Board of Directors
The AEV and AboitizPower Boards of Directors are at the helm of our Group’s corporate governance journey. Independent from management, they are committed to provide each company a strategic roadmap towards long-term growth, competitiveness, and building a sustainable business that, it is hoped, will thrive for another 100 years. Each Board performs the crucial role of articulating and reviewing each company’s purpose, vision and mission, and strategies to carry out its goals. They ensure that the strategic direction of each company’s businesses are well defined, properly managed, and are aligned with the overall strategic goals of the Aboitiz Group.
The Boards of AEV and AboitizPower each have nine members, all of whom come from diverse professional backgrounds. They are composed of legal and finance professionals, engineers, former or current CEO/COOs, auditors, and accountants. Many of them have management experience in the private and government sectors, as well as in multilateral agencies. AboitizPower has three Independent Directors, three Non-Executive Directors, and three Executive Directors. AEV has three Independent Directors, five Non-Executive Directors, and one Executive Director. The Chairmen of the AEV and AboitizPower Boards are highly experienced, NonExecutive Directors who are not involved in the Group’s day-to-day operations. They therefore remain focused on refining each company’s longterm strategy. The Lead Independent Directors are highly qualified professionals who are familiar with the operations of each company, and the industries it does business in.
In 2020, the members of the AEV Boards of Directors were the following:
Commitment to the Corporate Mission, Vision, and Strategy
The directors of AEV and AboitizPower acknowledge the importance of their role to lead and steer their respective companies as profitable and sustainable enterprises. The Board’s role for each company is to represent and protect the interests of its shareholders – the owners of the business – and other key external stakeholders. Guided by the Aboitiz Group’s purpose, brand promise, mission, and vision, the members of each Board, together with key officers and heads of the Strategic Business Units, participate in an Annual Board Retreat and Strategy Refresh. They review and align the corporate initiatives and strategic roadmaps of the Group’s core businesses with contemporary market and economic trends, both locally and worldwide. In 2020, this annual engagement was held in a series of online sessions that began on October 29, 2020.
Roles and Responsibilities of the Board of Directors
The Company believes that compliance with the principles of good governance begins with the Board of Directors. The Director’s office is one of utmost trust and confidence. The Board of Directors is expected to act in a fully informed basis, in good faith, with due diligence and care and act in the best interest of the Company in a manner characterized by transparency, accountability and fairness in the exercise of leadership in directing the Company’s sustainable growth. The Company’s Board responsibility is a recurring cycle as shown below:
The Board is actively engaged in discussions of strategic business issues and the directors are consulted for their invaluable inputs through the special strategy board meetings and gatherings with the management teams. The Board Corporate Governance Committee formalized these gatherings into an annual Board Retreat or strategy meetings in an atmosphere of relaxed, open and intellectual exchange.
As part of its director development program and to ensure that the members of the Board remain up to date with business and legal developments, the Board is provided with regular legal bulletins, and invited to economic and industry-specific briefings and strategy and management conferences within the Aboitiz Group. All directors, including the Independent Directors, actively participate in corporate governance seminars to further enhance their knowledge and expertise.
The Company’s By-Laws require that the quorum for valid board meetings is a majority of the members of the Board, in accordance with the with the Revised Corporation Code of the Philippines. As a matter of long standing Board practice, decisions of the Company’s Board are always made with the consensus or vote of all the Company’s independent directors, thus resulting in a unanimous vote of all directors of the Board.
By virtue of the Manuals and their respective Committee charters, the AEV and AboitizPower ESCG (Environmental, Social and Corporate Governance) Committees were tasked to develop and recommend a set of corporate governance principles, aimed to promote the independence of their respective Boards, including standards and guidelines applicable to the selection, contribution, and conduct of Board members.
In 2020, the AEV and AboitizPower Boards were composed of a majority of Non-Executive Directors. AEV has three qualified Independent Directors and five Non-Executive Directors out of its nine Board members. Meanwhile, AboitizPower has three qualified Independent Directors and three NonExecutive Directors out of its nine Board members. In addition, both Boards have each appointed a Lead Independent Director who serves as an intermediary between the Chairman and the other directors whenever necessary.
The diversity in professional and personal backgrounds (age, ethnicity, culture, skills, competence, gender, knowledge, and expertise) of Board members ensures that no director or group of directors can dominate the deliberation and decision-making process. AEV and AboitizPower can also benefit from the diverse perspectives in formulating sound corporate strategies and advancing towards long-term success. The annual selection process of directors is intended to appoint a diverse mix of highly-competent directors and officers with in-depth knowledge and experience in the core industries where AEV and AboitizPower are involved. Other factors considered are independent-mindedness, ethical behavior, and value contribution.
Recognizing that a sustainable enterprise goes beyond the current generations of leaders, the AEV and AboitizPower Boards appointed Ms. Ana Maria A. Delgado and Mr. Danel C. Aboitiz, respectively, as Directors in 2018. Ana and Danel are part of a new generation of homegrown leaders who add fresh perspectives to each Board’s deliberation. Ana is also the first female member of AEV’s Board of Directors. In 2020, the AEV and AboitizPower Boards initiated a process to review the profiles of the current Board members, in relation to an ideal profile, to determine their subjective and objective qualifications that are aligned with the long-term strategic direction of the Group. This initiative is meant to identify areas in which each Board can improve in terms of ensuring its members have complementary competencies and skill sets, and to assess the qualifications of potential future
candidates to each Board.
Term Limits of Independent Directors
AEV and AboitizPower both comply with the requirements of SEC Memorandum Circular No. 19, Series of 2016, prescribing a maximum term of nine years for independent directors, starting from 2012. In the nomination, selection, and election of the members of its Boards, AEV and AboitizPower recognize and respect the inviolable statutory right of each shareholder to vote and be voted as a director. If either AEV or AboitizPower intends to retain an independent director who has served the maximum of nine consecutive years, the shareholders of the relevant company shall be advised and provided with meritorious justifications during the Annual Shareholders’ Meeting (ASM) for which the election will take place.
Directorships in Other Listed Companies
The ESCG Committee of AEV and AboitizPower, respectively, selects qualified nominees for election as directors. One consideration is the number of directorships a nominee has in other corporations or organizations. As a corporate practice, AEV and AboitizPower directors, including Independent Directors, are discouraged from sitting as directors in more than five publicly-listed companies (PLCs). Executive Directors of AEV and AboitizPower do not generally sit on other boards of PLCs outside the Group, unless they have substantial interests in those PLCs or have been elected as independent directors. Both the AEV and AboitizPower Manuals require that the CEO and other executive directors shall submit themselves to a low active limit on membership in other corporate boards. In 2020, none of the AEV and AboitizPower directors sat in more than five PLCs.
Nomination, Selection, and Election of Directors
The Aboitiz Group believes that the nomination, selection, and election of directors are the fundamental elements of a well-functioning corporate governance system. AEV and AboitizPower both follow a formal and transparent board nomination, selection, and election process to ensure that the interests of all shareholders are protected. Any shareholder may nominate a director and independent director. The ESCG Committees of AEV and AboitizPower act as the nomination committees and oversee the selection of candidates for their respective independent, executive, and non-executive directors. In determining the right candidates for directors, both AEV and AboitizPower may use professional search firms and external sources of candidates, including director databases and professional organizations in the Philippines or abroad.
The members of the Boards of AEV and AboitizPower comply with the qualifications for directors found in the Revised Corporation Code, Securities and Regulation Code and its Implementing Rules and Regulations, related SEC issuances, and best practices in corporate governance. Considering that AEV and AboitizPower are involved in complex and highly regulated businesses, Board members are identified and nominated based on their wealth of experience, in-depth knowledge, wisdom, and capability to contribute to the long-term success of each company. The ESCG Committees of both companies, after rigorous screening of the candidates, provide the final list of candidates for directors to each company’s Corporate Secretary, for inclusion in the ASM agenda. This gives the stockholders the opportunity to assess the background and qualifications of the nominees before the actual ASM.
Every year during the ASMs, AEV and AboitizPower shareholders elect their representatives to the Boards by voting in person, by proxy, and – for the first time in 2020 – by voting in absentia. Proxy votes received by the Corporate Secretary of AEV and AboitizPower before the ASM are validated by each of the company’s Proxy Validation Committee. The members of the AEV and AboitizPower Proxy Validation Committees include each of the company’s compliance officer, its principal accounting officer, and the head of its internal audit team. AEV and AboitizPower both follow the rule of One-Share, One-Vote. Under this rule, any minority shareholder can influence the Board composition by individual nomination and by the power of cumulative voting rights. The right to cumulative voting is a statutory right granted by the Revised Corporation Code. A director holds office for one year until his successor is elected at the next ASM, in accordance with the Revised Corporation Code, each company’s by-laws, and the relevant SEC guidelines.
The Environmental, Social, and Corporate Governance Committees (formerly the Corporate Governance Committee) of AEV and AboitizPower are responsible for developing and recommending to their respective Board of Directors the appropriate governance principles applicable to the whole Group. The ESCG Committees also perform the functions of the Nomination and Remuneration Committees. In carrying out their duties and responsibilities, the ESCG Committee is supported by the company’s Compliance Officer, Chief External Relations Officer, as well as the Group Chief Human Resources Officer. These officers regularly attend committee meetings to act as resource persons. The chairmen of the ESCG Committees are the Lead Independent Directors.
In 2020, the Board ESCG continued to (1) review and monitor AEV and AboitizPower compliance with new laws and regulations (the Revised Corporation Code, various SEC and BIR issuances, among others); (2) review and update the Revised Manual to align with the best practices in the Integrated Annual Corporate Governance Report and the ASEAN Corporate Governance Scorecard; and (3) ensure that the nomination, selection, election, remuneration, and assessment of each company’s directors and officers are aligned with the Revised Manual. In the same year, the committees amended their respective Revised Manuals and Charters to establish a Board oversight and governance framework to promote and integrate the sustainability and corporate governance initiatives of AEV and AboitizPower.
The Audit Committees continued to provide oversight over AEV and AboitizPower financial reporting policies, practices and controls, and over the internal and external audit functions necessary for making good audit-related decisions. In 2020, the Audit Committee updated its Charter to improve the Company’s control performance by having an adequate and effective control system. Chaired by independent directors, the Audit Committees are composed of all three independent directors and two non-executive directors. Each company’s Chief Financial Officer and Internal Audit Head, who performs the functions of a Chief Audit Executive, are regular attendees and resource persons at committee meetings.
Sufficiency of Internal Control and Compliance System
The AEV and AboitizPower Audit Committees assist their respective Boards in fulfilling oversight responsibilities over their company’s system of internal control. They are responsible for monitoring, overseeing, and evaluating the duties and responsibilities of management, the internal audit activity, and the external auditors as those duties and responsibilities relate to the organization’s processes for controlling its operations. In 2020, the President and Chief Executive Officer, Chief Financial Officer, and Internal Audit Head of AEV and AboitizPower attested to the sufficient internal control and compliance system of their respective companies.
Audit and Non-Audit Fees
The Independent External Auditor of AEV and AboitizPower is the accounting firm of SyCip Gorres Velayo & Co. (SGV), with Ms. Maria Veronica Andresa R. Pore as current audit partner who has served since 2017. As a policy, the Board Audit Committee makes recommendations to the Board concerning the choice of external auditor and pre-approves audit plans, scope, and frequency before the audit is conducted. Audit services of external auditors for the years 2020 and 2019 were pre-approved by the Board Audit Committee. The Committee also reviewed the extent and nature of these services to ensure that the independence of the external auditors is preserved. The breakdown of the audit and non-audit fees paid by AEV and AboitizPower to their respective auditors are found in the companies’ Information Statements and Annual Reports.
The audit-related fees include assurance and services that are related to the review of AEV’s financial statements pursuant to its bond issuances. As a policy, the Board Audit Committee makes recommendations to the Board concerning the choice of external auditor and pre-approves audit plans, scope, and frequency before the audit is conducted. Audit services of external auditors for the years 2020 and 2019 were pre-approved by the Board Audit Committee. The Committee had also reviewed the extent and nature of these services to ensure that the independence of the external auditors is preserved.
The Risk and Reputation Committees exercise oversight functions over each company’s (i) enterprise risk management and (ii) reputation management, including their respective corporate brands and communication strategies. In 2020, the Board Risk and Reputation Committees updated their charter to continually identify, monitor, and manage the Group’s top risks.
The Related Party Transactions (RPT) Committees of AEV and AboitizPower are composed entirely of independent directors. In 2020, these committees approved the Revised RPT Policy and Charter of each company in compliance with the SEC memorandum circular on Material RPTs. In addition, they continued to review and approve each company’s CFO Guidelines on the Implementation of the RPT Policy, which requires all directors and officers to execute a certification to identify their related parties to be able to identify potential conflicts of interest. In 2020, AEV and AboitizPower updated the RPT Certification for Directors and Officers in compliance with the Bureau of Internal Revenue Regulation No. 19-2020 on the reporting guidelines for the transactions of individuals and juridical entities with related parties. The RPT Committees continued to ensure that related party transactions are taken on an arm’s-length basis and within market rates, with sufficient documentation, and coursed through the appropriate levels of approval. Except for the presence of the AEV and AboitizPower CFOs as resource persons, management is not invited to and has no participation in the RPT Committee.
The Executive Committees of AEV and AboitizPower were organized in May 2018 and are composed of five regular members, with at least two nonexecutive directors. The committees were formed to assist the Board in the management and oversight of each company’s day-to-day operations and strategic decision–making during the intervening period between full Board meetings. The President and CEO of AEV and AboitizPower are the chairmen of their respective Executive Committees.
The Cybersecurity Committee of AboitizPower were organized in April 2020. The purpose of the Committee is to carry out the responsibilities delegated by the Board of the Company in relation to its duty to provide strategic direction and ensure the establishment of a system of governance (processes, policies, controls, and management) for the Company and its Strategic Business Units (“SBU”, collectively the “Aboitiz Group’) on matters relating to information security and cybersecurity.
Please click here to view the Committee members and its charters.