Corporate Governance
“JGS acknowledges that sound and effective corporate practices are fundamental to the smooth, effective and transparent operation of the company”
Right to vote on all matters that require their consent or approval
Right to inspect corporate books and records
Right to information
Right to dividends
Appraisal right
Duty to Other Stakeholders
Customer's Welfare
Supplier/Contractor Selection
Employees
- Health, safety and welfare;
- Training and development;
- and Reward and compensation.
1. Performance-enhancing mechanisms for employee participation
2. Anti-corruption programs and procedures
The anti-corruption programs and procedures of the Company are summarized below:
Business Conduct & Ethics
Policy Statement
Conflict of Interest
Conduct of Business
and Fair Dealings
Receipt of Gifts
from Third Parties
Compliance with Laws
and Regulations
Respect for Trade Secrets/
Use of Non-public Information
Use of Company Funds,
Assets and Information
Employment and Labor Laws and Policies
Disciplinary Action
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@jgsumit.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 usig 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, harrassment and even informal pressures. It will take the necessary and appropriate action to do so in enforcing the policy.
Conflict Resolution
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.jgsummit.com.ph/corporate-governance/policies
The Company submitted the Integrated Corporate Governance Report (I-ACGR) to the Securities and Exchange Commission (SEC) and Philippine Stock Exchange (PSE) on May 30, 2019. The I-ACGR is a reportorial requirement under SEC Memorandum Circular No. 15 series of 2017 to all PLCs to disclose the Company’s compliance/non-compliance with the recommendations provided under the Corporate Governance Code for PLCs. With the “comply or explain” approach, voluntary compliance to recommended CG best practices is combined with mandatory disclosure. The Company also submitted the Material Related Party Transactions (MRPT) Policy to SEC on October 28, 2019 as required under SEC Memorandum Circular No. 10 series of 2019.
The Company’s I-ACGR may be accessed through the Company website by clicking this link, https://www.jgsummit.com.ph/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.
Board Duties and Responsibilities
General Responsibilities
Duties and Functions
- 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. The Board Member’s biographical details are set out in the succeeding section and may also be found in the Information Statement. The Board is diverse in terms of expertise, gender and professional experience. The Board of Directors is composed of 11 members. Currently, the Board has 10 directors, 9 of these directors are non-executive and 3 of which are independent directors”. The Board also has 2 women forming part of the non-executive directors. Furthermore, the posts of Chairman and Chief Executive Officer of the Company are separate to ensure a clear distinction between the Chairman’s responsibility to manage the Board and the Chief Executive Officer’s responsibility to manage the Company’s business. The division of responsibilities between the Chairman and the Chief Executive Officer is clearly established and set out in the Revised Corporate Governance Manual.
Board Independence
The Board has three independent directors that possess all the necessary qualifications and none of the disqualifications to hold the position. The Company reinforces proper mechanisms for disclosure, protection of the rights of shareholders, equitable treatment of shareholders, and the accountability of the Board and independent directors”. The Board also has 2 women forming part of the non-executive directors. Furthermore, the posts of Chairman and Chief Executive Officer of the Company are separate to ensure a clear distinction between the Chairman’s responsibility to manage the Board and the Chief Executive Officer’s responsibility to manage the Company’s business. The division of responsibilities between the Chairman and the Chief Executive Officer is clearly established and set out in the Revised Corporate Governance Manual. Management are in place. In cases of conflicts of interest, Directors with a material interest in any transaction with the Company abstain from participating in the deliberation of the same.
Board Training and Orientation
The Company ensures that directors are able to perform their functions effectively in this rapidly changing environment to cope with heightened regulatory policies, foreign and local demands, and the growing complexity of the business. Orientation programs are conducted for first-time directors to ensure that new members are appropriately apprised of their duties and responsibilities. This includes overview of the Company’s operations, Code of Conduct, Corporate Governance framework and other relevant topics essential in the performance of their functions. As a matter of continuous professional education, the Company facilitates the training opportunities provided for the Directors and Key Officers.
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 | John L. Gokongwei, Jr. + | May 30, 2019 | 7 | 5* | 100% |
| Director, Chairman | James L. Go | May 30, 2019 | 7 | 7 | 71% |
| Director, President and CEO | Lance Y. Gokongwei | May 30, 2019 | 7 | 7 | 100% |
| Director | Lily G. Ngo-Chua | May 30, 2019 | 7 | 7 | 100% |
| Director | Patrick Henry C. Go | May 30, 2019 | 7 | 6 | 85% |
| Director | Johnson Robert G. Go, Jr. | May 30, 2019 | 7 | 7 | 100% |
| Director | Robina Gokongwei-Pe | May 30, 2019 | 7 | 7 | 100% |
| Director | Cirilo P. Noel | May 30, 2019 | 7 | 7 | 100% |
| Independent Director | Jose T. Pardo | May 30, 2019 | 7 | 7 | 100% |
| Independent Director | Renato T. De Guzman | May 30, 2019 | 7 | 7 | 100% |
| Independent Director | Antonio L. Go | May 30, 2019 | 7 | 7 | 100% |
Note: *Mr. John L. Gokongwei, Jr. passed away on November 9, 2019.
The Board Committees
Audit Committee
| Position | Director |
|---|---|
| Chairman | Antonio L. Go (ID) |
| Members | Lance Y. Gokongwei James L. Go Jose T. Pardo Renato T. De Guzman |
| Position | Director |
|---|---|
| Chairman | Jose T. Pardo |
| Members | James L. Go Renato T. De Guzman Antonio L. Go |
Corporate Governance Committee
Board Risk Oversight Committee
| Position | Director |
|---|---|
| Chairman | Renato T. De Guzman |
| Members | James L. Go Lance Y. Gokongwei Jose T. Prado Antonio L. Go |
The Corporate Secretary
The Corporate Secretary keeps herself abreast on relevant laws, regulations, all governance issuances, relevant industry developments and operations of the Company, and advises the Board and the Chairman on all relevant issues as they arise. She works fairly and objectively with the Board, Management and Shareholders and contributes to the flow of information between the Board and Management, the Board and its Committees, and the Board and its Stakeholders, including Shareholders.
Atty. Rosalinda F. Rivera is the current Corporate Secretary of the Company. She was appointed as Corporate Secretary on August 6, 2003 and has been Assistant Corporate Secretary since May 2002. She is also the Corporate Secretary of Robinsons Land Corporation, Universal Robina Corporation, Cebu Air, Inc., Robinsons Retail Holdings, Inc. and JG Summit Petrochemical Corporation. Prior to joining the Company, she was a Senior Associate in Puno and Puno Law Offices.
The Compliance Officer
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 Universal Robina Corporation and Robinsons Land Corporation. Prior to rejoining JGS in February 2013, she was the Senior Vice President and Chief Risk Officer (SVPand 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 recognizes the increasing importance of sound risk management practices to drive business growth and sustainability. The Company implemented systems and processes to facilitate proper risk identification, monitoring and control, which are key to effective corporate governance. Timely and accurate management and financial reporting systems, internal controls, and audits are also employed to protect and maximize stakeholders’ value.
The Board oversees Management’s adoption and implementation of a sound risk management framework for identifying, monitoring and managing key risk areas. The Board of Directors reviews Management reports with due diligence to enable the company to anticipate, minimize, control and manage risks or possible threats to its operational and financial viability.
Enterprise Risk Management
The ERM framework revolves around the following eight interrelated risk management approaches:
1. Internal Environmental Scanning
2. Objective Setting
3. Event Identification
4. Risk Assessment
5. Risk Response
6. Control Activities
7. Information and Communication
8. Monitoring
Risk Assessment Tool
The Risk Assessment Tool documents the following activities:
- Risk Identification – is the critical step of the risk management process. The objective of risk identification is the early identification of events that may have negative impact on the Company’s ability to achieve its goals and objectives.
- Risk Indicator – is a potential event or action that may prevent the continuity of operation
or business - Risk Driver – is an event or action that triggers the risk to materialize
- Value Creation Opportunities – is the positive benefit of addressing or managing the risk
- Risk Indicator – is a potential event or action that may prevent the continuity of operation
- Identification of Existing Control Measures – activities, actions or measures already in place to control, prevent or manage the risk.
- Risk Rating/Score – is the quantification of the likelihood and impact to the Company if the risk materializes. The rating has two (2) components:
- Probability – the likelihood of occurrence of risk
- Severity – the magnitude of the consequence of risk
- Risk Management Strategy – is the structured and coherent approach to managing the identified risk.
- Risk Mitigation Action Plan – is the overall approach to reduce the risk impact severity and/or probability of occurrence.
Results of the Risk Assessment Process is summarized in a Dashboard that highlights the risks that require urgent actions and mitigation plan. The dashboard helps Management to monitor, manage and decide a risk strategy and needed action plan.
Internal Controls
Compliance with policies, procedures, laws and regulations
Identification and remediation control weaknesses
Economic and efficient
use of resources
Reliability and integrity
of information
Check and balance
and proper segregation
of duties
Proper safeguarding of company resources and protection of company assets through early detection and prevention of fraud.
Adequate and Timely Information
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 Board ensures that its Shareholders are provided with a balanced and comprehensible assessment of the Company’s performance, position and prospects on a quarterly basis. Interim and other reports that could adversely affect its business are also made available in the Company website including its submissions and disclosures to the SEC and PSE. Management formulates the rules and procedures on financial reporting and internal control for presentation to the Audit Committee in accordance with the following guidelines:
- 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.
Other Matters
External auditor and their fees
| Name of Auditor | Audit Fee | Non-Audit Fee |
|---|---|---|
| SyCip, Gorres, Velayo & Co. | Php 3,610,000 | None |
Ownership structure
| Shareholder | Number of Shares | Percent | Beneficial Owner |
|---|---|---|---|
| Gokongwei Brothers Foundation Inc. | 1,997,076,451 | 27.8881% | Same as record owner |
| PCD Nominee Corporation (Filipino) | 1,650,813,319 | 23.047% | PCD Participants & their clients |
| Robinsons Savings Bank-Trust & Investment Group | 1,033,319,225 | 14.426% | Trustee’s designated officers |
| PCD Nominee Corporation (NonFilipino) | 949,528,917 | 13.256% | PCD Participants & their clients |
Dealing in securities (changes in shareholdings of directors and key officers)
| Name of Director | Number of Direct Shares | % to Total Outstanding Shares |
|---|---|---|
| John L. Gokongwei, Jr.+ | 0 | 0.00% |
| James L. Go | 148,679,656 | 2.08% |
| Lance Y. Gokongwei | 541,838,575 | 7.56% |
| Lily Ngo-Chua | 388,018 | 0.01% |
| Patrick Henry C. Go | 93,500 | 0.00% |
| Robina Gokongwei Pe | 179,460,000 | 2.51% |
| Johnson Robert G. Go, Jr. | 1 | 0.00% |
| Cirilo P. Noel | 1 | 0.00% |
| Jose T. Pardo | 1 | 0.00% |
| Renato T. De Guzman | 21,751 | 0.00% | Antonio L. Go | 1 | 0.00% |
Note: Mr. John L. Gokongwei, Jr. passed away on November 9, 2019.
Elected Officers for the calendar year 2019
| Name of Officer | Position/ Designation | Number of Shares | % to Total Outstanding Shares |
|---|---|---|---|
| 1. Cornelio S. Mapa, Jr. | Senior Vice President, Corporate Strategy for Consumer Businesses | 0 | 0.00% |
| 2. Bach Johann M. Sebastian | Senior Vice President, Digital and Strategic Investments Groups | 0 | 0.00% |
| 3. Nicasio L. Lim | Senior Vice President, Corporate Resources Group | 0 | 0.00% |
| 4. Maria Celia H. Fernandez-Estavillo | Senior Vice President and General Counsel | 5,000 | 0.00% |
| 5. Renato T. Salud | Senior Vice President, Corporate Affairs | 0 | 0.00% |
| 6. Aldrich T. Javellana | Senior Vice President and Treasurer | 0 | 0.00% |
| 7. Francisco M. Del Mundo | Senior Vice President and Chief Financial Officer | 0 | 0.00% |
| 8. Michael P. Liwanag | Senior Vice President and Chief of Staff to the Chief Executive Officer | 0 | 0.00% |
| 9. Alan D. Surposa | Senior Vice President, Chief Procurement Officer | 0 | 0.00% |
| 10. Rosalinda F. Rivera | Corporate Secretary | 0 | 0.00% |
| 11. Chona R. Ferrer | Deputy Treasurer | 0 | 0.00% |
| 12. Arlene S. Denzon | Compliance Officer | 0 | 0.00% |
| 13. Ian Pajantoy | Data Protection Officer | 0 | 0.00% |
Dividends
The Board of Directors of the Company approved on May 30, 2019 the declaration of a regular cash dividend in the amount of Thirty Three Centavos (Php0.33) per common share from unrestricted retained earnings of JGS as of December 31, 2018 to all stockholders of record as of June 20, 2019 and which was paid on July 16, 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: https://www.jgsummit.com.ph/