Ayala companies management teams with Ayala Corporation board of directors

Corporate Governance at Ayala

Ayala's business success is a result of trust built and nurtured over the years. Our company adheres strictly to the principles of good corporate governance. We consider them fundamental to the creation of shareholder value and to our long-term growth, especially in light of sustainability issues that affect our reputation and our resources.

We support the growth of industry by checking our entire business for anti-competitive behavior, and anti-trust and monopoly practices, and there were no reported incidents pertaining to these last year. Nor were we subjected to any fines and sanctions for non-compliance with laws and regulations pertinent to our various businesses. We believe integrity, transparency, and accountability are important requisites for a robust and beneficial Philippine economy.

Board Structure

The Board of Directors represents the company and the shareholders. It is accountable to them for creating and delivering value and for protecting their best interests through good and effective governance.

The Board sets the vision, strategic objectives, key policies, and procedures for managing the company, and provides mechanisms for properly monitoring and evaluating management performance. It is also tasked with ensuring that adequate internal control mechanisms are in place for good governance.

The Board consists of seven directors elected annually by the stockholders. It is a collegial body and all its members are given the freedom and opportunity to discuss matters that they feel are important to the company.

Three members of the Board are independent directors who are able to exercise their best judgment for the company and its shareholders. Together making up more than 40 percent of the Board, they have no interests or relationships that may hinder their independence from the company or the Management, or interfere with their exercise of judgment in carrying out their responsibilities.

Four committees support the Board in carrying out its responsibilities, namely, the Executive Committee, Personnel and Compensation Committee, Nomination Committee, and Audit and Risk Committee. These provide organized and focused means for directors to achieve specific goals and to address issues, including issues relating to corporate governance.

Next to the Board of Directors, Ayala Corporation has a Holdings Management Committee, which consists of the chief executive officers of the subsidiaries and affiliates. At the parent company level, there is also an executive committee and a management committee.

Jaime Augusto Zobel de Ayala holds the positions of Chairman of the Board and Chief Executive Officer. Fernando Zobel de Ayala holds the position of President and Chief Operating Officer. The respective roles of the Chairman/ CEO and the President/COO are complementary and ensure an appropriate balance of power and increased accountability.

No member of the Board or the Management owns two or more percent of the outstanding capital stock.

Board Membership and Performance

The Nomination Committee attends to matters pertaining to qualifications for membership to the Board. It is responsible for screening candidates and ensuring that persons to be nominated at the Annual Stockholders’ Meeting possess the qualifications, and none of the disqualifications, stated in the company’s by-laws and relevant statutes.

The Committee endeavors to have a mix of competent directors who will add value by their presence and who, by their use of independent judgment, contribute to the formulation of sound corporate strategies and policies.

The Nomination Committee also has the task of reviewing and evaluating the qualifications of persons nominated to corporate positions that require appointment by the Board.

The compensation scheme for executives is based on their performance. As an additional incentive, they may be given stock option plans, for which the Board allots three percent of the company’s authorized capital stock. The grant of stock option plans is based on the individual executive’s performance over a three-year period.

Policies and Codes of Conduct

Ayala believes in the primacy of the person, in shared values, and in the empowerment of people; these are its basic operating principles.

Ayala and its employees commit to live out core values delineated in the company Code of Ethical Behavior, namely, the values of Integrity, Long-Term Vision, Empowering Leadership, and Commitment to National Development.

A company Manual of Corporate Governance supplements and complements the Articles of Incorporation and By-Laws, setting forth principles of good and transparent governance. In it, among others, is a policy on Conflict of Interest. Should an actual or potential conflict of interest arise involving a Board member, it must be fully disclosed and the Board member in question should not take part in its resolution. If there is a continuing conflict of interest of a material nature, the director should resign or, should the Board deem it necessary, be removed from the Board.

There is a Code of Conduct for all employees, senior executives, and members of the executive and management committees. Employees are expected to conduct business in accordance with Philippine laws and regulations at all times. In instances of doubt on the legality of any matter, employees are encouraged to consult the Legal and Compliance department.

Since 2002, Ayala has adopted a group-wide enterprise risk management framework that is in line with the corporate governance infrastructure.

Communication and Information

Ayala, through Investor Relations and Corporate Communications, addresses the various information requirements of the investing public, including minority shareholders. Briefings and meetings with analysts, including financial analysts from the banking community, are regularly conducted. The company gives analysts and media access to senior management.

All disclosures are done in a timely manner to the stock exchange and to the various publics through quarterly briefings, annual shareholders’ meetings, conference calls, road shows and investor conferences, company websites, emails, one-on-one meetings, and telephone calls.

The company and the highest governing body welcome feedback and recommendations from its employees. There is an informal labor-management council through which dialogue may be held. It consists of union officers and representatives and the human resource department, and meets regularly.

For the full discussion of corporate governance practices of individual companies, please refer to their respective annual reports.