Meralco’s 115th year of unparalleled service is a testament to the Company’s relentless dedication to serve all its stakeholders. After all, no company can thrive for more than a century of existence if it runs its business by looking out only for its own welfare. A company, which attends to some great demand and strives to provide great service, must also be dedicated in energizing its stakeholder service.
As a result of its continuous interactions with its stakeholders, the Company has formulated guidelines and strategies to ensure sustainable development determined to operate a business that is anchored on good governance.
The following are the Company’s key players in ensuring the application of good governance practices and policies within Meralco:
Meralco recognizes its responsibility to protect its shareholders’ rights by creating value and ensuring sustainable growth in business.
Right to information
Meralco upholds the rights of its shareholders to obtain relevant information about the Company in a timely and regular basis. Meralco’s financial performance and prospects are regularly reported to the SEC and PSE. These reports are immediately made public through press releases and postings in the Meralco’s website.
Investors’ briefings and teleconferences are held quarterly, where equity and credit analysts of both local and foreign-based institutions are invited. Analysts who are unable to attend in person participate through a teleconference facility with a playback feature available until the following day of the meeting. Members of senior Management make themselves available for meetings with institutional investors through Company visits, teleconferences, briefings and attendance in local and international investor conferences.
Press/media briefings are likewise held regularly to report on Meralco’s operating and financial results to the various representatives of media, particularly from the television, print and wire agencies. Such briefings are venues for Management to answer questions and clarify issues prior to the release of information to the public.
Shareholders and investors are provided with adequate facilities to communicate with Meralco through telephone, mail, electronic mail, and website, www.meralco.com.ph. The Investor Relations Office supervises the investors’ briefings and teleconference, and attends to institutional investors’ needs. Stockholder Affairs Office attends to the inquiries and other concerns of shareholders, including the distribution of Notice and Agenda of the Annual Stockholders Meeting, or ASM, at least 28 working days before the said meeting.
Right to Dividends
Meralco also adheres to its commitment to maintain a fair and competitive return to its investors. The Company has a dividend policy approved by the Board which was ratified by the shareholders in 2010. The policy provides for payment of regular cash dividend equivalent to 50% of the (audited) consolidated core earnings for the year with a “look-back” basis, which allows the Company to pay special dividends beyond 50% of the consolidated core earnings for the year, subject to the availability of unrestricted retained earnings in accordance with the guidelines of the SEC. The details of the cash dividend pay-outs are included in Notes to the Audited Consolidated Financial Statements, found on the Section on Equity.
Following are the cash dividends declared by the Board on common shares for 2018:
Rate per Share
Right to Participate in Decisions
Meralco upholds the rights of all shareholders, including the minority shareholders, to participate in:
- Changers or amendments to the Company's Articles of Incorporation or By-laws;
- Authorization for issuance of additional shares;
- Authorization of extraordinary transactions, including the transfer of all or substantially all assets that in effect result in the sale of the company;
- Approval of remuneration or increase in remuneration of non-executive and executive directors; and
- Voting on matters in absentia through the use of proxy forms.
Right to Vote and Participate Effectively
Disclosure and Release of Notice to ASM
It is the Company’s policy to encourage shareholders, including institutional shareholders and minority shareholders, to attend the Annual Stockholders Meeting or ASM.
To provide shareholders enough time to examine the Company’s information, the ASM Notice was posted on the Company’s website on January 29, 2018. The Definitive Information Statement (DIS) was distributed to the shareholders starting April 18, 2018, 41 days prior to the ASM date of May 29, 2018. Similar to all Company notices and circulars, the ASM Notice is written and published in English. The meeting invitation indicated the following: a) date, time and place of the meeting; b) profiles of the directors such as age, qualifications, experiences, positions or directorships in other companies, for re-electionists – date of first appointment; c) name and profile of the auditing firm recommended for appointment; d) issues to be voted with the Board’s opinions and supporting documents that will provide sufficient information for the shareholders to base their decisions on, and; e) brief description of the dividend policy and amount of final dividends declared.
Shareholders are encouraged to personally attend the ASM and if unable to do so, are advised of their right to appoint a proxy in their behalf. A copy of the proxy form was sent together with the ASM call to meeting. Notarization of a proxy is not required but has to comply with legal requirements. All information is provided ahead of the ASM schedule to provide adequate time for the stockholders to review the agenda.
Annual Stockholders Meeting
The 2018 ASM was held on Tuesday, May 29, 2018, at 10:00 AM at the Meralco Theater, Lopez Building, Ortigas Avenue, Barangay Ugong, Pasig City.
The Company facilitates participation of shareholders who cannot attend the meeting in person by enclosing proxy forms in the ASM Notice where they can indicate their votes on matters that are taken up during the ASM. Shareholders can download the proxy forms together with details on how to appoint a proxy from the Company’s website.
The Company granted all shareholders, including minority shareholders, the right to nominate directors and propose or inquire on agenda items. The “Call for Nominations” was posted on the Company’s website on January 29, 2018 for submission of proposed agenda and nomination of qualified candidates on or before March 9, 2018. The agenda and nominees were approved by the Board during its meeting on January 29, 2018 and March 23, 2018, respectively.
A three (3)-hour registration period was allotted before the start of the ASM. The Assistant Corporate Secretary reported a quorum with the attendance of shareholders who own or hold a total of 897,283,790 shares or approximately 79.61% of the total issued and outstanding shares of the Company. An electronic system facilitated the registration and vote tabulation to ensure accuracy and reliability of information.
The Assistant Corporate Secretary explained the vote tabulation procedures to the shareholders and stated that all shareholders were entitled to one vote for one share. Votes were tallied and tabulated by the office of the corporate secretary. Representatives from Reyes Tacandong & Co., an independent third party, validated the voting results for each agenda item.
The Company allowed shareholders to freely express their views and raise their questions during the ASM.
The Chairman of the Board, Chairman of the AuditCom, Chairman of the RLDC, Chairman of the Nom&Gov, Chairman of the Finance Committee, the Board, President and CEO, Chief Finance Officer (CFO), Assistant Corporate Secretary, other officers of the Company and its external auditor attended the ASM to present the performance results of the Company and respond to any question from the shareholders relevant thereto. The appropriate meeting procedures and guidelines were followed before, during and after the ASM.
The Company posted the resolutions approved during the ASM on its website the following day so that non-attending shareholders may be immediately informed.
The Company believes that the major responsibility of the BOD is to optimize the long-term value of the Company, and ensures that all shareholders are given their fair share in the benefits arising from such value.
The Company’s dividend policy, as approved by the Board and ratified by the shareholders during the May 25, 2010 ASM, calls for the payment of regular cash dividends equivalent to 50% of core earnings for the year with a “look-back” basis, which allows the Company to pay special dividends of up to 70% of the core earnings for the year, relative to availability of unrestricted retained earnings and cash, in accordance with the guidelines of the SEC.
The Board adopts and makes available at the option of a shareholder, an established alternative dispute resolution (ADR) mechanism to resolve intra-corporate disputes in an amicable and effective manner as provided in the Revised Manual of Corporate Governance. Accordingly, in resolving intra-corporate disputes between the Company and its stockholders, the Company may resort to alternative modes of dispute resolution as may be agreed upon with the adverse party, such as but not limited to the following:
- Arbitration - any of the forms of dispute resolution involving a mutually acceptable, neutral third party making a decision on the merits of the case, after an informal hearing which usually includes the presentation of evidence and oral argument.
- Mediation - a voluntary process in which the disputing parties, with the involvement of a neutral third party (the ‘mediator’), endeavor to reach an agreement. The mediator has no decision-making power and informally assists the parties to reach their own mutually acceptable settlement of disputed issues, maintain the channels of communication, articulate the interests of each party, and, if appropriate, may advise or make recommendations on disputed issues. The mediator generally meets separately with each party, taking information in confidence. All information disclosed in the course of mediation is to remain confidential. Mediation emphasizes self-resolution of conflict, and may involve more than one mediator.
- Conciliation - an informal process in which a neutral third party is positioned between the parties to create a channel for communications, usually by conveying messages between parties where it is preferable that they do not meet face-to-face, to identify common ground and to eventually re-establish direct communications between the parties, and possibly achieve settlement.
- Early Neutral Evaluation - process wherein parties and their lawyers are brought together early in a pre-trial phase to present summaries of their cases and receive a nonbinding assessment by an experienced, neutral person, with expertise in the subject in the substance of the dispute.
- Mini-trial - a structured dispute resolution method in which the merits of a case are argued before a panel comprising senior decision makers with or without the presence of a neutral third person after which the parties seek a negotiated settlement.
Meralco is committed to the development and welfare of its employees. As the Company sustains its efforts in building a high-performance culture to fully respond to the requirements of the new business environment, employees are continuously trained and developed to enable them to achieve excellent performance founded on our corporate values. Career development programs are implemented to ensure professional growth through skills and job enrichment opportunities, learning and development programs, performance management and promotions systems. Employees are compensated based on performance and over-all qualifications and market competitiveness. Adequate provisions for medical, health and other essential benefits; and workplace safety are provided to promote employee welfare and well-being. Uprightness and impartiality are observed in conflict resolution. HR Programs for our employees are continuously reviewed and enhanced to ensure their over-all effectiveness and responsiveness.
The Company is further committed in sustaining and/or further enhancing the high level of engagement of employees. Guided by the results of an employee engagement survey conducted, focused and deliberate initiatives are undertaken to help ensure employees job satisfaction and motivation. Employee communication is strengthened to keep employees well-informed on significant developments. Employees are likewise encouraged to give feedback and suggestions to Management to further improve corporate and operational performance, promoting employee accountability and empowerment.
Click the following links to view metrics related to employee welfare:
As one of Meralco’s five strategic business pillars, the subsidiaries contribute significantly in boosting shareholder value.
The Subsidiary Management Policy continues to serve as the guidebook in creating and managing subsidiaries based on the criteria and principles embodied in the Revised Manual of Corporate Governance, Code of Ethics, and existing laws, rules and regulations.
Meralco continues to strengthen the good governance practice of its subsidiaries by strongly advocating the need for each subsidiary to adopt its own Manual of Corporate Governance and Code of Ethics.
D. Community (Corporate Social Responsibility)
Meralco continues to live up to its commitment as a partner in building energized and strong communities through various corporate social responsibility programs under the stewardship of One Meralco Foundation, Inc. (OMF).
Through OMF, the Company launched its flagship social development programs: household electrification for low income families within the Meralco franchise are and the school electrification program for remote mountain and island public schools via solar technology. OMF also took the lead in promoting responsible energy use with the launch of its energy education program.
Outside its energy-related initiatives, the Company implements programs that foster partnerships in the grassroots, develop the skills and open up opportunities for the youth, provide assistance in times of disasters and engage its own employees to serve beyond the call of duty.
The Company also makes use of sports as a tool to mold the values of the future generation of Filipinos. It leverages its professional-league basketball team to come up with training programs in the communities where Meralco and its corporate partners operate.
For more information on the Company’s programs for the communities through OMF, please visit www.onemeralcofoundation.org.
E. Other Stakeholders
Meralco seriously considers the impact of business decisions on the interests of its shareholders and other stakeholders. The Declaration of Corporate Principle of the Company’s Revised Manual of Corporate Governance specifically mentions: “The Company…uphold(s) an ethical culture that will protect and promote the best interest of the Company for the common benefit of the Company’s stockholders and other stakeholders.” The Company also protects and maintains good relations with its suppliers and creditors based on mutual respect and benefit. The Company strives to foster long-term stability, direct and open relations, and continuous development with suppliers to ensure quality, competitiveness, process efficiency and performance reliability; foster governance principles in all of its business dealings with them; and seek, encourage and prefer suppliers whose business practices respect human dignity and the environment.
To ensure mutually beneficial relationship with its suppliers and contractors, the Company prescribes clearly defined and transparent procurement and supplier selection process through the Suppliers’ Business Conduct Policy and Vendor Accreditation Program. It ensures faithful compliance to all the terms and conditions of its procurement contracts. Under these programs,
More details on the Company’s bidding, technical and commercial evaluation and awarding procedures are available in .
The Company faithfully complies with all loan agreements with creditors. It ensures timely payment of its loans and efficiently operates its business to assure creditors of the Company’s sound financial standing and loan payment capabilities. In this regard, the Standard & Poor’s (S&P) global ratings raised its long-term corporate credit rating on Meralco to Investment Grade at BBB- with Stable Outlook from BB+ with Positive Outlook in 2017. The rights of creditors are protected by public disclosures of material information such as results of operations, systems of internal controls and regular assessment of risks to compliance with loan covenants and bonds. Periodic reports are made by the Company of its financial position through the submission of its quarterly and latest audited financial statements. The Company also conducts regular financial and operating results briefings.
- Only accredited suppliers are qualified to participate in bids and awards except when:
- the items lack the required number of accredited vendors participating in the bid
- there are no accredited suppliers for a particular item
- Purchases are made on the basis of competitive bidding – where the commercial and technical requirements are jointly evaluated except when:
- the items/services involve specialty work and critical components that can only be sourced from a particular vendor
- the item can only be obtained from a single source (i.e., there are patents, trade secrets, or copyrights that prohibit other vendors from supplying the same item)
- the purchase is negotiated with the vendor due to the urgency of requirement or there are additional requirements that should be included in an existing order, or only one vendor consistently submits bid every time a bid is conducted
- repeat awards also do not undergo bidding as long as the following criteria are met: (1) there is an urgent or additional requirement for the item in a purchase order; (2) quantity is not greater than the initial order quantity; (3) price is not higher compared with the initial order price; and (4) must be within three (3) months of the initial purchase order award. A maximum of three (3) repeat awards should be allowed.
- Suppliers are responsible and accountable for providing the required information in the suppliers’ business conduct commitment form. They are likewise expected to adhere to certain corporate governance standards and undertaking to apply these standards to their offices and employees.