Manila Water Company, Inc. (the “Company”) is dedicated to observing the highest standards of corporate governance in order to serve the best interests of the investing public. The Board, the Management and the employees of the Company are one in the conviction that sound and effective governance is fundamental to the Company’s continued success and stability, and will enable it to create and sustain increased value for its shareholders. Maintaining this strong foundation of good governance becomes more essential as Manila Water grows, both in its existing space and in the new markets it enters.
THE BOARD OF DIRECTORS
The Company prides itself with its Board of Directors (the “Board”), composed of highly competent individuals who are well-recognized in their respective fields and in the business community. The Board provides a clear vision towards the formulation of sound corporate strategies, and oversees the systemization, improvement and upholding of transparency in governance. The Board provides guidance in achieving fairness and accountability in all major dealings of the Company, with the objective of protecting the interests of all stakeholders.
THE PROFILES OF THE BOARD OF DIRECTORS & EXECUTIVE OFFICERS
Download the Charter of the Board of Directors
Board Diversity Policy
The Company values the inputs and opinions of each Director, ensuring that a Director shall not be discriminated upon by reason of gender, age, ethnicity, or political, religious or cultural beliefs. Towards this end, the Board has adopted a policy of diversity in gender, age and ethnicity, as well as religious, political or cultural background. Through this policy, the Board encourages the shareholders of the Company to nominate and select individuals who will promote diversity in the membership of the Board.
The Board has eleven members who are elected by the stockholders during the annual stockholders' meeting. All nominations to the Board are undertaken in accordance with the By-Laws of the Corporation.
Every stockholder has a right to submit a nomination for election to the Board. All nominations to the Board, whether for first time nominees or repeat nominees, or for independent directors, shall be submitted to the Nomination Committee at least thirty (30) working days before the date of the annual stockholders meeting. The stockholders, in making their nominations, or the Company, may make use of professional search firms or external sources of candidates when searching for candidates to the Board.
Upon expiration of the period within which nominations for election to the Board are required to be submitted, the Nomination Committee shall hold a meeting for the specific purpose of determining whether the nominees to the Board have all the qualifications and none of the disqualifications (as specified in the Corporation Code, the Manual of Corporate Governance, the Charter of the Board, the Securities Regulation Code Rules, and applicable laws, rules and regulations). The Nomination Committee shall evaluate each and every nomination and for this purpose, may even make an inquiry with their professional networks and outside references. The Nomination Committee undertakes the process of identifying the quality of directors aligned with the Company's strategic directions. Towards this end, the Committee confirms that all nominees for election have all the qualifications and none of the disqualifications to become directors, and that they have the competence and professional background that will enable them to perform their duties as directors of a highly regulated business as that of the Company. After evaluation of the qualifications/disqualifications of the nominees, the Nomination Committee shall issue a resolution whether to endorse or not the nominees for election to the Board of Directors. If a nominee is not endorsed for election by reason of a disqualification, the resolution of the Nomination Committee should clearly specify the grounds relied upon for disqualification.
The elected members of the Board hold office for one (1) year and until their successors have been elected and qualified. They are mandated to oversee the management of the Company, and, in the performance of their duties, must exercise their best and unbiased judgment to protect and promote the interest of the Company and its shareholders.
In compliance with the requirements of the law, the Company’s Manual of Corporate Governance (“Manual”), and the rules and regulations of the Securities and Exchange Commission (SEC), the Company has four independent directors as members of the Board. A director is considered independent if he holds no interests or relationships with the Company that may hinder his independence from the Company or its management, or would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Company also fully subscribes to the requirements of independence under existing laws, rules and regulations.
Roles and Responsibilities
In order to strengthen the participation of the Board and its Committees in the enhancement of corporate governance practices of the Company, the Board is guided by its own charter. Specifically, the Charter of the Board, among others:
• sets out the specific functions of the Chairman of the Board and the President, emphasizing their separate roles and responsibilities;
• imposes limitations on directorships in publicly listed companies, institutionalizes the performance evaluation of the Board, the Board Committees, and the President;
• requires a quorum of 2/3 of the number of directors fixed in the Articles of Incorporation; and
• requires the Board to conduct an annual review of the mission and vision of the Company.
The Board determines a level of remuneration for directors that shall be sufficient to attract and retain directors, and compensate them for attendance at meetings of the Board and Board Committees and their performance of numerous responsibilities as directors. The Remuneration Committee is responsible for recommending to the Board the fees and other compensation for directors. In fulfilling this duty, the Remuneration Committee is guided by the objective of ensuring that the proposed compensation should fairly pay directors for work required of the Company’s size and scope.
In a special meeting held on April 11, 2016, the Board approved an increase in the Board remuneration. The approved remuneration for the members of the Board consists of ₱500,000 as fixed annual retainer fee, ₱200,000 for each meeting of the Board actually attended, and ₱50,000 for each Committee meeting actually attended. This Board remuneration structure was approved by the stockholders in its annual stockholders’ meeting of even date, and has not been modified since then. In the same annual stockholders’ meeting held on April 11, 2011, the stockholders approved the amendment of the By-Laws, giving the Board the authority to determine the amount, form, and structure of the fees and other compensation of the directors.
Vision, Mission and Corporate Objectives
To ensure good governance of the Company, the Board is mandated under the Manual to formulate strategic objectives, key policies and procedures for the management of the Company. Furthermore, the Board is to establish the mechanism for monitoring and evaluating the performance of the Management, especially that of the President and CEO. Under its Charter, the Board is enjoined to periodically review the vision, mission, corporate strategic objectives and key policies of the Company to sustain the Company’s market competitiveness and enhance shareholder value..
In its regular meeting held on August 11, 2015 that was attended by all the members of the Board, the Board has confirmed the following mission and vision of the Company, as representative of its strategic and corporate objectives:
“Our mission is to create an exceptional customer experience in the provision of sustainable solutions vital to health and life.”
“Our vision is to become a leader in the provision of water, used water and environmental services which will empower people, protect the environment, and enhance sustainable development.”
Annual Board Evaluation
The Company has an annual Board evaluation process that is required to be accomplished by the directors, which enables an informed assessment of the following:
1. Board and Board Committee processes and meetings;
2. Compliance with the responsibilities and functions of the Board and Board Committees;
3. Board-Management relationship;
4. Board Member’s self-evaluation; and
5. Performance of the President and CEO.
This evaluation enables the Board and the Management to determine areas that need improvement on the very scope and criteria of the evaluation process. It also allows the Board to explain their respective ratings and to provide their own comments on the matters discussed in the evaluation. The scope and criteria for the Board Evaluation Process is contained in the Charter of the Board of Directors.
Download the Criteria for the Board Evaluation
In addition to the annual Board evaluation process, the Audit and Governance Committee adopted SEC Memorandum Circular No. 4 Series of 2012 on the Guidelines for the Assessment of the Performance of Audit Committees of Companies Listed on the Philippine Stock Exchange which took effect on June 30, 2012. Pursuant to this, an annual evaluation is also being conducted to assess the performance of the Audit and Governance Committee.
These annual evaluation processes are facilitated by the Office of the Corporate Secretary.
Corporate Governance Orientation for Directors
The members of the Board are to regularly attend seminars and conferences to continuously update themselves on the developments in policy, regulations and standards on good corporate governance. Under the Company’s Manual, the members of the Board are also provided with such resources, trainings and continuing education to enable each member to actively, independently and judiciously participate in Board and Committee meetings.
Newly-elected members of the Board undergo orientation programs for them to have a working knowledge of the statutory and regulatory requirements affecting the Company. They are also required to keep abreast with industry developments and business trends in order that they may promote the Company’s competitiveness and sustainability. Attendance in a corporate governance seminar conducted by a duly-recognized private or governmental institution is also a mandatory requirement prior to their assumption of office.
The Company also provides general access to training courses to its directors as a matter of continuous professional education as well as to enhance their skills as directors, and keep them updated in their knowledge and understanding of the Company’s business. The Board and Board Committees are also allowed to hire independent legal counsel, accountants or other consultants to advise them when necessary.
At every Board meeting, directors are provided with a management update on the operational and financial status of the Company to ensure that the directors are continuously informed of new developments and the performance of the Company.
Upon assumption of office, a director appointed for the first time undergoes a corporate orientation program conducted by the Office of the Corporate Secretary. The corporate orientation program includes modules on the operations of the Company, as well as relevant contracts of the Company. The orientation also covers existing policies, rules and regulations of the Company. The curriculum of the orientation program may be revised as often as necessary to include other relevant subjects and matters relating to the Company. In addition to the corporate orientation program for new directors, the Office of the Corporate Secretary informs the Board of any updates on the matters covered by the orientation program. The corporate orientation program and updates are usually given during the regular meetings of the Board.
These programs notwithstanding, directors are encouraged to attend external trainings, courses or continuing professional education programs on corporate governance. Directors are required to inform the Office of the Corporate Secretary of the trainings or courses attended for record and disclosure purposes.
Download the Attendance of the Board of Directors in Corporate Governance Trainings:
2015 Attendance in Trainings
2016 Attendance in Trainings
SEC Letter on the Exemption of Ambassador Jose L. Cuisia, Jr.
Under the Charter of the Board, the Board institutionalized a policy of holding at least six (6) meetings in a year. These include the organizational meeting of the Board which is usually held immediately after the annual stockholders’ meeting. Under the By-Laws, special meetings may be called by the Chairman, Vice Chairman, President or at the instance of a majority of the members of the Board
The Company’s directors are mandated to act in good faith, with due care and in the best interests of the Company and all its shareholders, including minority shareholders, based on all relevant information. Each director is expected to attend board meetings and applicable committee meetings and to ensure that other commitments will not interfere in the discharge of their duties.
Under the Manual, a director’s absence or non-participation for whatever reason in more than fifty percent (50%) of all meetings, both regular and special, in a year is a ground for temporary disqualification in the succeeding election. To promote transparency, the Board has a policy of requiring the presence of at least one independent director in all its meetings. In the past eleven years, the Board has not conducted a meeting without the presence of at least one independent director.
Under the Charter of the Board, at least two-thirds (2/3) of the members of Board (as fixed in the Articles of Incorporation) shall constitute a quorum for the transaction of corporate business, and every decision of at least a majority of the directors present at a meeting at which there is a quorum shall be valid as a corporate act, except as may have been provided in contracts binding on the Company and for the election of officers which shall require the vote of a majority of all the members of the Board. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum is obtained.
On the other hand, unless otherwise provided by law or regulations, all regular or special meetings of stockholders, the attendance of the stockholders constituting at least a majority of the outstanding voting capital stock of the Company must be present in person or by proxy, in order to constitute a quorum. Generally, the affirmative vote of the stockholders constituting at least a majority of the outstanding voting capital stock of the Company shall be necessary to approve matters requiring stockholders’ action.
However, stockholders constituting at least two thirds (2/3) of the outstanding capital stock of the Company must be present in person or by proxy in order to approve any of the following corporate measures: (i) the amendment of the Articles of Incorporation, (ii) adoption and/or amendment of the By-Laws, (iii) sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the corporate property, (iv) incurring, creating or increasing bonded indebtedness, (v) increase or decrease of capital stock, (vi) merger or consolidation of the Company with another company, (vii) investment of corporate funds in another corporation or business or for any purpose other than the primary purpose for which it was organized, and (viii) the dissolution of the Company.
Board Meeting Attendance
In accordance with the Manual, all the members of the Board attended at least fifty percent of the Board meetings held in 2015. A total of seven meetings were held by the Board in 2015. These are as follows:
• a regular meeting on February 20, 2015;
• a special meeting on March 17, 2015;
• an organizational meeting on April 7, 2015;
• a meeting of the Non-Executive Directors on April 7, 2015; and
• regular meetings on June 9, 2015, August 11, 2015 and November 26, 2015.
As an Executive Director, Mr. Gerardo C. Ablaza, Jr. was not a party to the meeting of the Non-Executive Directors.
Download Attendance in Board and Board Committee Meetings
2015 Attendance of the Board of Directors in Board and Board Committee Meetings
THE BOARD COMMITTEES
The Board is supported by several committees, namely: the Executive Committee, Related Party Transactions Committee, Audit and Governance Committee, Nomination Committee, Remuneration Committee, Risk Committee, and the Committee of Inspectors of Ballots and Proxies. These committees are required to report to the Board a summary of the actions taken on matters submitted to them for consideration. Each of the Board Committees has its own charter that provides guidance on the manner by which its members and the committees should exercise their functions and mandates.
Board Committee Section
Charter of the Committees
THE OFFICE OF THE CORPORATE SECRETARY
The Corporate Secretary ensures that the Board and the Management follow internal and external rules and regulations, and facilitates clear communications between the Board and Management. More importantly, the Company recognizes the mandate of the Office in championing the compliance of the Board and the Company with corporate governance practices and policies.
For this purpose, the Office of the Corporate Secretary, under its own Charter, is mandated to coordinate with the Office of the Compliance Officer with regard to the formulation and implementation of the corporate governance practices of the Company, especially those relevant to and affecting the Board. This is to ensure that sound corporate governance practices are embedded across the entire organization.
Download the Charter of the Office of the Corporate Secretary
The Management is primarily responsible for the operations of the Company. As part of its accountability, the Management is required to provide the Board with adequate and timely information on the operations and affairs of the Company.
The roles of the Chairman and the President were made separate to ensure an appropriate balance of authority, increased accountability and greater capacity of the Board for independent decision-making. The Manual requires the Company to disclose the relationship between the Chairman and the President, if any. In this regard, the Chairman of the Board, Fernando Zobel de Ayala, and the President and CEO of the Company, Gerardo C. Ablaza Jr., are not related to each other.
The Board, with the assistance of the Remuneration Committee, the Nomination Committee and the Company’s Corporate Human Resources Group, has adopted a professional development program for employees, officers and senior management. Through competency management, the Company has put in place a process to determine the skills necessary for particular positions in the Company, and identifies key talents for purposes of succession. The Company’s Corporate Human Resources Group has developed a Talent Master Plan to determine the optimal organizational structuring, recruitment strategies, performance evaluation methodologies, total rewards management and career development. These are all geared to attract, retain and engage the company’s employees, officers and senior management, and to cultivate them to become the Company’s future business leaders. The development of a leadership talent pool is crucial to the success of the Company in the future. Hence, it is one of the top strategic priorities of the Company. For the succession of the top key management positions, the Company has formed an Acceleration Pool composed of selected high potential key talents within the organization.
Talents identified to be part of the Acceleration Pool undergo the following:
1. assessment that gauges a talent’s business driver readiness and leadership competencies;
2. creation of an Individual Development Plan that outlines possible developmental areas and stretched assignments; and
3. coaching and mentoring sessions with the Management Committee.
The Management Committee is composed of the top key executives of the Company from the President/CEO to those occupying positions equivalent to Vice Presidents.
THE COMPLIANCE OFFICER
In accordance with the Manual, and in order to ensure adherence to the principles and best practices in corporate governance, the Board appoints a Compliance Officer whose primary role is to operationalize the Manual, and monitor overall compliance with its provisions and requirements. Moreover, the Compliance Officer is tasked with the duty to communicate with the SEC on matters relating to the Company’s compliance with the Manual and the clarification of matters required by the said Commission. Together with his primary function, the Compliance Officer is also tasked to oversee the implementation of the Company’s Code of Business Conduct and Ethics and the Related Party Transactions Policy. Luis Juan B. Oreta, who is concurrently the Company’s Chief Finance Officer and Treasurer, is the Compliance Officer designated to monitor, ensure and confirm adherence of the Company to the best practices in corporate governance.
THE CORPORATE GOVERNANCE OFFICE
The Legal and Corporate Governance Department (the “Department”) is the unit tasked to formulate and implement the initiatives and policies on corporate governance. The Department, on matters of corporate governance, reports directly to the Compliance Officer under the supervision of the Audit and Governance Committee. The Department has been active in the continuous reorientation of all the Company’s employees and business partners on the Company’s governance policies, particularly on matters contained in the Manual and the Code of Business Conduct and Ethics, such as transparency, honesty and fair dealing, and prompt and adequate disclosure of material information, among other policies.
Among the more important initiatives of the Department is the identification of gaps and challenges on corporate governance practices across the organization. This allows the Department to propose improvements on the Company’s policies based on international corporate governance standards. Finally, the Department, in coordination with the Office of the Corporate Secretary, also provides timely updates to the Board and Management on the current and best practices on corporate governance in the industry and globally.
The Internal Audit (IA) team conducts an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps the organization accomplish its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
The IA reports to the Audit and Governance Committee. It supports the Audit and Governance Committee in the effective discharge of its oversight role and responsibility.
The audit team consists of either a Certified Public Accountant, Certified Internal Auditor, Certified Information Systems Auditor, Certified in Risk and Information Systems Control, Civil Engineer, Electrical Engineer, or a mix thereof. Annually, a risk-based internal audit plan is prepared and approved by the Audit and Governance Committee. The IA conducts its activities guided by the Institute of Internal Auditors’ (IIA) Professional Practices Framework consisting of the International Standards for the Professional Practice of Internal Auditing (Standards), the Definition of Internal Auditing and the Code of Ethics. In June 2012, the Internal Audit function was rated “Generally Conforms” after a thorough third-party Quality Assessment Review (QAR) by the Institute of Internal Auditors Inc. The rating, considered the highest possible rating in connection with the QAR, confirmed that IA’s activities are conforming to and in compliance with the International Standards for the Professional Practice of Internal Auditing. The Standards requires that the external assessment be conducted at least once every five years.
In the last annual stockholders’ meeting held on April 11, 2016, the stockholders approved the re-appointment of SGV & Co. as external auditor of the Company for an audit fee of ₱2,000,000.00, exclusive of Value Added Taxes. Prior to the stockholders’ meeting, the Audit and Governance Committee endorsed, and the Board approved, the endorsement of SGV & Co. for re-appointment as the external auditor of the Company.
The external auditor of the Company is tasked with the audit of its annual and quarterly financial statements and reports. Where the Company engages the services of SGV& Co. for non-audit or consultancy services, the Company, as a matter of policy, ensures that the fees received by SGV & Co. on such non-audit or consultancy services are not more than the approved audit fees in order not to impair the external auditor’s independence which should be maintained at all times to assure the stockholders of the integrity of the Company’s financial statements and reports.
|External Audit Fees
|Financial Statements Audit
THE CHIEF RISK OFFICER
The Chief Risk Officer (CRO) oversees the entire risk management function and leads the development, implementation, maintenance and continuous improvement of Enterprise Risk Management (ERM) Program processes and tools. The CRO is the Vice Chairman of the Risk Management Executive Committee (RMEC) which directs the Enterprise Risk and Insurance Management (ERIM) Department in facilitating the ERM processes throughout the Company and in collecting and analyzing key business risk information for reporting to the RMEC.
THE ENTERPRISE RISK AND INSURANCE MANAGEMENT
The Enterprise Risk and Insurance Management Department is responsible for the sustained implementation of the Enterprise Risk Management Program of the Company and ensures that key risks are identified and managed by the respective risk owners. ERIM Department is also responsible for managing the insurance program of the Company and provides oversight on the insurance program of the subsidiaries, with the objective of making the program optimal, cost-effective, risk-based and responsive to the Company’s needs.
INVESTOR RELATIONS DEPARTMENT
The Investor Relations Department (IR) is tasked to regularly keep the Company’s investors and stakeholders informed of the developments in the Company’s business. For this purpose, the IR Department conducts quarterly analysts’ briefings and regular meetings with shareholders, fund managers and institutional investors to keep them updated on relevant material information and details on transactions of the Company. A press briefing is also held each year immediately after the annual stockholders' meeting to engage other stakeholders, specifically the media. The IR Department is easily reached through phone, electronic mail, or through the Company website for any stockholder, stakeholder or investor concerns.
In the pursuit of the Company’s thrust to continuously improve awareness of best practices in the conduct of its business and operations especially in corporate governance across the organization, including dealings with its business partners and customers, the Company constantly updates its website, www.manilawater.com, with a section dedicated to corporate governance. The Corporate Governance section of the website contains all disclosures made by the Company to the PSE and SEC, as well as its Manual, the Code, the Charters of the Board and its Committees, the various corporate governance policies and other matters and information of relevance to the stockholders and all stakeholders. The Company discloses its corporate governance practices, corporate events calendar, and other material information on its website in a timely manner.
The website also has a dedicated Investor Relations section that houses all information that may be required by the investors, shareholders and stakeholders. The site has been enhanced to be user-friendly and is accessible to the public at all times.
CORPORATE GOVERNANCE CAMPAIGN
Instilling awareness of the Company’s corporate governance practices among its stakeholders is a key initiative of the Compliance Officer in close coordination with the Office of the Corporate Secretary, the Legal and Corporate Governance Division, and the Audit and Governance Committee. This is achieved by conducting corporate governance orientations and by communicating the corporate governance practices of the Company through the Company website, annual reports, seminars and other literature. Furthermore, the Company offers various trainings, programs and workshops for its directors, officers, employees, and contractors and vendors in order to instill good corporate practices.
CORPORATE GOVERNANCE RECOGNITION AND AWARDS
The Company’s commitment to uphold the highest standards of good corporate governance has again been confirmed and recognized through the prestigious awards it has received in 2015. The Company made it to the inaugural list of the Association of Southeast Asian Nations’ (ASEAN) top 50 publicly listed companies (PLCs) in the region in recognition of the Company’s remarkable efforts in practicing good governance. The top 50 companies, including the Company, were acknowledged during the first ASEAN Corporate Governance Awards held last November 14, 2015. The Company’s Chief Finance Officer and Treasurer, Luis Juan B. Oreta, was also given the honor as the 2015 ING FINEX CFO of the Year in an awarding ceremony held on November 25, 2015.