Rights of Shareholders

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.