Board of Directors
FERNANDO ZOBEL DE AYALA
Fernando Zobel De Ayala
Filipino, 54, has served as Chairman of Manila Water since May 1997. He is the Vice Chairman, President and COO of Ayala Corporation. He holds the following positions in other listed companies of the Ayala group: Chairman of Ayala Land, Inc., Vice Chairman of the Executive Committee of Bank of the Philippine Islands. He is also: Chairman of AC International Finance Ltd.; Director of AC Energy Holdings, Inc., Hero Foundation, Inc. and Habitat for Humanity’s Asia-Pacific Capital Campaign Steering Committee; Co-Chairman of the Board of Trustees of Ayala Foundation, Inc.; Director of Accendo Commercial Corporation, Alabang Commercial Corporation, AC International Finance Ltd., Ayala International Pte. Ltd., Ayala Automotive Holdings Corporation, Automobile Central Enterprises, Inc., Liontide Holdings, Inc., Aurora Properties, Inc., Ceci Realty, Inc., Vesta Property Holdings, Inc., Emerging City Holdings, Inc., Bonifacio Land Corporation, LiveIt Investments, Ltd., Columbus Holdings, Inc., Fort Bonifacio Development Corporation, Inc., AG Holdings Ltd., Ayala International Holdings Limited, AC Infrastructure Holdings Corporation, Asiacom Philippines, Inc., AI North America, Inc., Sonoma Services, Inc., Ayala Retirement Fund Holdings, Inc.; Member of Philippine-Singapore Business Council, INSEAD East Asia Council and World Presidents’ Organization; Member of the Board of Trustees, Caritas Manila, Pilipinas Shell Foundation, Kapit Bisig para sa Ilog Pasig Advisory Board, National Museum and the Foundation of the Roman Catholic Church. He holds a Liberal Arts degree from Harvard College and a Certificate in International Management from INSEAD, France.
JAIME AUGUSTO ZOBEL DE AYALA
Jaime Augusto Zobel De Ayala
Filipino, 55, has served as Vice Chairman of Manila Water since May 1997. He is the Chairman and CEO of Ayala Corporation. He holds the following positions in other listed companies of the Ayala group: Chairman of Globe Telecom, Inc., Bank of the Philippine Islands and Integrated Micro-Electronics, Inc. and Vice Chairman of Ayala Land, Inc. He is also: Co-Chairman of Ayala Foundation, Inc.; Chairman of Harvard Business School Asia-Pacific Advisory Board, Vice Chairman of AC Energy Holdings, Inc., Makati Business Club, Director of Ayala Education, Inc., Ayala Retirement Fund Holdings, Inc., Asiacom Philippines, Inc., Ayala Group Club, Inc., Mermac, Inc., Alabang Commercial Corporation., Ayala International Pte. Ltd., LiveIt Investments Limited, AI North America, Inc., AG Holdings Limited. He is also a member of Harvard Global Advisory Council, Mitsubishi Corporation International Advisory Committee, JP Morgan International Council and Endeavor Philippines and National Competitiveness Council and Philippine Representative for the APEC Business Advisory Council. He holds a Bachelor of Arts degree in Economics (with honors) from Harvard College and an MBA from Harvard Graduate School of Business.
GERARDO C. ABLAZA JR.
Gerardo C .Ablaza Jr.
Filipino, 62, has served as Director of Manila Water since November 2009, and President and CEO since June 2010. He holds the following positions in other listed companies of the Ayala group: Co-Vice Chairman and Director of Globe Telecom, Inc., Director of Ho Chi Minh City Infrastructure Investment Joint Stock Company; Senior Managing Director of Ayala Corporation. He is also: Chairman of Manila Water Philippine Ventures, Inc., Boracay Island Water Company, Inc., Clark Water Corporation, Manila Water Total Solutions Corp., Manila Water Asia Pacific Pte. Ltd, Manila Water South Asia Holdings Pte. Ltd., Thu Duc Water Holdings Pte. Ltd., Kenh Dong Water Holdings Pte. Ltd., Manila Water Foundation, Inc. and Manila Water International Solutions, Inc.; Chairman of the Board of Trustees of Manila Water Foundation, Inc.; President of Manila Water Consortium, Inc. and Manila Water International Solutions, Inc.; Vice-Chairman of Laguna AAAWater Corporation; Member of AC Energy Holdings, Purefoods International Ltd., Asiacom Philippines, Inc., Asiacom Philippines, Inc., Azalea International Venture Partners Limited, LiveIT Investment Limited, Ayala Foundation, Inc., North-West of Saigon Holdings Pte. Ltd., A.C.S.T. Business Holdings, Inc., AC Infrastructure Holdings Corporation and Ayala Retirement Fund Holdings, Inc. He was recognized by CNBC as the Asia Business Leader of the Year, making him the first Filipino CEO to win the award. He was also awarded by Telecom Asia as the Best Asian Telecom CEO. In 2013, he was also awarded the Citi Distinguished Alumni Award for Leadership and Ingenuity making him the first and only Filipino to be awarded with such an honor. He holds a Liberal Arts degree, Major in Mathematics (Honors Program, Summa Cum Laude) from De La Salle University.
ANTONINO T. AQUINO
Antonino T. Aquino
Filipino, 68, has served as Director of Manila Water since April 24, 1998. In the other listed Ayala companies, he also serves as a Director of Ayala Land, Inc. He is also: Director of Anvaya Cove Beach and Nature Club, Inc. and The Philippine American Life and General Insurance Company. He holds a Bachelor of Science degree in Management in Ateneo de Manila University and has done post-graduate studies at the Ateneo Graduate School of Business. He was named “Co-Management Man of the Year 2009” by the Management Association of the Philippines for his leadership role in a very successful waterworks privatization and public-private sector partnership.
Jose L. Cusia Jr.
Jose L. Cusia Jr.
Filipino, 71, has served as Independent Director of Manila Water since April 2010. He is presently the Philippine Ambassador Extraordinary and Plenipotentiary to the United States of America. He holds the following positions in other listed companies: Vice-Chairman of SM Prime Holdings, Director of PHINMA Corporation and Director of Century Properties Group, Inc. He is also: Chairman of The Covenant Car Company, Inc., and a Board Member of AIG Shared Services – Business Processing, Inc. He holds an AB-BSC degree (Magna Cum Laude) in De La Salle University and an MBA from University of Pennsylvania (University Scholar).
John Eric T. Francia
John Eric T. Francia
Filipino, 44, has served as Director of Manila Water since April 2010. He holds the following positions in other listed companies of the Ayala Group: Director of Integrated Micro-Electronics, Inc., and Ho Chi Minh City Infrastructure Investment Joint Stock Company. His positions in other organizations and corporations are as follows: President and CEO of AC Energy Holdings Inc. and AC Infrastructure Holdings Corporation.; Managing Director of Ayala Corporation and Member of the Management Committee of Ayala Corporation. He also holds membership in the Boards of the following non-listed companies: Quadriver Energy Corporation, Monte Solar Energy, Inc., AF Payments, Inc., Light Rail Manila Corporation, Northwind Power Development Corporation, North Luzon Renewable Energy Corporation, South Luzon Thermal Energy Corporation, Dinginin Power GP Corp., Arlington Mariveles Philippines GP Corporation, Kauswagan Power GP Corp., MCX Tollway, Inc., Ayala Aviation Corporation, Ayala Hotels, Inc., LiveIt Investments Ltd., AC College of Enterprise and Technology, Inc. and LINC Institute, Inc. He holds a degree in Humanities and Political Economy (Magna Cum Laude) from the University of Asia and the Pacific and a Master’s Degree in Management Studies (with First Class Honors) from University of Cambridge.
Victoria P. Garchitorena
Victoria P. Garchitorena
Filipino, 71, has served as Director of Manila Water since April 2014. She is a Director of UCPB Finance Corp., UCPB Foundation, Inc., Avignon Tower Condominium Corporation, Asian Institute of Management and Ayala Foundation, Inc. Her positions and memberships in other organizations and corporations include: Consultant of Ayala Corporation; Adviser of the Gerry Roxas Foundation, and United CSO Federation of Makati; Member of the Makati Business Club, National Executive Committee of the Bishops-Businessmen’s Conference for Human Development, National Executive Committee of the UBAS (Ugnayan ng Barangay at Simbahan). She holds a Bachelor of Science degree in Physics (Magna Cum Laude) from College of the Holy Spirit, and has post-graduate studies in Management Development Program from Asian Institute of Management and Environmental Economics and Policy Analysis from Harvard Institute for International Development.
Delfin L. Lazaro
Delfin L. Lazaro
Filipino, 68, has served as a Director of Manila Water since May 2002. He holds the following positions in other listed companies of the Ayala group: Director of Ayala Land, Inc., Integrated Micro-Electronics, Inc., Ayala Corporation and Globe Telecom, Inc. He holds the following positions in these non-listed companies: President of Asiacom Philippines, Inc.; Director of Empire Insurance Company and Insular Life Assurance Co., Ltd. He holds a Bachelor of Arts degree in Metallurgical Engineering from the University of the Philippines and an MBA (with Distinction) from Harvard Graduate School of Business. He was named Management Man of the Year 1999 by the Management Association of the Philippines for his contribution to the conceptualization and implementation of the Philippine Energy Development Plan and to the passage of the law creating the Department of Energy.
Jaime C. Laya
Jaime C. Laya
Filipino, 75, has served as an Independent Director of Manila Water since April 2014. He holds the following positions in these listed companies: Independent Director of Ayala Land Inc., GMA Network and GMA Holdings, Inc.; Chairman and President of Philippine Trust Company (Philtrust Bank). He is also: Director of Philippine AXA Life Insurance Co., Inc., Cultural Center of the Philippines, St. Paul’s University – Quezon City, Ayala Foundation, Inc., Fundacion Santiago, Yuchengco Museum, CIBI Foundation, Inc., Escuela Taller de Filipinas Foundation, Inc. and Manila Polo Club. He holds a Bachelor of Arts degree in Accounting from the University of the Philippines, Masters Degree in Industrial Management from Georgia Institute of Technology, and Ph.D. in Financial Management from Stanford University. He is a certified public accountant.
Sherisa P. Nuesa
Sherisa P. Nuesa
Filipino, 61, has served as an Independent Director of Manila Water since April 2013. She currently holds the following positions: President of ALFM Mutual Funds Group, Board Adviser of Metro Retail Stores Group, and Consultant of VICSAL Development Corporation and Director of Far Eastern University. She also serves as a Director for the following non-listed companies: Generika Group (Actimed, Erikagen, Pharmagen, Novelis), East Asia Computer Center Inc./East Asia Educational Foundation, Integrity Initiative Inc., FINEX Foundation, Institute of Corporate Directors, FEU Health and Retirement Fund and Judicial Reform Initiative (JRI). She was awarded the ING-FINEX Chief Finance Officer of the Year for 2008. She holds a degree in Commerce (Summa Cum Laude) from Far Eastern University and an MBA from Ateneo-Regis Graduate School of Business, and completed the Advanced Management Program from the Harvard Business School. She is a certified public accountant.
Oscar S. Reyes
Oscar S. Reyes
Filipino, 69, has served as an Independent Director of Manila Water since February 2005. Of the other listed companies of the Ayala Group, he serves as the director of Bank of the Philippine Islands. He holds the following positions in other listed companies: President and CEO of Manila Electric Company; President of Meralco PowerGen Corporation; Chairman of MIESCOR, CIS Bayad Center, MEI, Redondo Peninsula Energy, Inc., PacificLight Pte., Ltd. and MRail, Inc.; Member of the Advisory Board of the Philippine Long Distance Telephone Company. He is also the Director of Pepsi Cola Products (Philippines), Inc., Basic Energy Corporation, Cosco Capital, Inc., PLDT Communications & Energy Ventures, Inc., Sun Life Financial Plans, Inc., Grepalife Fixed Income Fund Corporation, Petrolift, Inc., Eramen Minerals Inc., Meralco PowerGen Corporation, Meralco Industrial Engineering Services Corporation (MIESCOR), CIS Bayad Center, Meralco Energy, Inc. (MEI), Redondo Peninsula Energy, Inc., PacificLight Pte. Ltd., MRail, Inc., Republic Surety & Insurance Corporation, Calamba Aero Power Corporation and Clark Electric Development Corporation. He holds a Bachelor of Arts degree in Economics (Cum Laude) from Ateneo de Manila University and did post-graduate studies from Ateneo Graduate School of Business, Waterloo Lutheran University, and Harvard Business School.
Solomon M. Hermosura
Solomon M. Hermosura
Filipino, 53, has served as the Corporate Secretary of Manila Water since April 3, 2006. He is: Group Head of Corporate Governance, General Counsel, Compliance Officer, and the Corporate Secretary of Ayala Corporation; Group General Counsel and Corporate Secretary of Ayala Land, Inc.; Corporate Secretary of Globe Telecom, Inc., Integrated Micro-Electronics, Inc., and Ayala Foundation, Inc. He is also: CEO of Ayala Group Legal and a Director in a number of companies in the Ayala group. He holds a Bachelor of Law degree (Valedictorian) from San Beda College of Law and placed third in the 1986 Bar Examinations.
Senior leadership team and management committee
FERDINAND M. DELA CRUZ
Chief Operating Officer, Manila Water Operations
LUIS JUAN B. ORETA
Chief Finance Officer and Treasurer
GERARDO C. ABLAZA JR.
President and Chief Executive Officer
VIRGILIO C. RIVERA JR.
Chief Operating Officer, New Business Operations
Senior leadership team and management committee
ABELARDO P. BASILIO
Group Director, Strategic Asset Management
THOMAS T. MATTISON
Group Director, Corporate Project Management
(2nd from left)
RODELL A. GARCIA
Chief Technology Adviser Group Director, Information Technology
(2nd from right)
GEODINO V. CARPIO
Group Director, Corporate Operations
LUIS JUAN B. ORETA
Chief Finance Officer and Treasurer
The Corporate Finance and Governance Group (CFGG) was prepared for the expansion in the breadth of the business models it engaged in with the public sector. We initiated a corporate restructuring program aimed at streamlining the Company’s ownership of the Metro Manila concession and its subsidiaries and affiliates to establish greater accountability and regulatory compliance. To further increase accountability, we drilled down the P&L mindset to the department level to make each manager responsible for his profitability and cost drivers. CFGG continued to help the Company improve its adherence to corporate governance standards and risk management. As a result, Manila Water was ranked among the Top 50 Publicly Listed Companies in the ASEAN Corporate Governance Scorecard, one of only 11 Philippine companies in the list. Finally, CFGG closed landmark financing deals which enabled Manila Water to pursue its capital expenditure programs, and continue its expansion programs outside Metro Manila.
In 2016, CFGG will support the Metro Manila, Boracay Water and Clark Water concessions as they develop their Rate Rebasing Business Plans. More importantly, CFGG will facilitate the comprehensive review of performance and costs against regulatory commitments, to ensure objective and robust business plan submissions. At the enterprise level, the team will implement the next phase of corporate restructuring, while following through on the established enhancements to regulatory accounting, inventory management, corporate governance and risk management. The Group remains committed to international standards of corporate governance and will ensure the Company lives up to its reputation as one of the ASEAN Top 50.
FERDINAND M. DELA CRUZ
Chief Operating Officer, Manila Water Operations
Manila Water Operations (MWO) made significant efforts to sustain the business and operating performance in 2015 to cushion the impact of the reduced tariff in the East Zone. Billed volume grew by 2.8% to 461.35 MCM or an additional 12.46 MCM vs 2014. Demand requirements from the higher temperatures and lower rainfall due to El Nino were met through diligent and vigilant operations management and tight stakeholder engagement and communication. Total collection efficiency for the year reached 100% while non-revenue water was kept at 11%. We energized major Used Water projects – the Marikina North STP with a capacity to treat 100 MLD and the Taguig North STP with 75 MLD capacity - in March and December, respectively. Combined, the two system projects will serve an estimated 815,000 residents. The Taguig North STP, which doubles up as the Liwasan ng Kagitingan at Kalikasan, showcases the successful partnership with our stakeholders, and our ingenuity in the dual use of land having built our facility beneath a historical and recreational park. Work is also underway for the North and South Pasig Sewerage System and the 100 MLD Ilugin STP.
Continued enhancements will be done in 2016 as follow through to the new capabilities built in 2015 to adapt to new business requirements and bolster productivity. To name a few, we have rolled out an Enterprise Asset Management System, a new General Ledger System and a Records and Information Management System. We have also enhanced our existing Geospatial Information System to provide better analytics and support to operations. All of these are geared towards a stronger MWO as it prepares for the Business Plan submission for the 2018 Rate Rebasing in the Metro Manila East Zone.
VIRGILIO C. RIVERA JR.
Chief Operating Officer, New Busiess Operations
To position Manila Water for sustained growth beyond the Metro Manila concession, the Company restructured the organization in April 2015 which resulted in the creation of Manila Water Philippine Ventures (MWPV) and Manila Water Asia Pacific (MWAP) with the strategic mandate of expanding the water business in the Philippines and ASEAN. The geographical expansion is anchored on the core competencies of the Company which have already been proven in new businesses like Laguna Water, Clark Water, Boracay Water, and Cebu Water in the Philippines, and through its subsidiaries in Vietnam such as Kenh Dong Water, Thu Duc Water and Saigon Water. In 2015, the combined performance of MWPV and MWAP registered significant growth in profit of 30% from P666 million in 2014 to P869 million in 2015, with the breakdown in contribution equally distributed between MWPV and MWAP operations. Moreover, its respective balance sheets continued to grow with MWPV having an asset base of P10 billion and equity base of P3 billion, while MWAP has P6 billon for both asset and equity base. Aside from the geographic expansion, it was also in 2015 when Estate Water (EW) was created as an operating division of MWPV to be the vehicle for the strategic partnership between Ayala Land, Inc. (ALI) and MWPV where EW will be the exclusive water and used water services provider to all existing and future ALI projects.
Given the traction gained by MWPV and MWAP over the past five years and the robust pipeline of projects, our Group is well-positioned to meet its commitment of posting sustainable growth in the business and profitability.
management team As of December 31, 2015
CORPORATE FINANCE AND GOVERNANCE GROUP
Ma. Victoria P. Sugapong
Chief Accountant and Chief Risk Officer
Head, Accounting, Risk Management, and Treasury Division
Rosenni A. Basilio
Head, Financial Planning, Controllership, Investor Relations and Supply Chain Division
Jhoel P. Raquedan
Chief Legal Counsel
Head, Legal and Corporate Governance
Lizelle Z. Dimacuha
Department Head, Tax Management
Cristina F. Estandarte
Department Head, Procurement and Contracts Management
Ma. Lourdes P. Miranda
Deputy Chief Accountant – Regulatory Accounting
Department Head, Fixed Assets, Project and Regulatory Accounting
Mark S. Orbos
Department Head, Corporate Planning
Xerxes Noel O. Ordanez
Department Head, Internal Audit
Maritess M. Regala
Department Head, Materials Planning and Inventory Management
Karoline C. Sangalang
Finance and Governance Head, Manila Water Philippine Ventures, Manila Water Asia Pacific, and Manila Water Foundation
Jocelyn Frances P. Sison
Department Head, Treasury
Ma. Lourdes M. Dalusung
Finance Head, Saigon Water
Mark Anthony F. Mesina
Finance Head, Laguna Water
Rolando D. Sumallo, Jr.
Finance Head, Clark Water
Bernadette D. Masangkay
OIC, Supply Chain Services
Anne Lizbeth J. Olmo
Deputy Chief Accountant – Financial Reporting
OIC, Financial Accounting
Gerardo M. Lobo II
Senior Legal Counsel
Josephine F. Pagdanganan
Senior Legal Counsel
Patricia Carmen D. Pineda
Investor Relations Head
Marsha Emelinda Q. Santos
Financial Planning and Portfolio Management Head
CORPORATE HUMAN RESOURCES GROUP
Janine T. Carreon
OIC, Corporate Human Resources Group
Danilo E. de Guzman
Department Head, HR Operations Management
Iris Joy G. Garcia
HR Business Partner
OIC, Talent Management and Leadership Development
Yvette B. Sonza
Department Head, Manpower Planning and Organization Development
Andrian B. Villanueva
Department Head, Total Rewards
Management and PMO
Camela A. Chiu
OIC, Employee Engagement
CORPORATE STRATEGIC AFFAIRS GROUP
Nestor Jeric T. Sevilla Jr.
OIC, Corporate Strategic Affairs Group
Department Head, Corporate
Fernando L. Busuego III
Department Head, Advocacy and Research
CORPORATE REGULATORY AFFAIRS GROUP
Christopher Matthew A. Ilagan
OIC, Corporate Regulatory Affairs Group
Rosielle Levon A. Gonzales
Department Head, Business Operations Regulation
Marvin V. Lascano
Department Head, Financial Regulation
Rolando C. Palac
OIC, Technical Regulation
EAST ZONE BUSINESS OPERATIONS GROUP
Esmeralda R. Quines
OIC, East Zone Business Area
Elizabeth M. Cruz
Head, East Zone Business Area Operations
Orlando A. Villareal
Department Head, Technical Support
Services for Water Network
Selwyn P. Cabaluna
Department Head, Technical Support
Services for Used Water
Marvin J. Panday
OIC, East Zone Business Support
Maria Mabelle G. Amatorio
Area Business Manager, Makati
Shoebe Hazel B. Caong
Area Business Manager, Pasig
Ma. Christina S. Cruz
Area Business Manager, Taguig-Pateros
Ernesto P. Francisco
Area Business Manager, Marikina
Diana Lou B. Gomez
Department Head, Program and Policy Development
Kristine Jessah R. Guevarra
Department Head, Demand Forecasting and TMS Management
Amelia P. Pineda
Department Head, Billing and Collection
Janice E. Ruiz
Area Business Manager, Balara
Victoria G. Santos
Department Head, Customer Service and Stakeholder Management
Adrian Bryan M. Magallanes
OIC - Area Business Manager, Cubao
Donna Mae U. Perez
OIC - Area Business Manager, Rizal
Kristoffer D. Sabater
OIC - Area Business Manager, San Juan-Mandaluyong
CORPORATE INFORMATION TECHNOLOGY GROUP
Jose Ronaldo P. Cruz
Department Head, Systems and Solutions
Elmer D. Pevidal
Department Head, IT Governance
Gabriel V. Tuason
Department Head, Information Security
Jocelyn D. Santiago
Business Relationship Manager
CORPORATE OPERATIONS GROUP
Evangeline M. Clemente
Head, Technical Services
Estelita C. Orodio
Head, Operations Services
Joemar B. Emboltorio
Department Head, Water Supply Operations
Jose Paulo V. Serias
Department Head, Used Water Operations
William C. Alcantara
Department Head, Energy Management
Bernaliza B. Espina
Department Head, Laboratory Services
Mark Tom Q. Mulingbayan
Department Head, Sustainability
Roel Stephen M. Picart
Department Head, Maintenance Services
Dexter M. Quibuyen
Department Head, System Analytics
Jose M. Cadorna
Department Head, Fleet Management
Joannatess B. De Vera
Department Head, Operations Management
Alessandro Jose T. Zamora
Department Head, Corporate Security and Business Continuity
Mario S. Rodriguez
Headworks and Conveyance Manager
CORPORATE PROJECT MANAGEMENT GROUP
Anthony D. Castillo
Department Head, Project Management
Sarah Monica E. Bergado
Department Head, Project Management Office
Roberto L. Marcelino
Department Head, Quality Assurance
Frederick S. Sangalang
OIC, Construction Management
Edgar B. Bausa
Bernadette E. del Rosario
OIC, Project Stakeholder Engagement
Jommel Omar A. Gomez
OIC, Safety Solutions
Isagani B. Colocado
Headline Construction Manager
Johan L. Gomez
Senior Project Manager
Francisco D. Landayan Jr.
Senior Project Manager
Liezel T. Lee
Alicia M. Manalo
Headline Construction Manager
Allan B. Patdu
Senior Project Manager
Maria Elizabeth D. Tayamora
Headline Construction Manager
STRATEGIC ASSET MANAGEMENT GROUP
Noelito S. Abesamis
Department Head, Water Sources and Environmental Planning
Carlos Noel P. Carlos Jr.
Department Head, Asset Investment and Management Support
Baltazar P. De Guzman
Department Head, Asset Management OIC, Portfolio Management
Christine Aubrey N. Emboltorio
Department Head, Strategic Asset Planning
Jubie D. Torres
OIC, Value Assurance
Gillian Mari B. Berba
Rey Ann C. Dela Cruz
Water Systems Analysis and Modelling Manager
Rene N. Santos
Value Assurance Team Lead
MANILA WATER FOUNDATION
Carla May B. Kim
Executive Director, Manila Water Foundation
MANILA WATER TOTAL SOLUTIONS
Robert Michael N. Baffrey
Head, Product Innovation and Development
William Samuel U. Sy
Head, Corporate Accounts Management
Sharon May D. Marcial
OIC-General Manager, Healthy Family
MANILA WATER PHILIPPINE VENTURES
Jesus D. Laigo
General Manager, New Businesses
Bernardo C. Mañosca
Deputy Head, New Business Development
Arnold Jether A. Mortera
Head, New Business Development
Maidy Lynne B. Quinto
General Manager, Clark Water
Joseph Michael A. Santos
General Manager, Boracay Water
Melvin John M. Tan
General Manager, Laguna Water
Barny F. Kim
OIC - General Manager, Estate Water
Rodrigo A. Abinsay
Project Manager, Zamboanga Water
Jonathan Z. Urbano
OIC - General Manager, Cebu Water
Dante P. Agcaoili
OIC - Project Manager, Tagum Bulk Water Supply Project
Melissa A. Alcasid
Operations Head, Clark Water
Rodel V. del Rosario
Operations Head, Laguna Water
Rafael F. Facto
Facility Manager, Tagum Bulk Water Supply Project
Felipe A. Fradejas
Project Management and Technical Services Head, Laguna Water
Noel O. Julao
Regulatory and External Affairs Head, Clark Water
Christian Mhel C. Marcos
New Business Head, Clark Water
Constantine O. Uy
New Business Head, Laguna Water
MANILA WATER ASIA PACIFIC
Ronnie D. Lim
Country Manager, Vietnam Representative Office
Country Manager, Myanmar Representative Office
Elmer M. Largo
Operations and Maintenance Manager, Cu Chi Water
John Walter E. Tendencia
Operations Manager, Kenh Dong Water
Raymund V. Vagilidad
Operations Manager, Thu Duc Water
Ramoncito L. Gomez
OIC – General Manager, Asia Water Network Solutions
Jaime T. Galinato
Quality Control Manager, Asia Water Network Solutions
corporate governance report Dedicated to observing the highest standards
Manila Water 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
Manila Water 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 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.
Upon receipt of all nominations, the Nomination Committee convenes to evaluate the qualifications of nominees for election to the Board. In evaluating the nominations, the Nomination Committee adheres to the criteria for selection and the qualifications of directors set forth in the Manual of Corporate Governance (the “Manual”), the Charter of the Board of Directors, the Charter of the Board Committees, and those under existing laws, rules, and regulations.
After its deliberation, the Nomination Committee issues a resolution endorsing the election of the qualified nominees at the annual stockholders' meeting. The members of the Board so elected at the annual stockholders' meeting hold office for one year, and until their successors have been elected and qualified in accordance with the By-Laws.
The elected members of the Board 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.
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:
- 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;
- provides for increased quorum, from simple majority, to 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.
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 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.
THE BOARD COMMITTEES
The Board is supported by several committees, namely: the Executive 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.
The Executive Committee
- Composed of five directors as members
- Acts by majority vote of all its members and is authorized to act and shall act on matters within the competence of the Board, except those with respect to:
- Approval of any action for which shareholders’ approval is also required
- Filling of vacancies in the Board
- Amendment or repeal of the By-Laws or the adoption of new By-Laws
- Amendment or repeal of any resolution of the Board, which by its express terms is not so amendable or repealable
- Distribution of dividends to shareholders
- Meets as needed and performs such other functions as may be properly delegated to it by the Board
- Held three meetings in 2015
The Audit and Governance Committee
- Composed of four directors (three of whom are independent) and is required to be chaired by an independent director
- Provides the check and balance mechanism and is expected to bring positive results in supervising and supporting the management of the Company, with the following duties:
- Responsible for ensuring the development of, compliance with, and periodic review of corporate governance and financial reporting policies and practices of the Company
- Recommends the appointment of the Company’s external auditors and the Chief Audit Executive
- Provides concurrence to the replacement, re-assignment or dismissal of the Chief Audit Executive to ensure that the external and internal auditors will function and operate independently of the management as required of their function
- Meets at least every quarter and before the quarterly Board meetings and when needed
- Held six meetings in 2015
All members of the Audit and Governance Committee are required to possess adequate understanding of accounting and auditing principles in general and of the Company’s financial management systems and environment, in particular. Mr. Jaime C. Laya, an independent director and a member of the Audit and Governance Committee, is a Certified Public Accountant.
The Related Party Transactions Committee
- Considered by the Board as a subset of the Audit and Governance Committee, and is composed of all the three independent directors of the Audit and Governance Committee
- Primarily tasked with the duty of enforcing and implementing the Related Party Transactions Policy of the Company, with respect to material related party transactions
The Nomination Committee
- Composed of four directors, three of whom are independent, and under its own Charter is required to be chaired by an independent director
- Tasked to install and maintain an evaluation process to ensure that all directors to be nominated to the Board during the annual stockholders' meeting have all the qualifications and none of the disqualifications stated in the Manual, the Charter of the Board and the Committees, and the under existing laws and regulations
- Undertakes the process of identifying the quality of directors consistent with the Company’s strategic directions, and which have the competence and professional background that will enable them to perform their duties as directors of Manila Water
- Tasked to evaluate the qualifications of all officers nominated to positions in the Company which are appointed by, or required to be appointed by the Board
- Held two meetings in 2015
The Remuneration Committee
- Composed of four members, three of whom are independent, and under its own Charter is required to be chaired by an independent director
- Tasked with the duty to determine and approve all matters relating to the remuneration and benefits of the Company’s directors and key officers
- Continuously evaluates and recommends for Board approval, pertinent guidelines on executive and employee compensation, including non-monetary remuneration
- Held two meetings in 2015
The Risk Committee
- Composed of four members, majority of whom are independent directors, and is required to be chaired by an independent director
- Tasked to provide assistance in fulfilling the Board’s oversight responsibilities in relation to risk governance in Manila Water, which includes ensuring that Management maintains a sound and responsive risk management system across the organization
- Established separately from the Audit and Governance Committee in order to further enhance governance on risk matters and align with the best practices in risk management
- Supported by the Enterprise Risk and Insurance Management Department in the performance of its functions
- Held two meetings in 2015
The Committee of Inspectors of Ballots and Proxies
- Membership consists of the Internal Audit Head, the Chief Legal Counsel and a representative of the external auditor of the Company
- Carries the mandate to validate proxies issued by the stockholders and to determine if the same are in accordance with existing laws, rules, and regulations prior to the Annual Stockholders’ Meeting
- Default inspector of ballots and tabulator of votes during the Annual Stockholders’ Meeting, and as such, is required to coordinate closely with the Office of the Corporate Secretary and the independent validator of votes appointed for the purpose
Under the Charter of the Board, the Board institutionalized a policy of holding at least six 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 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 Manual, a director’s absence or non-participation for whatever reason in more than fifty percent of all meetings, both regular and special, in a year is a ground for temporary disqualification in the succeeding election.
Corporate 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 Corporation, 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. Director/s are required to inform the Office of the Corporate Secretary of the trainings or courses attended for record and disclosure purposes.
|DIRECTOR||PROGRAM||TRAINING INSTITUTION||DATE OF TRAINING|
|Fernando Zobel de Ayala||Corporate Governance Summit: Learnings from the Public Sector on Corporate Governance||Institute of Corporate Directors||February 18, 2015|
|Jaime Augusto Zobel de Ayala||Corporate Governance Summit: Learnings from the Public Sector on Corporate Governance||Institute of Corporate Directors||February 18, 2015|
|Gerardo C. Ablaza, Jr.||Corporate Governance Summit: Learnings from the Public Sector on Corporate Governance||Institute of Corporate Directors||February 18, 2015|
|Antonino T. Aquino||Corporate Governance Summit: Learnings from the Public Sector on Corporate Governance||Institute of Corporate Directors||February 18, 2015|
|Jose L. Cuisia, Jr.||Permanently Exempted pursuant to Memorandum Circular No. 2 Series of 2015 of the Securities and Exchange Commission||N/A||N/A|
|John Eric T. Francia||Corporate Governance Summit: Learnings from the Public Sector on Corporate Governance||Institute of Corporate Directors||February 18, 2015|
|Victoria P. Garchitorena||Corporate Governance Summit: Learnings from the Public Sector on Corporate Governance||Institute of Corporate Directors||February 18, 2015|
|Delfin L. Lazaro||Corporate Governance Summit: Learnings from the Public Sector on Corporate Governance||Institute of Corporate Directors||February 18, 2015|
|Jaime C. Laya||Corporate Governance Summit: Learnings from the Public Sector on Corporate Governance||Institute of Corporate Directors||February 18, 2015|
|Sherisa P. Nuesa||Corporate Governance Summit: Learnings from the Public Sector on Corporate Governance||Institute of Corporate Directors||February 18, 2015|
|Oscar S. Reyes||Corporate Governance Summit: Learnings from the Public Sector on Corporate Governance||Institute of Corporate Directors||February 18, 2015|
Board Attendance in Meetings
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, 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.
Mr. Gerardo C. Ablaza Jr., the sole executive director, was not required to attend the meeting of the non-executive directors.
During the 2015 Annual Stockholders’ Meeting held on April 7, 2015 at Fairmont Makati in Makati City, the Chairman of the Board of Directors, President and CEO of the Company, and the Chairman of the Audit and Governance Committee along with all the other directors and executive officers of the Company, were in complete attendance.
Under the Charter of the Board, at least 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, for the following corporate acts and measures, stockholders constituting at least two thirds of the outstanding capital stock of the Company must be present in person or by proxy:
- Amendment of the Articles of Incorporation
- Adoption and/or amendment of the By-Laws
- Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the corporate property
- Incurring, creating or increasing bonded indebtedness
- Increase or decrease of capital stock
- Merger or consolidation of the Company with another company
- Investment of corporate funds in another corporation or business for any purpose other than the primary purpose for which it was organized
- Dissolution of the corporation
|Board Committees and its Members||Meeting Attended/Held|
|Fernando Zobel de Ayala (Chairman)||3/3|
|Gerardo C. Ablaza, Jr.||3/3|
|Antonino T. Aquino||2/3|
|John Eric T. Francia||3/3|
|Sherisa P. Nuesa (ID)||3/3|
|Audit and Governance|
|Oscar S. Reyes (Chairman)(ID)||5/5|
|Jose L. Cuisia, Jr. (ID)||4/5|
|Jaime C. Laya (ID)||4/5|
|Victoria P. Garchitorena||5/5|
|Jose L. Cuisia, Jr. (Chairman)(ID)||2/2|
|Jaime Augusto Zobel de Ayala||2/2|
|Jaime C. Laya (ID)||2/2|
|Oscar S. Reyes (ID)||2/2|
|Oscar S. Reyes (Chairman)(ID)||2/2|
|Fernando Zobel de Ayala||2/2|
|Jose L. Cuisia, Jr. (ID)||2/2|
|Sherisa P. Nuesa (ID)||2/2|
|Jaime C. Laya (Chairman)(ID)||1/1|
|Oscar S. Reyes (ID)||1/1|
|Jose L. Cuisia, Jr. (ID)||1/1|
|Victoria P. Garchitorena||1/1|
|Related Party Transactions|
|Oscar S. Reyes (Chairman)(ID)||2/2|
|Jaime C. Laya (ID)||2/2|
|Jose L. Cuisa, Jr. (ID)||2/2|
|Committee of Inspectors of Ballots and Proxies|
|Xerxes Noel O. Ordanez, Department Head of Internal Audit (Chairman)||1/1|
|Jhoel P. Raquedan, Chief Legal Counsel||1/1|
|Representative of External Auditor||1/1|
ID: Independent Director
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 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 compensation should fairly pay directors for work required of the Company’s size and scope.
In a special meeting held on April 11, 2011, the Board approved an increase in the Board remuneration. The approved remuneration for the members of the Board consists of a fixed annual retainer fee of ₱500,000, ₱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.
The table below summarizes the total compensation/remuneration received by and/or to be paid to the directors for 2015 as members of the Board of Directors of the Company:
2015 BOARD OF DIRECTORS’ ATTENDANCE AND REMUNERATION
|Name||Attendance||Remuneration (in Pesos)|
|Meetings Attended/Held||Percentage||Fixed Retainer||ASM and Board Meetings**||Committee Meetings**||Total|
|Fernando Zobel de Ayala***||7/7||100%||500,000||1,400,000||200,000||2,100,000|
|Jaime Augusto Zobel de Ayala***||7/7||100%||500,000||1,400,000||100,000||2,000,000|
|Gerardo C. Ablaza, Jr.***||6/6*||100%||500,000||1,400,000||150,000||2,050,000|
|Antonino T. Aquino||7/7||100%||500,000||1,400,000||100,000||2,000,000|
|Jose L. Cuisia, Jr.||7/7||100%||500,000||1,400,000||550,000||2,450,000|
|John Eric T. Francia***||7/7||100%||500,000||1,400,000||150,000||2,050,000|
|Victoria P. Garchitorena||7/7||100%||500,000||1,400,000||300,000||2,200,000|
|Jaime C. Laya||7/7||100%||500,000||1,400,000||450,000||2,350,000|
|Delfin L. Lazaro***||6/7||86%||500,000||1,200,000||-||1,700,000|
|Sherisa P. Nuesa||7/7||100%||500,000||1,400,000||250,000||2,150,000|
|Oscar S. Reyes||7/7||100%||500,000||1,400,000||600,000||2,500,000|
* Mr. Ablaza is not required to attend the meeting of the Non-Executive Directors.
** Amounts (in Pesos) are tax-inclusive.
*** Board remuneration of Messrs. Fernando Zobel de Ayala, Jaime Augusto Zobel de Ayala, Gerardo C. Ablaza Jr., John Eric T. Francia and Delfin L. Lazaro were paid directly to Ayala Corporation.
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:
- Board and Board Committee processes and meetings;
- compliance with the responsibilities and functions of the Board and Board Committees;
- Board-Management relationship;
- Board Member self evaluation; and
- 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.
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.
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.
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 its annual report to the SEC. 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 Manila Water 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:
- assessment that gauges a talent’s business driver readiness and leadership competencies;
- creation of an Individual Development Plan that outlines possible developmental areas and stretched assignments; and
- 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.
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 the Company’s Chief Finance Officer and Treasurer, is the Compliance Officer designated to ensure and confirm adherence of the Company to the best practices in corporate governance.
Luis Juan B. Oreta, who is the Company’s Chief Finance Officer and Treasurer, is the Compliance Officer designated to ensure and confirm adherence of the Company to the best practices in corporate governance.
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 Manila Water 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, 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.
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 process throughout Manila Water and in collecting and analyzing key business risk information for reporting to the RMEC.
ENTERPRISE RISK AND INSURANCE MANAGEMENT
The Enterprise Risk and Insurance Management (ERIM) 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 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. The IR is easily reached through phone, electronic mail, or through the Company website for any stockholder, stakeholder or investor concerns.
COMPLIANCE AND CORPORATE GOVERNANCE
CORPORATE GOVERNANCE MANUAL
The corporate governance policy of Manila Water is primarily contained in its Manual of Corporate Governance (the “Manual”). As contained in the Manual, the Company’s corporate governance framework is based on the principles of accountability, fairness and transparency, and sustainability. The Company confirms its full compliance with its Manual of Corporate Governance.
The Manual contains the governance principles that the Company applies in all its undertakings and supplements Manila Water’s Articles of Incorporation and By-Laws. The adoption of the Manual instituted the policies on:
- the Board of Directors’ and management’s roles, functions and responsibilities in relation to good governance;
- the institution of training for the Board of Directors, executive directors and employees, and evaluation of the Board and Management’s performance;
- the enhanced roles of the Corporate Secretary and Audit and Governance Committee in corporate governance;
- related party transactions;
- conflict of interest; and
As a key policy, the members of the Board and key executives of the Company are required to disclose to the Board any material interest, whether direct or indirect, they may have in any transaction or matter that directly affects the Company. The directors are required to comply with all disclosure requirements of the Manual and the Securities Regulations Code (SRC) and its Implementing Rules and Regulations (IRR), and voluntarily disclose any conflict of interest, whether actual or potential, upon its occurrence. The disclosure of any conflict of interest, including related party transactions, is to be made fully and immediately. In cases where related party transactions exist, it is the Company’s policy that complete information on such transaction be immediately disclosed, and, if a director or officer is involved, the director or officer concerned shall not be allowed to participate in the decision-making process. The policy also mandates that a director who has a continuing conflict of interest of a material nature shall be required to resign, or if the Board deems appropriate, be removed as a member of the Board.
The Board commits, at all times, to adequately and timely disclose all material information that could potentially affect Manila Water’s share price and such other information that are required to be disclosed pursuant to the SRC and its IRR and other relevant laws. This information includes, but is not limited to, results of earnings, acquisition or disposal of significant assets, off-balance sheet transactions, changes in Board membership, as well as, changes in shareholdings of directors and officers, and related party transactions. The Company discloses its corporate governance practices, corporate events calendar and other material information on its website in a timely manner.
The Company’s Manual is continuously being revised in accordance with the directives and issuances of the SEC. The latest amendment to the Manual was in June 2014, in compliance with SEC Memorandum Circular No. 9 Series of 2014. The revisions to the Manual strengthened the protection of shareholders and stakeholders, particularly the minority, through:
- the inclusion of additional provisions on transparency on business operations;
- communication of important information from Management to the Board and from the Board to the shareholders and stakeholders;
- disclosures on and evaluation of directors’ and Management’s performance;
- qualifications and disqualifications of directors;
- participation of independent directors in all meetings of the Board; and
- full and consistent compliance with financial, legal, and regulatory requirements.
The Manual is available for download at the Company’s website.
RELATED PARTY TRANSACTIONS
To further instill the Company’s policies on Related Party Transactions, the Board adopted the Policy on Related Party Transactions (the “Policy”). The Policy confirms that the Company and its subsidiaries shall enter into any related party transactions solely in the ordinary course of business, on ordinary commercial terms, and on the basis of arm’s length arrangements, which shall be subject to appropriate corporate approvals and actions of the Company or the related parties, as the case may be.
Any related party transactions entered into by the Company or its affiliates shall be in accordance with applicable law, rules and regulations, and this Policy.
Related party transactions entered into by the Company with one or more of its directors or officers are voidable at the option of the Company, unless the transaction is deemed fair and reasonable under the circumstances and conducted at arm’s length.
The policy provides for the process of approving related party transactions, as well as the implications for violations. In addition, the Policy prohibits related party transactions involving loans and/or financial assistance to a director and loans and/ or financial assistance to members of the Management, except when allowed pursuant to an established Company benefit or plan.
Under the Policy, the approval of the Related Party Transactions Committee is required for material related party transactions.
CODE OF BUSINESS CONDUCT AND ETHICS
The Company’s commitment to the highest standards of ethics, good governance, competence and integrity was institutionalized through the Code of Business Conduct and Ethics (the “Code”). The Code addresses the issues and relationships between and among the Company’s directors, officers and employees, and its customers, suppliers, business partners, government offices and other stakeholders. The Code was revised in 2014, which re-confirmed the Company’s commitment to these high standards. Copies of the Code have been distributed to all directors, officers and employees of the Company to inform them of the basic mandates and policies of the Company under the Code.
Any director, officer or employee who commits a violation of the Code shall be subject to disciplinary action, without prejudice to any civil or criminal proceedings that the Company or regulators may file for violation of existing laws. The Office of the Compliance Officer is responsible for implementing and monitoring compliance with the Code, and shall also have the authority to decide any issues that may arise in connection with the implementation of the Code.
Honesty and Fair Dealing
- Mandates that directors, officers and employees shall not engage in any unfair dealing practices, such as taking advantage of anyone through abuse of confidential information, manipulation, concealment, misrepresentation or other similar acts.
Reporting of Fraudulent or Dishonest Acts (the Whistle Blower Policy)
- Provides for procedures to be followed to encourage all covered persons to report fraudulent or dishonest acts in order to protect the good name and reputation of the Company, and in the process, discourage the commitment of such acts.
- Directors, officers and employees are required to immediately report all suspected or actual fraudulent or dishonest acts to the Board in case of directors, and to the immediate supervisor or to the Office of the Compliance Officer in case of officers and employees.
- The Company shall promptly identify and investigate any suspected fraudulent or dishonest acts.
- Without prejudice to applicable administrative sanctions, the Company may pursue civil and/or criminal actions against directors, officers and employees as may be warranted.
- To ensure protection of the reporter from any form of retaliation or discrimination, the identity of the person making the report and the contents of the report shall be kept confidential to the extent legally permissible.
Conflict of Interest
- Specifies conflict of interest situations involving all directors, officers, employees and their relatives up to the fourth degree of consanguinity and/or affinity, including common law relationships.
- Under the policy, a conflict of interest arises when a director, an officer or employee appears to have a direct or indirect personal or financial interest in any transaction, which may deter or influence him from acting in the best interest of the Company. It is not required that there be an actual conflict; it is only required that there could be perceived conflict by an impartial observer.
- All such existing contracts/arrangements by directors, officers and employees, and their relatives were required to be terminated immediately and correspondingly reported ultimately to the Office of the Compliance Officer, as required under the Code.
Corporate Entertainment and/or Gifts
- Prohibits all officers and employees from accepting corporate entertainment/gifts from suppliers, contractors and other business partners, which can be viewed as influencing the manner on which an officer or employee may discharge his duties.
- Prohibits directors, officers and confidential employees from trading in Manila Water shares:
- ten days before and three days after the release of the financial statements; and
- three days before and three days after the release of other material information.
- In addition, directors and officers who may be covered by the reporting requirements of the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) in respect of their shareholding in the Company or any changes thereof, are required to report their dealings in Company shares within three business days after the transaction.
- Encourages prompt and adequate disclosure of all material facts or changes in the affairs of the Company, including any information likely to affect the market price of the Company’s shares.
- Institutionalizes the Company’s adherence to its loan covenants and agreements.
- Strictly prohibits giving and facilitating payments to any private or government officials or employees, their agents or intermediaries, in order to expedite or secure performance of any governmental action, or to gain any perceived or actual favor or advantage from any private or government entities. The Company must ensure that it and its directors, officers and employees fully comply with the laws governing bribes, unlawful payments and other corrupt practices.
- Recognizes the Company’s protection of the dignity of its human resources
Diversity in Board Membership
- Promotes equality among the members of the Board regardless of gender, age, ethnicity, or political, religious or cultural beliefs.
The objectives of the Procurement Policies are to promote transparency in the procurement process, and to afford vendors equal access to business opportunity with Manila Water, with the end view of enhancing vendor participation and the interest of Manila Water. Officers and employees involved in the procurement process for services, materials, supplies and equipment for Manila Water are required to comply with its Procurement Policies.
The Procurement Policies of the Company are downloadable at the Company website.
THE VENDORS’ CODE OF CONDUCT
The Vendors’ Code of Conduct sets out the rules that will guide Manila Water’s vendors in the performance of their obligations and/or transacting business with Manila Water, thus avoiding acts contrary to standards, policies, laws and morals. As business partners of Manila Water, its vendors are expected to act with utmost integrity, efficiency, and competence in performing awarded contracts and/or delivering ordered products. Moreover, they should demonstrate a strong sense of responsibility for public safety and interest that will ultimately promote and protect the good name of Manila Water.
A copy of the Vendor’s Code of Conduct is downloadable at the Company website.
THE ENTERPRISE RISK AND INSURANCE MANAGEMENT POLICY
Manila Water has established an Enterprise Risk Management (ERM) Program which aims to use a globally-accepted approach in managing imminent and emerging risks in its internal and external operating environments. Under the ERM Program, Manila Water shall appropriately respond to risks and manage them in order to increase shareholder value and enhance its competitive advantage.
In order to bolster the risk oversight and management functions relating to strategic, financial, operational, compliance, legal and other risks of the Company, the Board, on August 11, 2015, approved the establishment of a separate Risk Committee.
Subsequently, on November 26, 2015, the Board approved the Charter of the Risk Committee, which transferred the risk oversight and management functions to the Risk Committee from the Audit and Governance Committee. The Committee shall have the following authorities, roles and responsibilities:
- Promote an open discussion regarding risks faced by the Company, as well as risks faced by its subsidiaries that may have potential impact on the Company’s operations, and ensure that risk awareness culture is pervasive throughout the organization;
- Ensure that an overall set of risk management policies and procedures exist for the Company;
- Review the Company’s risk governance structure and the adequacy of the Company’s risk management framework/process;
- Review and endorse to the Board changes or amendments to the Enterprise Risk Management (ERM) Policy;
- Perform oversight functions specifically in the areas of managing strategic, financial, compliance, regulatory, operational and other risks of the Company, and crisis management;
- In coordination with the Audit and Governance Committee, ensure that the Company’s internal audit work plan is aligned with risk management activities and that the internal control system considers all risks identified in the risk assessment process; and
- Perform other activities related to this Charter as requested by the Board which involves periodic disclosure of risk exposures and related risk management activities.
SAFETY, HEALTH, AND WELFARE POLICY
Manila Water is committed to achieving customer satisfaction, upholding environmental sustainability, and ensuring safety, preservation of life and health of its employees and all stakeholders. To achieve these objectives, it is the policy of Manila Water to:
- Continuously assess, implement and improve its processes and business conduct by adopting best practices and keeping abreast with the latest innovations to ensure reliability and efficiency of its operations;
- Ensure full compliance with relevant laws and standards in pollution prevention and environmental sustainability, safety and health protection, as well as applicable regulatory standards and customer requirements related to the quality of its products and services;
- Build a strong culture committed to customer satisfaction, environmental protection, health and safety through education, training and awareness at all levels of the organization that will empower its employees, contractors, suppliers and stakeholders;
- Actively promote the conservation and optimal use of precious resources by constantly creating and improving existing programs aimed at pollution prevention, waste minimization, resource conservation and environmental sustainability;
- Systematically manage and control its health and safety risks through effective risk assessment processes; and
- Regularly revisit, improve, develop and maintain its Quality, Environment, Health and Safety management system to ensure its effectiveness and relevance to the changing needs of the company to drive continuous improvement in operations, quality, environmental, health and safety performances.
To promote transparency and goodwill, it is a Company policy to encourage the attendance of all its shareholders, including minority shareholders and institutional shareholders, in any stockholders meeting. The Company also makes it a point to invite stakeholders such as its regulators, customers and creditors, to attend its stockholders' meetings.
Under the Company’s By-Laws, the affirmative vote of stockholders as of the record date constituting at least a majority of the outstanding voting capital stock of the Company is necessary to approve matters requiring stockholders’ action.
In all items for approval, each share of stock entitles its registered owner as of the record date to one vote. At each election for directors, every stockholder shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected, or to cumulate his votes by giving one candidate as many votes as the number of such directors multiplied by the number of his shares shall equal, or by distributing such votes on the same principle among any number of candidates.
The Company has two classes of shares, common and participating preferred shares. Both classes of shares have equal voting rights.
The Company continues its practice of offering its shareholders an equitable share of the Company’s profits. In 2013, the Board of Directors confirmed the dividend payout which entitles holders of common shares and participating preferred shares to annual cash dividends equivalent to 35 percent of the prior year’s net income payable at least semi-annually, on such dates as may be determined by the Board of Directors, subject to applicable rules and regulations on record dates and payment dates. The participating preferred shares participate in the earnings at a rate of 1/10 of the dividends paid to a common share. As a matter of policy, payment dates of dividends declared are fixed within thirty (30) days from date of declaration. In 2015, the Company paid a total of ₱2.035 billion as dividends.
The Manual also provides for stockholders’ pre-emptive rights to subscribe to the capital stock of the Company, right of inspection of corporate books and records, as well as annual report and financial statements, right to information on all material items upon request and for a legitimate corporate purpose, and appraisal rights as provided under the law.
The revised Manual provides that the minority shareholders shall have the right to propose the holding of a meeting as well as the right to propose items in the agenda of the meeting, provided that the items proposed are for legitimate business purposes. Upon request and for a legitimate purpose, a shareholder shall be provided with periodic reports which disclose personal and professional information about the directors and officers and certain other matters such as their holdings of the Company’s shares, dealings with the Company, relationships among directors and key officers, and the aggregate compensation of directors and officers.
As a policy, notices and agenda of the Annual Stockholders’ Meeting are disclosed to the public at least two months before the scheduled meeting. The notice and agenda of the Annual Stockholders’ Meeting specifically provides that nominations to the eleven members of the Board of Directors must be received by the Nomination Committee at least thirty days before the meeting. Under the Charter of the Board, every stockholder has a right to submit a nomination for election to the Board.
The shareholders have an opportunity during the annual stockholders’ meeting to ask questions and raise their issues regarding the Company, its directors and the performance of its executive officers. The minutes of the meeting record the shareholder questions and corresponding answers given by the directors and officers of the Company. Copies of the minutes are available for download at the Company’s website.
Further rights of the Company’s shareholders include their respective rights to participate in decisions concerning fundamental corporate changes such as amendments to the Company’s constitution, authorization of additional shares and transfer of all or substantially all of its assets, which in effect result in the sale of the Company.
The Company is compliant with the requirement of the PSE on minimum public ownership with 55.2 percent of its common shares subscribed and owned by the public as of December 31, 2015. In compliance with the requirements of the PSE, the Company regularly and timely discloses its public ownership report and immediately makes a public disclosure of any change thereon.
INDEPENDENT EXTERNAL AUDITOR AND ITS REMUNERATION
In the last annual stockholders’ meeting held on April 7, 2015, the stockholders approved the re-appointment of Sycip, Gorres, Velayo & Company (SGV & Co.) as external auditor of the Company for an audit fee of ₱2,000,000 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 services or consultancy, the Company, as a matter of policy, ensures that the fees received by SGV & Co. on such non-audit 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 reports.
|Engagement||external auditor Fees|
|Financial Statements Audit||₱2,000,000||₱1,900,000||5%|
*GPOBA, Proxy Validation, Validation of ASM Votes and Equity Restructuring
Summary of Legal and Beneficial Ownership of the Board, Key Officers and Major Shareholders
Class of Share
Class of Share
|Fernando Zobel de Ayala||1||Common||1||Common|
|Jaime Augusto Zobel de Ayala||200,001||Common||200,001||Common|
|Gerardo C. Ablaza, Jr.||4,126,078||Common||3,626,079||Common|
|Antonino T. Aquino||12,749,543||Common||12,749,543||Common|
|Jose L. Cuisia, Jr.||1||Common||1||Common|
|John Eric T. Francia||1||Preferred||1||Preferred|
|Victoria P. Garchitorena||1||Preferred||1||Preferred|
|Delfin L. Lazaro||1||Common||1||Common|
|Jaime C. Laya||5,000||Common||5,000||Common|
|Sherisa P. Nuesa||5,309,607||Common||5,309,607||Common|
|Oscar S. Reyes||330,001||Common||330,001||Common|
|Gerardo C. Ablaza, Jr.||4,126,078||Common||3,626,078||Common|
|Virgilio C. Rivera, Jr.||2,242,795||Common||1,974,212||Common|
|Luis Juan B. Oreta||1,572,727||Common||1,281,341||Common|
|Ferdinand M. Dela Cruz||1,248,264||Common||921,517||Common|
|Geodino V. Carpio||1,629,800||Common||1,372,500||Common|
|Abelardo P. Basilio||775,200||Common||609,800||Common|
|Rodell A. Garcia||513,600||Common||253,500||Common|
|Thomas T. Mattison||274,100||Common||0||Common|
|Solomon M. Hermosura||50,100||Common||50,100||Common|
|First State Investment Management (UK) Limited (through PCD Nominee Corporation)||152,142,261||Common||117,100,761||Common|
|Philwater Holdings Corporation||3,999,999,998||Preferred||3,999,999,998||Preferred|
* Inclusive of 1,000,000 shares held through Michigan Holdings, Inc., a wholly owned subsidiary of Ayala Corporation
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, Manila Water 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 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. Manila Water 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.
Manila Water’s Chief Finance Officer and Treasurer, Luis Juan B. Oreta, was given the honor as the 2015 ING FINEX CFO of the Year in an awarding ceremony held on November 25, 2015.
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, Manila Water offers various trainings, programs and workshops for its directors, officers, employees, and contractors and vendors in order to instill good corporate practices.
RISK MANAGEMENT How it is embedded in the enterprise
Manila Water continues to grow and live up to its status of being the most successful model of public-private partnership in the Philippines. Risk management is a key contributor to this success. At all levels of the organization, risk management is consistently used as a tool for effective decision-making, planning and operations, resulting to a resilient and agile organization amidst difficulties in its regulatory and physical environment.
ENTERPRISE RISK MANAGEMENT IN MANILA WATER
Manila Water operates in a regulated and dynamic business where uncertainties, both detrimental and opportune to the Company, abound. The Company is accountable to its regulators, shareholders, employees and customers, among others, even as profitability, sustainable development and corporate social responsibility are expected to be continuously enhanced. In order to achieve its corporate objectives, Manila Water recognized the need for the active management of risks inherent in its business which involves the entire organization.
Manila Water continues to implement its Enterprise Risk Management (ERM) Program based on a globally-accepted approach, the ISO 31000:2009. Under the Program, Manila Water integrates risk awareness and responsibility at each level of management activities, and into all strategic planning and decision-making processes within Manila Water and its subsidiaries to support achievement of strategies and objectives. The ERM Program has been cascaded to all the departments in Manila Water. The same has been rolled out to subsidiaries in Boracay, Cebu, Clark and Laguna and its affiliates in Vietnam to ensure the attainment of their respective growth objectives. The rollout considered the unique business and risk environment where these subsidiaries operate.
The ERM Program operationalizes the Company’s Manual of Corporate Governance which mandates the Board of Directors (BOD) to ensure the presence of organizational and procedural controls supported by an effective management information system and risk management reporting system. In addition, the Company’s Risk Committee, as stated in the Risk Committee Charter, is required to provide oversight to management functions relating to strategic, financial, operational, compliance, legal and other risks of the Company which involves periodic disclosure of significant risk exposures and related risk management activities.
The President is the comprehensive risk executive and is ultimately responsible for ERM priorities, strategies, tolerances and policies. He chairs the Risk Management Executive Committee (RMEC) which is composed of top management and the Chief Risk Officer (CRO). The RMEC provides oversight and input to the President and to the Board to enable them to formulate better and informed decisions on matters relating to risks. The RMEC provides direction on the design and implementation of appropriate systems, tools and methodologies to support the ERM process and other risk management activities, and designates owners of specific risks and enablers of the ERM process (ERM Champions).
The CRO is the ultimate champion of ERM at Manila Water. Supporting the CRO is the Enterprise Risk and Insurance Management (ERIM) Department. It is responsible for developing risk management tools, methodologies and processes, and leads the implementation and dissemination of ERM across Manila Water in coordination with the risk owners or the CRO and ERM Champions of the business units.
With the ERM mindset continuously being assimilated into the Company’s culture and practices, ERM has been embedded in strategic, tactical and execution planning as well as in key-decision making processes such as insurance management. Manila Water has a risk-based insurance program wherein coverage considers relevant risks and existing controls in place. The integration of ERM with insurance management ensures that insurance provisions in contracts are custom-fit to respond to specific project risks.
To aid in the quantification of risks and determine the effectivity of risk management plans, Manila Water utilizes Key Risk Indicators (KRIs) with regular monitoring and reporting to management. The use of the KRIs enhances the analysis of risk levels and risk mitigation strategies. In addition, risk tolerance statements have been established for certain processes.
In line with management’s commitment to sustain the ERM Program in Manila Water, the ERM maturity rating continues to be part of the corporate targets. Manila Water also conducts an annual awards program, the Gawad Iwas-Lunas: Risk Management Excellence Awards to recognize individuals, teams and departments that have significantly embedded risk management and exhibited risk culture in the Company.
The risk management system of Manila Water is reviewed and assessed annually by the Internal Audit Department using a risk maturity assessment framework aligned with global best practices to determine the system’s adequacy and effectiveness. Manila Water subjects its ERM system to external assessment from time to time.
2015 ERM Activities
For 2015, the following are the improvements in the Risk Management System of Manila Water:
- Creation of Risk Committee of the Board of Directors. In line with best corporate governance practices and to further improve management of risks, Manila Water created a separate Risk Committee to handle risk-related responsibilities previously covered by the Audit and Governance Committee. In compliance with its charter, the Risk Committee discussed with management the adequacy and effectiveness of the ERM process, including significant risk exposures, the related risk mitigation efforts and initiatives, and the status of the mitigation plans. While the Risk Committee provides oversight on the risk management activities, the Company’s management remains primarily responsible for the risk management process.
- Strengthening of ERM Structure. Manila Water implemented changes on its ERM Structure to align with organizational changes. Separate RMECs were established for Manila Water Operations, Manila Water Philippine Ventures / Asia Pacific and Manila Water Total Solutions.
- Conduct of Black Swan Workshop. To improve its risk sensing capability, Manila Water engaged risk experts to conduct a black swan workshop for the Senior Leadership Team and Management Committee. The exercise enabled the management to challenge business assumptions and identify the black swans of the Company. The results of the exercise were used to validate the top risks identified earlier during the year.
- Enhancement of Risk Management Excellence Awards Program. Manila Water expanded the reach of its risk management excellence awards program to include the subsidiaries considering their states of readiness. Other components of the ERM maturity were also added in the criteria for the Risk Management Culture category.
- Inclusion of ERM maturity in Corporate and Group Targets. Since Manila Water already exceeded its maturity rating targets, the ERM maturity rating was included as a penalty item in the corporate and group targets for 2015. This implies that business units will be penalized during performance appraisal if they fail to comply with ERM requirements.
- Quality Management System for Insurance Management. A Quality Management System based on ISO 9001:2008 was established for Insurance Management. New processes such as insurance program review, claims management and monitoring, risk survey for Manila Water facilities, insurance broker service bidding/selection and evaluation have been developed and implemented.
- Insurance Roadshow. Manila Water conducted its first insurance roadshow in 2015 which highlighted the risk management activities for property and projects. The roadshow resulted in insurance coverage which took into consideration the risk management activities of the Company.
In addition, an external assessment of Manila Water’s ERM maturity was conducted by Aon Philippines. Manila Water achieved a Risk Maturity Index of 4.5 placing Manila Water between the operational and advanced levels of ERM implementation. The 4.5 score is also above the global average for all industries (3.0) and global average for utility companies (2.5).
Manila Water was shortlisted in the 2016 Institute of Risk Management (IRM) Global Awards for the Delivering Value through Risk Management category. This is an external affirmation of its various risk management initiatives over the past years. The IRM Global Risk Awards recognizes individuals and teams that have demonstrated innovation and excellence in risk management.
As Manila Water sets its sights on further expanding its reach and footprint, it continues to engage its talents in finding more cost-effective and innovative ways to manage risk. With sustained active involvement and appreciation of risk management at all levels within the organization, the Company is geared up to manage uncertainties in the regulatory, business and physical environment, and is equipped to achieve and seize new business goals as well as continue its very crucial role in protecting the environment and enhancing sustainable development both locally and internationally.
MANAGEMENT OF TOP CORPORATE RISKS
The RMEC, composed of Manila Water’s Senior Leadership Team, Manila Water Operations Management Committee and the Chief Risk Officer, determines the most significant risks facing the Company. Management of Top Corporate Risks, which has been mapped up to the department level, was delegated to the appropriate Risk Owners.
Risk Owners formulate and commit to a risk management plan, monitored by the ERIM Department, which defines specific action points, accountability and timeline. The status of the Top Corporate Risks is regularly discussed at the RMEC and is reported to the Risk Committee.
|2015 TOP CORPORATE RISKS||MITIGATION STRATEGIES|
|RATE REBASING||Actual accomplishment is reviewed versus approved business plan to ensure compliance to commitments. Meanwhile, improvements in various processes and systems have been implemented.|
|INVESTMENT PLAN EXECUTION||A capex optimization project was undertaken to optimize processes, functions and resources to ensure projects are implemented within budget and timeline, and at an acceptable quality level. A project risk management program is in place wherein projects are categorized in different tiers with varying frequencies of review, and reporting of risks and levels for risk acceptance.|
|WATER SUPPLY||Activities are being done to further increase reliability and efficiency of the current water supply system such as the development of medium-term water sources, weekly monitoring and investigation of non-revenue water contributors, weekly monitoring of dam water levels, preventive and corrective maintenance of dam facilities and aqueducts, and implementation of metering at raw water portal and tailrace metering.|
|REGULATORY||Programs have been implemented to ensure control of regulatory and socio-political risks at both compliance and strategic levels. There were organizational changes to improve the regulatory compliance of the organization. The document management system has been enhanced to improve readiness in regulatory review and audit.|
|NEW BUSINESS OPERATIONS||Organizational enhancements were implemented to improve Manila Water’s control and visibility in the subsidiaries. Risk Officers have been appointed to strengthen risk governance in the subsidiaries. The enterprise risk management framework had been implemented by the new businesses. Respective top risks and action plans are being reported to Manila Water.|
Report of the Risk Committee to the Board of Directors For the year ended December 31, 2015
The Risk Committee was established by the Board of Directors at its August 2015 meeting in pursuit of the Board’s oversight responsibilities in relation to risk governance in Manila Water. The Risk Committee’s roles, responsibilities and authority are defined in the Risk Committee Charter approved by the Board of Directors during its November 26, 2015 meeting.
In compliance with the Risk Committee Charter, the Committee confirms that:
- An independent director chairs the Risk Committee. The Committee has three out of four members who are independent directors.
- The Committee had one meeting during the year with the following attendance rate:
|Directors||No. of Meetings Attended/Held||Percent Present|
|Jaime C. Laya||1/1||100%|
|Jose L. Cuisia, Jr.||1/1||100%|
|Victoria P. Garchitorena||1/1||100%|
|Oscar S. Reyes||1/1||100%|
- The Committee reviewed and endorsed the Committee Charter for the approval of the Board of Directors.
- The Committee discussed with Management the adequacy and effectiveness of the Enterprise Risk Management process, including significant risk exposures, the related risk-mitigation efforts and initiatives, and the status of the mitigation plans. The review was undertaken in the context that Management is primarily responsible for the risk management process.
- The Committee has reviewed the Enterprise Risk Management Process and is satisfied that sufficient risk management systems are in place in Manila Water Company, Inc..
- The Committee noted the 2016 plans and initiatives of the Enterprise Risk and Insurance Management (ERIM) Department to create a robust risk awareness and management culture and to promote good risk management practices achieving appropriate risk and reward in Manila Water’s business.
The Risk Committee was established in August 2015, its tasks having been performed by the previously responsible Committee. The present Risk Committee addressed only the matters reported above and expects to more fully exercise its functions and meet Board, Management and shareholder expectations in the coming year.
February 24, 2016
JAIME C. LAYA
JOSE L. CUISIA JR
VICTORIA P. GARCHITORENA
OSCAR S. REYES