Governance Structure

The Board exercises its express powers in the By-Laws and in the Manual and those that may be authorized by the Board and under existing laws, rules and regulations.

The Board’s Governance Responsibilities:

Article I, Section 1.4 of the Company’s Corporate Governance Manual outlines the governance responsibilities of the Board.

1. The Board members shall act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the Company and all shareholders;

2. The Board shall oversee the development of and approve the Company’s business objectives and strategy, and monitor their implementation, in order to sustain the Company’s long-term viability and strength;

3. The Board shall be responsible for ensuring and adopting an effective succession planning program for directors, key officers, and management to ensure growth and a continued increase in the shareholders’ value. This includes adopting a policy on the retirement age for directors and key officers as part of management succession and to promote dynamism in the Company.

4. The Board should align the remuneration of key officers and board members with the long-term interests of the Company. In doing so, it should formulate and adopt a policy specifying the relationship between remuneration and performance. Further, no Director should participate in discussions or deliberations involving his own remuneration.

5. The Board should have the overall responsibility in ensuring that there is a groupwide policy and system governing related party transactions (RPTs) and other unusual or infrequently occurring transactions, particularly those which pass certain thresholds of materiality. The policy should include the appropriate review and approval of material or significant RPTs, which guarantee fairness and transparency of the transactions. The policy should encompass all entities within the Group, taking into account their size, structure, risk profile and complexity of operations.

6. The Board should be primarily responsible for approving the selection and assessing the performance of the Management led by the Chief Executive Officer (CEO), and control functions led by their respective heads (Chief Risk Officer, Chief Compliance Officer, and Chief Audit Executive).

7. The Board should ensure the establishment of an effective performance management framework that will ensure that the Management, including the Chief Executive Officer, and personnel’s performance is at par with the standards set by the Board and Senior Management.

8. The Board should oversee that an appropriate internal control system is in place, including setting up a mechanism for monitoring and managing potential conflicts of interest of Management, board members, and shareholders. The Board should also approve the Internal Audit Charter.

1. The Board should oversee that a sound enterprise risk management (ERM) framework is in place to effectively identify, monitor, assess and manage key business risks. The risk management framework should guide the Board in identifying units/business lines and enterprise-level risk exposures, as well as the effectiveness of risk management strategies.

10. The Board should adopt a Code of Business Conduct and Ethics, which would provide standards for professional and ethical behavior, as well as articulate acceptable and unacceptable conduct and practices in internal and external dealings. The Code should be properly disseminated to the Board, senior management, and employees. It should also be disclosed and made available to the public through the Company website.

Aside from these, Section 3.1. of the Charter of the Board also lists the following powers of the Board:

1. The Board should ensure the integrity of the Company’s accounting and financial reporting systems, including the independent audit, and that appropriate systems of control are in place, in particular, systems for risk management, financial and operational control, and compliance with the law and relevant standards.

2. The Board shall ensure a formal, transparent board nomination and election process.

3. The Board shall monitor the effectiveness of the Company’s governance practices and make changes as needed.

4. The Board shall oversee the process of disclosure and communications

5. The Board shall regularly review, at least annually, the mission and vision of the Company and shall revise the same, as may be necessary, in accordance with the strategic directors of the Company.

Without prejudice to the requirements of existing laws, rules and regulation, and the provisions of the By Laws and the Manual, the Board may delegate the implementation of the foregoing functions to the Board Committees, Executive Officers and key senior managers of the Company.

Manila Water encourages the selection of a mix of competent directors, each of whom can add value and contribute independent judgment to the formulation of sound corporate strategies and policies. 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 skills, competence, gender, age and ethnicity, as well as religious, political or cultural background.

Article 5.1.b.ii of the Charter of the Board of Directors states that "The Board shall encourage the shareholders of the Company to select nominees that will promote diversity in the membership of the Board". 

As part of the implementation of our policy on Board Diversity, we have atleast one (1) female Independent Director serving as a member of the Board. 

The Board has eleven (11) members who are elected by the stockholders during the annual stockholders' meeting. The directors shall hold office for one (1) year and until their successors are elected and qualified. 

The Board of Manila Water is composed of Directors with a collective working knowledge, experience or expertise that is relevant to the Company’s industry or sector. The Board membership has an appropriate mix of competence and expertise and it is required that members remain qualified for their positions individually and collectively, to ensure that the Board is able to fulfill its roles and responsibilities and respond to the needs of the organization based on the evolving business environment and strategic direction.

It is a policy of Manila Water that the Board shall be composed of a majority of non-executive directors who possess the necessary qualifications to effectively participate and help secure objective, independent judgment on corporate affairs and to substantiate proper checks and balances.

In compliance with the requirements of the law, the Company’s Manual, and the rules and regulations of the Securities and Exchange Commission (SEC), the Company has four (4) independent directors as members of the Board.

Under the Charter of the Board, Independence is defined as, with respect to any person, the absence of any restrictions or limitations or freedom from any interests or relationships that would interfere with the exercise of impartial and objective judgment in carrying out the responsibilities of that person.

Under the Manual, Independence is defined as, with respect to any person, the absence of any restrictions or limitations or freedom from any interests or relationships that would interfere with the exercise of impartial and objective judgment in carrying out the responsibilities of that person.

Thus, Independent directors shall hold no interests or relationships with the Company that may hinder their independence from the Company or its management, which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

An Independent Director shall, within thirty (30) days from his election or appointment, including any re-election or re-appointment, submit to the Corporate Secretary a letter of confirmation stating that he holds no interests affiliated with the Company, its management or controlling shareholder.

Finally, the Company also subscribes to the requirements of independence under existing laws, rules and regulations, in particular, the SEC Memorandum Circular No. 16 Series of 2002. Hence, the Company ensures that its independent directors have all the qualifications and none of the disqualifications specified in the said SEC Memorandum Circular.

Among the Independent Directors, the Board should designate a lead director if the Chairman of the Board is not independent, or if the positions of the Chairman of the Board and Chief Executive Officer are held by one person. The functions of the lead independent director include, among others, the following: serves as an intermediary between the Chairman and the other directors when necessary; convenes and chairs meetings of the non-executive directors; and contributes to the performance evaluation of the Chairman, as required.

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 of a Board member. 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 fees should fairly compensate the directors for the work required consistent with the Company’s size and industry.

In a special meeting held on April 11, 2011, the Board approved an increase in the Board remuneration. The approved remuneration for each member of the Board consists of ₱500,000 as a 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 meeting held on April 11, 2011, the stockholders approved the amendment of the By-Laws, giving the Board of Directors the authority to determine the amount, form, and structure of the fees and other compensation of the directors. 

On November 18, 2021, the Board resolved that Executive Directors shall not receive per diem remuneration for his participation and attendance in the meetings of the Board and Board Committees.

On February 24, 2022, the Board approved to discontinue the payment of per diems of directors for their attendance and participation in asynchronous meetings of the Board and Board Committees. 

The Talent and Remuneration Committee, who is responsible for determining matters relating to the remuneration and benefits of the Board, ensures that any director shall not decide on his own remuneration during his incumbent term.  

The Board formulates strategic objectives, key policies and procedures for the management of the Company. Furthermore, the Board has established 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, at least annually, the mission and vision statements of the Company, and to revise the same as may be necessary, in accordance with the strategic objections, directions and key policies of the Company, to sustain market competitiveness and enhance shareholder value.

Accordingly, in its special meeting held on August 25, 2021, the Board approved the new mission, vision, and purpose statement of the Company, and its core values as follows:

Purpose

Better lives and resilient economies throughout critical infrastructure.

Mission

Deliver world-class services tailored to the needs of communities we serve, through sustainable solutions and purpose driven, empowered, innovative teams. 

Vision

A global leader in providing quality water & environmental services supportive of sustainable development. 

Core Values

•    Care 

•    Excellence 

•    Tenacity 

•    Collaboration 

•    Integrity

•    Pioneering 

The Board has an annual evaluation process that is required to be accomplished by the directors, which enables an informed and objective assessment of the following:

1. Board and Board Committee processes and meetings; 
2. Compliance by the Board and Board Committees with their functions and responsibilities;
3. Board-Management and Board Committee-Management relationships;
4. Board member and Board Committee member self-evaluation; and
5. Evaluation of the 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. The Charter of the Board is available for download at the Company’s website.

Download the Evaluation Form 

In addition to the annual Board evaluation process, the Audit Committee complies with 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 Committee in accordance with the Circular.

The members of the Board are required 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. 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 and during their term 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, and other relevant matters, about 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 to enable them to have a working knowledge of the statutory and regulatory requirements affecting the Company. The corporate orientation program includes modules on the operations of the Company, as well as relevant contracts of the Company, and 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, Manila Water encouraged its directors to attend external trainings, courses or continuing professional education programs on corporate governance. The Directors are required to inform the Office of the Corporate Secretary of the trainings or courses attended for record and disclosure purposes.

The following trainings were attended by the Company's Board of Directors in 2022:

^{1Mr. de Larrazabal was elected as a Director on September 30, 2022. He serves the unexpired term of Mr. Zobel de Ayala.}

The directors should attend and actively participate in all meetings of the Board, Committees, and Shareholders in person or through tele-/videoconferencing conducted in accordance with the rules and regulations of the SEC, except when justifiable causes, such as, illness, death in the immediate family and serious accidents, prevent them from doing so. In Board and Board Committee meetings, the director should review meeting materials and if called for, ask the necessary questions or seek clarifications and explanations.

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 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.

To promote transparency, the Board has a policy of requiring the presence of at least one (1) independent director in all its meetings. In the past twelve (12) years, the Board has not conducted a meeting without the presence of at least one independent director.

Under the Manual, a director’s absence or nonparticipation, for whatever reason in more than fifty percent (50%) of all Board meetings, both regular and special, in a year is a ground for temporary disqualification in the succeeding election.

The non-executive directors (NEDs) are mandated to hold separate periodic meetings with the external auditor and heads of the internal audit, compliance and risk functions, without any executive directors present to ensure that proper checks and balances are in place within the Company. These meetings shall be chaired by the Lead 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 when a higher quorum is required in contracts binding on the Company.

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.

In accordance with the Manual, all the members of the Board were present in at least fifty-one percent (51%) of the Board meetings held in 2022. A total of fourteen (14) meetings were held by the Board in 2022. These are as follows:

• special meeting held on January 13, 2022;
• regular meeting held on February 24, 2022;
• special meeting held on March 26, 2022;
• organizational meeting held on April 20, 2022;
• special meeting held on May 12, 2022;
• special meeting hled on May 30, 2022;
• special meeting held on July 20, 2022;
• special meeting held on August 11, 2022;
• regular meeting held on August 23, 2022;
• special meeting held on September 30, 2022;
• special meeting held on November 11, 2022;
• regular meeting held on November 17, 2022;
• special meeting held on November 30, 2022; and
• special meeting held on December 23, 2022. 

The meeting of the non-executive directors' was held on November 17, 2022;

.As Executive Directors, Mr. Jose Victor Emmanuel A. de Dios, the President and CEO of the Company, and Mr. Donato C. Almeda, the Chief Regulatory Office of the Company are never parties to the meeting(s) of the Non-Executive Directors.
 

² Mr. Consing resigned as a director effective January 18, 2023 

³ Mr. de Larrazabal was elected as a director on September 30, 2022. He served the unexpired term of Mr. Zobel de Ayala.