Governance Practices

At the Aboitiz Group, our corporate governance framework is deeply rooted in our core values, meticulously outlined in our Corporate Governance Manual, Code of Ethics, and key company policies and protocols. This robust framework is designed to ensure that we operate with integrity, accountability, and transparency across all levels of the organization.

Our governance framework encompasses the entire Aboitiz Group, led by a diverse and proficient Board of Directors and Board Committees. A capable and accountable management team supports them and empowered team members, all united by a shared commitment to the Aboitiz core values.

We believe that strong corporate governance is essential to achieving our strategic objectives and ambitious growth aspirations. By adhering to these principles, we continue to drive change for a better world, advancing business and communities as we navigate the challenges of the Great Transformation. Our goal is to shape a future where innovation is the cornerstone of our growth, aspiring to become the Philippines’ first techglomerate.

Together, we are committed to upholding the highest standards of corporate governance, ensuring that our actions reflect our values and contribute to the sustainable success of the Aboitiz Group.

Aboitiz Governance Structure

Together, we are committed to upholding the highest standards of corporate governance, ensuring that our actions reflect our values and contribute to the sustainable success of the Aboitiz Group.

For more details, kindly refer to AEV’s organizational structure.

Aboitiz High Impact Governance

Governance at Aboitiz is strengthened by the synergistic partnership between the highly skilled and diverse Boards and Board Committees of AEV. This collaboration is reinforced by capable and responsible management teams, as well as empowered team members. In the face of a rapidly changing business landscape, this collaborative governance model equips Aboitiz with the adaptability to navigate challenges and pursue strategic growth directions.

Board of Directors

The Board of Directors plays a pivotal role in steering our Group’s corporate governance journey. Operating independently but working closely with management, each member is dedicated to collectively provide the Company with a strategic roadmap for long-term growth, competitiveness, and the establishment of a sustainable business that is poised to thrive for another century. The Board is responsible for articulating and reviewing the Company’s purpose, vision, mission, and strategies to achieve its objectives. They ensure that the strategic direction of the Company’s businesses is well-defined, properly managed, and aligned with the overarching strategic goals of the Aboitiz Group.

Comprising nine members from diverse professional backgrounds, including legal and finance professionals, engineers, former or current Chief Executive Officers/Chief Operating Officers, auditors, and accountants, the AEV Board of Directors brings a wealth of experience. Many members have held management positions in both the private and government sectors, and in multilateral agencies. The Board includes three Independent Directors, five Non-Executive Directors, and one Executive Director. The Chairman of the AEV Board, a Non-Executive Director, operates independently from management, focusing on ensuring the efficient conduct of board-related activities and the effective discharge of the duties and responsibilities of the AEV Board. The Lead Independent Director, a highly qualified professional familiar with the Company’s operations and the industries in which it operates, plays a crucial role in this regard.

Summary of Changes in the Board of Directors

As of December 31, 2023, the members of the AEV Board of Directors were the following:

Conduct and Attendance at Board and Board Committee Meetings

The AEV Board of Directors is expected to serve with the highest level of diligence. In 2022, the Company increased the quorum and voting requirements for the Board of Directors to two-thirds (2/3). The Board of Directors also increased its members’ attendance requirement from 50% to 75%. Failure to meet the attendance requirement is a ground for preventive suspension.

To ensure their availability, the schedule for regular Board and committee meetings for the upcoming year is approved and circulated to members before the start of the year. Directors are not only expected to attend meetings but also to actively participate by providing valuable professional counsel, strategic guidance, and constructive feedback.

Board and Board Committee meetings are conducted either in person or through a secure video-conferencing platform, allowing each member to interact and participate remotely. Meeting materials are disseminated through a secure digital platform at least five days prior to the meeting, maintaining the practice from previous years. Additionally, meeting protocols are regularly reviewed and refined to enhance the efficiency of virtual Board and committee meetings.

Commitment to the Corporate Mission, Vision, and Strategy

The directors of AEV recognize the critical importance of their role in leading and steering their respective companies toward profitable and sustainable growth. The Board’s primary responsibility is to represent and protect the interests of its shareholders—the owners of the business—and other key external stakeholders. Actively engaged in strategic business discussions, the directors provide invaluable insights during special strategy board meetings and gatherings with management teams.

Guided by the Aboitiz Group’s purpose, brand promise, mission, and vision, the Board members, along with key officers and heads of the Strategic Business Units (SBUs), participate in an Annual Board Retreat and Strategy Refresh. This event is essential for reviewing and aligning the corporate initiatives and strategic roadmaps of the Group’s core businesses with contemporary market and economic trends, both locally and globally. Beginning 2022, the AEV Board of Directors has included strategy discussions at every board meeting, ensuring continued strategic alignment despite the challenges of the global landscape.

Roles and Responsibilities of the Board of Directors    

The Company believes that compliance with the principles of good governance begins with the Board of Directors. The Director’s office is one of utmost trust and confidence. The Board of Directors is expected to act in a fully informed basis, in good faith, with due diligence and care and act in the best interest of the Company in a manner characterized by transparency, accountability and fairness in the exercise of leadership in directing the Company’s sustainable growth. The roles and responsibilities of the members of the Board of Directors are outlined in the Company’s Manual on Corporate Governance and the Board Charter.

Board Independence

The Company acknowledges that Independent Directors play a crucial role in fostering accountability and transparency. By offering unbiased insights and challenging management decisions, they safeguard against conflicts of interest and ensure ethical operations. Their presence on the Board strengthens investor confidence and demonstrates the Company’s commitment to governance practices that prioritize shareholder value and stakeholder trust.

To enhance the independence of the Board, the Corporate Governance Manual mandates that the AEV Board of Directors must have at least three Independent Directors. These Independent Directors provide an impartial perspective, ensuring the best interests of the Company and all stakeholders are prioritized. Their independence must be clear to stakeholders, beneficiaries, and the public.

To qualify as independent, a Director must have no interests or relationships with the Company that could compromise their impartiality. Upon election or re-election, an Independent Director submits a letter of confirmation to the Corporate Secretary, affirming their lack of affiliations with the Company, management, or controlling shareholders. This certification is included in the Company’s Information Statement, distributed to shareholders for the Annual Shareholders’ Meeting (ASM) where directors are elected.

In 2023, the AEV Board comprised a majority of Non-Executive Directors, including three qualified Independent Directors and five Non-Executive Directors out of nine Board members. Additionally, the AEV Board appointed a Lead Independent Director to act as an intermediary between the Chairman and other directors when necessary. This role is pivotal in maintaining Board effectiveness by serving as a liaison between the Chairman and other directors, ensuring effective communication and mediation when needed.

Annual Executive Session of Independent Directors

In accordance with the Board Protocol, the Company ensures that its Independent Directors meet at least once a year for an Executive Session. Additionally, Independent Directors have the prerogative to meet periodically in executive sessions without the presence of executive directors or management, providing a platform for candid and unbiased discussions. These sessions are presided over by the Chairman of the Environmental, Social, and Corporate Governance (ESCG) Committee (now Sustainability, Governance, and Related Party Transactions (SGRPT) Committee).

Held every January of every year, the Independent Directors determine the agenda for these executive sessions, focusing on topics they deem pertinent. While these discussions are essential for in-depth deliberation, formal actions of the Board are reserved for official Board meetings. This structure allows Independent Directors to explore issues thoroughly and provide well-considered input during Board meetings.

The Executive Sessions of Independent Directors are a critical aspect of AEV’s commitment to robust corporate governance. These sessions enhance the Board’s effectiveness by fostering an environment where Independent Directors can freely discuss and address issues, ultimately contributing to the Company’s strategic direction and governance.

By upholding this practice, AEV demonstrates its dedication to maintaining transparency, accountability, and integrity within its leadership, reinforcing the trust and confidence of its shareholders and stakeholders.

Board Diversity 

The diversity in professional and personal backgrounds of AEV Board members, encompassing age, ethnicity, culture, skills, competence, gender, knowledge, and expertise, is instrumental in ensuring a balanced deliberation and decision-making process. This diversity prevents any director or group of directors from dominating discussions, leading to well-rounded decisions that benefit from a wide array of perspectives. AEV leverages this diversity to formulate sound corporate strategies, driving the organization towards long-term success.

The annual selection process of directors aims to appoint a diverse mix of highly competent individuals with in-depth knowledge and experience in AEV’s core industries. Factors such as independent-mindedness, ethical behavior, and value contribution are carefully considered.

Recognizing that a sustainable enterprise transcends current leadership, the AEV Board appointed Ms. Ana Maria A. Delgado as Director in 2018. Ana represents a new generation of homegrown leaders, bringing fresh perspectives to the Board’s deliberations. She is the first of two women on AEV’s Board of Directors. In 2021, Ms. Joanne De Asis was nominated and elected as Independent Director, the second female Director of AEV, highlighting its commitment to diversity and inclusion.

Every year, the AEV Board conducts a review of its members’ profiles, aligning them with an ideal Board profile to determine their qualifications in relation to the Group’s long-term strategic direction. This initiative aims to identify areas for improvement, ensuring that the Board’s members possess complementary competencies and skill sets. Additionally, it assesses the qualifications of potential future candidates, enhancing the Board’s ability to adapt to evolving challenges and opportunities.

By prioritizing diversity and leadership renewal, the AEV Board demonstrates its commitment to governance practices that foster innovation, resilience, and sustainable growth, positioning the organization for continued success in the dynamic business landscape.

Term Limits of Independent Directors 

AEV complies with the requirements of SEC Memorandum Circular No. 19, Series of 2016, prescribing a maximum term of nine years for independent directors, starting from 2012. At the same time, the Company recognizes and respects the inviolable statutory right of each shareholder to vote and be voted for as a director.

In 2023, all independent directors have tenure less than nine years since they were first elected.

Directorships in Other Listed Companies

The SGRPT Committee, acting as the Nomination Committee, selects qualified nominees for election as directors. One consideration is the number of directorships a nominee has in other corporations or organizations and the ability of the nominee director to diligently and effectively perform his or her duties and responsibilities.

Since 2022, AEV directors, including Independent Directors, are prohibited to sit in more than five publicly-listed companies (PLCs) outside the Aboitiz Group. In 2023, none of the AEV directors sat in more than five PLCs outside the Aboitiz Group.

Nomination, Selection, and Election Process

The Aboitiz Group is committed to a transparent process for the nomination, selection, and election of directors, which are fundamental elements of a well-functioning corporate governance system. AEV follows a formal and transparent procedure to ensure the protection of all shareholders’ interests. Any shareholder may nominate a director or independent director. The SGRPT Committee acts as the Nomination Committee, overseeing the selection of candidates for independent, executive, and non-executive director positions.

In identifying suitable candidates for directors, AEV employs professional search firms and external sources, including director databases and professional organizations in the Philippines and abroad. This comprehensive approach ensures that the pool of candidates is diverse and highly qualified.

Qualification and Evaluation

Members of the AEV Board follow the qualifications for directors outlined in the Revised Corporation Code, Securities and Regulation Code, its Implementing Rules and Regulations, related SEC issuances, and best practices in corporate governance. Annually, the AEV Board reviews the profiles of its current members against an ideal Board profile. This assessment ensures that directors possess the necessary qualifications aligned with the Group’s long-term strategic direction, reinforcing the Board selection process by ensuring directors have complementary competencies, skill sets, and capabilities to contribute to the Company’s success.

Nomination and Election Process

After rigorous screening, the SGRPT Committee submits the final list of director candidates to the Company’s Corporate Secretary. The profiles of each nominee are disclosed and included in the Information Statement distributed to shareholders in preparation for the ASM. This transparency allows shareholders to evaluate the background and qualifications of nominees before the ASM.

During the ASMs, AEV shareholders elect their representatives to the Board by voting in person, by proxy, or by voting in absentia. Proxy votes received by the Corporate Secretary before the ASM are validated by the Company’s Proxy Validation Committee, comprising the Chief Compliance Officer, the principal accounting officer, and the Group Internal Audit Head. AEV adheres to the “One-Share, One-Vote” rule, allowing any minority shareholder to influence Board composition through individual nominations and cumulative voting rights. This statutory right, granted by the Revised Corporation Code, ensures that all shareholders have a voice in the election process.

Directors serve a one-year term until their successors are elected at the next ASM, in accordance with the Revised Corporation Code, the Company’s by-laws, and relevant SEC guidelines. This process underscores AEV’s commitment to robust corporate governance and the continuous enhancement of its leadership framework.

BOARD COMMITTEES

The SUSTAINABILITY, GOVERNANCE, AND RELATED PARTY TRANSACTIONS (SGRPT) COMMITTEE (formerly the Environmental, Social, and Corporate Governance Committee) plays a pivotal role in spearheading the creation and oversight of a robust governance mechanism. This mechanism is specifically designed to champion sustainability practices, encompassing responsible environmental stewardship, meaningful social development, and the implementation of sound corporate governance principles. In addition to these core responsibilities, the SGRPT Committee also fulfills the essential functions of the Nomination and Remuneration Committees. In carrying out its duties and responsibilities, the SGRPT Committee is supported by Ex-Officio Members consisting of executive heads of relevant corporate services units such as compliance, human resources, sustainability, and external relations. These officers regularly attend committee meetings to act as resource persons. The Chairman of the SGRPT Committee is the Lead Independent Director.

Key Areas of Focus in 2023 (Sustainability and Governance)

Key Areas of Focus in 2023 (Related Party Transactions)

The AUDIT COMMITTEE represents the Board in discharging its responsibility related to audit matters for the Group. Independent Directors comprise the majority of the members of the Board Audit Committee, including its Chairman. The Company’s Chief Financial Officer and Internal Audit Head, who performs the functions of a Chief Audit Executive, are regular attendees and resource persons at each committee meeting. At the end of every Audit Committee meeting, Committee Members meet without the presence of any executives.

Key Areas of Focus in 2023

Sufficiency of Internal Control and Compliance System

The AEV Audit Committees assists the Board in fulfilling oversight responsibilities over the Company’s system of internal control. They are responsible for monitoring, overseeing, and evaluating the duties and responsibilities of management, the internal audit activity, and the external auditors as those duties and responsibilities relate to the organization’s processes for controlling its operations. In 2023, the President and Chief Executive Officer, Chief Financial Officer, and Internal Audit Head of AEV attested to the sufficiency of the Company’s internal control and compliance system.

Audit and Non-Audit Fees

In 2023, the Company reappointed accounting firm SyCip Gorres Velayo & Co. (SGV) as their respective independent external auditor. Ms. Jhoanna Feliza C. Go is the current audit partner in her second year after replacing Maria Veronica Andrea R. Pore in 2022. The Board Audit Committee reviews the performance of its external auditors. As a policy, the Board Audit Committees recommend to their respective Boards the choice of external auditor for the year. The committees also review the extent, nature, and fees for the services to be provided to ensure that the independence of the external auditors is preserved.

The following table sets out the aggregate fees paid by AEV and AboitizPower for professional fees rendered by SGV:

The RISK AND REPUTATION MANAGEMENT COMMITTEE exercises oversight functions over the Company’s enterprise risk management and reputation management, including their respective corporate brands and communication strategies. The committees ensure the establishment and maintenance of a robust risk management framework and the requisite supporting governance mechanism within their respective companies. In 2023, the Risk and Reputation Management Committee of AEV was composed of all the three Independent Directors, one Executive Director, and one Non-Executive Director who also acted as the Chairman of the Committee. The Chairman of the Risk and Reputation Management Committee of AEV is not the Chairman of the Board or any other Board Committees.

Key Areas of Focus in 2023

The EXECUTIVE COMMITTEE assists the Board in the management and oversight of the Company’s day-to-day operations and strategic decision–making during the intervening period between full Board meetings. The President and CEO of AEV is the committee chairman. Since the company’s Board of Directors met monthly in 2023, no Executive Committee meetings were held during the year.

The CYBER AND INFORMATION SECURITY COMMITTEE assists the AEV and AboitizPower Boards in providing the strategic direction, ensure the establishment of the company’s system of governance (processes, policies, controls and management) on all matters relating to information security and cybersecurity. In 2023, the AEV Cyber and Information Security Committee was composed of two Independent Directors and two Non-Executive Directors, including its Chairman.

Key Areas of Focus in 2023

The SGRPT Committee ensures that the remuneration for Directors and Key Executives is consistent with the Group’s culture, strategy, and business policies. Guided by the Aboitiz Compensation Philosophy, factors such as individual and organizational performance, and inflation, among others, are taken into account to ensure that the compensation structure will attract, retain, and engage the best talents to contribute to the success of the business. Each year, the results of the study are presented, discussed, and approved during the first meeting of the SGRPT Committee.

In a transparent and collaborative process, the results of this comprehensive study are presented, discussed, and subject to approval during the first meeting of the ESCG Committees of both companies each year. This practice not only emphasizes the commitment to fair and equitable compensation but also underscores the proactive and strategic approach taken to align remuneration practices with the Group’s evolving objectives. Through these deliberative measures, the ESCG Committees actively contribute to fostering a work environment that values and rewards excellence while reinforcing the Group’s commitment to sustainable success.

In 2023, the Directors of AEV and AboitizPower were entitled to the following compensation:

Other than the directors’ per diem and monthly allowance, there are no other standard arrangements under which directors are compensated or to be compensated. In no case has each Board’s total yearly compensation exceeded 10% of their respective company’s net income before income tax of the preceding year.

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

In 2023, the members of the AEV Board conducted the following performance reviews and assessments:

The Corporate Governance Code recommends that at least once in every three years, an independent third-party facilitator must support the conduct of the Board performance assessment. AEV complied with this requirement in 2023 with the engagement of Complete Coherence, a leadership development and coaching company based in the United Kingdom. The results of the assessment, and the recommendations from Complete Coherence, were presented and discussed at the Board meeting on December 12, 2023.

AEV places a premium on the proactive engagement of their Directors with current industry dynamics and business trends to bolster the Group’s competitiveness. Equally vital is the assurance that all Directors have a clear understanding of their duties and responsibilities, supported by the necessary information to effectively fulfill their functions.

To this end, the AEV Corporate Governance Manual requires every director to undergo an initial onboarding session upon first appointment to the Board, and to commit to a continuing professional training program (formal and informal) to ensure that they remain abreast of the latest developments in internal policies, pertinent laws and regulations, and the diverse business risks relevant to the Group’s operations. Taking a hands-on approach, the Chairman of the Board, in collaboration with the Chief Compliance Officer, actively monitors the compliance with these requirements. This collaborative effort reinforces a commitment to continuous learning and professional development, positioning AEV’s leadership to navigate the complexities of the business landscape with acumen and foresight.

In 2023, AEV continued to organize its “Aboitiz Board Learning Sessions”, a series of online seminars with renowned experts across the globe. The seminars are intended to provide the Directors and Officers with current industry developments, business trends, and corporate governance practices. These aim to promote the Group’s competitive advantage, build on the techglomerate premium, and address any identified skill or competency gaps. These sessions were attended by the Directors and Officers of the various strategic business units, including AboitizPower.

AEV organized fifteen (15) Board Learning Sessions and two Virtual Asset Tours. The Securities & Exchange Commission (SEC) accredited some of these sessions in compliance with the four-hour mandatory corporate governance seminars for Directors and Officers of publicly listed companies.

Protecting the rights of its shareholders is paramount to the Company. The goal is to ensure that any shareholder is equally afforded the opportunity to exercise their rights regardless of the number of shares he or she owns.

Among the rights of the Company’s shareholders are: (i) to receive notices of and to attend shareholders’ meetings; (ii) call for a special board meeting and propose a meeting agenda; (iii) to participate and vote on the basis of the one-share, one-vote policy; (iv) vote in person, in absentia, or through proxy; (v) ratify corporate actions; (vi) nominate, elect, remove, and replace Board members (including via cumulative voting); (vii) inspect corporate books and records; (viii) receive dividends; and (ix) to be timely and regularly informed of the state of the Company’s businesses.

Right to Dividends

The right to receive dividends is a basic shareholder right. The Company promotes this basic shareholder right by adopting a clear and transparent dividend policy.

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

In the last three (3) years, the Company has paid the following dividends:

Right to Participate in Fundamental Corporate Changes

As a matter of policy, AEV encourages the active participation of shareholders in corporate decisions, such as amendments to the Articles of Incorporation and By-laws, appointment of auditors, and the approval of audited financial statements, among others. The Company’s Amended By-Laws and Manual mandate that 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 the Company.

At the ASM, the Board of Directors present and submit proposed actions to shareholders for approval. The shareholders are also given an opportunity to ask questions regarding the proposed actions during the meeting. Only upon receipt of the affirmative vote of shareholders representing at least 2/3 of the issued and outstanding capital stock of the Company, will such action be considered as duly approved by the shareholders.

In 2020, AEV amended its Articles of Incorporation to (1) Article Two: include in the primary purpose the power to act as guarantor or surety for the loans and obligations of its affiliates and associates; (2) Article Four: amend the corporate term to perpetual existence, and (3) Article Seven: amend the features of the preferred shares. The amendment to Article Four was proposed to align with the provisions of the Revised Corporation Code on the perpetual existence of corporations. Meanwhile, the amendments to Articles Two and Seven were proposed to give AEV the additional flexibility in its capital- and fund-raising activities. The proposals received the affirmative vote of shareholders representing at least 2/3 of the issued and outstanding capital stock of the Company.

On October 1, 2020, the SEC approved the amendment to AEV’s Articles of Incorporation.

Effective Participation in Shareholders’ Meetings

AEV remains steadfast in its commitment to conducting its annual and special stockholders’ meetings with unwavering transparency and fairness, ensuring shareholders access accurate and timely information crucial for making well-informed decisions.

Detailed financial, non-financial, and operational performance summaries of AEV and its subsidiaries are meticulously outlined in their respective Definitive Information Statements and Annual Reports. These essential documents, distributed prior to ASMs and readily available on the company’s website, offer invaluable insights for shareholders. Additionally, profiles of both new and returning directors, alongside a concise summary of the Board and Board Committee’s performance assessments, attendance records, compensation details, and notable achievements for the year, are transparently shared.

To bolster accessibility, notices for AEV ASMs, complete with quick response (QR) codes linking to the Definitive Information Statements, are published in two widely circulated newspapers at least 21 days before the meetings.

The dedication to shareholder engagement is palpable in the meticulous planning of stockholder meetings. Notices are disseminated a minimum of 28 days ahead of time, outlining all agenda items for discussion. No new agenda items are introduced during the meeting, and the rationale behind each item is explicitly included in the notices.

AEV prioritizes providing accessible venues for shareholders to exercise their right to attend and participate in shareholder meetings. For the fourth consecutive year in 2023, AEV conducted a fully digital stockholders’ meeting, providing shareholders with options to cast votes through non-traditional means such as remote communication or via an online voting portal.

During stockholder meetings, an open forum enables shareholders to voice concerns, pose questions, and provide feedback on the state of the business through the ASM online portal or live interaction if time permits. There are no barriers hindering shareholders from communicating with each other, directors, or the Corporate Secretary.

Minutes of the ASM

AEV’s commitment to transparency is underscored by the prompt publication of meeting minutes, including questions, answers, issues, motions, agreements, and voting results, which are made publicly available on the company’s website under the Investor Relations page by the next working day. AEV promptly discloses all approved items to the Philippine Stock Exchange (PSE), the Philippine Dealing & Exchange Corp (PDEx), and the Securities and Exchange Commission (SEC) by the following business day. The minutes of AEV’s 2023 and 2024 ASMs were made available on the following day on April 25, 2023 and April 23, 2024, respectively. The minutes can be accessed in the Investor Relations Section of www.aboitiz.com.

Approval of Directors’ Remuneration and Per Diem

The Company has a compensation transparency policy for its Directors and key officers, pursuant to SEC rules. Information based on Board remuneration is readily accessible through the Company’s SEC Form 17-A (Annual Report), the Annual Corporate Governance Report, ESCG Committee minutes and its Company Website. The ESCG Committee ensures that the Directors’ and executives’ remuneration are consistent with the Company culture, strategy and business policies at a level sufficient to attract and retain Directors and officers who are needed to run the Company successfully. The Company rewards its individual Directors and key officers based on their ability to execute their duties and responsibilities.

Performance is evaluated and compensation is reviewed annually. The Company ensures that it pays its Directors and Officers competitively by comparing rates with other Philippine based companies through participation in and access to market salary surveys. Any adjustments in the Director’s remuneration and per diems must be approved by the Company’s shareholders.

In 2021, the Company’s shareholders approved the following adjustments:

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

AEV is committed to a transparent and inclusive nomination and election process, ensuring all shareholders can shape the Company’s leadership. Shareholders have the right to nominate an individual to the Board. The Corporate Secretary receives nominations following the Company’s By-Laws and the Guidelines for the Nomination and Election of Independent Directors, approved on March 23, 2017. This process is outlined in the Company’s Definitive Information Statement, Annual Report, and accessible on the Company’s website. Key points of the nomination guidelines are also shared with shareholders at every ASM. The SGRPT Committee oversees the candidate selection.

The Amended By-Laws ensure all shareholders, regardless of shareholding size, participate in decision-making under the one-share, one-vote policy. Shareholders can vote their shares for multiple candidates, cumulate votes for one candidate, or distribute votes among several candidates. The total votes cast must not exceed the number of shares owned multiplied by the number of directors to be elected. Delinquent stock is not eligible to vote.

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

The Office of the Corporate Secretary ensures that the minutes of annual and special shareholders’ meetings comprehensively document all matters discussed. This includes the opportunity for questions, the questions and answers themselves, motions made, resolutions approved, and voting results. Additionally, the Company discloses all items approved at the shareholders’ meeting to the Philippine Stock Exchange (PSE), Philippine Dealing & Exchange Corp. (PDEx), and the Securities and Exchange Commission (SEC) the next business day. Voting results, including quorum and a summary of resolutions approved, are made publicly available on the Company’s website under the Investor Relations page by the next working day.

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

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

During the Company’s 2023 and 2024 ASMs Board members, the CEO, CFO, external auditors, stock transfer agent, the Board of Election Inspectors, and other key officers and heads of strategic business units were present and made themselves accessible to shareholders. The minutes of the ASM available in the Company’s website also documents the attendance and participation of the Board of Directors, Management and the members of the different Board committees.

Voting by Proxy/ Voting in Absentia

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

Beginning 2010, the Company removed the notarization requirement of proxy forms to be used in all shareholders’ meetings. In 2020, the Company allowed the electronic submission of proxies as part of the full digitization of its ASM.

Every year, the Company formed a Proxy Validation Committee, consisting of representatives from senior management to validate and count proxies received for the ASM. An independent auditing company, Luis Cañete & Company, was appointed as independent inspector/ scrutineers for the validation of votes during the 2023 and 2024 ASMs.

Voting by Poll and Remote Communication

Voting during the ASM is done by poll, under the supervision of the Company’s Corporate Secretary, Stock and Transfer Agent, and validated by the Proxy Validation Committee and an independent third party inspector of votes.

Since 2020, the Company allowed voting through remote communication or in absentia, stockholders may access AEV’s online voting portal to register and vote on the matters submitted for shareholders approval at any ASM.

Appointment of Independent Party Inspector to Validate Vote at the ASM

During the 2023 ASM, the Company appointed Luis Cañete & Company, an independent accounting firm, as the Independent Board of Election Inspectors who witnessed and verified counting of the votes. The method of counting the votes was done in accordance with the general provisions of the Revised Corporation Code by the representatives of the Office of the Corporate Secretary, who served as members of the Election Committee.

Disclosure of the Results of the ASM

The Minutes of the 2023 and 2024 ASM were uploaded to the Company’s website on April 25, 2023 and April 23, 2024, respectively, or one day after the ASM.

Results of the votes taken during the ASMs, as verified by the Independent Board of Election Inspectors, were immediately flashed to the stockholders after the adjournment of the ASM. Copies of the voting tally sheet, as confirmed by the Independent Board of Election Inspectors, were uploaded to the company’s website on the following day after the ASM.

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

During the 2020 and 2021 ASMs, AEV provided at least 28 days prior notice of the meeting and information on all proposed resolutions and rationale thereof with corresponding explanation for each agenda item requiring shareholders’ approval in the notices of the ASM. The Company also published the notices of the shareholders’ meetings in national newspapers of general circulation.

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

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

The Company’s Revised Manual gives the Board the power to appoint an independent party to evaluate the fairness of the transaction price for the acquisition or disposal of assets.

In 2023, the Company engaged Nomura as the sole financial advisor to evaluate the fairness of the transaction price (fairness opinion report) of AEV’s acquisition of 40% beneficial interest in Coca-Cola Beverages Philippines, Inc.

The Aboitiz Group believes that it is the duty of the Board of Directors to advance the Group’s interests and those of its stakeholders. To this end, AEV has adopted a Policy on Conflict of Interest, which promotes an ethical corporate culture and prohibits directors, officers, team leaders, and team members from taking advantage of access to corporate property and proprietary information for personal gain. The policy also encourages the disclosure of relationships, actions, or transactions that may cause a conflict of interest.

In addition, AEV directors are required to abstain or inhibit themselves from any Board discussion or decision that affects or has relevance or relation to their personal, business or professional interests; are prohibited from engaging in any business that competes with or is antagonistic to the Group; and must notify the Board, through the Corporate Secretary, prior to accepting any directorship outside the Aboitiz Group during their term.

The Company believes that a commitment to proper disclosures and transparency of the businesses elicit the trust and confidence of stakeholders. The Aboitiz Group puts a high premium to its reputation and work at keeping this well-earned trust of stakeholders gained over the years. Pursuant to the Group’s commitment to transparency and accountability, the Company continues to improve its dedicated corporate governance web page on its website.

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

Transparent Ownership Structure 

The Governance and Compliance Team, as well as the Board Secretariat monitor and timely disclose any changes in the share ownership of their respective Directors, Executives, and Key Officers. They also ensure that trading blackouts are implemented at the right time and to appropriate individuals.

Every quarter, AEV and AboitizPower disclose a public ownership report detailing the extent of ownership of their respective controlling stockholders, including the shareholdings of subsidiaries and affiliates, and of Directors and Key Officers. In addition, the two companies disclose a list of their top 100 stockholders every quarter. They also disclose their top 20 stockholders, including record and beneficial stockholders owning more than five percent of their respective outstanding capital stock. Both companies, however, have no control over external stockholders who opt to put their shares under nominee holding companies such as the PCD Nominee Corporation, and are thus unable to make any disclosure on the details of beneficial ownership.

Please click here for the latest ownership structure.

Identity of the Beneficial Owners Holding 5% or More Shares 

Disclosure of Direct and Indirect Shareholdings of Major/Substantial Shareholders

Disclosure of Direct and Indirect Shareholdings of Directors and Senior Management

Based on the Company’s Public Ownership Report which was filed with the SEC and PSE and subsequently posted in the Company’s website, below is the direct and indirect ownership of directors and senior management of the Company as of December 31, 2023:

Insider Trading Prohibition

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

Reporting of Share Trades

The Company ‘s General Trading Policy requires the Board of Directors and the officers to notify the Company at least one (1) day before they deal in the company shares. Directors and key officers are required to regularly report their beneficial ownership of shares in the Company and any dealings in AEV shares must be reported to the Corporate Secretary within one day from the sale or purchase of AEV shares. In addition, the Company discloses beneficial ownership in its Disclosures (SEC Form 23-B and Public Ownership Report, the Annual Report, and the Information Statements to the SEC including trading of Company shares of its directors and key officers. There has been no investigation of violation and conviction of insider trading and abusive self-dealing by directors, management and employees in the past five years that the Trading Policy has been in place.