(1) the powers and responsibilities of the Chairman and of the CEO are specified and separate in the By-laws;

(2) only two of the seven directors are executive directors and the powers and responsibilities of directors are clearly delineated from the powers and responsibilities of management; and

(3) three of the seven directors are independent directors.

 

 ROLES, ACCOUNTABILITIES AND DELIVERABLES OF THE CHAIRMAN AND CEO

  Chairman Chief Executive Officer
Role
  1. Schedule meetings to enable the Board to perform its duties responsibly while not interfering with the flow of the Corporation’s operations;
  2. Prepare the meeting agenda;
  3. Exercise control over quality, quantity and timeliness of the flow of information between Management and the Board; and
  4. Assist in ensuring compliance with the Corporation’s guidelines on corporate governance.
  1. Have general supervision of the business, affairs, and property of the Corporation, and over its employees and officers;
  2. See that all orders and resolutions of the Board of Directors are carried into effect;
  3. Submit to the Board as soon as possible after the close of each fiscal year, and to the stockholders at the annual meeting, a complete report of the operations of the Corporation for the preceding year, and the state of its affairs; and
  4. Report to the Board from time to time all matters within its knowledge which the interest of the Corporation may require to be brought to their notice.
Accountabilities

Deliverables

 

 

 

 

 

 

BOARD OF DIRECTORS' PLAN FOR THE SUCCESSION OF THE CEO/MANAGING DIRECTOR/PRESIDENT AND THE TOP KEY MANAGEMENT POSITIONS

The Corporate Governance and Nomination Committee of the Board conducts a review and evaluation of the qualifications of all persons nominated to positions in the Corporation which require appointment by the Board. In conducting its review, the Committee considers the following factors:

a) Duties and responsibilities of the position/s under consideration;

b) For the nominees:

(i) level of knowledge on the Corporation’s business;

(ii) potential to assume greater responsibility in the organization;

(iii) ability, integrity and expertise; and

(iv) results of previous performance assessments.

The Committee’s review of the management succession plan shall also take into account relevant human resource policies of the Corporation and its vision, mission and overall corporate strategy. (Charter of the Nomination Committee, Section 4)

The Board approves the succession plans for the CEO/Managing Director/President and the top key management positions based on the recommendations of the Committee and other factors that the Board may deem proper and relevant. (Charter of the Board of Directors, Section 6.1 (t), and Annex B)

 

III. OTHER EXECUTIVE, NON-EXECUTIVE AND INDEPENDENT DIRECTORS 

 

COMPANY POLICY FOR ENSUREING DIVERSITY OF EXPERIENCE AND BACKGROUND OF DIRECTORS IN THE BOARD

The Board shall be composed of members who possess the necessary knowledge, skills and experience required to properly perform the duties of the Board.

The Board shall encourage the selection of a mix of competent directors, each of whom can add value and independent judgment in the formulation of sound corporate strategies and policies. Careful attention must be given to ensure that there is independence and diversity, and appropriate representation of women in the Board to the greatest extent possible. (Charter of the Board of Directors, Section 2.2)

Mr. Keiichi Matsunaga, a Non-Executive Director of the Corporation, is the General Manager of Mitsubishi Corporation-Manila Branch. Mitsubishi Corporation is also a holding company. Mr. del Rosario, an Independent Director of the Corporation, has been the President and CEO of Phinma, Corporation, a holding company, for at least ten years.

 

ROLES, ACCOUNTABILITIES, AND DELIVERABLES OF THE EXECUTIVE, NON-EXECUTIVE AND INDEPENDENT DIRECTORS

 

  Executive Directors Non-Executive Directors Independent Directors

Role

 

  1. Conduct fair business transaction with the corporation and ensure that personal interest does not bias Board decisions.
  2. Devote time and attention necessary to properly discharge his duties and responsibilities.
  3. Before deciding on any matter brought before the Board, every director should carefully study the issue.
  4. The director should view each company issues objectively and support plans and ideas which he believes are beneficial to the Company
  5. The director should be knowledgeable of the statutory and regulatory requirements affecting the corporation.
  6. The director should not disclose any non-public information of the Company to any person without the authority of the Board.
  7. Each director is responsible for assuring that actions taken by the Board maintain the adequacy of the control environment within the Corporation.
  8. Prior to assuming office, the director is expected to attend a seminar on corporate governance conducted by a duly recognized private or government institution.

Perform the same roles and deliverables as those given to the executive and non-executive directors. In addition, independent directors serve as chairs of the Audit Committee, Risk Management and Related Party Transactions Committee, Compensation Committee and Corporate Governance and Nomination Committee of the Company.

 

 

 

 

 

 

 

 

Deliverables

 

 

 

 

 

 

 

 

 

 

 

Accountabilities

 

 

 

 

Directors who willfully and knowingly vote for or assent to patently unlawful acts of the Corporation or who are guilty of gross negligence or bad faith in directing the affairs of the Corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors, shall be liable jointly and severally for all damages resulting therefrom suffered by the Corporation, its stockholders and other persons.

When a director attempts to acquire or acquires, in violation of his duty, any interest adverse to the Corporation in respect of any matter which has been reposed in him in confidence, as to which equity imposes a disability upon him to deal in his own behalf, he shall be liable as a trustee for the Corporation and must account for the profits which otherwise would have accrued to the Corporation.

 

The Board has established an effective performance management framework that ensures that Management’s performance is at par with the standards set by the Board and Senior Management.

  Process Criteria
CEO/President/Senior Management Group The performance of the Senior Management Group, including the Chairman and the President, are regularly evaluated. The Company uses an Evaluation System which includes self-assessment and discussions. The company’s Performance Evaluation System includes metrics, deliverables, accomplishments and development plan.
Managers & Staff

1. The performance review of all managers are regularly evaluated and is supported by an online evaluation system.

2. Deliverables are set at the start of every performance year,  discussed and agreed upon as a collaborative effort between Immediate Supervisors and employees.

3. Regular Feedback and mid-year review is set and observed.

4. Evaluations are done based on defined and agreed upon metrics.

5. Performance Dialogue is an important part of the evaluation system.

The company’s Performance Evaluation System includes metrics, deliverables, accomplishments and development plan

 


INDEPENDENT DIRECTOR

The Corporation adheres to both Philippine law and the rules of the Securities and Exchange Commission and of the Philippine Stock Exchange. (the “Philippine Requirements”) and the standards set by the Association of Southeast Asian Nations (ASEAN) for the strengthening of the ASEAN capital market development and integration for the establishment of an ASEAN Economic Community (the “ASEAN Standards”) in the determination of independent directors. In line with this, the Corporation has adopted the following definition of independent directors:

Independent directors under the Philippine Requirements shall, apart from their fees and shareholdings, hold no interests or relationships with the Corporation that may hinder their independence from the Corporation, Management or shareholders which could or could reasonably be perceived to, materially interfere with the exercise of independent judgment in carrying out the responsibilities of a director. For this purpose, each independent director submits to the Corporate Secretary a letter of confirmation stating that he holds no interest affiliated with the Corporation, the Management or controlling stockholder at the time of his election or re-election.

On the other hand, independent directors under the ASEAN standards shall also possess the qualifications and none of the disqualifications for independent directors under the Philippine Requirements provided and except that, when relevant in the application of the qualifications and disqualifications, a “substantial stockholder” shall mean a stockholder who possesses the power to direct or govern, directly or indirectly, the financial and operating policies of the Corporation so as to obtain benefits from its activities. (Charter of the Board of Directors, Section 2.4 and Annex A).

 

OFFICERS ATTESTATION TO THE COMPANY'S FULL COMPLIANCE WITH THE SEC CODE OF CORPORATE GOVERNANCE

On January 9, 2015, the Company submitted to the SEC the Consolidated Changes in the Annual Corporate Governance Report for 2014 that was reviewed and approved by the Board of Directors of the Company at their meeting on December 4, 2014.

On January 7, 2016, the Company submitted to the SEC the Consolidated Changes in the Annual Corporate Governance Report for 2015 that was reviewed and approved by the Board of Directors of the Company at their meeting on December 3, 2015.

On May 12, 2017 , the Company submitted to the SEC the Annual Corporate Governance Report for 2016 that was reviewed and approved by the Board of Directors of the Company at their meeting on April 21, 2017.

The Chairman of the Board, Compliance Officer and Chief Audit Executive attest to the adequacy of the Corporation’s systems for internal control and risk management and processes for compliance and governance. Please click the link below:

2017 Attestation of Internal Controls

 

TERM LIMIT FOR INDEPENDENT DIRECTORS

In accordance with SEC Memorandum Circular No. 4, Series of 2017, an Independent Director, after serving for nine (9) years, shall be perpetually barred from being elected as such in the Corporation, without prejudice to being elected as a non-Independent Director in the Corporation and as an Independent Director in other companies outside of the business conglomerate, where applicable, under the same conditions provided for in the rules and regulations of the SEC. In case the Corporation wants to retain an Independent Director who has served for nine (9) years already, the Board should provide meritorious justifications and seek shareholders' approval during the annual shareholders' meeting.

 

IV. CHANGES IN THE BOARD OF DIRECTORS 

 

SELECTION/APPOINTMENT, RE-ELECTION, DISQUALIFICATION, REMOVAL, REINSTATEMENT AND SUSPENSION

Directors shall hold office for a term of one (1) year, more or less, immediately upon their election and until their successors shall have been elected and qualified in accordance with the Company By-Laws and applicable rules.In case any vacancy or vacancies should occur on the Board of Directors other than removal or expiration of term, due to death, resignation or other causes, the remaining Directors, if still consisting a quorum, may fill said vacancies by election from among the stockholders and the stockholders so elected shall act as members of said Board until the new Board of Directors is elected.

Procedure Process Adopted Criteria
a. Selection/Appointment
(i) Executive Directors

The stockholders of the Company may submit written nominations to the Board at least 30 business days before the next annual meeting of the stockholders. The Corporate Governance and Nomination Committee evaluates the nominees and approves a list of nominees eligible to be elected as members of the Board.

The Corporate Governance and Nomination Committee may consider and recommend to the Board other qualifications for directors, including independence criteria/standards for independent directors, which are aligned with the Corporation’s vision, mission and corporate strategy that are now or may hereafter be provided in relevant laws or any amendments thereto.

The Corporate Governance and Nomination Committee likewise identifies and recommends qualified individuals for nomination and election to the Board through the use of professional search firms and other external sources of candidates.

 

 

 

 

 

 

 

 

A director of the Company shall have the following qualifications:

  1. Ownership of at least one (1) share of the capital stock of the Company;
  2. College degree or its equivalent or adequate competence and understanding of the fundamentals of doing business or sufficient experience and competence in managing a business;
  3. Relevant qualifications, such as previous business experience, membership in good standing in relevant industry and membership in business or professional organizations;
  4. Integrity, probity, diligence and assiduousness in the performance of his functions;
  5. Directorships in other companies, taking into account the following factors: i) the nature of the business of the Corporation ii) the number of directors in other companies; iii) any possible conflict of interest; and iv) the age of the director; and
  6. For independent directors, beneficial equity ownership in the Corporation or in its related companies, which must not exceed two percent (2%).
(ii) Non-Executive Directors

(iii) Independent Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

b. Re-appointment
(i) Executive Directors

The stockholders of the Company may submit written nominations to the Board at least 30 business days before the next annual meeting of the stockholders. The Corporate Governance and Nomination Committee evaluates the nominees and approves a list of nominees eligible to be elected as members of the Board.

The Corporate Governance and Nomination Committee may consider and recommend to the Board other qualifications for directors, including independence criteria/standards for independent directors, which are aligned with the Corporation’s vision, mission and corporate strategy that are now or may hereafter be provided in relevant laws or any amendments thereto.

The Corporate Governance and Nomination Committee likewise identifies and recommends qualified individuals for nomination and election to the Board through the use of professional search firms and other external sources of candidates.

 

 

 

 

 

 

 

 

 

 

 

A director of the Company shall have the following qualifications:

  1. Ownership of at least one (1) share of the capital stock of the Company;
  2. College degree or its equivalent or adequate competence and understanding of the fundamentals of doing business or sufficient experience and competence in managing a business;
  3. Relevant qualifications, such as previous business experience, membership in good standing in relevant industry and membership in business or professional organizations;
  4. . Integrity, probity, diligence and assiduousness in the performance of his functions;
  5. Directorships in other companies, taking into account the following factors:         i) the nature of the business of the Corporation                ii) the number of directors in other companies;               iii) any possible conflict of interest; and iv) the age of the director;
  6. For independent directors, beneficial equity ownership in the Corporation or in its related companies, which must not exceed two percent (2%); and
  7. The term limit set for independent directors under applicable laws, rules and regulations.
(ii) Non-Executive Directors

(iii) Independent Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c. Permanent Disqualification
(i) Executive Directors

The Company abides with the rules set forth in its  Corporate Governance Manual, the SEC Code of Corporate Governance and existing laws.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following persons are disqualified from being a director of the Corporation:

  1. Any person who has been finally convicted by a competent judicial or administrative body of any crime involving the purchase or sale securities, arising out of the person’s conduct as an underwriter, broker, dealer, and arising out of his relationship with a bank, quasi-bank and investment house.
  2. Any person finally convicted judicially of an offense involving moral turpitude or fraudulent acts or transgressions;
  3. Any person finally found by the SEC or a court or other administrative body to have willfully violated or willfully aided any provision of the Securities Regulation Code;
  4. Any person judicially declared to be insolvent;
  5. Any person finally found guilty by a foreign court or equivalent financial regulatory authority of acts, violation or misconduct listed above;
  6. Any person convicted by final and executory judgment of an offense punishable by imprisonment for a period exceeding six (6) years, or a violation of the Corporation Code, committed within five (5) years prior to the date of his election of appointment;
  7. Any person engaged in any business which competes with or is antagonistic to that of the Corporation; and
  8. After serving as independent director for nine years, the independent director shall be perpetually barred from being elected as such in the Corporation, without prejudice to being elected as independent director in other companies outside of the business conglomerate, where applicable, under the same conditions provided for in the rules and regulations of the SEC.
(ii) Non-Executive Directors

(iii) Independent Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

d. Temporary Disqualification
(i) Executive Directors

The Company abides with the rules set forth in its Corporate Governance Manual, the SEC Code of Corporate Governance and existing laws. The temporary disqualification of the director requires a resolution of a majority of the Board.

 

 

 

 

 

 

 

 

 

 

 

  1. The following are the grounds for temporary disqualification of incumbent directors: Refusal to fully disclose the extent of his business interest as required under the Securities Regulation Code and Implementing Rules and Regulations.
  2. Absence or nonparticipation for whatever reason/s other than illness, death of immediate family or serious accident in at least 75% of all board meetings during his incumbency, or any twelve month period during his incumbency.
  3. Dismissal or termination from directorship in another listed corporation;
  4. Being under preventive suspension by the Corporation for any reason; and 5. Conviction that has not yet become final referred to in the grounds for disqualification of directors
(ii) Non-Executive Directors

(iii) Independent Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

e. Removal
(i) Executive Directors

The removal of directors requires an affirmative vote of 2/3 of the outstanding capital stock of the Company.

 

 

A director may be removed with or without cause with the affirmative vote of shareholders owning 2/3 of outstanding capital stock. However, a director may not be removed without cause if it will deny minority shareholders representation in the Board.

(ii) Non-Executive Directors

(iii) Independent Directors

 

 

f. Re-instatement
(i) Executive Directors

A temporary disqualified director shall, within 60 business days from such disqualification, take the appropriate action to remedy or correct the disqualification.

If the beneficial security ownership of an independent director in the Corporation or in its related companies exceeds 2%, the Corporation shall cease to consider him as an independent director until his beneficial security ownership is reduced to 2% or lower.

(ii) Non-Executive Directors

(iii) Independent Directors

 

 

g. Suspension
(i) Executive Directors After due notice and hearing, a director who violates the Corporate Governance Manual will be subjected to the penalties as set forth in the said Manual.
(ii) Non-Executive Directors
(iii) Independent Directors

 

VOTES FOR DIECTORS DURING THE LAST ANNUAL STOCKHOLDERS' MEETING

 

Name of Director Votes Received (in favor based on total outstanding shares)
Jaime Augusto Zobel de Ayala 647,093,265 (78.79%)
Fernando Zobel de Ayala 642,434,149 (78.22%)
Delfin L. Lazaro 644,748,351 (78.50%)
Keiichi Matsunaga 648,097,609 (78.91%)
Xavier P. Loinaz 652,400,681 (79.44%)
Ramon R. Del Rosario, Jr. 644,936,051 (78.53%)
Antonio Jose U. Periquet 641,507,101 (78.11%)

                                                               

V. ORIENATION AND EDUCATION PROGRAM

 

ORIENTATION PROGRAM FOR NEW DIRECTORS

All new Directors of the Corporation shall undergo at the minimum an eight-hour orientation program on the Corporation's business and corporate structure, vision and mission, corporate strategy, Governance Codes and Policies, Articles, By-Laws, this Manual, the Charters, the SEC-mandated topics on governance matters and other matters essential for the effective performance of their duties and responsibilities.

The Office of Corporate Strategy and the Chief Finance Officer give each new director a briefing of existing and planned investments, current strategic directions, budgets and internal controls and processes.

Prior to assuming office, each director is required to attend a seminar on corporate governance conducted by a duly recognized private or government institution.

Mr. Keiichi Matsunaga, being a newly elected director of the Company in 2017, had his orientation programs on May 9, 2017 for Audit Committee related matters and on June 21, 2017 for governance and board matters. These orientation programs lasted for a total of eight (8) hours. 

 

IN-HOUSE TRAINING AND EXTERNAL COURSES ATTENDED BY DIRECTORS, CORPORATE SECRETARY, COMPLIANCE OFFICER, CHIEF FINANCE OFFICER, TREASURER AND OTHER MEMBERS OF SENIOR MANAGEMENT FOR THE PAST THREE (3) YEARS:

  • Ayala-LEAP (Ayala Leadership Acceleration Program)
  • EAGLE (Emerging Ayala Group Leaders Program)
  • The Leadership Circle (integrated within Ayala-LEAP and EAGLE)
  • LEAP Alumni Learning Series (presentations by visiting professors and practitioners in the fields of customer centricity, strategy, leadership, etc.)  
  • Executive Coaching
  • Ayala Group Corporate Governance Summit
  • Corporate Governance and Risk Management for Banks
  • Ayala Group Corporate Governance Summit held on 18 February 2015
  • Corporate Governance Seminar by SGV on December 8, 2015
  • Ayala Corporation Corporate Governance and Risk Management Summit held on 8 March 2016
  • CFA Phils Financial Modeling & Valuation, March 14-15, 2016
  • Corporate Governance Seminar by SGV on April 11, 2016
  • ECOP BOSH Certificate, May & August 2016
  • Strategic Risk Forum, May 17, 2016, Singapore
  • Project Management Institute – Project Management Fundamentals, June 20-24, 2016
  • Certified Knowledge Manager, June 20 – 24, 2016, Virginia USA
  • BSI Audit Training, June 20-24,2016, Singapore
  • CINO Summit, June 28-July 1, 2016
  • IIA International Conference, July 17-20, 2016, NYC, USA
  • CIO Summit, July 24-27, 2016, Bhutan
  • ECC International HR Metrics & Analytics, August 2-3, 2016
  • SEC Corporate Governance Forum on August 3, 2016
  • Harvard Comparative Tax Policy on August 15-26, 2016 at Boston MA, USA
  • Tourism Security Conference, August 24-25, 2016, Singapore
  • ECC International Crisis Communication Planner, September 1-2, 2016
  • Customer Experience Management Summit, September 6-7, 2016, Singapore
  • Distinguished Corporate Governance Speaker Series on October 7, 2016 by the ICD
  • Corporate Governance Seminar by SGV on December 9, 2016
  • Strategic Negotiations Program on January 9 to 13, 2017
  • Corporate Governance Seminar by SGV on February 27, 2017
  • Financial Modeling and Valuation on March 13 to 14, 2017
  • Distinguished Corporate Governance Speaker Series on May 10, 2017 by the ICD
  • Risk Financing & Transfer Solutions on May 18, 2017 by Asia Risk Management Institute
  • Employee Benefits Asia on May 18-19, 2017, Singapore
  • Rapid Earthquake Damage Assessment System Training on June 5-10, 2017
  • Integrated Learning on Innovation on  June 21-22, 2017 by IXL Center
  • HPE Philippines Executive Summit on July 5-7, 2017
  • Understanding Corporate University on July 7, 2017
  • Risk Based Auditing: A Value Add Proposition on July 21-22, 2017
  • IIA International Conference on July 23-26, 2017, Australia
  • Flexible Work Arrangements in PH on July 26, 2017 by PMAP
  • Corporate Governance Seminar by SGV on July 26, 2017
  • Level-Up Leadership on July 27-28, 2017 by Francis Kong
  • BCM5000 ISO 22301 BCMS Expert Implementer on July 31 – August 4, 2017, Singapore
  • Ayala Corporate Governance and Risk Management Summit on August 11, 2017
  • The Accidental Project Manager on August 11-12, 18-19, 2017
  • Moody's Analytics Intro to Derivatives on August 16-17, 2017
  • Strategic Leadership Communication on August 30 – September 1, 2017
  • Aon Risk Symposium on September 4-6, 2017
  • Data Privacy Learning Session on September 5, 2017
  • Cultivating a Thriving Workforce in an Era of Disruption on September 21-22, 2017
  • UN Global Compact Leaders Summit on September 23-24, 2017, USA
  • Microsoft Envision: Digital Transformation on September 25-27, 2017
  • Corporate Governance Conference on September 26, 2017
  • Leadership for Social and Economic Renewal on September 29-30, 2017 by the Center of Asia Leadership
  • People Management Association of the Philippines Conference on October 11-12, 2017
  • Innovations in Library Tech, Communications Resources and Services on October 11-13, 2017
  • Advance Cash Flow Management and Working Capital Optimization on October 16-17, 207
  • Moody's Advanced Financial Statement Analysis on October 16-18, 2017, Hong Kong
  • Adversity Quotient/GRIT Workshop on October 20, 2017
  • Formulating and Manualizing Policies and Procedures on October 23, 2017
  • Certificate in the Foundations of Organization Development on October 23-27, 2017
  • Risk LEADERS Masterclass on October 30 – November 1, 2017
  • Simplified Strategic Planning on November 2-3, 2017
  • Ayala HR Summit on November 7, 2017
  • Transformation in an Era of Disruption on November 9, 2017
  • Pan-Asia Risk and Insurance Management Association on November 14-15, 2017
  • Knowledge Management Asia Conference on November 15-16, Hong Kong
  • Advanced Certificate for Executive Personal Assistants on November 20-24, 2017, Singapore
  • Ayala Innovation Conference on November 22, 2017
  • SEC 2017 Annual Disclosure Seminar on November 27, 2017
  • Corporate Governance Seminar by SGV on December 6, 2017
  • Conference on Intellectual Capital and Knowledge Management on December 7-8, 2017, Hong Kong
  • Treasury Operations Certificate Program on December 7-9, 14-16, 2017
  • Distinguished Corporate Governance Speaker Series on February 13, 2018 by the ICD
  • Corporate Governance Seminar by SGV on August 15, 2018
  • Ayala Group Corporate Governance and Risk Management Summit on September 10, 2018
  • Advanced Corporate Governance Training on 5 October 2018

Continuing education programs for directors: programs and seminars and roundtables attended during the years 2017 and 2018.

Name of Director/Officer Date of Training Program* Name of Training Institution
Jaime Augusto Zobel de Ayala

August 11, 2017** and September 10, 2018***

 

 

 

Ayala Group Corporate Governance and Risk Management Summit

 

 

Institute of Corporate Directors, Inc.

 

 

Fernando Zobel de Ayala
Keiichi Matsunaga (NED)
Xavier P. Loinaz (Lead ID)
Ramon R. del Rosario (ID) July 26, 2017 and August 15, 2018° Corporate Governance Seminar SyCip Gorres Velayo & Co.
Delfin L. Lazaro (NED) May 10, 2017^ and September 10, 2018

Distinguished Corporate Governance Speaker Series and Ayala Group Corporate Governance and Risk Management Summit

Institute of Corporate Directors
Antonio Jose U. Periquet (ID) February 27, 2017  Corporate Governance Seminar SyCip Gorres Velayo & Co.
February 13, 2018^^ Distinguished Corporate Governance Speaker Series Institute of Corporate Directors
*each program lasted for four (4) hours

**August 11, 2017 Ayala Group Corporate Governance and Risk Management Summit - Theme: Right of Privacy and Obligation of Transparency; Topics: Data Privacy, Cyber Rights: The Right to Know and the Right to be Forgotte, Freedom of Information, and Disclosure for Transparency

***September 10, 2018  Ayala Group Corporate Governance and Risk Management Summit - Theme: Into the Future; Topics: The Role of Corporate Governance Policies and Practices in Accelerating Business Growth, Risk in the Age of Disruptive Technology and Risk, Culture and Remuneration: Role of the Remuneration and Nomination Committees in Ensuring Corporate Governance

° In-house seminars conducted by SGV for the Phinma Group of Companies

^Topics: New Corporate Governance Code: Issues and Challenges on Doing the Right Thing, ASEAN Corporate Governance Scorecard 2.0, and Challenges and Drivers of Talent Development: A Board Perspective

^^Topics: Mastering the Eight Components of Board-Building and Improving Decision-Making at the Board Level 

The directors of the Corporation, in their own capacity or as sponsored by the Corporation, may attend education programs, seminars, and roundtable discussions on corporate governance with service providers that are accredited by the SEC. 

Top

Code of Business Conduct and Ethics

Code of Business Conduct and Ethics

Governance  >  Annual Corporate Governance Report  > Code of Business Conduct and Ethics

CODE OF CONDUCT AND ETHICS

COMPANY POLICIES ON THE FOLLOWING BUSINESS CONDUCT AND ETHICS AFFECTING DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Business Conduct & Ethics Directors Senior Management Employees
(a) Conflict of Interest All the Corporation’s directors, officers and employees are expected to avoid situations of conflicts of interest or impropriety. Directors, officers and employees who have personal or pecuniary interest on any enterprise with which the Corporation has an existing or intended transaction shall fully disclose the relevant facts of the situation.
(b) Conduct of Business and Fair Dealings All directors, officers, and employees shall:
1. Deal fairly with the Corporation’s customers, suppliers and business partners, and with the government, competitors and colleagues;
2. Not take undue advantage through misrepresentation of material facts, concealment, manipulation, or any other form of unfair dealing practice; and
3. Treat everyone with respect and act in good faith and with integrity and sense of professionalism at all times.
(c) Receipt of gifts from third parties

Directors, officers and employees shall not accept gifts or invitations of any form from any supplier, customer or business partner of the Corporation, or from any third person or entity with existing or intended business dealings with the Corporation, except when the gift or invitation is:

▪ directly attributable to purely familial or personal relationships;

▪ only of nominal value;

▪ a simple promotional item or is part of the supplier’s public relations program; or

▪ part of business meetings or discussions.

However, when the gift does not fall under any of the above-mentioned conditions, the Company encourages the employee to turn over the gift to Strategic Human Resources and Organization Development for inclusion in the Company Christmas party raffle.

Directors, officers and employees must immediately report any offer or gift of any value given to them or their immediate family with a view to get favors or to influence business recommendations, proposals or decisions affecting the Corporation or any of its related companies. The report shall be made to the Chairman of the Board in the case of the directors, President and CEO, to the President in case of the Managing Directors, and to the Group Head and Unit Heads in the case of employees. All disclosures shall be submitted to the Managing Director for Strategic Human Resources.

(d) Compliance with Laws and Regulations

Ayala expects its directors, officers and employees to conduct business in accordance with Philippine laws and regulations. Employees are encouraged to consult with Corporate Governance Group and the Office of General Counsel whenever there is any doubt concerning the legality of any matter.

Any suspected criminal violations will be reported to the appropriate authorities. Non-criminal violations will be investigated and addressed as appropriate.

(e) Respect for Trade Secrets/Use of Nonpublic Information The directors, officers and employees shall strictly observe company rules that provide for restrictions to access to classified information and controls on the release of such information to other companies, agencies, parties or to the general public. The directors, officers and employees shall not release classified information unless authorized by Management. They should shall maintain the integrity of all company documents and records and protect them against unauthorized or improper alteration, forgery, concealment or destruction
(f) Use of Company Funds, Assets and Information All directors, officers and employees shall be responsible for the proper use of all company assets and resources, which include, but are not limited to, information, facilities, equipment, software, vehicles and supplies owned or leased by the Corporation or are otherwise in its possession, They shall use company assets and resources efficiently, responsibly and for legitimate business purposes only.
(g) Employment & Labor Laws & Policies The Company is consistently compliant with the Philippine labor laws, its implementing rules & regulations, DOLE department orders and circulars. The Ayala Group (AG) networks on Labor and Employee Relations, with oversight provided by the AG Human Resource Council, meet regularly to, among other functions, monitor and share current trends in, including strict observance of, legislation and jurisprudence on laws, proclamations and orders involving employee and labor relations .
(h) Disciplinary action

The Company, in the spirit of its shared and corporate values, holds all its employees in esteem and believes in protecting their rights, implementing discipline with firm but fair actions. At the same time, it expects each of its employees to respect the rights of fellow employees at all times and strive to live out these shared values in conducting personal and business affairs with: integrity; long-term vision; empowering leadership; commitment to national development.

All offenses or violations of Company policies and rules shall be dealt with accordingly

(i) Whistle Blower

As expressly provided in its Code of Conduct and Ethics and the Whistleblower Policy, the Company encourages directors, officers, and employees, and all suppliers, business partners, contractors and sub-contractors to come forward and raise serious concerns about a perceived wrongdoing, malpractice or risk involving the Corporation. The whistleblower may send or communicate a report, formally or anonymously, through a face-to-face meeting with the members of the Disclosure Committee, or email to whistleblower@ayala.com.ph.

The Disclosure Committee will forthwith conduct investigations and, applying the rules of due process, make the appropriate recommendations on personnel actions.

Should it be determined by the Committee that a whistleblower knowingly (a) submitted a report containing false allegations or (b) presented fabricated evidence, the whistleblower shall be subject to disciplinary or legal action pursuant to the policies and procedures of the Corporation, and any applicable laws

(j) Conflict Resolution

The Company adheres to the ideals of justice and fairness in its business and in all its dealings with its Employees. The Company provides for an Investigation Committee to look into serious violations of Company policies, rules and regulations.

 

DISSEMINATION OF THE CODE OF CONDUCT AND ETHICE TO ALL DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

All employees have copies of the Code of Conduct and Ethics. Part of the on-boarding program of all newly hired employees is the orientation on the Code of Conduct and Ethics to keep them informed in the same manner that the existing employees, as well as the directors, chairman, and senior management, are aware and informed. They are provided with the Code of Conduct and Ethics handbook.

 

IMPLEMENTATION AND MONITORING OF COMPLIANCE WITH THE CODE OF CONDUCT AND ETHICS

The Strategic Human Resources has the specific task of implementing and monitoring compliance with the provisions of the Code. It is responsible for:

  • ensuring that the contents of the Code are communicated to all existing and new directors, officers and employees, and requiring each to sign an acknowledgment receipt that he/she has read and understood the same and agrees to abide with the standards and norms set forth therein;
  • making the Code available on the company intranet for ease of access;
  • requiring all directors, officers and employees to declare annually that they have complied with the Code, specifically on the provisions of conflict of interest and insider trading;
  • investigating reported violations of the Code and impose sanctions for violations determined after investigation;
  • reviewing and continuously updating the Code; and
  • drafting and promulgating the Implementing Rules for the effective implementation of the Code, subject to the approval of the President and CEO.

Management is also responsible for enforcing and monitoring compliance with the Code within their respective area of jurisdiction and taking or implementing disciplinary action after proper investigation.

All directors, officers and employees have the duty to report non-compliance with the Code and its Implementing Rules that may come to their knowledge and attention, in accordance with the relevant company rules and procedures.

Any violation shall be dealt with in accordance with the procedures provided in the Implementing Rules, the Corporation’s Human Resources Manual of Policies and Procedures, the Employee Handbook and other existing company policies and proper observance of the requirements of due process. This shall be without prejudice to the filing of any legal action against the party concerned under existing laws.

 

RELATED PARTY TRANSACTIONS

 

POLICIES AND PROCEDURES

The Company’s Related Party Transactions (RPT) policy was revised, approved and was in effect in December 2014. It was further improved and strengthened on March 5, 2018.

It is the policy of Ayala Corporation that related party transactions between the Corporation and related parties shall be subject to review and approval to ensure that they are at arm’s length, the terms are fair, and they will inure to the best interest of the Corporation and its shareholders.

Related party transactions shall be disclosed, reviewed and approved in accordance with the policy consistent with the principles of transparency and fairness.

The policy covers RPTs between the Corporation and a Related Party or between a subsidiary or an affiliate of the Corporation and a Related Partry if the subsidiary or affiliate has not adopted its own RPT policy. It  also defines related party as a person or entity that is related to the entity that is preparing its financial statements, also referred to as the reporting entity.

  • A person or a close member of that person’s family is related to a reporting entity if that person has control or joint control over the reporting entity; has significant influence over the reporting entity; or is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
  • An entity is related to a reporting entity if any of the following conditions applies:
    • The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);
    • One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);
    • Both entities are joint ventures of the same third party;
    • One entity is a joint venture of a third entity and the other entity is an associate of the third party;
    • The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity;
    • The entity is controlled or jointly controlled by a person of the reporting entity;
    • A person of the reporting entity has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); or, 
    • The entity, or any member of a group of which it is a part, provides key management personnel service to the reporting entity or to the parent of the reporting entity.

Material/significant RPTs shall be reviewed by the Risk Management and Related Party Transactions Committee and endorsed to the Board of Directors for approval.  The threshold of which is set to whichever is lower of PhP50,000,000.000 or 5% of total assets of either party.

The Board shall approve a material/significant RPT before its commencement. If not identified beforehand, the material RPT must be subsequently reviewed by the Committee and ratified by the Board or the same may be discontinued, rescinded or modified to make it acceptable for ratification.

The Committee considers the following factors in the review of the RPTs:

  • The terms of the transaction;
  • The aggregate value of the transaction;
  • Whether the terms of the transaction are no less favorable than those generally available to nonrelated parties under the same or similar circumstances;
  • The extent of Related Party’s interest in the transaction;
  • Purpose and timing of the transaction;
  • Whether the transaction would present an improper conflict of interest or special risks or contingencies for the Corporation, or the related party taking into account the size of the transaction and the overall financial position of the Related Party; and
  • Any material information or other factors the Committee deems relevant.

The Group Risk Management  and Sustainability Unit monitors RPTs for approval of the Risk Management and Related Party Transactions Committee while the Controllership Unit ensures that RPTs are properly disclosed in the Corporation’s financial statements, and other applicable filings in accordance with the relevant rules and issuances of the Securities and Exchange Commission and other regulatory bodies.

Related Party Transactions​ Policies and Procedures
(1) Parent Company

All transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. There have been no guarantees provided or received for any related party receivables or payables. An assessment is undertaken each financial year through examining the financial position of the related parties and the markets in which the related parties operate.

 

(2) Joint Ventures
(3) Subsidiaries
(4) Entities Under Common Control

(5) Substantial Stockholders

(6) Officers including spouse/children/siblings/parents

There is an annual disclosure of business interests and adherence to AC’s Insider Trading Policy to uphold transparency and practice corporate governance.

 

 

 

 

(7) Directors including spouse/children/siblings/parents

(8) Interlocking director relationship of Board of Directors

 

CONFLICT OF INTEREST

There has been no actual or probable conflict of interest to which directors/officers/5% or more shareholders may be involved.

The Company has laid down the following mechanisms to detect, determine and resolve any possible conflict of interest between the company and/or its group and their directors, officers and significant shareholders:
 
  Directors/Officers/Significant Shareholders

Company

The Company’s Human Resources Manual of Policies and Procedures, the Employee Handbook, and the Code of Conduct and Ethics apply to directors, officers and employees. They provide principles, guidelines and standards by which officers are expected to conduct themselves.

Directors, employees and officers are required to submit Annual Disclosure of business interests and adherence to the company’s Insider Trading Policy to uphold transparency and practice corporate governance.

If a director has an interest in a matter under consideration by the board, then the director is not allowed to participate in those discussions and the board should follow any further appropriate processes. Individual directors should be conscious of shareholder and public perceptions and seek to avoid situations where there might be an appearance of a conflict of interest.

Independent directors are aware of the shareholders’ and public’s perceptions and they are guided to avoid situations where there could be an appearance of conflict of interest.

Group

Each company in the Group has its Manual of Policies and Procedures and Code of Conduct which apply to directors, officers and employees.

 

FAMILY, COMMERCIAL AND CONTRACTUAL RELATIONS

 

Names of Related Significant Shareholders Type of Relationship Brief Description of the Relationship
None    

 

SHAREHOLDERS' AGREEMENTS THAT MAY IMPACT ON THE CONTROL, OWNERSHIP AND STRATEGIC DIRECTION OF THE COMPANY

 

Names of Related Significant Shareholders Type of Relationship Brief Description  Transaction
None that the Company is aware of.    

 

ALTERNATE DISPUTE RESOLUTION 

The alternative dispute resolution system that the Company has adopted or the last three (3) years to settle conflicts or differences between the corporation and its stockholders, and the corporation and third parties, including regulatory authorities.

  Alternative Dispute Resolution System
Corporation & Stockholders

The Company has no record of conflicts or differences with its stockholders, regulatory authorities and other third parties.

However, it is the policy of the Company to resolve disputes or differences with stockholders, regulatory authorities and other third parties, if and when such disputes or differences arise, through mutual consultation or negotiation, mediation or arbitration.

Corporation & Third Parties

Corporation & Regulatory Authorities

 

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Board Meetings and Attendance

Board Meetings and Attendance

Governance  >  Annual Corporate Governance Report  > Board Meetings and Attendance

I. SCHEDULE OF MEETINGS 

At the beginning of the year, the Office of the Corporate Secretary sends to the directors, though email, the schedule of board meetings for the year as follows:

January 21, 2019

March 12, 2019

April 26, 2019 (Organizational Board Meeting)

 

The members of the Board of Directors, upon their election on the April 26, 2019 Annual Stockholders’ Meeting, set the dates of the Board meetings for the for the rest of 2019, as follows:

July 16, 2019

September 13, 2019

December 5, 2019


 

II. ATTENDANCE OF DIRECTORS 

The Board meets at least (6) times each calendar year. A director who fails, wihout any justifiable cause, to attend at least 75% of the total number of Board meetings during any term shall not be eligible for re-election.

The directors are encouraged to attend all board and committee meetings, either in person or via teleconferencing facility. The Corporate Secretary provides dial-in numbers to the directors who wish to join the meetings via teleconferencing facility.

The following is the record of attenance of the our directors in the board meetings held in 2018. 

Board Name No. of Meetings Held during the year* No. of Meetings Attended* %
Chairman Jaime Augusto Zobel de Ayala 6 6 100%
Member Fernando Zobel de Ayala 6 5 83%
Member Delfin L. Lazaro 6 6 100%
Independent Xavier P. Loinaz 6 6 100%
Independent Ramon R. Del Rosario, Jr. 6 5 83%
Independent Antonio Jose U. Periquet 6 6 100%
Member Keiichi Matsunaga 6 6 100%

 

Non-Executive Directors Meeting


In 2018, the non-executive and the independent directors had two meetings held on March 9, 2018 and December 6, 2018 without the presence of the executive directors. The meeting was chaired by the Lead Independent Director, Xavier P. Loinaz. Discussions during the meeting revolved around engagement of a third party to process reports from whistleblowers, managing government relations, unpaid receivables from the government sector, increasing dangers of social media, external auditors’ performance, and the e-commerce landscape of the Philippines. Respective department heads were invited to discuss specific agenda items during the meeting. Additional information, documents, and materials are provided to the directors as and when required to enable them to make informed decisions.

 

III. QUORUM REQUIREMENT

 Two-thirds (2/3) of the number of directors as fixed in the articles of incorporation constitute a quorum for the transaction of corporate business.

 

IV. ACCESS TO INFORMATION

The board materials for the board of directors’ meetings are being distributed to the directors at least five business days before the meeting.

The board members are free to contact the Chief Legal Officer and Corporate Secretary, and any of the management team to discuss issues or matters that need clarification in the discharge of their duties as members of the Corporation’s board of directors.

The following are the procedure that Directors can avail of to enable them to get information necessary to be able to prepare in advance for the meetings of different committees:

Committee Details of the procedures
Executive

1. The Office of the Corporate Secretary sends the board materials at least five business days before the scheduled meeting.

2. The board materials provide supporting information for matters for approval of the directors during the meeting.

3. The Company meets with the independent directors, nonexecutive directors and executive directors, individually or in groups, as may be necessary for management to keep the directors informed and to seek guidance.

 

 

 

 

 

Audit

Risk Management and Related Party Transactions

Nomination
Remuneration
Finance
Inspectors of Proxies and Ballots

The General Counsel and Corporate Secretary of the Company attends to the directors’ concerns. When necessary, the General Counsel and Corporate Secretary may recommend to the directors to seek for an advice from third parties.

The Board of Directors has not introduced and any change on existing policies that may have an effect on the business of the company.

 

External Advice

The Chief Legal Officer and Corporate Secretary of the Company attends to the directors’ concerns. When necessary, the Chief Legal Officer and Corporate Secretary may recommend to the directors to seek for an advice from third parties.

 

Any change/s introduced by the Board of Directors (during its most recent term) on existing policies that may have an effect on the business of the company and the reason/s for the change:

Existing Policies

Changes

Reason

none

 

 

 

 

V. CORPORATE SECRETARY

The Corporate Secretary of the Corporation, who is not a member of the Board of Directors, has the following functions:

(a) Serve as an adviser to the directors on their responsibilities and obligations;

(b) Keep the minutes of meetings of the stockholders, the Board of Directors, the Executive Committee, and all other committees in a book or books kept for that purpose, and shall furnish copies thereof to the Chairman, the President and other members of the Board as appropriate;

(c) Keep in safe custody the seal of the Corporation and affix it to any instrument requiring the same;

(d) Have charge of the stock certificate book and such other books and papers as the Board may direct;

(e) Attend to the giving and serving of notices of Board and shareholder meetings;

(f) Be fully informed and be part of the scheduling process of other activities of the Board;

(g) Prepare an annual schedule of board meetings and the regular agendas of meetings, and put the Board on notice of such agenda at every meeting;

(h) Oversee the adequate flow of information to the Board prior to meetings;

The Corporate Secretary also assists the Chairman of the Board in preparing the board agenda, facilitating training of directors, keeping directors updated regarding any relevant statutory and regulatory changes, among others.

The Corporate Secretary of the Company is Atty. Solomon M. Hermosura. He possesses organizational and interpersonal skills, and the legal skills of a chief legal officer. He also has financial and accounting knowledge. 

Solomon M. Hermosura, Filipino, 57, has served as Managing Director of Ayala Corporation since 1999 and a member of the Ayala Corporation Management Committee since 2009 and the Ayala Group Management Committee since 2010. He is also the Group Head of Corporate Governance, and the Chief Legal Counsel, Chief Compliance Officer, Corporate Secretary and Data Protection Officer of Ayala Corporation.  He is the CEO of Ayala Group Legal. He serves as the Corporate Secretary and Group General Counsel of Ayala Land, Inc., and Corporate Secretary of Globe Telecom, Inc., Manila Water Company, Inc., Integrated Micro-Electronics, Inc. and Ayala Foundation, Inc.  He also serves as a Corporate Secretary and a member of the Board of Directors of a number of companies in the Ayala group.  He is currently a member of the faculty of the College of Law of San Beda University. He graduated valedictorian with Bachelor of Laws degree from San Beda College in 1986 and placed third in the 1986 Bar Examinations.

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Remuneration Matters

Remuneration Matters

Governance  >  Annual Corporate Governance Report  > Remuneration Matters

I. REMUNERATION OF CEO AND FOUR (4) MOST HIGHLY COMPENSATED MANAGEMENT OFFICERS

 

PROCESS USED IN DETERMINING THE REMUNERATION OF THE CEO AND FOUR (4) MOST HIGHLY COMPENSATED MANAGEMENT OFFICERS

Process CEO Top 4 Highest Paid Management Officers
(1) Fixed remuneration Approved by the Board of Directors upon the recommendation of the Compensation Committee of the Board. Approved by the Board of Directors upon the recommendation of the Compensation Committee of the Board and the Chairman of the Board
(2) Variable remuneration The Company adopts a performance-based variable pay program aligned with business strategy. It is determined by the Compensation Committee of the Board and duly approved by the Board of Directors. The Company adopts a performance-based variable pay program aligned with business strategy. The Performance Bonus Pie is approved by the Compensation Committee of the Board. Individual amount is approved by the Chairman and CEO and the President and COO.
(3) Per diem allowance In the conduct of business abroad, per diem allowance is provided to reimburse miscellaneous expenses like airport fees, travel tax, taxi fare, laundry and phone allowance
(4) Bonus Same with variable remuneration Same with variable remuneration
(5) Stock Options and other financial instruments grantees, the size of the grant, the offer price and the discount. The grant is approved by the Board of Directors upon the recommendation of the Compensation Committee of the Board.
(6) Others (specify) N.A N.A

 

 

REMUNERATION OF MANAGEMENT

Remuneration received of the top five (5) members of management who are not at the same time executive directors during the financial year:

 

Name of Officer/Position Total Remuneration
Paolo Maximo F. Borromeo P166M
John Eric T. Francia
Solomon M. Hermosura
Jose Teodoro K. Limcaoco
John Philip S. Orbeta

 

 

II. REMUNERATION OF EXECUTIVE AND NON-EXECUTIVE DIRECTORS 

 

COMPANY POLICY ON REMUNERATION AND STRUCTURE OF COMPENSATION PACKAGE OF THE EXECUTIVE AND NON-EXECUTIVE DIRECTORS 

  Remuneration Policy Structure of Compensation Packages How Compensation is Calculated
Executive Directors

Directors who hold executive or management positions do not receive directors’ fees.

Each director shall be entitled to receive from the Corporation, pursuant to a resolution of the Board of directors, fees and other compensation for his services as director. The Board of Directors shall have the sole authority to determine the amount, form and structure of the fees and other compensation of the directors. The Personnel and Remuneration Committee shall have the responsibility of recommending to the Board of Directors the fees and other compensation for directors. In discharging this duty, the committee shall be guided by the objective of ensuring that the level of compensation should fairly pay directors for work required in a company of the Corporation’s size and scope.

Fixed and variable compensation, stock options and other benefits (for the executive position).

 

Based on the role, responsibility, performance of the company and the individual, contribution to the organization, and market. The Board of Directors shall have the sole authority to determine the amount, form and structure of the fees and other compensation of the directors. In no case shall the total yearly compensation of directors exceed one percent (1%) of the net income before tax of the Corporation during the preceding year.

 

Non-Executive Directors

Retainer fee: P3,000,000;

Board meeting fee per meeting attended: P200,000;

Committee meeting fee per meeting attended: P100,000;

 

 

STOCKHOLDERS' APPROVAL 

At its Annual Stockholders’ Meeting on April 18, 2011, the stockholders of the Corporation approved the increase in the compensation of the non-executive directors of the Company. On the same meeting, the stockholders granted the sole authority to determine the amount, form and structure of the fees and other compensation of the directors to the Board of Directors.

In the exercise of the delegated power and authority, the Board of Directors, at its meeting on April 21, 2017, approved the new directors’ fees, as follows:

Remuneration Scheme Date of Stockholders’ Approval
Retainer Fee: P3 Million annually April 21, 2017
Board Meeting Fee: P200,000 for every meeting attended April 21, 2017
Committee Meeting: P100,000 for every meeting attended April 21, 2017

 The rationale for such increase in compensation is to recognize the invaluable services rendered by the directors of the Corporation in successfully governing the business of the Corporation.

AGGREGATE REMUNERATION OF THE DIRECTORS DURING THE MOST RECENT YEAR 

Remuneration Item Executive Directors Non-Executive Directors (other than independent directors) Independent Directors
(a) Fixed Remuneration The Executive Directors do not receive remuneration as directors. P6,000,000.00 P9,000,000.00
(b) Variable Remuneration none none
(c) Per diem Allowance P5,200,000.00 P7,250,000.00
(d) Bonuses none none
(e) Stock Options and/or other financial instruments none none
(f) Others (Specify) none none
Total P 11,200,000.00 P 16,250,000.00

 

Other Benefits Executive Directors Non-Executive Directors (other than independent directors) Independent Directors
(a) Advances The Executive Directors do not receive remuneration as directors. none none
(b) Credit granted none none
(c) Pension Plan/s Contributions none none
(d) Pension Plans, Obligations incurred none none
(e) Life Insurance Premium none none
(f) Hospitalization Plan none none
(g) Car Plan none none
(h) Others (Specify) none none
Total    

 

STOCK RIGHTS, OPTIONS AND WARRANTS GRANTED TO THE DIRECTORS

Director’s Name

Number of Direct Option/Rights/ Warrants

Number of Indirect Option/Rights/ Warrants Number of Equivalent Shares Total % from Capital Stock
Delfin L. Lazaro* 3,060 None 3,060 0.0005%
Fernando Zobel de Ayala 27,633 None 27,633 0.0045%

*Grants given during his employment in the Company.

No rights and warrants were given to directors with their position as director of the company. Non-executive and Independent Directors do not receive any compensation as director other than the retainer fee and per diem as set forth above.

 

AMENDMENT OF INCENTIVE PROGRAMS

Incentive Program Amendments Date of Stockholders’ Approval
None    

 

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Board Committees

Board Committees

Governance  >  Annual Corporate Governance Report  > Board Committees

NUMBER OF MEMBERS, FUNCTIONS AND RESPOSIBILITIES

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. Performs other activities related to this Charter as requested by the Board.
Corporate Governance  and 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. Assess the company’s needs in identifying the best mix of competencies for the directors that would be aligned with the company’s vision, mission and strategic objectives;
  3. Determine the requirements that would 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;
  4. Ensure that all nominations to the Board are fair and transparent;
  5. Evaluate all nominees’ qualifications and suitability in accordance with the By -laws, Manual of Corporate Governance, relevant laws, rules and regulations and the needs of the corporation;
  6. Recommend to the Board the final list of nominees who meet the specified requirements containing all relevant information about the nominees;
  7. 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;
  8. Review succession plans for members of the Board and senior executives (from group heads to the Chief Executive Officer);
  9. 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
  10. 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.

II. COMMITTEE MEMBERS 

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. 23
Member (ED2 Fernando Zobel de Ayala May 10, 1996 N.A. N.A. 23
Member (NED) Yoshio Amano** April 30, 2012 N.A. N.A. 7
Member (NED) Keiichi Matsunage April 21, 2017 N.A N.A. 2

                *The was no actual meeting held in 2018. The actions of the Executive Committee were taken by written consent (electronic or digital format) by majority of the members of the Committee.

   

 

AUDIT COMMITTEE 

Office Name Date of Appointment No. of Meetings Held in 2018 No. of Meetings Attended* % Length of Service in the Committee
Chairman (Lead ID) Xavier P. Loinaz April 3, 2009 4 4 100% 10
Member (ID Ramon R. Del Rosario, Jr. April 16, 2010 4 4 100% 9
Member (NED) Keiichi Matsunaga April 21, 2017 4 4 50% 2

         

Xavier P. Loinaz, Filipino, 75, Independent Director of Ayala Corporation since April 2009. He has been our Lead Independent Director since April 2017.  He is also an Independent Director of the 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; 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 MBA-Finance at Wharton School, University of Pennsylvania in 1965..

Keiichi Matsunaga, Japanese, 54, has been a Director of Ayala Corporation since April 2017. He is the General Manager of Mitsubishi Corporation Manila Branch. Currently, he is also the Chairman of International Elevator & Equipment Inc.; President of MC Diamond Realty Investment Phils., MC Oranbo Investment, MC Cavite Holdings, Inc., FMT Kalayaan, Inc.; and Director of Century City Development II Corporation (CCDC II), Isuzu Philippines Corporation, Kepco Ilijan Corporation, Trans World Agro-Products Corp., Portico Land Corp., Japanese Chamber of Commerce & Industry of the Philippines (JCCIPI) and The Japanese Association Manila, Inc. (JAMI). 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, 74, Independent Director of Ayala since April 2010. He holds the following positions in publicly listed companies: President and Chief Executive Officer of Phinma Corporation; Chairman of PHINMA Energy Corp. and PHINMA Petroleum and Geothermal, Inc. 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, St. Jude College, United Pulp and Paper Co., Inc.,  PHINMA Power Generation Corporation, PHINMA Renewable Energy Corp., One Subic Power Generation Corp., PHINMA Microtel Hotels, Inc. and PHINMA Hospitality, Inc.  He is Vice-Chairman of Phinma Foundation, Inc. and Phinma Property Holdings Corp.; Director of Union Galvasteel Corp. and other PHINMA managed companies. He is the Chairman of Philippine Business for Education; and Vice-Chairman of Caritas Manila and Philippine Business for Social Progress . He is a former chairman of the National Museum of the Philippines, Ramon Magsaysay Award Foundation and Makati Business Club, where he remains a Trustee. Mr. del Rosario graduated from De La Salle College in 1967 with degrees in BSC-Accounting and AB Social Sciences Magna cum Laude and from Harvard Business School in 1969 for a Master in Business Administration degree. He has managed Phinma since 2002 and brings with him a wealth of experience in leading a diversified conglomerate.

 

AUDIT COMMITTEE'S RESPONSIBILITIES RELATIVE TO 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.

 

CORPORATE GOVERNANCE AND NOMINATION COMMITTEE 

Office Name Date of Appointment No. of Meetings Held in 2018 No. of Meetings Attended* % Length of Service in the Committee
Chairman (ID) Ramon R. Del Rosario, Jr. April 18, 2011 2 2 100% 8
Member (ID) Antonio Jose U. Periquet April 20, 2012 2 100% 7
Member (Lead ID) Xavier P. Loinaz April 15, 2016 2 100% 3

                                   

PERSONNEL AND COMPENSATION COMMITTEE

Office Name Date of Appointment No. of Meetings Held in 2018 No. of Meetings Attended* % Length of Service in the Committee
Chairman (ID) Ramon R. del Rosario, Jr. April 16, 2010 2 2 100% 9
Member (NED) Delfin L. Lazaro March 30, 2007 2 100% 12
Member (NED) Keiichi Matsunaga April 21, 2017 2 100% 2

   

 

FINANCE COMMITTEE 

Office Name Date of Appointment No. of Meetings Held in 2018 No. of Meetings Attended* % Length of Service in the Committee
Chairman (NED) Delfin L. Lazaro April 16, 2010 7

6

86% 9
Member (ED) Jaime Augusto Zobel de Ayala April 29, 2012 5 71% 7
Member (ID) Antonio Jose U. Periquet April 18, 2011 7 100% 8
Member (ED) Fernando Zobel de Ayala April 15, 2016 7 100% 3

 

 

COMMITTEE OF INSPECTORS OF PROXIES AND BALLOTS

Office Name Date of Appointment No. of Meetings Held in 2018 No. of Meetings Attended* % Length of Service in the Committee
Chairman Solomon M. Hermosura April 16, 2010 2 2 100% 9
Membe Catherine H. Ang April 11, 2014 2 100% 5
Member Josephine G. De Asis April 19, 2013 2 100% 6

 

RISK MANAGEMENT AND RELATED PARTY TRANSACTION COMMITEE 

Office Name Date of Appointment No. of Meetings Held in 2018 No. of Meetings Attended* % Length of Service in the Committee
Chairman (ID) Antonio Jose U. Periquet September 1, 2014 4 4 100% 5
Member (ID) Ramon R. del Rosario, Jr. September 1, 2014 4 100% 5
Member (NED) Keiichi Matsunaga** April 21, 2017 4 100% 2

      

 

CHANGE IN COMMITTEE MEMBERS OCCURRED IN 2018 AND 2019

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

 

 

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Risk Management System

Risk Management System

Governance  >  Annual Corporate Governance Report  > Risk Management System

OVERALL RISK MANAGEMENT PHILOSOPHY OF THE COMPANY

Risk Management at Ayala: From Avoidance and Mitigation to Value Creation

Risk Management has become an increasingly important business driver and part of successful corporate governance. At Ayala, an effective corporate governance entails risk intelligence – a philosophy that encourages risk-taking, and embeds appropriate risk management into the whole organization – so that risk-taking for value creation becomes as significant as risk mitigation for value protection. We ensure that our risk management system has the right architecture, strategy, and protocols to support the risk management process.. We revisit these three key factors yearly, as we believe that with the right approach, risks can be turned into opportunities.

Institutionalized in 2002, the Company has adopted an enterprise risk management (ERM) framework that is continuously being enhanced and improved. Under the supervision of the Chief Risk Officer (CRO), the Group Risk Management & Sustainability Unit continues to align Ayala’s risk governance with that of global risk consultant Deloitte, which espouses a best practice that goes beyond risk avoidance and mitigation to utilize calculated risk-taking as a means to create value.

Similar to a risk intelligent enterprise, Ayala’s risk governance is at the apex of the system. The Board of Directors is provided appropriate transparency and visibility into the organization’s and the group’s risk management practices. Through the Risk Management and Related Party Transactions Committee, the Board of Directors ensures that an effective risk management process is in place and that its risk appetite remains relevant to achieve its set goals. The CRO, being the advocate for the company and the group, has the primary responsibility of designing, implementing and maintaining an effective risk program. The Group Risk Management & Sustainability Unit supports the CRO by designing activities that enhance the organization and the group’s risk intelligent culture, formulating risk management strategies, evaluating tools and techniques for risk assessment, and monitoring and reporting on key principal and emerging risks. It also convenes the ERM Council, a group comprising the risk officers of Ayala business units, for risk framework alignment, continuous risk process improvement, and other groupwide projects. On a semi-annual basis, the ERM Council provides the top risks of their respective organization to the Group Risk Management & Sustainability Unit for reporting to both the CRO and the Risk Management and Related Party Transactions Committee.

Management committees also provide support to the CRO by ensuring the existence of a structure at the operating level that will communicate and monitor key principal and emerging risks. They also ensure that risks are discussed during project and investment meetings. As risk owners, the business unit leaders are responsible for managing the risks they face in the day-to-day operations within the established risk framework. They have the responsibility to identify, measure, monitor, control and report on risks to the management. Finally, the Internal Audit Unit provides an independent assurance on the adequacy, effectiveness, and efficiency of the risk management process.

 

 Board Review of the effectiveness of the risk management system

As set forth in its Charter approved by the Board of Directors, the Risk Management and Related Party Transactions Committee has reviewed and assessed the adequacy and the effectiveness of the Corporation's enterprise risk management process:

  • The Committee has reviewed the following policies: enterprise risk management policy, related party transactions policy, and the business continuity management policy.
  • Thru the Chief Risk Officer, as supported by the Group Risk Management and Sustainability Unit, the Committee has ascertained that an effective risk management process was in place. Aside from the black swan approach and bowtie analysis, risk sensing, a tool that employs human insights and advanced analytics capabilities to identify, analyze and monitor emerging risks, was utilized in the annual risk assessment. This allowed the Management to assess how emerging risks can affect the Corporation’s business model, long-term viability and ability to create value. Furthermore, the Management gained a better understanding of the risk/reward tradeoffs inherent in value creation, which can help improve their funding decisions and resource allocation.
  • With the view of integrating the disciplines of risk management and sustainability, the Management mapped the identified sustainability megatrends for the year to the fourteen risk categories of Ayala, and discussed how these trends can translate or contribute to a risk for the Corporation.
  • The Committee has also noted management support as the Managing Directors made themselves available to discuss their risk strategies and respond to queries raised by the Committee.

Period covered by the review: For the year ended December 31, 2018

In addition to the regular reports of the CRO thru the Group Risk Management and Sustainability Unit, the Corporation has engaged Aon Risk Solutions to execute a group-wide risk management maturity assessment, the first round of which was completed in 2015. According to best practice, the assessment of the maturity of the risk management process should be performed every two to three years.

The Aon Risk Maturity Index (RMI) is designed to capture and assess an organization’s risk management practices and provide participants with immediate feedback in the form of a Risk Maturity Rating and actionable steps for improvement. Aon has partnered with the Wharton School of the University of Pennsylvania to develop the Index and conduct joint research on the relationships between risk management practices and actual performance. The Aon Risk Maturity Index contains questions on risk management processes, corporate governance and risk understanding. The questions are based upon the ten characteristics of an advanced risk management maturity:

  • Board-level understanding of and commitment to risk management as a critical factor for decision-making and for driving value;
  • A senior-level executive who drives and facilitates key risk management processes and development;
  • Transparency of risk communication;
  • A risk culture that encourages full engagement and accountability at all levels of the organization;
  • Identification of existing and emerging risks using internal and external data and information;
  • Participation of key stakeholders in risk management strategy development and policy setting;
  • Formal collection and incorporation of operational and financial risk information into decision-making and governance processes;
  • Integration of risk management insights into human capital processes to drive sustainable business performance;
  • Use of sophisticated quantification methods to understand risk and demonstrate added value through risk management; and,
  • A move from focusing on risk avoidance and mitigation to leveraging risk and risk management options that extract value.

Through this study, the Corporation and the Group evaluated the effectiveness of the improvements implemented since 2015. Similarly, the Corporation’s ERM roadmap was revised to address other potential areas for improvement.

 

RISK POLICY

 For the Company

 

Risk Exposure Risk Management Policy Objective
Political and regulatory Inability to anticipate changes in the political and regulatory landscapes may result in the Group being unable to shield our profitability and brand value. To ensure that the Corporation has the ability to anticipate and adapt to changes in the political and regulatory landscapes to continue its long-term value creation process for all its stakeholders
Information security and cyber Failure to ensure strong and adequate information security controls to safeguard confidentiality, integrity and availability of critical information may result to financial losses and damaged reputation. To ensure that the Corporation’s critical and other information are processed and stored with appropriate information security controls to preserve its confidentiality, integrity and availability to stakeholders
Brand and reputation The inability to maintain our stature as a company of choice may result in significant difficulty in creating and/or maximizing value for all stakeholders. To maintain and improve the strong Ayala brand, identified as its core value

For the Group

Risk Exposure Risk Management Policy Objective
Political and regulatory Inability to anticipate changes in the political and regulatory landscapes may result in the Group being unable to shield our profitability and our brand value. To improve the Group’s ability to anticipate and adapt to political and regulatory changes, which may impact the Group’s business models
Brand and Reputation Failure to ensure that we have the right people at all times may result in inability to execute and achieve business objectives.
  • To continue being the employer of choice
  • To enhance our talent management program from recruitment, talent development, succession planning, until resignation/retirement of our employees

Brand and reputation

The inability to maintain our stature as a company of choice may result in significant difficulty in creating and/or maximizing value for all stakeholders.

To continue the long-term value creation for the Group’ stakeholders

 

For Minority Shareholders

Risk to Minority Shareholders​
The Company’s Related Party Transactions policy that took effect last December 2014 ensures that the rights of the minority shareholders are protected. The Corporation established a mechanism to ensure that related party transactions are at arms-length, the terms are fair, and that they inure to the best interest of the Corporation and all of its shareholders. The Corporation strictly monitored, reported, and disclosed related party transactions as well as inter-company transactions.

 

CONTROL SYSTEM SET UP 

 For the Company

Risk Exposure

Risk Assessment

(Monitoring and Measurement Process)​

Risk Management and Control (Structures, Procedures, Actions Taken)​
Political and regulatory
  • Continuous scanning of political and regulatory landscapes
  • Evaluation of new laws and regulations on how they could impact the companies’ business operations
  • The Corporation’s Public Policy unit actively monitors potential changes in regulatory policies and frameworks and strengthens ties and relationships of the Group with the government.
  • The Ayala Regulatory Council periodically discusses new regulations that may affect the companies’ business operations.
  • The Group Risk Management Team, together with other members of the Corporation, reviews regulatory risk framework previously developed for the Corporation and its investee companies.
Information security and cyber
  • Continuous update of anti-virus software and other security controls
  • Periodic assessment of the appropriateness and adequacy of information security controls
  • Strengthen layers of control on both hardware and software assets.
  • Perform vulnerability tests prior to first use of hardware, software and web hosts.
  • Constantly improve knowledge of cyber attacks and increase employee awareness on information security and cyber controls.
  • Regularly cascade IT policies and standards across the organization.
  • Benchmark with international companies on mitigating cyber risks.
Brand and reputation
  • Scanning of local, regional and international news
  • Inclusion of social media in the monitoring of trends
  • Regularly engage in meaningful discussions with investors and analysts
  • Analyze local and global news and trends.
  • Regularly refresh Ayala’s branding position.
  • Continuously identify opportunities for collaboration with partners.

For the Group

Risk Exposure

Risk Assessment

(Monitoring and Measurement Process)​

Risk Management and Control (Structures, Procedures, Actions Taken)​
Political and regulatory
  • Continuous scanning of political and regulatory landscapes
  • Evaluation of new laws and regulations on how they could impact the companies’ business operations
The Ayala Regulatory Council ensures legal and regulatory compliance of the Group, and periodically discusses new regulations that may affect the companies’ business operations.
Talent
  • Monitoring of attrition rate across the group
  • Regular discussions among the Strategic HR Groups on initiatives and staff needs
  • Annual performance assessment to ensure that the talent has the right fit to the roles and responsibilities associated with the function
  • Execute annual talent review process for all subsidiaries.
  • Update the succession plan whenever necessary.
  • Implement service level agreements (SLAs) on hiring.
  • Continuously implement and improve employee engagement and retention programs
Brand and reputation
  • Scanning of local, regional and international news
  • Inclusion of social media in the monitoring of trends
  • Implement brand refresh across the group every three years.
  • Continuously monitor issues that may impact the brand.
  • Align sponsorships with the Group strategy.
  • Continue proactive identification of opportunities to collaborate with potential partners and improve relationships with existing partners.

(c) Committee

Identify the committee or any other body of corporate governance in charge of laying down and supervising these control mechanisms, and give details of its functions:

Committee/Unit Control Mechanism Details of its Functions
Executive Committee (ExCom)
  • Corporate governance control and mechanisms
  • Corporate governance control and mechanisms

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, except with respect to --

i. approval of any action for which shareholders’ approval is also required;

ii. the filling of vacancies on the Board or in the Executive Committee;

iii. the amendment or repeal of any resolution of the Board of Directors which by its express terms is not so amendable or repealable;

iv. the distribution of cash dividends;

v. the exercise of powers delegated by the Board exclusively to other committees, if any.

Corporate Governance and Nomination Committee
  • Corporate governance control and mechanisms
  • Ensures that all nominees to the Board have all the qualifications and none of the disqualifications under the Company’s By-Laws, its Manual of Corporate Governance, and the rules of the SEC
  • Reviews the qualifications of all persons nominated to positions requiring appointment by the Board.

The Nomination Committee of the Board of Directors shall:

(a) install and maintain a process to ensure that nominees to the Board for election by the stockholders or the Board are qualified in accordance with the By-laws, Manual of Corporate Governance and relevant laws, rules and regulations;

(b) 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;

(c) review and evaluate the qualifications of persons nominated for Managing Director (Vice President) or higher rank, which shall require appointment by the Board, and provide guidance and advice as necessary for appointments by the Chairman or President to positions below Managing Director (Vice President);

(d) review succession plans for members of the Board and senior executives (from group heads to the CEO);

(e) provide 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; and

(f) discharge any other duties and responsibilities delegated to the Committee by the Board from time to time.

The Committee shall be guided by the Company's mission and vision in the fulfilment of its functions.

Personnel and Compensation Committee
  • Corporate governance control and mechanisms
  • Establishes a policy for a formal and transparent procedure for determining the salaries of officers and directors
  • Supports the Board in the determination of executive compensation and remuneration

The Committee shall have the following powers, duties and responsibilities:

  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 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. Review, at least annually, the performance of each of the Chairman of the Board, the Chief Executive Officer (CEO), the President and Chief Operating Officer (COO) and measure such performance against each of his or her goals and objectives pursuant to the Corporation's plans and determine his or her compensation for approval of the Board;
  3. Review the structure and competitiveness of the Corporation's executive officer compensation programs considering the following factors:

    (i) the attraction and retention of executive officers;

    (ii) the motivation of executive officers to achieve the Corporation's business objectives, and

    (iii) the alignment of the interest of executive officers with the long-term interests of the Corporation's shareholders.

  4. Develop and periodically review a form on Full Business Interest Disclosure, which among others compel all incoming and incumbent officers to declare under the penalty of perjury all their existing business interests or shareholdings that may directly or indirectly conflict in their performance of duties once hired;
  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; and
  6. Periodically review the Human Resources 55 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. No member of the Committee will act to fix his or her own compensation except for uniform compensation to directors for their services as a director

 

Finance Committee
  • Corporate governance control and mechanisms
  • Oversees the company’s financial policy and strategy, including capital structure, dividend policy, acquisitions and divestments, and makes the appropriate recommendations to the Board of Directors
  • Oversight responsibility over the Company’s Treasury activities, and reviews and approves changes in Treasury Policies
  • Responsible for reviewing and evaluating the financial affairs of the company on a regular basis and carrying out such other duties as may be delegated to it by the Board of Director

The Finance Committee shall carry out the following duties, in each case in line with the Board’s policies and directives:

  1. The Committee shall review the company’s capital structure strategies. The Committee shall also review and approve the Corporation’s dividend policy and recommend dividend actions to the Board of Directors.
  2. The Committee shall review the financial terms of mergers, acquisitions, or other strategic investments, as well as divestitures of any material operations of the Company, and make the appropriate recommendations to the Board of Directors.
  3. The Committee shall have general oversight responsibility over the Corporation’s Treasury activities. The Committee shall review and approve changes in Treasury Policies, including:

a. Policies with respect to cash flow management,

b. Policies with respect to investment of the company’s cash, and

c. Policies with respect to financial risk management, including the use of derivatives.

The Committee shall approve 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.

Audit Committee
  • Corporate governance control and mechanisms
  • Oversees the internal control, internal auditors, external auditors, financial reporting.

The Audit Committee provides assistance to the Board of Directors in fulfilling their oversight responsibility to the shareholders relating to:

  • the integrity of the Company's financial statements and the financial reporting process;
  • the appointment, remuneration, qualifications, independence and performance of the independent external auditors and the integrity of the audit process as a whole;
  • the effectiveness of the systems of internal control and the risk management process;
  • the performance and leadership of the internal audit function;
  • the company's compliance with applicable legal, regulatory and corporate governance requirements; and
  • the preparation of year-end report of the Committee for approval of the Board and to be included in the annual report
Risk Management and Related Party Transactions Committee
  • Risk Governance
  • Related Party Transactions Review
  • Ensure that Management maintains a sound risk management framework and internal controls system and identifies material risk exposures and their impact in achieving the Corporation’s objectives.
  • Determine the advisability of, and review and evaluate the terms and conditions of any material/significant related party transactions and their required reporting disclosures.

 

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Internal Audit and Control

Internal Audit and Control

Governance  >  Annual Corporate Governance Report  > Internal Audit and Control

I.  INTERNAL CONTROL SYSTEM 

Internal Control System is the framework under which internal controls are developed and implemented (alone or in concert with other policies or procedures) to manage and control a particular risk or business activity, or combination of risks or business activities, to which the corporation is exposed. To be effective, the internal control system needs to adapt to changing business and operating environments, mitigate risks to acceptable levels, and support sound decision-making and governance of the organization. Internal control effected by the company’s board of directors, management, and all employees, is designed to provide reasonable assurance regarding the achievement of the company’s objectives.

Everyone in the organization has responsibility for internal control. Management owns the internal control system and is responsible for establishing sound internal control policies and procedures. Management is accountable to the Board of Directors who provides governance, guidance, and oversight. Internal auditors play an important role in evaluating the effectiveness of control systems, and contribute to ongoing effectiveness by providing recommendations.

 

Directors review of tthe effectiveness of the internal control system

The Board of Directors, through the Audit Committee and the Risk Management and Related Party Transactions Committee, has reviewed the internal control system of the Company based on the assessments completed and reported by the internal and external auditors. The Board found the internal control system to be effective.

The statement of the directors on the effectiveness of the company’s internal control system is embodied in the Report of the Audit Committee to the Board of Directors which is will be part of the company’s 2018 Annual Report which were distributed during the Annual Stockholders’ Meeting of the Company on April 26, 2019.

Period covered by the review: For the year ended December 31, 2018

Management reviews the adequacy and effectiveness of internal controls continuously throughout the year as part of its day-to-day function. Internal Audit assists management to attain company goals through independent risk-based planned reviews and evaluation of the effectiveness of controls.

The directors’ criteria for assessing the effectiveness of the internal control system include:

  1. Control Environment-the tone of the top and ethical behavior culture in the company
  2. Risk Assessment-the identification and analysis of relevant risks to the achievement of objectives, forming a basis for how the risks should be managed and provide reasonable assurance that risks are reduced to an acceptable level.
  3. Information and Communication-systems or processes that support the identification, capture, and exchange of accurate and complete information.
  4. Control Activities- policies and procedures, international standards and industry best practices to ensure compliance with laws, regulations, supervisory requirements, and relevant internal policies.
  5. Monitoring-processes used to regularly assess the continuing quality of internal control and risk management activities.

 

II. INTERNAL AUDIT 

 

Role, Scope and Internal Audit Function

The Internal Audit Group governs its work in adherence to The Institute of Internal Auditors’ “Code of Ethics” and the Company’s Code of Conduct. The Internal Audit also conducts its activities in conformance with the International Standards for the Professional Practice of Internal Auditing (ISPPIA) of The Institute of Internal Auditors and guided by the COSO framework on internal control. Internal Audit Charter 2017

Role Scope Indicate whether In-house  or Outsource Internal Aiudit Function Name of Chief Internal Auditor/Auditing Firm Reporting Process
  • Assist the Board and the Audit Committee in discharging its governance responsibility
  • Evaluates and provides reasonable assurance that risk management, control, and governance systems are functioning as intended and will enable the company’s strategy, objectives and goals to be met

The scope of work of the internal audit function is to determine whether Ayala Corporation’s risk management, control, and governance processes is adequate and functioning effectively to ensure:

  • Risks are appropriately identified and managed;
  • Financial information is accurate, reliable, and timely;
In-house Catherine H. Ang To maintain its independence, Internal Audit reports functionally to the Board of Directors, through the Audit Committee, and administratively to the President and Chief Operating Officer or his designate.
  • Reports risk management issues and internal controls deficiencies identified directly to the Audit Committee and provides recommendation s to improve the company’s operations, in terms of both efficient and effective performance
  • Evaluates information security and associated risk exposures
  • Evaluates regulatory compliance program with consultation from legal counsel and other relevant units or external advisors, as necessary
  • Evaluates the company’s readiness in case of business interruption
  • Maintains open communication with management and the Audit Committee
  • Teams with other internal and external resources as appropriate for assurance and advisory work
  • Engages in continuous education and staff development
  • Provides support to the company's anti-fraud and whistleblower programs.
  • Compliance with policies, standards, procedures and applicable laws and regulations is achieved;
  • Resources are safeguarded; and
  • Achievement of programs, plans and objectives are reasonably assured. In carrying out their duties and responsibilities, members of the internal audit function have full, free, and unrestricted access to all organizational activities, records, property and personnel of Ayala Corporation.
    Reports are issued to management and the Audit Committee upon completion of the audit reviews. Significant findings and issues are taken up in the quarterly meetings of the Audit Committee

As provided in the Audit Committee Charter and the Internal Audit Charter, the Audit Committee is responsible for the setting up of the Internal Audit Department, including the qualification criteria and appointment of the Chief Audit Executive. The Committee evaluates the performance of the Chief Audit Executive and the Internal Auditors taken as a whole. Moreover, the Committee having appointed the Chief Audit Executive, also approves his/her replacement, re-assignment, or dismissal. The Committee also reviews and approves any outsourcing of the internal audit function.

The Chief Audit Executive reports directly to the Board of Directors through the Audit Committee and has direct access to all members of the Audit Committee. The internal audit function as empowered by the Audit Committee Charter and the Internal Audit Charter has free access to all records, properties and personnel.

 

Resignation, Re-assignment and Reasons

None in 2017. 

 

Internal audit’s progress against plans, significant issues, significant findings and examination trends

Progress Against Plans

The activities of Internal Audit are guided by the Audit Committee approved, risk-based audit plan. Internal Audit submit periodic reports to the Committee on the status of its activity, accomplishments, key findings and recommendations, as well as management’s responses thereto

Issues

There are no significant issues noted based on the results of the audit reviews conducted. Noted issues are on enhancements of and compliance to existing policies and procedures

Finding

There are no significant findings noted based on the results of the audit reviews conducted. Reported findings are primarily on the enhancements and documentation of corporate governance policies and guidelines, and consistent implementation of procedural controls. Report on the results of the audit review is provided to the responsible personnel, department heads, senior management, and the Audit Committee based on the Committee approved Risk Reporting Framework.

Examination Trends

High risk areas are reviewed at least annually. Based on follow-up of audit recommendations, management are addressing reported risk issues, control weaknesses and opportunities for improvement within the audit period and committed timeline.

The relationship among progress, plans, issues and findings should be viewed as an internal control review cycle which involves the following step-by-step activities:

  1. Preparation of an audit plan inclusive of a timeline and milestones;
  2. Conduct of examination based on the plan;
  3. Evaluation of the progress in the implementation of the plan;
  4. Documentation of issues and findings as a result of the examination;
  5. Determination of the pervasive issues and findings (“examination trends”) based on single

 

Audit Control Policies and Procedures

Internal audit controls, policies and procedures that have been established by the company and the result of an assessment as to whether the established controls, policies and procedures have been implemented under the column “Implementation.”

Policies & Procedures

Implementation

Finance Manual

Implemented

Treasury Manual

Implemented

Information Technology Manual

Implemented

Human Resources Manual

Implemented

Related Party Transactions Policy

Implemented in 2016

Electronic Disbursement Policy

Implemented in 2016

Social Media Policy

Implemented in 2016

Business Continuity Policy

Implemented in 2016

Crisis Management Policy

Implemented in 2016

 

Mechanism and Safeguards

Mechanism established by the company to safeguard the independence of the auditors, financial analysts, investment banks and rating agencies:

Auditors

(Internal and External)

Financial Analysts

Investment Banks

Rating Agencies

Rotation of partner-incharge every five years for external auditors

Equitable access to company representatives by analysts, regardless of their prior research, opinions, recommendations, earnings estimates or research conclusions on the company.

Approval of the Investment Committee and/or the Finance Committee and the Board of Directors prior to any engagement with Investment Banks.

Approval of the Investment Committee and/or the Finance Committee and the Board of Directors prior to engagement of rating agency.

Functional reporting to the Audit Committee by the internal auditors

Equitable release of disclosure/information (i.e. no analyst gets more information than the other) in terms of content and timing (i.e. no one gets ahead of information over another)

Use of different Investment Banks for each deal.

Periodic submission of reports and data to the Rating Agency

Abide by the company’s Code of Ethics

Independence and impartiality in the opinions, estimates or forecasts made by analysts on Ayala’s performance.

          

Use of multiple Investment Banks instead of just one or two for bond deals.

Management interview sessions prior to ratings.

Abide by the company’s policy on Conflict of interest, Insider Trading Policy

Open flow of communication with analysts without compromising material non-public information

 

 

 

Attestations to Company’s full compliance with the SEC Code of Corporate Governance:

On January 9, 2015, the Company submitted to the SEC the Consolidated Changes in the Annual Corporate Governance Report for 2014 that was reviewed and approved by the Board of Directors of the Company at their meeting on December 4, 2014.

On January 7, 2016, the Company submitted to the SEC the Consolidated Changes in the Annual Corporate Governance Report for 2015 that was reviewed and approved by the Board of Directors of the Company at their meeting on December 3, 2015.

On May 12, 2017 , the Company submitted to the SEC the Annual Corporate Governance Report for 2016 that was reviewed and approved by the Board of Directors of the Company at their meeting on April 21, 2017.

The Chairman of the Board, Compliance Officer and Chief Audit Executive attest to the adequacy of the Corporation’s systems for internal control and risk management and processes for compliance and governance. Please click the link below:

2017 Attestation of Internal Controls

2018 Attestation of Internal Controls

 

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Role of Stakeholder

Role of Stakeholder

Governance  >  Annual Corporate Governance Report  > Role of Stakeholder

COMPANY POLICIES AND ACTIVITIES

 

Policy

Activities

Customers' welfare

We take innovative approaches to increase customer value and enhance customer experience; empower more customers including those with limited access to essential goods and services.

Our product and services are designed in such a way that customers and the general public’s health and safety are improved and safeguarded.

Our businesses put customers first, providing superior end-to-end customer experience within a corporate culture of genuine service and care. Feedback are regularly analyzed and addressed to continually raise the bar of customer service and engagement.

For Water: Our water and wastewater business ensures that water quality always complies with the Philippine National Standard for Drinking Water.Our stakeholder engagements are designed and implemented to understand our customers well. We offer our customers sustainable lifestyle as we design our products and services. We also provide customer touch points to ensure that their feedback and concerns are monitored and acted upon. We do an annual customer satisfaction survey so we can improve the overall customer experience.

For Water: Our water and wastewater business implements a Water Safety Plan developed in 2009 to minimize and/or eliminate contamination at each stage-from source to production, storage and conveyance to customers. It reports no major water contamination since beginning operations in 1997, at testament to its commitment to secure safe and potable water supply for its customers.

For Real Estate: Our real estate business ensures that its products and services do not pose a risk to health and safety. Moreover, by advancing sustainable design, it restores the environment and improves quality of life.

Supplier/contractor selection practice

We shall establish social and environmental parameters in accrediting suppliers, and shall prefer suppliers that observe sustainability practices. We shall support community development by providing opportunities to community-based entrepreneurs and cooperatives with the use of our buying volume.

Whenever possible, subsidiaries of the Ayala group choose and accredit suppliers that observe sustainability practices. We actively include locally based community enterprises and small businesses in our supply chains to boost inclusive economic growth.

We make sure that environmental impacts are always considered when procuring supplies, especially for environmentally sensitive projects. All our suppliers undergo a screening or accreditation process, which includes assessments of their safety, health, and environmental policies.

Moreover, our companies ensure that their suppliers are always legally compliant and adhere to stringent quality standards.

The Ayala group maintains an updated list of both reliable and delinquent suppliers through Ayala ProcurementNet. This platform, together with the various procurement measures of our subsidiaries, addresses the negative performance of vendors and reports repeatedly erring suppliers. To minimize engaging potentially delinquent suppliers, regular vendor evaluations are conducted across our group.

Environmentally friendly valuechain

We shall establish social and environmental parameters in accrediting suppliers, and shall prefer suppliers that observe sustainability practices. We shall support community development by providing opportunities to community-based entrepreneurs and cooperatives with the use of our buying volume.

 

Whenever possible, subsidiaries of the Ayala group choose and accredit suppliers that observe sustainability practices. We actively include locally based community enterprises and small businesses in our supply chains to boost inclusive economic growth.

We make sure that environmental impacts are always considered when procuring supplies, especially for environmentally sensitive projects. All our suppliers undergo a screening or accreditation process, which includes assessments of their safety, health, and environmental policies.

Moreover, our companies ensure that their suppliers are always legally compliant and adhere to stringent quality standards.

The Ayala group maintains an updated list of both reliable and delinquent suppliers through Ayala ProcurementNet. This platform, together with the various procurement measures of our subsidiaries, addresses the negative performance of vendors and reports repeatedly erring suppliers. To minimize engaging potentially delinquent suppliers, regular vendor evaluations are conducted across our group.

Community interaction

We promote quality education, gainful micro enterprise, a healthy environment, and cultural development in our communities.

 

Through Ayala Corporation’s social commitment arm, Ayala Foundation Inc.(AFI), the Group actively consults with communities to understand their dreams, needs, aspirations, and even their capacities. AFI’s interventions in education, youth leadership, sustainable livelihood, and arts and culture ensure great participation from the members of the communities. Each community member is an active partner, not just a beneficiary or recipient. AFI conducts community insighting and other forms of intensive on-the-ground work and research prior to starting projects. AFI conducts program reviews on a periodic basis to ensure the effectiveness of the programs.

AFI is a strong believer in public-private partnerships. Every sector in its program communities has a role to play to ensure the effectiveness and sustainability of its programs. In addition, the Foundation is consistently in consultation with its stakeholders (donors, project partners, LGUs/government representatives, etc.) before, during, and after any intervention.

Other subsidiaries of Ayala Corporation have programs that engage community and develop activities and programs that will improve the Filipinos quality of life. The Group ensure that we include the broader community in our creation of shared value process.

Anti-corruption programmes and procedures?

Ayala adopts a zero tolerance policy towards bribery and corruption. Thus, all directors, officers and employees of the Corporation are obliged to strictly observe the following guidelines:

  1. Directors, officers and employees shall not offer, promise or give bribes to obtain, retain or “facilitate” business or any transactions of the Corporation;
  2. Directors, officers and employees shall not request, agree to accept of take bribes from any person or organization.

The foregoing applies even if made through another person.

The Anti-Bribery and AntiCorruption Policy must be strictly observed in all transactions and dealings of the directors, officers and employees of Ayala with the customers, suppliers and business partners of the Corporation as well as with the government,

The Offices of the Internal Audit, Controller, SHR, the Finance Group, Compliance Officer and General Counsel, subject to the approval of the President and CEO, shall provide for the Implementing Rules of this Policy.

Among the other guidelines on anti-corruption, the Company sets guidelines for dealing with business gifts and gratuities to protect the integrity of its employees and its business interests.

Safeguarding creditors' rights

The Company shall protect the rights of all creditors as an integral stakeholder.

The Company shall comply with all positive, affirmative and negative debt covenants for so long as the obligations are outstanding.

In the event of a default, the Company will abide with the relevant provisions of the agreement pertaining to defaults, remedies, and penalties for all outstanding obligations.

The Company shall regularly furnish all creditors information that will enable the lenders to evaluate the Company.

The Company shall embed Creditor’s protection in its internal Treasury Performance Management Systems.

 

The Company shall ensure that all covenants for all obligations are identified, monitored and complied with. The Company regularly tracks and complies with deadlines of reports related to covenants that need to be submitted.

The Company shall endeavor that no event of default will occur. All events that are considered events of default are identified, monitored and complied with to prevent any event from occurring. In the unlikely event of a default, the Company will immediately notify all creditors, abide with the provisions pertaining to default, including remedies and pay the penalties if needed.

The Company shall identify all information and frequency of submission that lenders are to be provided for in accordance with the loan agreements. The company endeavors to submit these information, including audited annual financial statements, unaudited semiannual reports, and verification of no-default on or before due date.

Internally, the Company has a specific section in Treasury tasked with Debt Management. The objectives of the Debt Management Section are:

  1. To maintain a healthy debt mix at a level aligned with strategic and operational requirements at a minimum borrowing/interest costs possible.
  2. To ensure timely and accurate payments of interest and principal as they become due.
  3. To ensure compliance to covenants as stipulated in loan agreements.

 

CORPORATE RESPONSIBILITY AND SUSTAINTABILITY REPORTS/SECTIONS

A write-up on sustainable developments and corporate social responsibility are also included in the Annual Report. A section on Sustainability is also available at the company website (www.ayala.com.ph). The Company has been releasing Integrated Annual Reports since 2017.

 

PERFORMANCE ENHANCING MECHANISMS FOR EMPLOYEE PARTICIPATION

 

Company’s policy for its employees’ safety, health, and welfare

The well-being of Ayala employees is important to us. In this regard, the organization remains responsible in ensuring the employees’ occupational health and safety. The organization remains committed to being compliant to related regulations on industrial health and safety, both locally and globally.

A fundamental part of this commitment is informing and training the employees on disaster preparedness, and in conducting their activities in a safe, healthy, and responsible manner. The organization realizes that an assessment of the risks related to business and employees is critical and to this end, the organization ensures a continuous and updated review and assessment of the related processes. It is important that hazards to the organization are identified clearly to ensure quick and proper response in mitigating these elements. This include identifying activities that minimize the risks, and establishing control measures benchmarked with industries’ best practices.

The Company maintains a comprehensive medical and wellness program which provides for in-patient and outpatient benefits for employees, dependents and retirees. It is designed to provide payments of the actual, reasonable and customary expenses incurred by an employee and eligible dependents and retirees, subject to a maximum amount limit.

We also encourage employees to undergo annual executive check-up or physical examinations for health maintenance. The company pays for memberships in gym, sports club and interest clubs. We maintain a chapel in the office vicinity for daily masses and spiritual growth.

 

Data relating to health, safety and welfare of its employees

Health programs for periodic medical and dental care and annual medical check-up are available to our employees and their dependents. We also established an annual vaccination program to combat diseases such as flu, hepatitis B, cervical cancer, and pneumonia.

The company maintains on-site medical clinic managed by doctors and nurses supervised by one of the leading hospitals in the country. First-aid and over-the-counter medicines are available when needed. There was no accident-related absences recorded in 2017.

To keep our employees energized and engaged, we organized activities such as annual foundation and summer outing, Halloween Party, and Ayala Olympics are designed to increase and strengthen camaraderie. We have enrolled our employees to a gym membership and also supported our employees' sport and other interests through our annual JZA Cup comprising of golf, badminton, volleyball, bowling, and street dance, among others.

Below are the data relating to employee-related activities for the year 2017:

 

Items

Employees

Dependents

Annual Executive Check-up 41 -
Annual Check-up (Staff) 189 273
Dental Check-up 63 92
Annual Vaccination Program 66 130
             Anti-Cervical Cancer 12 10 
             Flu Vaccine 57 103
             Pneumonia 21 27
             Hepa A and B 24 17
Recorded absence due to accident 0 0
Fundaytion (Family Day) 37 81
Halloween Party 29 46
Movie Night 35 76
Gym Members 19 7

 

Training and development programmes for its employees

All regular employees are given opportunities for advancement through institutionalized training and career growth programs. Strategically targeting areas for improvement and advancement, these programs ensure that our employees are constantly updated with knowledge and skills needed to deliver quality results. Training programs are either held in-house, online, or thru public courses. In 2017, a total of 4,298 training hours were recorded or an average of 28.8 training hours per employee; 1,985 hours and 2,313 hours for staff and managerial positions, respectively.

Ayala’s groupwide Leadership Excellence Acceleration Program (LEAP), developed in collaboration with the Harvard Business School, is offered to its senior leaders and officers. The program covers strategic visioning and execution, customer centricity, innovation and growth, and leading for transformation and engagement. After Ayala LEAP, leadership development focus shifted to the next line of leaders. For the middle managers, Ayala developed the Emerging Ayala Group Leaders Program (EAGLE) which focuses on strategy, innovation, customer centricity, and transformational leadership.

We have further broadened our relationship with professors and institutions like Harvard, INSEAD and the Center for Innovation, Excellence and Leadership (IXL) to offer programs on Strategic Negotiations, Leadership Communications, and Integrated Learning Program on Innovation. These programs aim to institutionalize a culture of innovation.

 

Company’s reward/compensation policy that accounts for the performance of the company beyond short-term financial measures

The company rewards qualified employees with long-term stock options or stock ownership. The company promotes an ownership culture within the company which aligns the interests of the stock plan participants with those of the shareholders.

 

Company’s procedures for handling complaints by employees concerning illegal (including corruption) and unethical behavior

The Whistleblower Policy provides a formal mechanism and an avenue for directors, officers, employees, suppliers, business partners, contractors and sub-contractors, and other third parties to raise concerns about a perceived wrongdoing, malpractice, or a risk involving the company. The policy likewise provides an assurance that a whistleblower will be protected from reprisals, harassment, or disciplinary action or victimization for whistleblowing.

The whistleblower may submit a written report directly to the Office of the Compliance Officer, or by e-mail to whistleblower@ayala.com.ph, or through a face-to-face meeting with any member of the Disclosure Committee composed of one representative each from the Office of the General Counsel, Strategic Human Resources, Internal Audit, and Enterprise Risk Management.

The company adheres to the ideals of justice and fairness in its business and in all its dealings with its employees. There is an established Investigation Committee and investigation process to look into reported violations of company policies, rules, and regulations. All reports are treated in confidence and discussed with the Audit Committee who monitors the resolution and closure of all reports.

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Disclosure and Transparency

Disclosure and Transparency

Governance  >  Annual Corporate Governance Report  > Disclosure and Transparency

I . OWNERSHIP STRUCTURE

Holding 5% shareholding or more as of March 31, 2019

 

Shareholder

Number of Shares

Percent*

Beneficial Owner

Mermac, Inc.

Common-296,625,706

Voting Preferred- 170,809,486

56.27%

Mermac, Inc.

PCD Nominee Corporation (Non-Filipino)

Common- 179,323,529

21.59%

PCD Participants acting for themselves or for their customers

PCD Nominee Corporation (Filipino)

Common- 91,285,373

10.99%

PCD Participants acting for themselves or for their customers

Mitsubishi Corporation

Common- 41,577,540

Voting Preferred- 21,514,970

7.60%

Mitsubishi Corporation

*of outstanding voting shares
 

Shareholdings of Officers as of March 31, 2019  

Please refer to our public ownership report as of March 31, 2019 for the shareholdings of our directors and key officers. 

https://www.ayala.com.ph/sites/default/files/disclosures/PSE-BIR-Public%20Ownership%20Report%20as%20of%20March%2031%2C%202019.pdf

All directors and officers from Managing Directors and above, and the Controllers, Chief Internal Auditor, Chief Risk Officer, Treasurer, Corporate Secretary and Assistant Corporate Secretary, shall report their trades to the Office of the Compliance Officer within three (3) business days from dealing with such securities. All other officers and employees shall likewise report to the Office of the Compliance Officer within ten (10) days from the end of each quarter their trades with Ayala securities during such quarter.

 

II. ANNUAL REPORT DISCLOSURES 

The annual report disclosed the following:

Key risks

Biographical details of directors/commissioners

Corporate objectives

Training and/or continuing education program attended by each director/commissioner

Financial performance indicators

Number of board meetings held during the year

Non-financial performance indicators

Attendance of each director in respect of meetings held

Dividend policy

Details of whistle-blowing policy

 

 

 
 

External Auditor’s Fee* for the Year 2018

 

Name of auditor

Audit Fee

Audit Related Fee

Non-audit Fee

Sycip, Gorres, Velayo & Co.

P5.99million

P4.93million

P0.12million

 *inclusive of VAT

 

III. MEDIUM OF COMMUNICATIONS

Ayala employs the following modes of communication for disseminating corporate developments and financial and operational results on a regular basis to its stakeholders:

Structured and unstructured corporate disclosures

One-on-one meetings between company officers and analysts/institutional investors

Company website

Annual report

Analysts’ briefings

International and local investor conferences

Press releases

International non-deal roadshows

Press briefings

Stockholders’ meeting

Conference calls

Email alerts

Mobile Application  

 

 

 

 

 

 
Date of Release of Audited Financial Statements 
 

2017 Audited FS - March 16, 2018

2018 Audited FS- March 22, 2019

 

V.  COMPANY WEBSITE

The companywebsite discloses up-to-date information about the following

  • Business operations
  • Financial statements/reports (current and prior years)
  • Materials provided in briefings to analysts and media
  • Shareholding structure
  • Group corporate structure
  • Downloadable annual report
  • Notice of AGM and/or EGM
  • Company's constitution (company's by-laws, memorandum and articles of association)

 

VI. RELATED PARTY TRANSACTIONS 

The Related Party Transactions of the Company are disclosed in the audited financial statements.

 
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Rights of Stockholders

Rights of Stockholders

Governance  >  Annual Corporate Governance Report  > Rights of Stockholders

RIGHT TO PARTICIPATE EFFECTIVEY IN AND VOTE IN ANNUAL/SPECIAL STOCKHOLDERS' MEETINGS

 

Quorum Requirement : One-half of the outstanding stock is present or represented except in cases where the Corporation Law requires a greater number.

 
 System Used to Approve Corporate Acts
 
System Used By poll.

Description

Straight and cumulative voting.

In all items for approval, each voting share of stock entitles its registered owner as of the Record Date to one vote.

In the case of the election of directors, each stockholder may vote such number of shares for as many persons as there are directors to be elected or he may cumulate the aforesaid shares and give one nominee as many votes as the number of directors to be elected multiplied by the number of his shares, or he may distribute them on the same principle among as many nominees as he shall see fit; provided that, the whole number of votes cast by him shall not exceed the number of shares owned by him multiplied by the total number of directors to be elected.

Voting will be by poll. Upon registration at the annual stockholders’ meeting, each stockholder will be given a ballot to enable him to vote in writing on each item or proposal in the Agenda. Nonetheless, each stockholder may vote viva voce or by other means of communicating his approval or objection.

All votes will be counted and tabulated by the Office of the Corporate Secretary and the results will be validated by the external auditor of the Company, SGV & Co.

 

STOCKHOLDERS' PARTICIPATION DURING ANNUAL STOCKHOLDERS' MEETING

The agenda for the Annual Stockholders’ Meeting, the detailed Definitive Information Statement and the unbundled proxy form are distributed to the stockholders on record 15 business days prior to the meeting to enable the stockholders to study and understand every agenda item of the meeting. During the annual stockholders’ meeting, the Chairman of the Board encourages the stockholders to ask questions for each agenda or matters for approval during the meeting. The question and answer portion is documented in the minutes of the meeting.

The Company calls for a regular or special stockholders’ meeting to propose to the stockholders the actions listed above. The details of the proposed actions are presented in the Definitive Information Statement which is made available to the stockholders. During the meeting, the Company’s board and/or management present the proposed actions and encourage stockholders to ask questions. The affirmative vote of stockholders representing at least 2/3 of the issued and outstanding capital stock of the Company is required for the approval of the above items.

In cases of amendment of the Articles of Incorporation where written assent is allowed, a stockholder may deliver, in person or by mail, his vote directly to the Corporation.

 

Date of sending out notices for April 20, 2018 Annual Stockholders’ Meeting:

On March 14, 2018 or 24 business days from date of meeting, the Company distributed copies of detailed agenda of the Annual Stockholders’ Meeting to stockholders on record.

On March 16, 2018 or 35 days from the date of meeting, the Company posted on its website the copy of the Definitive Information Statement and the unbundled proxy form of the Annual Stockholders’ Meeting to stockholders on record. Also on March 16, 2018, 22 business days from date of meeting, the Company distributed electronic copies of the same to the stockholders on record.

 

Date of sending out notices for April 26, 2019 Annual Stockholders’ Meeting:

On March 22, 2019 or 35 days from the date of meeting, the Company posted on its website the copy of the Definitive Information Statement and the unbundled proxy form for the 2019 Annual Stockholders’ Meeting to be held on April 26. 2019. On March 26,  2019 or 20 business days from date of meeting, the Company distributed electronic copies of the same to the stockholders on record.

 

 

Questions and answers during the 2018 and 2019 Annual Stockholders’ Meetings

The questions and answers for during the 2018 and 2019 Annual Stockholders' Meetings are recorded in the minutes of the meetings.

https://www.ayala.com.ph/sites/default/files/asmm/AC%20ASM%2020Apr2018.pdf

https://www.ayala.com.ph/sites/default/files/asmm/AC-%20SH%20-%20ASM%20Minutes%20-%2026%20April%202019%20%28for%20SH%20Approval%29.pdf

 

Result of 2018 and 2019 Annual Stockholders’ Meeting’s Resolutions

The votes received for each item on the agenda of the meetings are recorded in the minutes of the meetings and in the following voting results as validated by Sycip Gorres Velayo & Co.

 

Stockholders’ Attendance

Type of Meeting Names of Board members/Officers present Date of Meeting Voting Procedure (by poll, show of hands, etc.) % of SH Attending in Person % of SH in Proxy Total % of SH attendance
2018 Annual Stockholders' Meeting 

Members of the Board: Jaime Augusto Zobel de Ayala, Fernando Zobel de Ayala, Keiichi Matsunaga, Xavier P. Loinaz, Antonio Jose U. Periquet and Ramon R. Del Rosario, Jr., Corporation Secretary, Chief Audit Executive, Investor Relations Head and the members of the Senior Leadership Team

April 20, 2018 By poll 66.67% 11.11% 77.79%
2019 Annual Stockholders' Meeting  Members of the Board: Jaime Augusto Zobel de Ayala, Fernando Zobel de Ayala, Keiichi Matsunaga, Xavier P. Loinaz, Antonio Jose U. Periquet and Ramon R. Del Rosario, Jr., Corporation Secretary, Chief Audit Executive, Investor Relations Head and the members of the Senior Leadership Team April 26, 2019 By poll 77.26% 1.28% 78.54%

 

Independent Validators

The company has engaged SyCip Gorres Velayo & Co. to validate the voting results of the company’s annual stockholders’ meeting since 2014.

 

Number of Votes per Share

One vote per share for common and voting preferred shares. One vote per share for preferred “B” on matters where holders of non-voting shares are entitled to vote under Section 6 of the Corporation Code.

 

Policies on Proxy Voting 

  Company's Policies

Execution and acceptance of proxies

Proxies shall be in writing, signed by the stockholder or his duly authorized representative and filed before the scheduled meeting with the Corporate Secretary.

A stockholder may designate any person of his choice to act as his proxy. Absent such designation or in cases where the designated proxy should fail to appear at the meeting, the Chairman of the meeting shall be deemed authorized and hereby directed to cast the vote as indicated by the voting stockholder or his proxy.

If a duly accomplished and executed proxy is undated, the postmark or date of dispatch indicated in the electronic mail or, if not mailed, its actual date of presentation, shall be considered as the date of the proxy.

Notary

Not required

Submission of Proxy

The stockholder may deliver in person or by mail his or her proxy forms directly to the Corporation through the Office of the Corporate Secretary not later than seven (7) business days prior to the meeting.

Several Proxies

Where a proxy is given to two or more persons in the alternative in one instrument, the proxy designated as an alternate can only act as proxy in the event of nonattendance of the other designated person. If the stockholder designates several proxies, the number of shares of stock to be represented by each proxy will be specifically indicated in the proxy form. Where the same stockholder gives two or more proxy forms, the latest one given is to be deemed to revoke all former proxies.

Validity of Proxy

The duly accomplished proxy form should be submitted to the Office of the Corporate Secretary not later than seven (7) business days prior to the date of the annual stockholders’ meeting. Unless provided in the proxy, it will be valid only for the meeting for which it is intended. No proxy will be valid and effective for a period longer than five (5) years at any one time. Stockholders may vote by proxy at other corporate meetings even when the purpose thereof is not solely to elect the directors of the Corporation.

Any reasonable doubt about the validity of the proxy shall be resolved in favor of the stockholder.

Proxies executed abroad

Proxies executed abroad should be authenticated by the Philippine Embassy or Consular Office.

Invalidated Proxy

Proxy forms received after the prescribed date of submission shall be invalid. A proxy may be revoked at any time before the right granted is exercised, unless it is coupled with interest. The revocation may be done in writing, orally or by conduct (e.g. appearance of the stockholder of record at the meeting).

Validation of Proxy

The validation of proxy shall be conducted by the Committee of Inspectors of Proxies and Ballots at least five (5) business days prior to the date of the stockholders’ meeting.

Violation of Proxy

No person making a solicitation shall solicit any undated or post-dated proxy or any proxy which provides that it shall be deemed to be dated as of any date subsequent to the date on which it is signed by the security holder. No security broker shall give any proxy, consent or authorization, in respect of any security carried for the account of a customer, to a person other than the customer, without the express written authorization of such customer.

 

Policies on Sending of Notices

Policies Procedure

In accordance with the company’s By-laws and applicable rules, written notice of the time, date, place, and purposes of the meeting shall be sent to all stockholders as of the record date for the annual/special stockholders’ meeting.

The Company abides by its policies in sending out of notices of Annual/Special Stockholders’ Meeting.

 

 

The notice of the annual/special stockholders’ meeting shall be sent to the stockholders at least 15 business days before the meeting.

The notice of the meeting shall be deemed to have been given at the time when delivered personally or deposited in the post office, or sent electronically or by e-mail.

The Corporation shall give the notice and provide electronically only to stockholders who have consented to receive notices by e-mail or electronic transmission.

 

Definitive Information Statements and Management Report

  2018 2019

Number of Stockholders entitled to receive Definitive Information Statements and Management Report and Other Materials

7,612 7,543

Date of Actual Distribution of Definitive Information Statement and Management Report and Other Materials held by market participants/certain beneficial owners

March 27, 2018 March 26, 2019

Date of Actual Distribution of Definitive Information Statement and Management Report and Other Materials held by stockholders

March 27, 2018 March 26, 2019

State whether CD format or hard copies were distributed

CD format, hard copies, and electronic mail Hard copies and electronic mail,and quick response (QR) code
If yes, indicate whether requesting stockholders were provided hard copies

Yes, stockholders who wished to receive paper copies of the Definitive Information Statement were provided with paper copies.

Yes, stockholders who wished to receive paper copies of the Definitive Information Statement were provided with paper copies.

 

Contents of the Notice of Annual/Special Stockholders’ Meeting

  • Each resolution to be taken up deals with only one item.
  • Profiles of directors (at least age, qualification, date of first appointment, experience, and directorships in other listed companies) nominated for election/re-election
  • An explanation of the dividend policy, if any dividend is to be declared
  • The auditors to be appointed or re-appointed.
  • The amount payable for final dividends
  • Documents required for proxy vote

 

Treatment of Minority Stockholders

Policies Implementation

A Director may be removed with or without cause, but directors shall not be removed without cause if it will deny minority shareholders representation in the Board.

The Company strictly adheres with its policies with respect to the treatment of minority stockholders.

The minority shareholders shall have the right to propose the holding of a meeting, and the right to propose items in the agenda of the meeting, provided the items are for legitimate business purposes.

The minority shareholders shall have access to any and all information relating to matters for which the management is accountable for and to those relating to matters for which the management should include such matters in the agenda of the meeting provided always that this right of access is conditioned upon the requesting shareholder’s having a legitimate purpose for such access.

The company’s Board Charter and the Charter of the Nomination Committee allows any stockholder, including minority stockholders, to nominate candidates for board of directors.

 

II. DIVIDEND DECLARATIONS 

Cash Dividend on Common Shares

Declaration Date Record Date Payment Date
June 25, 2015 July 9, 2015 July 24, 2015
December 3, 2015 December 17, 2015 January 2, 2016
June 24, 2016 July 11, 2016 July 24, 2016
December 2, 2016 December 16, 2016 January 1, 2016
June 22, 2017 July 7, 2017 July 22, 2017
December 1, 2017 December 15, 2017 December 31, 2017
June 22, 2018 July 6, 2018 July 22, 2018
December 6, 2018 December 20, 2018 January 5, 2019

 

Cash Dividend on Preferred B Series 1 Shares

Declaration Date Record Date Payment Date
December 2, 2016 January 20, 2017 February 15, 2017
December 2, 2016 April 18, 2017 May 15, 2017
December 2, 2016 July 20, 2017 August 15, 2017
December 2, 2016 October 18, 2017 November 15, 2017
December 1, 2017 January 22, 2018 February 15, 2018
December 1, 2017 April 18, 2018 May 15, 2018
December 1, 2017 July 20, 2018 August 15, 2018
December 1, 2017 October 18, 2018 November 15, 2018
December 6, 2018 January 22, 2019 February 15, 2019
December 6, 2018 April 16. 2019 May 15, 2019
December 6, 2018 July 22, 2019 August 15, 2019
December 6, 2018 October 21, 2019 November 15, 2019

Cash Dividend on Preferred B Series 2 Shares

Declaration Date Record Date Payment Date
December 2, 2016 January 11, 2017 February 5, 2017
December 2, 2016 April 6, 2017 May 5, 2017
December 2, 2016 July 12, 2017 August 5, 2017
December 2, 2016 October 9, 2017 November 5, 2017
December 1, 2017 January 10, 2018 February 5, 2018
December 1, 2017 April 10, 2018 May 5, 2018
December 1, 2017 July 11, 2018 August 5, 2018
December 1, 2017 October 8, 2018 November 5, 2018
December 6, 2018 January 10, 2019 February 5, 2019
December 6, 2018 April 4, 2019 May 5, 2019
December 6, 2018 July 10, 2019 August 5, 2019
December 6, 2018 October 9, 2019 November 5, 2019

Cash Dividend on Voting Preferred Shares

Declaration Date Record Date Payment Date
December 3, 2015 April 26, 2016 May 20, 2016
December 2, 2016 April 25, 2017 May 20, 2017
December 1, 2017 April 24, 2018 May 20, 2018
December 6, 2018 April 23, 2019 May 20, 2019

 

 

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Investors Relations Program

Investors Relations Program

Governance  >  Annual Corporate Governance Report  > Investors Relations Program

INTERNAL AND EXTERNAL COMMUNICATIONS POLICIES

Ayala’s external and internal communications programs are handled by both the Corporate Communications and Investor Relations units. Major company announcements are reviewed and approved by the Chairman and Chief Executive Officer, President and Chief Operating Officer, Audit Committee, Chief Finance Officer and Group Head of Corporate Strategy and Development, as applicable.

The company’s communication policies are reviewed in conjunction with enterprise risk management reviews or as needed or required.

INVESTOR RELATIONS PROGRAM

  Details

(1) Objectives

 

The company’s investor communications program is aimed at promoting greater understanding among the investing public of the company’s investment proposition, its performance targets and strategies, and its long-term value creation objectives.

Through its Investor Relations Unit under Corporate Strategy and Development, information requirements of the investing public and minority shareholders are fully disclosed to the Philippine Stock Exchange on time, as well as through quarterly briefings, annual reports, stockholders’ meetings, one-on-one meetings, conference calls, roadshows, investor conferences, website, mobile application, email alerts and conference calls.

The Investor Relations Unit also provides feedback to company management of perspectives and views of the investing public on the company and its stated goals/strategies.

(2) Principles

 

Ayala’s investor relations program is guided by the principles of full disclosure, transparency and fairness. The company also implements uniform disclosure standards across all stakeholders (whether minority, retail, institutional, local or foreign shareholders). Ayala also practices proper internal checks across all communications and ensures these do not compromise competitive information.

(3) Modes of Communications

 

Ayala employs the following modes of communications for its stakeholders:

  1.  Structured and unstructured corporate disclosures
  2. Company website
  3. Analysts’ briefings
  4. Mobile application  
  5. Press releases
  6. Press briefings
  7. One-on-one meetings between company officers and analysts/institutional investors
  8.  Annual report
  9. International and local investor conferences
  10. International non-deal roadshows
  11. Stockholders’ meeting
  12. Conference calls
  13. Email alerts

(4) Investors Relations Officer

 

Ms. Celeste M. Jovenir

Investor Relations Head

Tel:+632 908 3394

Email: jovenir.cm@ayala.com.ph

Fax: +632 848 5846

 

RULES AND PROCEDURES FOR MERGERS AND ACQUISITIONS

  1.  Starts with Strategy and Planning where a potential transaction is assessed in the context of strategic goals of the Company, its subsidiaries and affiliates;
  2. Once this is pre-cleared through the Investment Committee (IC), the transaction then goes to the second stage of evaluation and screening for a more detailed due diligence procedure. In this stage, a project lead, team members (from financial, technical, legal, commercial, environmental, etc.), steering committee members (preferably composed of business unit, finance and legal representatives) and external advisors are formed and engaged;
  3. An inventory of risks with various risk levels / probability of occurrence and suggested risk mitigants are reported to the Steering Committee for evaluation, recommendation and discussion of risk levels, tolerance and mitigation strategies;
  4. The key transaction risks and mitigation strategies identified along with the proposed offer, structure and authorized signatories are then subject to IC approval;
  5. \When necessary, the proposal will also pass through the Finance Committee, Executive Committee and the Board of Directors;
  6. Once approved, the final bid or offer is prepared and the binding terms of the definitive agreements are negotiated and discussed.
  7. After signing, the transaction is then disclosed to the public.

RULES AND PROCEDURES FOR DIVESTMENTS

  1. Starts with strategy and planning on the account of the portfolio review or business unit initiative in the context of strategic goals of Company, its subsidiaries and affiliates;
  2. Approval of the Investment Committee is needed in order to determine initial position of whether to hold or sell;
  3. Once pre-cleared, a project lead, team members (from financial, technical, legal, commercial, environmental, etc.), steering committee members (preferably composed of business unit, finance and legal representatives) and external advisors are formed and engaged;
  4. Divestment plans (with identification of potential buyers and target selling price) are prepared;
  5. Investment teaser is provided to the interested buyers and they are asked to sign an Non-Disclosure Agreement (NDA);
  6. After signing the NDA/exclusivity agreement, buyers can then perform its own due diligence;
  7. Offers are evaluated by the team and steering committee and presented to the IC (then Finance Committee/Executive Committee/Board of Directors, if necessary) for approval;
  8. Once approved, the final bid or offer is prepared and the binding terms of the definitive agreements are negotiated and discussed;
  9. After signing, the transaction is then disclosed to the public.

The company engaged various accredited independent parties to issue fairness opinion reports for the Company’s mergers, acquisitions of assets and divestment transactions.

There are no transactions in 2018 that required fairness opinion report from an independent party.  

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Corporate Social Responsibility Initiatives

Corporate Social Responsibility Initiatives

Governance  >  Annual Corporate Governance Report  > Corporate Social Responsibility Initiatives

The Group’s Corporate Social Responsibility is evolving. Just like any other corporation or organization, it all started in philanthropy and realized that the impact was not significant. Then it evolved to Corporate Social Responsibility where employees were encouraged to volunteer and reach more communities. However, the impact is still not significant. To create a material and relevant impact, the Group has embraced the creation of shared value process, two years ago. The Group use its resources and capabilities to innovate products, services and processes to address a societal challenges and create a socially-relevant business model and bring it to a scale. The Group has recently invested in education and healthcare, two areas where we can introduce innovative solutions in addressing the broader communities’ social challenges.

Below are some of the group’s initiatives:

Initiative Beneficiary

REFORESTATION / FOREST PROTECTION

The Sustainability Council, through the leadership of AC, embarked on a nationwide reforestation / forest protection program with a current target of covering 13,000 hectares. This initiative is called “Project Kasibulan”.

This project primarily benefits the environment and our companies who are in need to off-set their carbon emission. This further benefits the employees from the Ayala Group who take part in the initiative as it drives a change in their mindset to care more for the environment. Since the inception of the project in September 2016, two batches of volunteers have planted a total of 700 trees in NLR, Pagudpud. The project has gained traction as well and is attracting bigger batches of volunteers.

HEALTH

(AC Health) Medical missions for various places.​

 

A total of 4,607 patients benefited from the medical missions across all sites. The patients received free consultations from doctors and free medicines for cough, colds, fever, pain, and maintenance medicines for diabetes, high blood pressure, and any more. Majority of the patients were senior citizens, women and children.

YOUTH LEADERSHIP

Ayala Young Leaders Congress (AYLC), the flagship youth leadership program of the Ayala group of companies.

Top student leaders from universities and colleges nationwide.

 

YOUTH LEADERSHIP

Leadership Communities, empowers youth organizations to help address pressing needs and issues in their local community through projects they themselves propose, plan, and implement.

Community-based young leaders committed to bringing positive change in their respective communities.

 

 

SUSTAINABLE LIVELIHOOD

Iraya-Mangyan Project, implemented with the support of the Ayala group of companies and the Sisters of Charity of St. Anne

 

Members of the indigenous Iraya-Mangyan community in Talipanan, Oriental Mindoro.

Traditional woven goods made by Iraya-Mangyans are now carried by three stores. Aside from this, Ayala Foundation provides educational assistance for 64 Iraya-Mangyan students, a feeding program for 130 Mangyan children. The Iraya-Mangyan weaving enterprise has gross earnings of P4.3 million.

SUSTAINABLE LIVELIHOOD

Calauan, Laguna Project focuses on Southville 7 in Calauan, Laguna, a 107 hectare relocation site for families displaced by Typhoon Ondoy and the Pasig River rehabilitation. AFI is implementing sustainable livelihood projects for the families in the area in partnership with the Municipal Government of Calauan, Salesians of Don Bosco, Franciscan Sisters of Sacred Heart, and the Ayala Group of Companies.

Residents of Southville 7, Calauan, Laguna.

Through various livelihood and employment programs, Ayala Foundation assisted 111 individuals find employment. Twenty residents were engaged in AFI-established enterprises.

 

SUSTAINABLE LIVELIHOOD

El Nido Project works closely with the local communities in their efforts towards gaining employment or diversified sources of income and developing and strengthening local industries such as weaving, local tourism and others.

Residents of barangay Sibaltan in El Nido, Palawan

The weaving enterprise has 184 participants, who had an average increase in income of 41.28 percent.

 

ARTS AND CULTURE

Ayala Museum

Filipinos and foreigners interested in Filipino art, history, and culture.

ARTS AND CULTURE

Filipinas Heritage Library (FHL)

Students and researchers interested in Philippine art, history, and culture

 

 

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Board, Director, Committee and CEO Appraisal

Board, Director, Committee and CEO Appraisal

Governance  >  Annual Corporate Governance Report  > Board, Director, Committee and CEO Appraisal

CRITERIA USED IN ASSESSING THE ANNUAL PERFORMANCE OF THE BOARD, COMMITTEES, INDIVIDUAL DIRECTOR, AND CEO/PRESIDENT

  Process Criteria

Board of Directors

 

The directors are requested annually to answer a performance assessment survey form where they will evaluate their performance as a director and the performance of the Board. The Corporate Secretary summarizes the result of the survey and are reported at the board meeting immediately following the completion of the survey. An outside consultant may be employed to conduct simultaneous evaluation of the Board’s performance.

 

 

The self-assessment tool will cover the following:

  1. structure of the Board;
  2. shareholder benefits;
  3. fulfillment of the Board’s key responsibilities;
  4. oversight function;
  5. effectiveness of the Board’s processes and meetings;
  6. quality of the Board-Management relationship;
  7. corporate ethics, and
  8. performance evaluation.

Board Committees

 

The Committees conduct an annual assessment to evaluate the effectiveness of their performance against the requirements of their Charter. The Chairman of the Committee will lead the discussion on the results of the assessment, focusing on areas which need improvement or where there is great variation in answers. The results and any action plans arising from the discussion will be reported to the Board.

Audit Committee fills out a self-assessment questionnaire that shall benchmark its practices against the expectations set forth in the Audit Committee Charter.

 

  1. Committee Organization – Whether the Committee is composed of appropriate number of Directors with the right balance of skills, experiences and backgrounds to ensure the proper performance of the roles and responsibilities of the Committee;
  2. Committee Meetings – Whether the Committee had adequate number of meetings to sufficiently focus on significant matters of concern; and
  3. Committee Processes and Procedures – Whether the Committee adopted processes and procedures to ensure timely resolution of matters before it.

Individual Directors

 

The directors are requested annually to answer a performance assessment survey form where they will evaluate their performance as a director and the performance of the Board. The Corporate Secretary summarizes the result of the survey.

 

  1. Has understanding of the mission, values and strategies of the Company;
  2. Is abreast of the latest best practices in corporate governance;
  3. Attends the Board and Committee meetings on time, prepared and knowledgeable about the issues to be discussed;
  4. Avoids entering into situations where he may be placed in a conflict of interest with that of the Company and promptly discloses any conflict which might occur;
  5. Has a good record of Board and Committee meeting attendance;
  6. Participates actively in Board discussions with a sense of independence and objectivity, and encourage other Board members to express different opinions as much as possible;
  7. Promotes the work and the mission of the Company in the community whenever he has the chance to do so;
  8. Has awareness on the Company's by-laws and governing principles and policies and keeps himself updated on the latest best practices in corporate governance;
  9. Has added significant value to the Board

CEO/President

The performance of the Senior Management Group, including the Chairman and the President, are regularly evaluated. The Company uses an Evaluation System which includes selfassessment and discussions.

The company’s Performance Evaluation System includes metrics, deliverables, accomplishments and development plan.

 

 

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Internal Breaches and Sanctions

Internal Breaches and Sanctions

Governance  >  Annual Corporate Governance Report  > Internal Breaches and Sanctions

Internal policies on sanctions imposed for any violation or breach of the corporate governance manual involving directors, officers, management and employees

Violations Sanctions

First Violation

Reprimand

Second Violation

Suspension from office. The duration shall be at the reasonable discretion of the Board, depending on the gravity of the violation.

Third Violation

Removal from office.

 

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