7-Eleven Philippines

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, 2019 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 Board of Directors is expected to attend board meetings held by the Corporation which is scheduled before the start of the fiscal year. Absence of a director in more than 50% of all the regular and special meetings during his incumbency or any 12- month period during such incumbency is a ground for his temporary disqualification in the succeeding election unless the absence is due to serious illness, death in the immediate family or serious accident. All directors complied with attendance requirement of at least 50% of all board meetings for the year. Below is the list of directors of PSC and their attendance to Annual Stockholders’ Meeting (ASM) and board meetings held for the fiscal year 2019.

Attendance of the Board of Directors for 2019

Board Charter

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

Executive Committee

The Executive Committee as created under Section 20 of the By-Laws and in accordance with Section 34 of RCC (previously Section 35 of the Corporation Code) shall exercise during intervals between Board meeting all the powers and functions vested in the Board, as well as act on specific matters as may be delegated to it by the Board, except with respect to: 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 By-Laws or adoption of new By-Laws, 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 with respect to 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 CommitteeCorporate 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 Company. Each Committee has its own charter, which defines its purpose, roles, responsibilities, and authority, including the rules and procedures that shall guide the function of the committee.

 

Audit &  Risk Committee

The Audit & Risk Committee assists the board and management by providing advice and guidance on the adequacy of PSC’s initiatives for Financial reporting and disclosures, Values and Ethics, Governance Structure, Risk Management, Related Party Transactions, Internal Control Framework, Compliance, and Oversight of the external auditors, internal audit activity, and other providers of assurance.

In broad terms, the Audit & Risk Committee reviews each items noted above and provides the board with independent advice and guidance regarding the adequacy and effectiveness of management’s practices and potential improvements to those practices.

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. In 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 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

Internal Audit Charter

Self Assessment Worksheet for AudCom Performance

 

Corporate Governance Committee

The Corporate Governance Committee shall review and evaluate the qualifications of all persons nominated to the Board that require the Board approval and to assess the effectiveness of the Board’s processes and procedures in the election or replacement of directors. It also oversees the development and implementation of corporate governance principles and policies as part of its governance functions.

The Corporate Governance Charter can be found in this link:

CG Com Charter

 

Compensation Committee

The Compensation Committee shall establish 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

Internal Audit Charter

CG Com Charter

Compensation Committee Charter

 

Access to information

Board papers for Board of Directors are generally provided 3-5 days prior to 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

Election of directors are held annually during the stockholders meeting and conducted in a manner provided by the Corporation Code.  Each director will hold office until the annual meeting held next after his election and until his successor shall have been duly chosen and qualified, or until he has resigned.

 

Remuneration

The Company has certain standard arrangements with respect to 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 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 company updated its policy to provide guidelines for 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 P 200,000.00. If he is a Chairman of any Board Committees, the Independent Director shall be entitled to an annual director’s fee of P 200, 000.00, and if a member of any Board Committees, the Independent Director shall be entitled to an annual director’s fee of P 100,000.00.

In addition to per diems, profit sharing is provided in the Code of By-laws in an amount not exceeding 15% of the net profits of the Corporation (after tax), which shall be distributed to the members of the Board of Directors and Executive Committee members and officers of the Corporation in such amounts and manner as the Board may determine. Profit share not exceeding 15% of net profits after tax of the Corporation shall be submitted to stockholders for approval. The last profit sharing in 1996 was set at 5% of net income after tax thereon. The directors and the executive officers did not receive any profit sharing in the years after 1996. In 2009, target incentive and annual performance bonus were granted to management, the officers and support personnel based on achievement of the target rate for pre-tax income for the year as set in the annual plan and budget. These are provided to regular employees and executive officers of the Corporation.

 

Board Chairman

To ensure Board independence, the Chairman and Chief Executive Officer should, as much as practicable be separate.  This is to foster the principle of a balanced power and better capacity in terms of decision-making.  In a proviso of unified positions, proper check and balances are laid down to ensure that the Board obtains the benefit of independent views and perspectives.

Promoting the balancing of powers, Mr. Jose T. Pardo serves as the Chairman of the Board and independent Director and Mr. Jose Victor P. Paterno as PSC 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 in PSC’s CG Manual and Board Charter, is its policy on training directors. It provides training/orientation programs 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 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 2019, the training covered topics on CG Trends, Revised Corporation Code of 2019, Sustainability Reporting and Directors and Officers Roles and Liabilities. 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 Company in identifying key issues necessary to facilitate the development and monitor the performance of the Company. The results of the assessment are compiled by the Compliance Officer and are reported during the Corporate Governance Committee meeting.

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, monitoring of Company performance and key issues/trends affecting the Company, among others. Meanwhile, directors also assess their individual performance by answering a self assessment survey with 31 questions. In this assessment, directors 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 in accordance with 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, 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.