Board Committees
The eleven (11) directors of the Company are elected at the Annual Stockholders meeting to hold office for one (1) year and until their respective successors have been elected and qualified. The Chairman of the Board and the President are separate individuals. Mr. Jose T. Pardo serves as the Chairman of the Board and Mr. Jose Victor P. Paterno serves as President and Chief Executive Officer (CEO).
The independent directors of the Company as of December 31, 2020, are Mr. Jose T. Pardo, Mr. Michael B. Zalamea, and Mr. Antonio Jose U. Periquet, Jr., they are not officers or substantial shareholders of Philippine Seven Corporation nor are they the directors or officers of its related companies. Their shareholdings in the Corporation are less than 2% of the Corporation’s outstanding capital stock pursuant to Section 38 of the SRC.
Board Processes
Board Meetings and Attendance
The directors shall, as a rule, attend and actively participate in all meetings of the Board, Committees, and shareholders in person or through tele/video conferencing conducted based on the rules and regulations of SEC, except when justifiable causes such as illness, death in the immediate family, and serious accidents prevent them from doing so. This year, in the face of threats posed by the COVID-19 pandemic, the SEC issued M.C. No. 6, series of 2020, allowing participation in corporate meetings through tele/video conferencing, and other remote or electronic means of communication to minimize face-to-face interactions and as a safety measure to prevent the further spread of COVID-19.
In board and committee meetings, the director should review meeting materials and if called for, ask the necessary questions or seek clarifications and explanations. All directors complied with the attendance requirement of at least 50% of all board meetings for the year. Below is the list of directors of PSC and their attendance at the Annual Stockholders’ Meeting (ASM) and board meetings held for the fiscal year 2020.
Board Quorum
As provided in Section 16 of PSC’s Amended By-laws, a quorum at any meeting of the Board of Directors shall consist of a majority of the Directors as fixed in the Articles of Incorporation, and every decision of such quorum duly assembled as a board shall be valid as a corporate act.
The Executive Committee and the Board Committees
The Executive Committee, as created under Section 20 of the bylaws and Section 34 of RCC (previously Section 35 of the Corporation Code), shall exercise during intervals between Board meetings, all the powers and functions vested in the Board, as well as act on specific matters within the competence of the Board, as may be delegated to it in the bylaws or by a majority vote of the Board except with respect to the: 1) approval of any action for which shareholders’ approval is also required; 2) the filling of vacancies in the Board; 3) the amendment or repeal of any resolution of the Board which by its express terms is not so amendable or repealable; 4) amendment or repeal of bylaws or adoption of new bylaws, and 5) distribution of cash dividends to stockholders. Items 4 and 5 are as provided in the RCC. All matters passed and acted upon by the Executive Committee in the exercise of its powers and functions as provided herein, have the same force and effect for all intents and purposes, as if passed by the Board itself.
Board committees shall be set up, to the extent possible, to support the effective performance of the Board’s functions, particularly concerning audit, risk management, related party transactions, and other key corporate governance concerns such as nomination and remuneration. The type of board committees to be established would depend on the Corporation’s size, risk profile, and complexity of operations. However, if the committees are not established, the functions of these committees may be carried out by the whole board or by any other committee.
PSC’s Board established the Audit & Risk Committee, Corporate Governance Committee, and Compensation Committee, which assist the Board to oversee the development and achievement of corporate objectives and strategy, risk management, business plan, targets and budgets, and monitor performance to create optimal value to the Corporation. Each Committee has its charter, which defines its purpose, roles, responsibilities, and authority, including the rules and procedures that shall guide the function of the committee.
The Audit & Risk Committee assists the Board in the performance of its oversight responsibility for the financial reporting process, a system of internal control, audit process, and monitoring of compliance with applicable laws, rules, and regulations. It also provides oversight over Management’s activities in managing credit, market liquidity, operational, legal and other risks of the Corporation; and performs oversight functions over the Corporation’s internal and external auditors.
Adhering to the Principle of Proportionality, PSC combines the functions of a Board Risk Oversight Committe (BROC) and Related Party Transaction Committee (RPTC) in its Audit and Risk Committee to achieve functional and cost-efficiency.
PSC complies with the SEC Memorandum Circular No. 4 Series of 2012, which requires the adoption of an Audit Committee Charter and an evaluation process to assess the Committee’s performance. On Sept. 30, 2012, PSC Adopted its Audit Committee Charter that sets the purpose, roles, responsibilities, and authority of the Committee including the rules and procedures that shall guide the function of the Committee. In accordance with the Charter, the Audit Committee shall conduct an assessment of its performance at least annually and shall use as reference the self-assessment worksheet and parameters as provided by SEC. The assessment for 2019 was done last February 2020 through the accomplishment of the Self Assessment Worksheet for AudCom Performance.
The Audit Charter, Self Assessment Worksheet for AudCom Performance, and the internal audit charter can be found in the following links:
Audit & Risk Committee Charter
Self Assessment Worksheet for AudCom Performance
Corporate Governance Committee
The Corporate Governance Committee oversees the development and implementation of corporate governance principles and policies of the Corporation. It also subsumed the functions of the nomination committee. It reviews and evaluates the qualifications of all persons nominated to the Board that require Board approval and assesses the effectiveness of the Board’s processes and procedures in the election or replacement of directors.
The Corporate Governance Charter can be found in this link:
The Compensation Committee establishes formal and transparent procedures for developing a policy on remuneration of directors and officers to ensure that their compensation is consistent with the Corporation’s culture, strategy, and the business environment in which it operates.
The Compensation Charter can be found in this link:
Compensation Committee Charter
Board Committee Charters:
Audit & Risk Committee Charter
Compensation Committee Charter
Access to information
Board papers for the Board of Directors are generally provided 3-5 days prior to the meeting in advance of the board meetings.
Board Secretary
The Board is assisted in its duties by a Corporate Secretary, who is not a member of the Board of Directors, and annually attends training on corporate governance. The Corporate Secretary is a Filipino citizen and a resident of the Philippines, is an officer of the Corporation and has among others, the following responsibilities: assists the Board and the board committees in the conduct of their meetings, including preparing an annual schedule of board and committee meetings and the annual board calendar, and assisting the Chair of the Board and its committees to set agendas for those meetings; safekeeps and preserves the integrity of the minutes of the meetings of the Board and its committees, as well as other official records of the Corporation; and keeps abreast on relevant laws, regulations, all governance issuances, relevant industry developments and operations of the corporation, and advises the Board and the Chairman on all relevant issues as they arise;
Nomination and Election of Directors
The election of directors is held annually during the stockholders’ meeting and conducted in a manner provided by the RCC. Each director will hold office until the annual meeting held after his/her election and until his/her successor has been duly chosen and qualified, or until he/she has resigned.
Remuneration
The levels of remuneration of the Corporation should be sufficient to attract and retain the services of qualified and competent directors and officers. A portion of the remuneration of executive directors may be structured or be based on corporate and individual performance. The Board shall look into the alignment of remuneration of key officers and board members with the long-term interests of the Corporation.
No director shall participate in the approval of his compensation. Directors shall not receive any compensation unless provided in the bylaws of the Corporation or approved by the stockholders as may be required in its bylaws. However, the Board may, from time to time, approve a reasonable per diem that a director may receive for attendance in Board and Board Committee meetings. With the passing of the RCC on February 20, 2019, the Corporation has aligned its CG Manual, policies, and bylaws to the requirements of the law.
The Corporation has certain standard arrangements for compensation and profit-sharing. Per diems of P 20,000.00 (Philippine Peso) or equivalent of USD380.00 (US Dollars) net of taxes (as may be fixed by the Compensation Committee from time to time) are given to each of the members of the board of directors, members of board committees, designated corporate/executive officers, members of the advisory committee or adviser/consultant for every regular or special meeting of the Board, Executive Committee, Board Committees, and other related corporate meetings actually attended, either physically or by teleconferencing/videoconferencing.
The Corporation has a policy on the director’s fee and gratuity for the Office of the Chairman of the Board, as approved by the Compensation Committee. A monthly director’s fee shall be provided for the position of the Chairman of the Board as determined by the Compensation Committee, from time to time, as concurred by the Board and/or the Executive Committee. An additional director’s fee (gratuity) shall be given upon the occurrence of the following: a) End of term of office and not accepting reappointment (except due to removal); b) Incapacity; c) Resignation due to any of the above; d) Death, which shall be equivalent to one month of the Chairman’s prevailing monthly director’s fee for every year or term in office.
The Corporation updated its policy to provide guidelines for a director’s fee to be provided to independent directors. As a director and member of the Board, the independent director shall be entitled to an annual director’s fee of PHP 200,000.00. If he is a Chairman of any Board Committee, the independent director shall be entitled to an annual director’s fee of PHP 200, 000.00, and if a member of any Board Committee, the independent director shall be entitled to an annual director’s fee of PHP 100,000.00.
Board Chairman
The Chairman of the Board and the Chief Executive Officer have a separate leadership structure to ensure Board independence and foster the principle of balanced power and better capacity in terms of decision-making. They assume divergent key roles, wherein each requires an appropriate level of accountability from the Board, stakeholders, and shareholders.
Mr. Jose T. Pardo serves as the Chairman of the Board and Independent Director and Mr. Jose Victor P. Paterno as PSC’s President and Chief Executive Officer.
Board Diversity Policy
PSC values the importance of board diversity that encourages its members to have an active role in providing optimal decision-making and formulation of corporate rules, regulations, and policies. It shall embrace board diversity, as much as practicable, which is not limited in terms of age, gender, culture, skills, competence, and knowledge. The directors of PSC also have diversified business experience in retail, finance, banking, property, IT, and Communications. The Board’s current composition is set out in the following chart:
Board Training
Integrated into PSC’s CG Manual and Board Charter is its policy on training directors. It provides a training/orientation program for first-time directors and annual continuing training to all directors. It conducts a business overview and provides an exposure tour of 7-Eleven stores and a trade-check of other retail business formats. It also provides recent trade analysis or industry benchmarking together with recent industry surveys.
PSC provides yearly training on Corporate Governance to its directors and key officers. For 2020, the PSC Corporate Governance training focused on corporate governance in a time of the COVID-19 pandemic and the rise of digital transactions. The Good Governance Advocates & Practitioners of the Philippines (GGAPP) conducted the CG Training for PSC’s directors and key officers.
Board Evaluation
Directors and Board Assessment
PSC’s Board conducts and accomplishes self-rating surveys annually. The assessments are utilized as a vital tool for maximizing their effectiveness, which will aid the Corporation in identifying key issues necessary to facilitate the development and monitor the performance of the Corporation. The results of the assessment are compiled by the Compliance Officer and are reported to the Corporate Governance Committee.
The Board’s performance is measured through a rating scale of 1 to 5, where 1 is Not Performing and 5 is Outstanding Performance. They are asked to evaluate the Board’s meeting procedures, preparation for meetings, and monitoring of Corporation’s performance and key issues/trends affecting the Corporation, among others. Meanwhile, directors also assess their individual performance by answering a self-assessment survey with 31 questions. In this assessment, each director must answer with either any of the following: SA – Strongly Agree, A – Agree, N – Neither Agree Nor Disagree, D – Disagree, and SD – Strongly Disagree.
Board Committee Assessment
A self-assessment worksheet following the Audit and Risk Committee Charter is accomplished every March of each year by its members to evaluate their performance. The results of the assessment are compiled by the Compliance Officer and are reported during the Corporate Governance Committee meeting. The basis of evaluation is provided under the Code, which provides their assessment based on their respective responsibilities such as 1) setting of committee structure; 2) oversight on financial reporting and disclosures, which provides responsibility for the financial reporting process, a system of internal control, audit process, and monitoring of compliance with applicable laws; 3) oversight on risk management and internal controls, which provides for managing credit, market liquidity, operational, and legal and other risk exposure; 4) oversight on management and internal audit, which provides a review for the annual audit plan in conformity with the objectives of the Company; and 5) oversight on external audit, which ensures proper coordination if more than one audit firm is involved in the activity to secure proper coverage and minimize duplication of efforts.
The Corporate Governance and Compensation Committees also adopted an internal assessment worksheet to evaluate their performance following the criteria set by the CG Manual and following each of the Committees’ respective Charters.
