The Aboitiz Group’s new purpose statement, “To drive change for a better world”, is an inspired commitment to transform Aboitiz business practices and culture into a more holistic and enduring engagement of all our stakeholders. It is a commitment to create long-term value for our stakeholders. The purpose statement reflects a visionary perspective of what corporates can purposively build when, guided by its core values of integrity, teamwork, innovation and responsibility, a company makes it its business to be in the business of uplifting people’s lives.
Over the years Aboitiz Equity Ventures, Inc.(AEV) and Aboitiz Power Corporation (AboitizPower) have actively pursued growth in the Group’s core businesses of banking and financial services, food, land, infrastructure and power. But in today’s competitive, volatile and disruptive business environment, creating, building and growing a sustainable business can certainly be a challenge. In this environment, it is therefore important to embed the hallmarks of a high-performing organization – a strong purpose, a differentiated brand and a rich culture.
Good corporate governance practices have strengthened and supported the Aboitiz culture, purpose and brand. These practices provide the Group with a clear path for advancing business and communities. These practices enable the Group to drive economic and social development alongside the Group’s host communities’ growth.
2016 was another busy year for AEV and AboitizPower. Both companies worked on ways to further improve or deepen corporate governance practices and ingrain them into the corporate culture. The Board of Directors of AEV and AboitizPower reviewed and updated the companies’ Codes of Ethics and Business Conduct, and the Manual of Corporate Governance. The Boards also reviewed existing governance policies such as the securities trading and whistleblowing policies. Management was in constant flux as the leaders realigned, reorganized or created new teams, new organizational structures and committees, and pursued strategies to respond to the demands of the Group’s growth and changes in regulatory regimes. All these initiatives were intended to improve the Group’s agility, competence and capability to execute with excellence the agreed strategic objectives, to raise the levels of stakeholder engagement, to build up its human capital, and to achieve steady sustainable growth for the Group.
Despite regulatory challenges, 2016 still proved to be a productive year for the AboitizPower organization as its companies implemented improvements in business processes, systems and operations.
AEV’s and AboitizPower’s strategic goals are still the same, namely Grow the Business, Stakeholder Engagement, Execution Excellence and Building Human Capital. AboitizPower needed to navigate through a more complex regulatory environment and fierce competition under an unsettled open access market. 2016 required a disciplined business approach. AEV and AboitizPower recognize that 2017 will also need a disciplined and flexible tack in pursuing their strategic goals.
The Aboitiz governance structure is underpinned by our core values of integrity, teamwork, innovation, and responsibility. These values guide the Group in meeting our day-to-day business as usual challenges and in balancing the interests of our various stakeholders. The inspired Group purpose, the core values, and leadership dimensions create the totality of the Aboitiz corporate culture. More importantly, these values and fundamental beliefs constitute the strong foundation for the organization’s corporate governance structure.
The Board Corporate Governance Committee, acting as nomination committee and in accordance with the existing Guidelines for the Nomination and Election of Directors, oversee the selection of candidates for directors of AEV and AboitizPower.
The selection process involves the nomination of directors by both controlling shareholders and minority shareholders who actively participate in the nomination and election. For the 2016-2017 term, minority shareholders actively nominated the independent directors. The Board Corporate Governance Committee oversees the nomination process.
All shareholders have the right to cast their vote in the election of directors for the Board of Directors. Directors are elected at the annual shareholders’ meeting in person by the shareholder or by way of a shareholder’s proxy. The Aboitiz Proxy Validation Committee validated all proxies prior to the 2016 Annual Stockholders Meeting. Voting at the 2016 Annual Stockholders Meeting was done through an electronic platform and the results were immediately disclosed to the assembly within a few minutes of the completion of the voting. The 2017 Annual Stockholders Meeting follows the same procedure and adopts the same controls.
Our Boards of Directors are fully engaged Boards composed of highly regarded professionals. The directors lend their broad experience and expertise to the Board and the Management team in all relevant matters affecting the Aboitiz Group. AEV and AboitizPower are continually reviewing the roles and responsibilities of their Boards to assess the propriety and value of existing and proposed Board and Board Committee protocols, systems and policies. All directors have been carefully selected and nominated based on their credentials as well as their ability to contribute and share their expertise in all relevant matters affecting the business units of AEV and AboitizPower.
The existing company policies of AEV and AboitizPower, such as those found in the By-Laws, the Manual on Corporate Governance, the Code of Ethics and Business Conduct, Board protocols, other Board secretariat guidelines, and the Aboitiz Information Management System protocols, ensure excellence in the performance of the directors’ roles and responsibilities.
In 2016, the Independent Directors of both AEV and AboitizPower worked closely with the internal audit teams in the performance of their functions as members of the Board Audit Committee, the Board Corporate Governance Committee, the Board Risk and Reputation Committee and of course, as members of the Board.
Our directors were quite engaged in Board work and very focused on their responsibilities as directors. They actively participated at regular and special meetings, either in person or through the use of video and teleconferencing. They were diligent in the performance of their duties.
To broaden the directors’ depth of knowledge and industry competence, AEV and AboitizPower organized seminars, lectures and orientations on highly technical topics unique to or relevant to the Aboitiz Group’s businesses. These include discussions on changing regulatory oversight of the energy market and their impact on AboitizPower, analysis and review of Aboitiz risk maturity index results up to 2016, top residual risks of the Aboitiz Group, cyber risks, political and country risks and the World Economic Forum Global Risks. They participated in the in-house mandatory corporate governance seminar, Philippine economic briefings, and in 2016 a review of the Aboitiz Group’s strategic objectives and identified business strategies.
AEV and AboitizPower each have three Board committees that assist the Board in its oversight responsibility over the Aboitiz business units - the Board Corporate Governance Committee, the Board Risk and Reputation Management Committee, and the Board Audit Committee. Three Independent Directors sit on the Board Corporate Governance and Board Audit Committees, comprising a majority of the membership of these Board Committees. In the Board Risk and Reputation Management Committee, while not constituting the majority of the committee membership, two Independent Directors sit on the respective Board Committees.
The rights of shareholders are unequivocally recognized in the AEV and AboitizPower By-laws, Code of Ethics and Business Conduct, and the Manual on Corporate Governance. The policy statements found in these documents reflect the commitment of AEV and AboitizPower to ensure the protection of shareholder interests and concerns, as well as the free exercise of these rights. These include the rights to receive notices and attend shareholders’ meetings, to participate and vote in meetings on the basis of the one-share one-vote policy, to cumulate their votes, to inspect corporate books and records, to vote in person, in absentia or by proxy, to receive dividends, to nominate and elect directors to the Board, and to ratify corporate action, among others.
The Aboitiz Group believes that the rights and interests of shareholders are aligned to that of the controlling shareholders, not only in terms of returns on their investments, but also in the sustainability of the businesses. AEV and AboitizPower take exceptional efforts to ensure that shareholders receive timely public information affecting the businesses they have invested in, and that everyone receives their dividends in accordance with the established dividend policy.
All shareholders, regardless of the amount of their shareholdings, are given the right to participate in company decision-making, pursuant to the one-share one-vote policy of AEV and AboitizPower. As a matter of policy and practice, to ensure that directors, officers, and even majority shareholders do not take advantage of their position of knowledge in AEV and AboitizPower, related party transactions and amounts are fully disclosed in the Audited Financial Statements and the Notes. AEV and AboitizPower also strictly enforce the General Trading Policy of Company Securities, and also enforce and implement the Policies against Insider Trading and trading blackout rules. The Board Secretariat is committed to vigilantly ensuring compliance with these rules by all team leaders and team members who are privy to sensitive transactions and information.
The Boards encourage active shareholder participation by sending, at least 28 days before the shareholders’ meeting, the notice of shareholders’ meetings and all agenda items to be discussed and decided upon during the meetings. No new agenda items are taken up during the meeting. For the guidance of shareholders, the rationale of agenda items subject to shareholder approval are disclosed in the notices of shareholders’ meetings.
As long as shareholders provide their contact details, AEV and AboitizPower send out notices to all shareholders of record for all annual shareholders’ meeting, as well as provide them with copies of the Information Statement, the Annual Report, and the Aboitiz integrated annual report. At the shareholders’ meeting, the Board of Directors, the chief executive officer (CEO), chief financial officer (CFO), the independent auditors, the stock transfer agent, and other key officers of AEV and AboitizPower attend and make themselves accessible and available to answer any questions that shareholders and investors may raise. Questions from shareholders on the floor are always encouraged by the Chairman and the CEO.
The Code of Ethics and Business Conduct of AEV and AboitizPower embodies our commitment to the principles of fair dealings with our stakeholders. It provides an ethical compass for the day-to-day activities in the Company. The Code of Ethics and Business Conduct, recently amended in 2016, clearly articulates our commitment to the compliance with laws and regulations; to the equitable treatment of stakeholders; to fair dealings with stakeholders; to the protection of corporate assets and interests, including conflict of interest; to the proper handling of proprietary and confidential information; to making truthful disclosures of material information; to transparency in the best interests of shareholders and the public; and to our commitment to sustainable business practices.
The business model of AEV and AboitizPower is anchored on the sustainable growth of the Group’s businesses and the full engagement of our stakeholders. The key stakeholders include team leaders and team members who work toward achieving business strategies; the host communities of the companies and business units; the local government units that support and host the Group’s businesses; the regulators of the businesses; the customers whom they serve; and the environment that sustains growth. (See Stakeholder Engagement Timeline at www.aboitiz.com)
The Group recognizes that corporate governance principles revolve around relationships between and among these stakeholders and the Group’s goals. Together, they contribute to the successful pursuit of business goals. AEV and AboitizPower corporate governance practices include policies and procedures that promote awareness and observance of stakeholders’ rights at the company level. Indeed, stakeholder engagement is one of the strategic pillars and part of the Aboitiz corporate culture.
The Group launched its Sustainability Policy in 2013, in the belief that all stakeholders must be treated with fairness and that corporate social responsibility is an integral part of doing business. In 2014, AboitizPower continued to implement this policy and as an initiative for the year, jointly launched the BetterWorld campaign to encourage all stakeholders to adopt this policy for sustainability. In 2015, the Group explored a wholistic approach to corporate governance integrating the concept of Creation of Shared Value. (See Sustainability Report at www.aboitiz.com). Through the Aboitiz Foundation, Inc. (Aboitiz Foundation) the Aboitiz Group is pursuing concrete projects to fulfill eight out of the 17 Global Goals for Sustainable Development, namely: No Poverty, Zero Hunger, Good Health & Well Being, Quality Education; Responsible Production & Consumption; Climate Change; Life Below Water; and Life on Land.
Our Group is especially proud of our track record in corporate social responsibility. AEV and AboitizPower, through their business units and through the Aboitiz Foundation, have consistently pursued and supported long standing CSR commitments and partnerships.
The Boards and Management of AEV and AboitizPower believe that a commitment to proper disclosure and transparency of the businesses elicit the trust and confidence of stakeholders. The Aboitiz Group puts a high premium on its reputation and works at keeping this well-earned trust of stakeholders gained over the years.
Pursuant to the Group’s commitment to transparency and accountability, AEV and AboitizPower continue to improve and update the corporate governance pages on our websites (www.aboitiz.com) and (www.aboitizpower.com). These web pages contain company information. The corporate websites make available to the public copies of the annual corporate governance reports, annual reports, company disclosures and investor reports, organizational information, Board and Board Committees membership, policies such as the Manual on Corporate Governance, Code of Ethics and Business Conduct, minutes of the Annual Stockholders’ Meetings, Investor Relations information, and other relevant information to stakeholders. The websites serve as a resource center for stakeholders and the public.
AEV and AboitizPower are committed to legal and regulatory compliance and overall good corporate governance practices. In 2016, there was no deviation from or violation of the rules under the Manual on Corporate Governance, other company governance and compliance policies, and protocols.
AEV and AboitizPower, along with subsidiaries and affiliates, have been consistently recognized in local and international surveys, assessments, and governance scorecards, as among the Philippines’ best-managed companies.
As in previous years’ PSE Bell Awards, AEV was cited for its good corporate governance and AboitizPower received the Bell Award for Excellence in Corporate Governance. AboitizPower was also recognized in 2016 as Overall Best Managed Power Company in Asia by FinanceAsia. Both companies scored very high in the 2016 round of the ASEAN Corporate Governance Scorecard (ACGS) for publicly listed companies in the Philippines. The ACGS is reviewed by the Institute of Corporate Directors in partnership with the SEC.