Corporate
Governance
Universal Robina Corporation (“The Company”) acknowledges that good corporate governance is essential to build an environment of trust, transparency and accountability necessary for fostering long-term performance, financial stability, business integrity and sustainability of the company for the protection of the interests of shareholders and other stakeholders.
Corporate governance is the framework of rules, systems and processes of the corporation that governs the performance by the Board of Directors and Management of their respective duties and responsibilities to the stakeholders. The Revised Corporate Governance Manual was adopted to institutionalize corporate governance principles as a guide for the daily conduct of business.
The Company continuously strives to strengthen and improve its corporate governance practices by adopting best practices that includes building a competent board, aligning strategies with goals, managing risk effectively, adhering to high standards of ethics and integrity, and promoting accountability by defining roles and responsibilities.
The Company believes that sound and effective corporate practices are fundamental to the smooth, effective and transparent operation of the company, its ability to attract investment and enhance shareholder
value. This includes the Company’s commitment to ensure fair and equitable treatment of all shareholders, including the minority, and the protection of their rights that include:
1
Right to vote on all matters that require their consent or approval
2
Right to inspect corporate books and records
3
Right to information
4
Right to dividends
5
Appraisal right
“ The Company believes that sound and effective corporate practices are fundamental to the smooth, effective and transparent operation of the company, its ability to attract investment and enhance shareholder value. ”
The Company is transparent and fair in the conduct of the annual and special Shareholders’ meetings. To foster active shareholder participation, the Board sends the Notice of Annual and Special Shareholders’ Meeting with sufficient and relevant information at least fifteen (15) business days before the meeting, compliant with the Securities Regulation Code. The Shareholders are encouraged to personally attend such meetings and those who are unable to attend are apprised ahead of time of their right to appoint a proxy. Subject to the requirements of law, rules and regulations and the By-Laws, the exercise of that right shall not be unduly restricted and any doubt Ilabout the validity of a proxy shall be resolved in the favor of the shareholder.
Guided by the principles of fairness, accountability and transparency to the shareholding public, the Company ensures that the result of the votes taken during the most recent Annual or Special Shareholders’ Meeting are made available the next working day. In addition, the Minutes of the Annual and Special Shareholders’ Meeting may be accessed through the Company Website within five (5) business days from the end of the meeting.
Duty to Other Stakeholders
Customer's Welfare
The Company adopts customer relations policies and procedures to protect customer’s welfare. This includes providing and making available the customer relations contact information who is empowered to address and attend to customer questions and concerns.
Supplier/Contractor Selection
The Company follows the Supplier Accreditation Policy to ensure that the Company’s suppliers and contractors are qualified to meet its commitments. Apart from the accreditation process, suppliers and contractors also undergo orientation on Company policies and ethical practices.
Employees
The Board also establishes policies, programs and procedures that encourage employees to actively participate in the realization of the Company’s goals and its governance including but not limited to:
- Health, safety and welfare;
- Training and development; and
- Reward and compensation.
1. Performance-enhancing mechanisms for employee participation
The Company abides by the standards and policies set by the Department of Labor and Employment. Likewise, the Company has Security and Safety Manuals that are implemented, reviewed and regularly updated to ensure the security, safety, health, and welfare of the employees in the workplace.
The Company continuously provides learning and development opportunities for its employees through the John Gokongwei Institute for Leadership and Enterprise Development (JG-ILED), the leadership platform for systematic and sustained development programs across the conglomerate. Its mission is to enable a high performing organization that will facilitate the learning process and develop the intellectual and personal growth of all employees through targeted and customized trainings and development programs.
2. Anti-corruption programs and procedures
The Company also has an established suitable framework for whistleblowing and ensure its enforcement to allow employees and other stakeholders to freely communicate their concerns about illegal or unethical practices, without fear of retaliation and to have direct access to an independent member of the Board or a unit created to handle whistleblowing concerns.
" The Board sets the tone and makes a stand against corrupt practices by adopting anti-corruption policies and programs. "
The anti-corruption programs and procedures of the Company are summarized below:
Conflict of Interest
The Company's Code of Business Conduct and Conflict of Interest Policy require employees to make a conscious effort to avoid conflict of interest situations; that his judgment and discretion are not influenced by considerations of personal gain or benefit. A conflict of interest may also occur because of the actions, employment, or investments of an immediate family member of an employee
Conduct of Business and Fair Dealings
The Company’s employees who recommend, endorse, or approve the procurement or sale of goods and services should make a conscious effort to avoid any conflict of interest situation in transactions they are involved in.
Receipt of Gifts from Third Parties
The Company discourages the acceptance of gifts. However, gifts like advertising novelties may be given or accepted during the Christmas season. There is no restriction in the value of the gift that may be accepted. However, accepted gift with estimated value over Php2,000.00 must be disclosed to the Conflicts of Interest Committee.
Compliance with Laws and Regulations
The Company ensures that all transactions comply with relevant laws and regulations. Any deficiencies are immediately rectified.
Respect for Trade Secrets/Use of Non-public Information
The Company has policies that ensure proper and authorized disclosure of confidential information. Disclosures to the public can only be done after the disclosure to SEC and PSE by the Company’s authorized officers.
Use of Company Funds, Assets and Information
Employees are required to safeguard Company resources and assets with honesty and integrity. Employees must ensure that these assets are efficiently, effectively, and responsibly utilized.
Employment and Labor Laws and Policies
The Company ensures the observance, strict implementation and compliance with employment and labor laws and policies with regards to recruitment, employment, retention and benefits of the employees.
Disciplinary Action
Violation of any provision of the Code of Business Conduct may result to disciplinary action, including dismissal and reimbursement for any loss to the Company that resulted from the employee’s actions. If appropriate, a violation may result in legal action against the employee or referral to the appropriate government authorities.
Whistleblowing
The stakeholders may discuss or disclose in writing any concern on potential violation of the Code of Business Conduct with the Conflicts of Interest Committee. Reports or disclosures can be made in writing or by email using the following contact details:
a. email address cicom@jgsummit.com.ph
b. fax number 8395-3888
c. mailing address
Must be sent in a sealed envelope clearly marked
“Strictly Private and Confidential-To Be Opened by Addressee Only”
CICOM
JG Summit Holdings, Inc.
40th Flr. Robinsons Equitable Tower
ADB Avenue, Cor., Poveda Road, Pasig City
The complaint shall be filed using the Complaint/Disclosure Form (CDF) available in the company website.
All information received in connection with the reports or disclosures shall be strictly confidential and shall not be disclosed to any person without prior consent of CICOM.
The Company commits to protect those who report in good faith from retaliation, harassment and even informal pressures. It will take the necessary and appropriate action to do so in enforcing the policy.
Conflict Resolution
The Conflicts of Interest Committee submits recommendations on courses of action to be taken on conflicts of interest situations. The decision is done by the Executive Committee.
Corporate Governance Highlights
Consistent with the Revised Corporate Governance Manual and pursuant to the recommendations provided in the Code of Corporate Governance for Publicly Listed Companies (PLCs), the Company strengthened its policies on Board Diversity, Board Nomination and Election, Succession Planning and Remuneration, Material Related Party Transactions, and Whistleblowing to reinforce the governance framework of the Company. These policies may be accessed in the Company’s website, in the Governance section, https://www.urc.com.ph/corporate-governance/company-policies/
The Company’s I-ACGR may be accessed through the Company website by clicking this link, https://www.urc.com.ph/corporate-governance/I-ACGR
The Board of Directors
The Board of Directors (“The Board”) is primarily responsible for the governance of the Company and provides an independent check on management. It has the duty to foster the long-term success of the Company and to ensure that the Company’s competitiveness and profitability will be sustained in a manner consistent with its corporate objectives for the best interest of the company and its stakeholders.
“ The Board exercises care, skill and judgment and observes good faith and loyalty in the conduct and management of the business and affairs of the Company. ”
Board Duties and Responsibilities
General Responsibilities
Duties and Functions
To ensure high standard for the Corporation, its Shareholders and other Stakeholders, the Board shall conduct itself with honesty and integrity in the performance of, among others, the following duties and responsibilities:
- Act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the Company and all Stakeholders;
- 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. The Board shall review and guide corporate strategy, major plans of action, risk management policies and procedures, annual budgets and business plans; set performance objectives; monitor implementation and corporate performance; and oversee major capital expenditures, acquisitions and divestitures;
- Oversee the adoption of an effective succession planning program and remuneration policies;
- Adopt policies on board nomination and election that will ensure diversity in board composition in terms of knowledge, expertise and experience;
- Oversee the implementation of a policy and system on RPTs which shall include the review and approval of material or significant RPTs and ensure fairness and transparency of the transactions;
- Oversee the adoption of policies on the selection of Management and Key Officers and the assessment of their performance;
- Oversee the establishment of an internal control system to monitor and manage potential conflicts of interest and an ERM framework to identify, monitor, assess and manage key business risks;
- Annually review, together with Management, the Company’s vision and mission;
- Ensure the Corporation’s faithful compliance with all applicable laws and regulations, and best business practices;
- Establish and maintain an Investor Relations Program that will keep the Shareholders informed of important this program; or differences between the Corporation and its developments in the Corporation. The Corporation’s CEO shall exercise oversight responsibility over this program;
- Identify the Corporation’s Stakeholders in the community in which it operates or are directly affected by its operations and formulate a clear policy of accurate, timely, and effective communication with them;
- Adopt a system of check and balance within the Board. A regular review of the effectiveness of such system should be conducted to ensure the integrity of the decision-making and reporting processes at all times;
- Ensure that the Corporation has an independent audit mechanism for the proper audit and review of the Corporation’s financial statements by independent auditors;
- Consider the implementation of an alternative dispute resolution system for the amicable settlement of conflicts or differences between the Corporation and its Shareholders, if applicable.
- Ensure that the Corporation establishes appropriate Corporate Governance policies and procedures pursuant to this Manual and the Governance Code, including but not limited to, policies on conflict of interest, and oversee the effective implementation thereof; and
- Consider the implementation of an alternative dispute resolution system for the amicable settlement of conflicts or differences between the Corporation and its Shareholders, if applicable.
Balanced board composition
“ The Company recognizes the benefits of having a diverse Board and its value in maintaining sound corporate governance while achieving strategic objectives and sustainable growth. ”
Board Independence
Board Training and Orientation
“ Orientation programs are conducted for first-time directors to ensure that new members are appropriately apprised of their duties and responsibilities. ”
Board Meetings
The Board schedules meetings at the beginning of the year, holds regular meetings in accordance with its By-Laws and convene special meetings when required by business exigencies. The notice and agenda of the meeting and other relevant meeting materials are furnished to the Directors at least five (5) business days prior to each meeting. Meetings are duly minuted. The Independent Directors shall always attend Board meetings. Unless otherwise provided in the By-Laws, their absence shall not affect the quorum requirement. However, the Board may, to promote transparency, require the presence of at least one (1) Independent Director in all its meetings.
To monitor the Directors’ compliance with the attendance requirements, the Company submits to the Commission an advisement letter on the Directors’ record of attendance in Board meetings.
Attendance of Directors
January 1, 2019 to December 31, 2019
| Board | Name | Date of Election | No. of Meetings Held during the year | No. of Meetings Attended | % |
|---|---|---|---|---|---|
| Director, Chairman Emeritus and Founder | John L. Gokongwei, Jr. + | May 29, 2019 | 10 | 8* | 80% |
| Director, Chairman Emeritus | James L. Go | May 29, 2019 | 10 | 10 | 100% |
| Director, Chairman | Lance Y. Gokongwei | May 29, 2019 | 10 | 10 | 100% |
| Director, President and CEO | Irwin C. Lee | May 29, 2019 | 10 | 10 | 100% |
| Director, Executive Vice President | Patrick Henry C. Go | May 29, 2019 | 10 | 10 | 100% |
| Director | Johnson Robert G. Go, Jr. | May 29, 2019 | 10 | 10 | 100% |
| Director | Robert G. Coyiuto, Jr. | May 29, 2019 | 10 | 6 | 60% |
| Independent Director | Wilfrido E. Sanchez | May 29, 2019 | 10 | 10 | 100% |
| Independent Director | Cesar V. Purisima | May 29, 2019 | 10 | 10 | 100% |
The Board Committees
A. Audit Committee
The Audit Committee provides oversight over the Company’s financial reporting, Internal Control System, Internal and External Audit processes, and monitor compliance with applicable laws and regulations. It ensures that systems and processes are put in place to provide assurance in areas including reporting, monitoring compliance with laws, regulations and internal policies, efficiency and effectiveness of business operations, and proper safeguarding and use of the Company’s resources and assets.
| Position | Director |
|---|---|
| Chairman | Cesar V. Purisima (ID) |
| Members | James L. Go Lance Y. Gokongwei Johnson Robert G. Go, Jr. Irwin C. Lee Wilfrido E. Sanchez |
B. Corporate Governance Committee
| Position | Director |
|---|---|
| Chairman | Wilfrido E. Sanchez |
| Members | James L. Go Lance Y. Gokongwei Johnson Robert G. Go, Jr. Irwin C. Lee |
C. Board Risk Oversight Committee
| Position | Director |
|---|---|
| Chairman | Lance Y. Gokongwei |
| Members | James L. Go Lance Y. Gokongwei Johnson Robert G. Go, Jr. Irwin C. Lee Cesar V. Purisima |
The Corporate Secretary
The Compliance Officer
The Compliance Officer monitors, reviews, evaluates and ensures the compliance by the Company; its Officers and Directors with the provisions and requirements of the Corporate Governance Manual and the relevant laws, the Corporate Governance Code, rules and regulations and all governance issuances of regulatory agencies. She also ensures the integrity and accuracy of all documentary submissions to the regulators; identifies possible areas of compliance issues and works towards the resolution of the same. She assists the Board and the Corporate Governance Committee in the performance of their governance functions, including their duties to oversee the formulation of review and implementation of the Corporate Governance structure and policies of the Company.
Arlene S. Denzon is the current Compliance Officer and Vice President of the Corporate Governance and Management Systems (CGMS) of JGSHI. She also serves as the Compliance Officer of Robinsons Land Corporation and JG Summit Holdings, Inc. Prior to rejoining JGSHI in February 2013, she was the Senior Vice President and Chief Risk Officer (SVP and CRO) in charge of the Enterprise-wide Risk Management Group of Digitel Mobile Philippines, Inc. (DMPI, more popularly known as Sun Cellular) until December, 2012. Ms. Denzon started her career in the Gokongwei Group in 1991 and performed various roles including Accounting Manager of JGSHI until 1997, Assistant Vice President – Special Assistant to the Chairman until 2001, Vice President – Treasurer and Acting Chief Financial Officer of URC International until 2003 before she was seconded to DMPI in 2004. Prior to JGSHI, Ms. Denzon had three years working experience as external auditor in Sycip, Gorres, Velayo & Co.
She is a Certified Public Accountant Board top-notcher and obtained her Bachelor of Accountancy degree, Magna Cum Laude, from the Polytechnic University of the Philippines.
Enterprise Risk Management, Accountability And Audit
“ The Company implemented systems and processes to facilitate proper risk identification, monitoring and control, which are key to effective corporate governance ”
Enterprise Risk Management
The ERM framework revolves around the following eight interrelated risk management approaches:
1. Internal Environmental Scanning
It involves the review of the overall prevailing risk profile of the Business Unit (BU) to determine how risks are viewed and addressed by the management. This is presented during the strategic planning, annual budgeting and mid-year performance reviews of the BU.
2. Objective Setting
The Company’s BOD mandates Management to set the overall annual targets through strategic planning activ- ities, in order to ensure that management has a process in place to set objectives that are aligned with the Company’s goals.
3. Event Identification
It identifies both internal and external events affecting the Group’s set targets, distinguishing between risks and opportunities.
4. Risk Assessment
The identified risks are analyzed relative to the proba- bility and severity of potential loss that serves as basis for determining how the risks will be managed. The risks are further assessed as to which risks are controllable and uncontrollable, risks that require management’s action or monitoring, and risks that may materially weaken the Company’s earnings and capital.
5. Risk Response
The Company’s BOD, through the oversight role of the Internal Control Group ensures action plan is executed to mitigate risks, either to avoid, self-insure, reduce, transfer or share risk.
6. Control Activities
Policies and procedures are established and approved by the Company’s BOD and implemented to ensure that the risk responses are effectively carried out enterprise-wide.
7. Information and Communication
Relevant risk management information is identified, captured and communicated in form and substance that enable all personnel to perform their risk management roles.
8. Monitoring
The Internal Control Group of the respective Company and BUs and Corporate Internal Audit constantly monitor the management of risks through audit reviews, compliance checks, revalidation of risk strategies and performance reviews.
Risk Assessment Tool
To help Business Units in the Risk Assessment Process, the Risk Assessment Tool, which is a database driven web application, was developed for departments and units to facilitate the assessment, monitoring and management of risks.
The Risk Assessment Tool documents the following activities:
Through a sound Enterprise Risk Management (ERM) framework, the Company effectively identifies, monitors, assesses and manages key business risks. The framework guides the Board in identifying units/business lines and enterprise level risk exposures, as well as the effectiveness of risk management strategies.
1. Risk Identification
- 1.1. Risk Indicator – is a potential event or action that may prevent the continuity of operation or business
- 1.2. Risk Driver – is an event or action that triggers the risk to materialize
- 1.3. Value Creation Opportunities – is the positive benefit of addressing or managing the risk
2. Identification of Existing Control Measures
3. Risk Rating/Score
- 3.1. Probability – the likelihood of occurrence of risk
- 3.2. Severity – the magnitude of the consequence
of risk
4. Risk Management Strategy
5. Risk Mitigation Action Plan
Is the overall approach to reduce the risk impact severity and/or probability of occurrence.
Internal Controls
1
Compliance with policies, procedures, laws and regulations
2
Economic and efficient use of resources
3
Check and balance and proper segregation of duties
4
Identification and remediation control weaknesses
5
Reliability and integrity of information
6
Proper safeguarding of company resources and protection of company assets through early detection and prevention of fraud
Adequate and Timely Information
To enable the Directors to properly fulfill their duties and responsibilities, Management provides the Directors with complete, adequate, and timely information about the matters to be taken up in their meetings. Information may include the background or explanation on matters brought before the Board, disclosures, budgets, forecasts, and internal financial documents. If the information provided by Management is not sufficient, further inquiries may be made by a Director to enable him to properly perform his duties and responsibilities. The Directors have independent access to Management and to the Corporate Secretary.
The Directors, either individually or as a Board, and in the performance of their duties and responsibilities, may seek access to independent professional advice within the guidelines set by the Board.
Accountability and Audit
- The extent of its responsibility in the preparation of the financial statements of the Company, with the corresponding delineation of the responsibilities that pertain to the External Auditor, should be clearly defined;
- An effective system of internal control that will ensure the integrity of the financial reports and protection of the assets of the Company for the benefit of all Shareholders and other Stakeholders;
- On the basis of the approved Internal Audit Plan, Internal Audit examinations should cover, at the minimum, the evaluation of the adequacy and effectiveness of controls that cover the Company’s governance, operations and information systems, including the reliability and integrity of financial and operation information, effectiveness and efficiency of operations, protection of assets, and compliance with contracts, laws, rules, and regulations;
- The Company consistently complies with the financial reporting requirements of the SEC;
- The External Auditor shall be rotated or changed every five (5) years or earlier, or the signing partner of the External Auditing firm assigned to the Company, should be changed with the same frequency. The Corporate IA Head should submit to the Audit Committee and Management an annual report on the Internal Audit department’s activities, responsibilities, and performance relative to the Internal Audit Plan as approved by the Audit and Risk Committee. The annual report should include significant risk exposures, control issues, and such other matters as may be needed or requested by the Board and Management. The Internal Audit Head should certify that he conducts his activities in accordance with the International Standards on the Professional Practice of Internal Auditing. If he does not, the Internal Audit Head shall disclose to the Board and Management the reasons why he has not fully complied with the said documents; and
- The Board, after consultations with the Audit Committee shall recommend to the Shareholders an External Auditor duly accredited by the SEC who shall undertake an independent audit of the Company, and shall provide an objective assurance on the matter by which the financial statements shall be prepared and presented to the Shareholders.
Internal Audit
The Corporate Internal Audit is focused on delivering its mandate of determining whether the governance, risk management and control processes, as designed and represented by management, are adequate and functioning in a manner that provides reasonable level of confidence that:
- Employees’ actions are compliant with policies, standards, procedures, and applicable laws and regulations;
- Quality and continuous improvement are fostered in the control processes;
- Programs, plans, and objectives are achieved;
- Resources are acquired economically, used efficiently, and protected adequately;
- Significant financial, managerial, and operating information is accurate, reliable, and timely;
- Significant key risks are appropriately identified and managed; and
- Significant legislative or regulatory issues impacting the Company are recognized and properly addressed.
Opportunities for improving management control, profitability and the Company’s reputation may be identified during audits.
Other Matters
Audit and Audit-Related Fees
| Name of Auditor | Audit Fee | Non-Audit Fee |
|---|---|---|
| SyCip, Gorres, Velayo & Co. | Php12,077,000 | -0- |
Ownership Structure
Holding 5% shareholding or more (as of December 31, 2019)
| Shareholder | Number of Shares | Percent | Beneficial Owner |
|---|---|---|---|
| JG Summit Holdings, Inc. | 1,215,223,061 | 55.13% | Same as record owner |
| PCD Nominee Corporation (Non-Filipino) | 686,055,483 | 31.13% | PCD Participants & their clients |
| PCD Nominee Corporation (Filipino) | 268,162,896 | 12.17% | PCD Participants & their clients |
Dealing in securities (changes in shareholdings of directors and key officers)
A. Elected Directors for the calendar year 2019
| Name of Director | Number of Direct Shares | % to Total Outstanding Shares |
|---|---|---|
| John L. Gokongwei, Jr.+ | 0 | 0 |
| James L. Go | 1 | 0% |
| Lance Y. Gokongwei | 500,001 | 0.02% |
| Patrick Henry C. Go | 45,540 | 0% |
| Johnson Robert G. Go, Jr. | 1 | 0% |
| Roberto G. Coyiuto, Jr. | 1 | 0% |
| Irwin C. Lee | 1 | 0% |
| Wilfrido E. Sanchez | 1 | 0% |
| Cesar V. Purisima | 1 | 0% |
B. Elected Officers for the calendar year 2019
| Name of Officer | Position/ Designation | Number of Direct Shares | % to Total Outstanding Shares |
|---|---|---|---|
| Cornelio S. Mapa, Jr. | Executive Vice President, Corporate Strategy | 0 | 0% |
| Bach Johann M. Sebastian | Senior Vice President, Digital Strategic and Investments Group |
0 | 0% |
| David J. Lim, Jr. | Senior Vice President | 0 | 0% |
| Francisco M. Del Mundo | Senior Vice President and Chief Financial Officer | 0 | 0% |
| Michael P. Liwanag | Senior Vice President, Investor Relations |
25,000 | 0% |
| Alan D. Surposa | Senior Vice President and Chief Procurement Officer | 20,000 | 0% |
| Chona R. Ferrer | First Vice President | 0 | 0% |
| Marcia Y. Gokongwei | Vice President | 578,795 | 0.03% |
| Teofilo B. Eugenio, Jr. | Vice President | 0 | 0% |
| Vincent Henry C. Go | Vice President | 45,540 | 0% |
| Ellison Dean C. Lee | Vice President | 40,000 | 0% |
| Renato P. Cabati | Vice President | 40,000 | 0% |
| Anne Patricia C. Go | Vice President | 8,855 | 0% |
| Socorro ML. Banting | Vice President | 0 | 0% |
| Charles Bernard A. Tañega | Treasurer | 0 | 0% |
| Rosalinda F. Rivera | Corporate Secretary | 0 | 0% |
| Arlene S. Denzon | Compliance Officer | 0 | 0% |
| Anna Milagros D. David | Chief Marketing Officer | 49,630 | 0% |
Dividends
a) Regular Cash Dividend of One Peso and Fifty Centavos (P1.50) per share and paid on March 28, 2019 and
b) Special Cash Dividend of One Peso and Sixty Five Centavos (P1.65) per share and paid on July 25, 2019
Company Website
The Company updates the public with operating and financial results through timely disclosures filed with SEC and PSE. These are available on the company’s website: www.urc.com.ph
