On March 7, 2019, the Company declared regular dividend in favor of shareholders of record as of March 21, 2019 payable on April 5, 2019 based on one-third of the net consolidated income for fiscal year ending December 31, 2018 under the existing dividend policy of the Company.
The Company has consistently paid its dividends within 30 business days from its declaration date pursuant to existing best practices.
Right to Participate in Fundamental Corporate Changes
The Company recognizes and upholds the importance of a genuine exercise of shareholders’ rights as granted by the Corporation Code of the Philippines, by other related laws and by its corporate covenants under the Company’s Articles of Incorporation, By-Laws and the Company’s Manual on Corporate Governance. One important corporate governance practice followed by the Company is an assurance that shareholders enjoy all the rights granted by the Corporation Code of the Philippines. The Board and Management team ensure the promotion of these rights and have been mandated to institute remedial measures to swiftly address any violation or transgressions.
As a matter of policy, the Company encourages active participation from shareholders in corporate decisions, such as the amendments of the Company’s constitution, Articles of Incorporation and By-laws, authorization of additional shares and transfer of all or substantially all assets, which in effect results in the sale of the Company.
The Company calls for a special shareholders’ meeting or includes these proposed actions in the annual meeting if there are actions requiring shareholders’ approval. Prior to the meeting, the Company distributes to the shareholders entitled to participate in the meeting, the Information Statement which contains the details of the proposed actions to be approved by the shareholders. The agenda of the meeting also contains an explanation why the Company wishes to undertake these proposed actions.
At the ASM, the Board of Directors of the Company presents and submits to the shareholders the proposed actions for approval. The shareholders are also given an opportunity to ask questions regarding the proposed actions during the meeting. Only upon the 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.
Effective Participation in Shareholders’ Meetings
The Company strives to maintain a transparent and fair conduct of its Annual and Special Shareholders’ Meetings and ensures that accurate and timely information are available to the shareholders to enable them to make a sound judgment on all matters brought to their attention for consideration or approval. The Definitive Information Statement and the Aboitiz Integrated Annual Report, distributed prior to and during the ASM, include the highlights and summary of the financial condition of the Company. The Definitive Information Statement filed with the PSE, PDEx and SEC is prepared with the objective of providing full and accurate information enabling stakeholders to make informed decisions. Shareholders are provided with individual profiles of new and returning directors, as well as a summary of the Board meeting attendance and performance record of its directors. Agenda items are included in the notices with a corresponding rationale.
Approval of Directors’ Remuneration and Per Diem
The Company has a policy on transparency of compensation for its Directors and key officers, in accordance with the SEC rules. Information on the basis of Board remuneration is readily accessible through the Company’s SEC Form 17-A (Annual Report), the Annual Corporate Governance Report, Board Corporate Governance Committee minutes and its Company Website. The Board Corporate Governance 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 Officers based on ability to execute their duties and responsibilities. It is the Company’s philosophy to reward officers and employees based on individual performance measured through established Human Resources management metrics.
Performance is evaluated and compensation is reviewed on an annual basis. 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.
Nominations of Board of Directors and the Right to Elect Directors Individually
All shareholders have the right to nominate individually all the members of the Board. Nominations for the position of a director are received by the Corporate Secretary in accordance with the Company’s By- Laws and recently amended Guidelines for the Nomination and Election of Independent Directors which was approved on March 23, 2017. The process of nomination is clearly set out in the Company’s Definitive Information Statement, Annual Report, Guidelines for the Nomination and Election of Independent Directors, and these information are readily accessible through the Company’s website. The gist of the nominations guidelines is also broadcast to the shareholders at every Annual Shareholders’ Meeting. The Board Corporate Governance Committee oversees the selection of candidates for the Board of Directors.
Disclosure of ASM Voting Results and Tabulation Procedures
The exercise of a shareholder’s voting right is encouraged by the Company to ensure meaningful participation in all shareholders’ meetings. The Board is committed to removing costs and other administrative or practical impediments to a shareholder’s right to vote. The counting of shareholders’ votes is done in accordance with the general provisions of the Corporation Code and the Company’s internal procedures. The Office of the Corporate Secretary supervises the counting of votes through an electronic platform and through the appointed third party vote canvasser/validator.
The voting methods and vote-counting systems employed by the Company during every shareholders’ meeting are disclosed in the Information Statement and clearly explained by the Corporate Secretary to shareholders during the shareholders’ meeting to ensure the intelligent exercise of the shareholders’ right to vote.
The Company follows the system of cumulative voting for the election of directors, to allow shareholders an opportunity to elect each member of the Board of Directors individually. Other matters are also decided through voting by shares of stock. The Company adheres to the one-share, one-vote policy for the same class of shares. Proxy voting is allowed at all meetings and is facilitated through proxy voting forms. In its regular board meeting last November 12, 2010, the Board of Directors of the Company approved the deletion of the notarization requirement of proxy forms to be used in all stockholders’ meetings of the Company. This is to facilitate easy voting by shareholders, in line with the Company’s efforts to promote shareholder engagement and to improve corporate governance practices.
The Company makes the results of the votes publicly available the next working day.
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 all minutes of annual and special meetings of shareholders clearly and satisfactorily reflect all matters taken up during these meetings. All shareholders are encouraged and given the right to participate in the meetings. The opportunity to ask questions or raise issues, the questions, answers, issues and motions raised, the agreements and resolutions arrived at, the corporate acts approved or disapproved, and the voting results are reported in the minutes. The Company also discloses to PSE, PDEx and the SEC all the items approved at the shareholders’ meeting no later than the next business day. The voting results including quorum and summary of resolutions approved are made publicly available by the next working day through the Company’s website under Investor Relations’ page.
At every ASM, the Company ensures the effective exercise of the rights of its shareholders. There are no barriers or impediments preventing shareholders from consulting or communicating with one another, with the Directors and with the Corporate Secretary. Questions raised during the shareholders’ meeting by the shareholders are minuted or documented.
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.
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 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 CD kit containing the soft files of the Information Statement; and (3) downloadable form from the Company’s website.
In its regular board meeting last November 12, 2010, the Board of Directors of the Company approved the deletion of the notarization requirement of proxy forms to be used in all shareholders’ meetings of the Company. This is to facilitate easy voting by shareholders, in line with the Company’s efforts to improve corporate governance practices.
In 2018, a Proxy Validation Committee, consisting of representatives from senior management was formed by the Company in order to validate and count proxies received for the ASM. An independent auditor, Luis Cañete & Company, was appointed as independent inspector/ scrutineers for the validation of votes during the 2018 ASM.
The Company intends to secure electronic voting in absentia in its future ASMs.
Voting by Poll
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. The Board Secretariat also uses an electronic platform to record the votes.
Appointment of Independent Party Inspector to Validate Vote at the ASM
At the ASM, the Company engages an independent third party to assist in the validation of proxy and the counting of votes. In the 2017 ASM, a Proxy Validation Committee, consisting of representatives from senior management, was formed by the Board Secretariat in order to validate and count proxies received for the meeting. Luis Cañete & Co., an independent third party, provided the proxy and vote validation functions for the 2017 ASM.
Disclosure of the Results of the ASM
Approved Shareholders’ resolutions and the minutes during the ASM are disclosed and made publicly available on the Company’s website on the next working day after the ASM. The minutes of the 2018 meeting of shareholders were uploaded to the Company’s website the day after the ASM or on May 22, 2018. The minutes can be accessed on the Company’s website at www.aboitiz.com under Investor Relations’ page.
Agenda for the Shareholders’ Meeting Rationale and Explanation for Each Agenda Item
The Company provides 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 publishes 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 Board delegates to Management the power and discretion to engage independent parties to evaluate the fairness of the transaction price for the acquisition or disposal of assets, which will depend on the size of the transaction, the jurisdiction(s) involved, and the availability and capacity of expertise in-house. Depending on the factors mentioned, Management then decides whether to engage an independent party to evaluate the fairness of the transaction price.
The Company has a deep bench of competent investment and finance experts who are capable of evaluating the fairness of the transaction price. The Chief Strategy Officer of the Company has a wealth of experience in management, investment banking, and private equity investing, including almost 38 years of experience in energy markets. Taking into account the size of the transaction and its overall effect on the Company’s businesses and positions, the entire transaction, including the transaction price, is presented to the Board for approval.
In 2018, the Company appointed Morgan Stanley as financial advisor to the Aboitiz Group in the acquisition of a 75% stake in Gold Coin Management Holdings Limited.
Policies and Practices to Encourage Effective Exercise of Ownership Rights
The Company strives to maintain a transparent and fair conduct of its annual and special shareholders’ meetings and ensures that accurate and timely information should be made available to the shareholders to enable them to make a sound judgment on all matters brought to their attention for consideration or approval. The Definitive Information Statement and the Aboitiz Integrated Annual Report, distributed prior to and during the ASM and available in the Company’s website, include the highlights and summary of the financial condition of the Company. The Definitive Information Statement filed with the PSE, PDEx and SEC is prepared with the objective of providing full and accurate and truthful information enabling stakeholders to make informed decisions. Shareholders are provided with individual profiles of new and returning directors, as well as a summary of the Board meeting attendance and performance record of its Directors. Agenda items are included in the notices and includes a rationale for each agenda item.
The Company continues to exert efforts to extend the communication channels between the Company and the institutional shareholders through its Investor Relations Office and to the nominee registered shareholders through the PCD Nominee Corporation. The Governance and Compliance team reach out and provide copies of the notice and agenda of the ASM, sample proxy forms, and the Definitive Information Statement prior to the shareholders’ meeting for dissemination to the brokers to ensure that institutional investors are properly represented during the shareholders’ meeting.
As a matter of policy, the Company does not solicit proxies.