Corporate Governance Seal

QUESTION LINK SOURCE
I. Stakeholder Relationships
1. Does GOCC disclose a policy that:
a. Stipulates the existence and scope of its effort to address customer’s welfare? See PNOC EC Manual for Corporate Governance, Section 8.3 (f), CORPORATE SOCIAL RESPONSIBILITY AND RELATIONS WITH STAKEHOLDERS (CUSTOMERS), page 31.
b. Elaborates its efforts to interact with the communities in which they operate? See PNOC EC Manual for Corporate Governance, Section 8.3 (e), CORPORATE SOCIAL RESPONSIBILITY AND RELATIONS WITH STAKEHOLDERS (COMMUNITIES), pages 30-31.
c. Ensure that its value chain is environmentally friendly or is consistent with promoting sustainable development? See PNOC EC Manual for Corporate GovernanceSections 8.4, HEALTH AND SAFETY and 8.5, ENVIRONMENT, page 33.
2. Does the GOCC disclose the activities that it has undertaken to implement the abovementioned policies?
a. Customer health and safety The Company ensures compliance of customers and contractors to the Company’s EHS policy through the conduct of safety trainings and awareness programs. In PNOC EC’s port operations in Energy Supply Base, representatives of locators and contractors participated in the supervisor safety training in November 2016 and bomb threat awareness seminar in December 2016. In COC 41 Zamboanga Sibugay, small-scale coal mine (SSCM) permittees were trained in mine emergency rescue in March 2016. See 2016 PNOC EC Annual Report, HSSE, page 16.
b. Interaction with the communities PNOC EC conducts regular interaction with communities within its areas of operation. See 2017 PNOC EC Annual Report, Corporate Social Responsibility Section, Pages 14 to 15.
c. Environmentally-friendly value chain In exploration projects, PNOC EC preserves ecological balance by doing the following:

  • Using environment-friendly drilling fluids, equipment, and technology in drilling operations which is accepted worldwide;
  • Conducting seismic shooting outside migration period of marine mammals (e.g., whales, dolphins) and other endangered marine species (e.g., pawikans); PNOC EC has marine mammals observers onboard seismic vessels during operations to ensure this;
  • Conducting Information, Education, and Communication campaigns (IECs) in affected host communities for any exploration work;
  • Ensuring responsible disposal of waste materials and restoration of drill sites to, as much as possible, their original state and condition;
  • Balling and relocating trees in case drill sites are located in forested or wooded areas;
  • Strictly adhering to the terms and conditions of the Environmental Compliance Certificate (ECC), which is regularly monitored by a multi-partite monitoring team; and
  • Following good oil industry practices

The Company also complies with relevant environmental legislation and regulations as evidenced by acquisition/renewal of pertinent permits, clearances and accreditation covering the Company’s various activities and the submission of periodic reports to Environmental Management Bureau (EMB).

3. Does the GOCC have a separate Corporate Social Responsibility (CSR) report/section or sustainability report/section? There is a CSR Section in the 2017 PNOC EC Annual Report on pages 14 to 15.

See PNOC EC Manual for Corporate Governance under Section 8, CORPORATE SOCIAL RESPONSIBILITY AND RELATIONS WITH STAKEHOLDERS, pages 26 to 33. Refer to PNOC EC Website under GCG Requirements.

4. Where stakeholder interests are protected by law, stakeholders should have the opportunity to obtain effective redress for violation of their rights.
Does the GOCC provide contact details via the Company’s website or Annual Report which stakeholders (e.g. customers, suppliers, general public, etc.) can use to voice their concerns and/or complaints for possible violation of their rights? Stakeholders may contact MS. MYRANNOR B. HANDIG, Social Performance Specialist, at mbhandig@pnoc-ec.com.ph, or at 497-9400 local 444. See 2017 PNOC EC Annual Report, About the Report, Page 4. Stakeholders may also use the Contact Us function of the Website.
5. Performance-enhancing mechanisms for employee participation should be permitted to develop.
a. Does the GOCC explicitly mention the health, safety and welfare policy for its  employees? See EHS Policy Manual.
b. Does the GOCC publish data relating to

health, safety and welfare of its

employees?

See 2016 PNOC EC Annual Report on Safety Performance, page 17.
c. Does the GOCC have training and development programmes for its employees See Competency Development Framework.
d. Does the GOCC publish data on training and development programmes for its employees? See Training and Development Programs Participated by Employees 2016.
6. Stakeholders including individual employee and their representative bodies, should be able to freely communicate their concerns about illegal or unethical practices to the board and their rights should not be compromised for doing this.
a. Does the GOCC have procedures for complaints  by employees concerning illegal (including corruption) and unethical behavior? PNOC EC has a Whistle Blowing Policy in accordance with GCG Memorandum Circular No. 2014-04, or the Whistle Blowing Policy on the GOCC Sector, among other relevant regulations, and approved by GCG. See PNOC EC Whistle Blowing Policy.
b. Does the GOCC have procedures to protect an employee/person who reveals illegal/unethical behavior from retaliation? PNOC EC has a Whistle Blowing Policy in accordance with GCG Memorandum Circular No. 2014-04, or the Whistle Blowing Policy on the GOCC Sector, among other relevant regulations, and approved by GCG. See PNOC EC Whistle Blowing Policy.
II. Disclosure and Transparency
7.Quality of Annual Report.

Does the GOCC’s annual report disclose the following items:

a. Corporate objectives PNOC EC has disclosed its Corporate Objectives. See 2017 PNOC EC Annual Report, Strategic Objectives and Measures, Page 28.
b. Financial performance indicators PNOC EC has disclosed its Financial Performance Indicators. See 2017 PNOC EC Annual Report, Financial Highlights, Pages 20 to 22.
c. Non-financial performance indicators PNOC EC has disclosed its Non-Financial Performance Indicators. See 2017 PNOC EC Annual Report, Strategic Objectives and Measures, Page 28.
d. Details of whistle blowing policy PNOC EC adopted its internal whistle blowing policy in May 2017 in compliance with GCG MC 2016-02. See 2017 PNOC EC Annual Report Corporate Governance, Conflicts of Interest, Page 25.
e. Biographical details of directors PNOC EC included the biographical details of its Board of Directors. See 2017 PNOC EC Annual Report, BOD Profile, Pages 30 to 31.
f. Training and/or continuing education    programme attended by each director PNOC EC Directors underwent some training in 2017. See 2017 PNOC EC Annual Report, Collective Knowledge of Highest Governing Body, Page 26.
8. Are the Annual Reports downloadable from the GOCC’s website? See PNOC EC Annual Reports.
9. Corporate Governance Confirmation Statement
Does the Annual Report contain a statement confirming the company’s full compliance with the code of corporate governance and where there is non-compliance, identify and explain reasons for each such issue? See 2017 PNOC EC Annual Report, Corporate Governance Statement, Page 23.
10. Timely filing/release of annual/financial reports
a. Are the audited annual financial report/statement released within 60 days upon receipt from COA? Timely release of audited annual financial report/statement within 60 days upon from COA.
b. Is the annual report released within 90 days from release of audited financial report? PNOC EC released its 2017 Annual Report 32 days after release of its Annual Audit Report.

c. Is the true and fairness/fair representation of the annual financial statement/reports affirmed by the board of directors and/or the relevant officers of the company?

 

The true and fair representation of the annual financial statements/reports is affirmed in the Statement of Management Responsibility signed by the President and CEO and the VP for Management Services/CFO.

See page 36 of the 2016 PNOC EC Annual Report 2016.

III. Responsibilities of the Board
11. Corporate Vision and Mission/ Strategy
a. Has the Board of Directors reviewed the vision and mission/ strategy in the last financial year? The Board reviewed the Company’s Strategy Map and Performance Scorecard during the Board meeting held on January 12, 2016. Further, the Board likewise oversaw implementation of the corporate strategy through Management reports presented during the Strategic Planning Sessions held on February 2, 2016, March 29, 2016, April 12 and 26, 2016, May 12, 2016, and June 14, 2016.
b. Does the Board of Directors monitor/oversee the implementation of the corporate strategy? PNOC EC holds an annual strategic planning workshop attended by members of the Board and Management, where the Company’s corporate vision and mission/strategy are deliberated on.
12. Did the GOCC achieve 90% in the PES? PNOC EC achieved 90.93% in its 2016 Performance Scorecard subject to final validation by the GCG.

See PNOC EC’s 2016 Performance Scorecard.

13. Code of ethics or conduct
a. Are the details of the code of ethics or conduct disclosed?

b. Does the GOCC disclose that all Directors, senior management and employees are required to comply with the code?

c. Does the company disclose how it implements  and monitors compliance with the code of  ethics or conduct?

The PNOC EC Board of Directors, Management, and employees are covered by and are required to comply with the following:

 

  1. Republic Act No. 6713
  2. Republic Act No. 6713 IRR
  3. Company Policy on Discipline
  4. Table of Penalties
  5. Rules and Regulations on Discipline of Corporate Officers and Secretary Certificate on Board Resolution No. 7-7, S’2012.
  6. Republic Act No. 10149
  7. GCG Memorandum Circular No. 2012-05
14. Does the Board appoint a Nomination and Compensation / Remuneration Committee? PNOC EC Board of Directors created a Nomination and Remunerations Committee, whose functions were merged with the existing Compensation, Education and Employee Welfare Committee, and renamed to Nomination, Remuneration, Education, and Employee Welfare Committee.

In 2016, said Committee was composed of the following:

Chairman:  Ralph Pastor A. Salazar

Members:  Rufino B. Bomasang

Fernando V. Barreiro

Joseph L. Emnas

Rafael M. Iriarte

Emmanuel K. Veloso

See Secretary’s Certificate for PNOC EC Board Resolution No. 5-9, Series of 2016 and Secretary’s Certificate for PNOC EC Board Resolution No. 4-2, Series of 2016.

15. Did the Nomination and Compensation/Remuneration Committee meet at least twice during the year? The Nomination, Remuneration, Education and Employee Welfare Committee did not meet in 2016.
16. If yes, is the report of the Nomination and Compensation/Remuneration Committee publicly disclosed? Not applicable
17. Does the Board appoint an Audit Committee? PNOC EC formally combined the Audit Committee and Risk Management Committee into the Audit and Risk Management Committee pursuant to Section 16.6 of the GCG Code of Corporate Governance, as well as Section 3.15(f) of the PNOC EC Manual of Corporate Governance.

In 2016, the PNOC EC Audit and Risk Management Committee was composed of the following:

Chairman:  Leopoldo E. Petilla

Members:  Ralph Pastor A. Salazar

Rafael M. Iriarte

Fernando V. Barreiro

Joseph L. Emnas

Emmanuel K. Veloso

See Secretary’s Certificate for PNOC EC Board Resolution No. 4-2, Series of 2016.

18. If yes, is the report of the Audit Committee publicly disclosed? See 2016 Audit and Risk Management Committee Report.
19. Does at least one member of the Audit Committee have an audit, accounting or finance background (qualification or experience)? See Resumé of Director Fernando V. Barreiro, Resumé of Director Joseph L. Emnas, and Resumé of Director Emmanuel K. Veloso.
20. Did the Audit Committee meet at least four times during the year? The Audit and Risk Management Committee held thirteen (13) meetings in 2016.

See Attendance in the Joint Committee Meetings 2016.

21. Does the Board appoint a Risk Management Committee? PNOC EC formally combined the Audit Committee and Risk Management Committee into the Audit and Risk Management Committee pursuant to Section 16.6 of the GCG Code of Corporate Governance, as well as Section 3.15(f) of the PNOC EC Manual of Corporate Governance.

In 2016, the PNOC EC Audit and Risk Management Committee was composed of the following:

Chairman:  Leopoldo E. Petilla

Members:  Ralph Pastor A. Salazar

Rafael M. Iriarte

Fernando V. Barreiro

Joseph L. Emnas

Emmanuel K. Veloso

See Secretary’s Certificate for PNOC EC Board Resolution No. 4-2, Series of 2016.

22. If yes, is the report on Risk Management Committee publicly disclosed? See 2016 Audit and Risk Management Committee Report.
23. Does at least one member of the Risk Management Committee have a background in finance and investments? See Resumé of Director Fernando V. Barreiro, Resumé of Director Joseph L. Emnas, and Resumé of Director Emmanuel K. Veloso.
24. Board meetings and attendance
a. Are the Board of Directors meetings scheduled at the beginning of the year?(end of Q1) As its practice, PNOC EC Board holds its Regular Board Meeting every second Tuesday of the Month and its Special Board Meeting on the last Tuesday of the month
b. Does the Board of Directors meet at least monthly? The Board of Directors hold at least one (1) meeting every month.

See Attendance in Board Meetings 2016.

c. Did the Board of Directors meet on at least 75% on their scheduled meetings? The Board of Directors held thirteen (13) meetings in 2016.

See Attendance in Board Meetings 2016.

d. Has each of the directors attended at least 90% of all the board meetings held during the year? See Attendance in Board Meetings 2016.
e. Did the Board of Directors meet separately atleast once during the year without the President/CEO present? The PNOC EC Board of Directors held a meeting on July 13, 2016 without the President/CEO present.
25. Access to information
a. Does the GOCC have a policy that stipulates board papers for Board of Directors  meetings be provided to the Board at least three (3) working days in advance of the board meeting? As a practice, materials for Board Meetings are provided to the Board at least three (3) working days in advance of all Board Meetings.
b. Is the Board Secretary trained in legal, accountancy or company secretarial practices? See Curriculum vitae of Atty. Michael A. Medado.
26. Internal Audit
a. Does the company have a separate internal audit function? PNOC EC has a separate internal audit function and has appointed an Internal Audit Manager. See 2016 PNOC EC Annual Report,  page 34.
b. Does the appointment and removal of the internal auditor require the approval of the Audit Committee? See PNOC EC Manual for Corporate Governance,

Section 3.15 (b) (vi).

27. Risk Oversight
a. Does the company disclose the internal control procedures/risk management systems it has in place? PNOC EC discloses its internal control procedures/risk management systems in the existing Risk Management Manual that is in place since 1993. Included in the Manual is the Risk Management System/Process which provides for the identification of risks, risk management/analysis, risk selection techniques, implementation of risk management techniques and monitoring and improving the risk management system. Financial Risk and Capital Management is also disclosed in the 2016 PNOC EC  Annual Report, page 64.
b. Does the Annual Report disclose that the Board of Directors has overseen a review of the company’s material controls (including operational, financial and compliance controls) and risk management systems? As disclosed in the Company’s Annual Report, the Board of Directors oversee the risk management functions, particularly in the areas of managing credit, market liquidity, operational, legal, reputational, and other risks of PNOC EC.  The Company’s Management regularly reports to the Audit and Risk Management Committee and to the Board of Directors all matters concerning PNOC EC’s material controls and risk management system.

 

Refer to Corporate Governance section, of the 2016 PNOC EC Annual Report, pages 20 to 24.

c. Does the company disclose how key risks are managed? Management of key risks affecting PNOC EC are disclosed in the existing Risk Management Manual that is in place since 1993. PNOC EC also has an existing Guidelines on Risk Assessment. See also Risks and Strategies.
d. Does the Annual Report contain a statement from the Board of Directors or Audit Committee commenting on the adequacy of the GOCC’s internal controls/risk management systems? The annual report contains a statement that the Board of Directors oversee the risk management functions, particularly in the areas of managing credit, market liquidity, operational, legal, reputational, and other risks of PNOC EC.  The Company’s Management regularly reports to the Audit and Risk Management Committee and to the Board of Directors all matters concerning PNOC EC’s material controls and risk management system.

Refer to Corporate Governance section, of the 2016 PNOC EC Annual Report, pages 20 to 24.

28. Board Chairman
Do different persons assume the roles of Chairman and CEO? For 2016, PNOC EC’s Chairman of the Board was the late Gemiliano C. Lopez, Jr.; while the President and CEO has been Pedro A. Aquino, Jr.
29. Board of Directors Development
a. Does the GOCC have orientation programs for new Directors? The Office of the Corporate Secretary holds an orientation session for new directors, covering the following topics: (1) Company overview; (2) Role of PNOC EC Board of Directors; and (3) PNOC EC Operations.
b. Does the GOCC have a policy that encourages Directors to attend on-going or continuous professional education programmes? See PNOC EC Manual for Corporate Governance,

Section 3.5 (i), page 10.

c. Did all Appointive Directors attend at least 1 training for the calendar year?
30. Board Appraisal
a. Is an annual performance assessment conducted of the Board of Directors? See PNOC EC Manual for Corporate Governance, Section 3.16.
b. Does the GOCC disclose the process followed in conducting the Board assessment? See PNOC EC Manual for Corporate Governance, Section 3.16.
c. Does the GOCC disclose the criteria used in the Board assessment? See PNOC EC Manual for Corporate Governance, Section 3.16.
31. Committee Appraisal
Is an annual performance assessment conducted of the Board of Directors Committees? See PNOC EC Manual for Corporate Governance, Section 3.15.
BONUS
Stakeholder Relationships
1. Does the GOCC practice Global Reporting Initiative (GRI) on its annual reports? PNOC EC’s 2017 Annual Report’s Corporate Governance Section is referenced to the Global Reporting Initiative (GRI) standards.
Disclosure Transparency
2. Quality of Annual Report
Are the audited annual financial report/statement released within 30 days upon receipt from COA? PNOC EC released its 2016 Annual Audit Report 7 days after receipt from COA.

PENALTY
Responsibilities of the Board
1. Are there members of the Board of Directors who hold more than five (5) positions in GOCCs and PLCs? No PNOC EC Board Member holds more than  five (5) positions in GOCCs and PLCs.
2. Is there non-compliance with Good Governance Conditions? PNOC EC is fully compliant with all Good Governance Conditions.
(page update November 27, 2018)