Bank of the Philippine Islands 2018 ASEAN Corporate - BPI

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 1 of 36 E. Responsibilities of the Board Guiding Reference Yes/No Supporting Documents E.1 Board Duties and Responsibilities Clearly defined board responsibilities and corporate governance policy E.1.1 Does the company disclose its corporate governance policy / board charter? OECD PRINCIPLE V: Disclosure and Transparency (A) Disclosure should include, but not be limited to, material information on: 8. Governance structures and policies, in particular, the content of any corporate governance code or policy and the process by which it is implemented.

Yes Our corporate governance policy is to ensure the responsible stewardship and value-driven management and control of the bank, that through the guidance of our Board of Directors, all employees including the board and management, live up to the bank’s Credo wherein independent business judgment and core values of fairness, accountability and transparency are primary in every interaction and transaction with all of our stakeholders, including shareholders, customers, employees, regulators and the broader community.

The Bank’s corporate governance policy and the Board Charter are both disclosed on the company website and are incorporated in the Manual of Corporate Governance which is also posted online.

The Manual of Corporate Governance details the Bank’s governance policies and practices as well as the types of decisions made by the Board. Links/Sources:  COPRORATE GOVERNANCE MANUAL, “Board Governance”, “Board Charter”, Sec. II.A.8, p.25 https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf  ANNUAL REPORT “Senior Management and Corporate Governance”, “Board Charter”, p.91 https://www.bpiexpressonline.com/media/uploads/5b3b0c0283739_ BPI_IR_2017_Senior_Management_and_Corporate_Governance_6.p df  BPI WEBSITE “Board charter” https://bpiexpressonline.com/p/1/1346/board-charter E.1.2 Are the types of decisions requiring board of OECD PRINCIPLE VI (D) Yes Duties and Responsibilities The Board bears the primary responsibility for creating and enhancing the long-term shareholder value of BPI, and generating reasonable and

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 2 of 36 directors/commissioners' approval disclosed ? sustainable returns on shareholder capital by, among others, reviewing and approving the Bank’s mission, vision, strategies and objectives; appointing senior executives and confirming organizational structures; approving enterprise-wide policies and procedures; monitoring business and financial performance; overseeing risk management frameworks and risk appetite, and fostering regulatory compliance. Links/Sources:  COPRORATE GOVERNANCE MANUAL “Specific Duties and Responsibilities of the Board”, Sec II.A.7, pp.

21-25 https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf  ANNUAL REPORT “Senior Management and Corporate Governance, Duties and Responsibilities”, p.91 https://www.bpiexpressonline.com/media/uploads/5b3b0c0283739 _BPI_IR_2017_Senior_Management_and_Corporate_Governance_6. pdf

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 3 of 36 E.1.3 Are the roles and responsibilities of the board of directors/commissioners clearly stated ? OECD PRINCIPLE VI: The Responsibilities of the Board (D) The board should fulfil certain key functions, including: 1. Reviewing and guiding corporate strategy, major plans of action, risk policy, annual budgets and business plans; setting performance objectives; monitoring implementation and corporate performance; and overseeing major capital expenditures, acquisitions and divestitures.

2. Monitoring the effectiveness of the company’s governance practices and making changes as needed.

3. Selecting, compensating, monitoring and, when necessary, replacing key executives and overseeing succession planning. 4. Aligning key executive and board remuneration with the longer term interests of the company and its shareholders. 5. Ensuring a formal and transparent board nomination and election process. 6. Monitoring and managing potential conflicts of interest of management, board members and shareholders, including misuse of corporate assets and abuse in related party transactions. 7. Ensuring the integrity of the corporation’s accounting and financial reporting systems, including the independent audit, and that appropriate systems of control are in place, in particular, systems for risk management, financial and operational control, and compliance with the law and relevant standards.

8. Overseeing the process of disclosure and communications. Yes Duties and Responsibilities The Board bears the primary responsibility for creating and enhancing the long-term shareholder value of BPI, and generating reasonable and sustainable returns on shareholder capital by, among others, reviewing and approving the Bank’s mission, vision, strategies and objectives; appointing senior executives and confirming organizational structures; approving enterprise-wide policies and procedures; monitoring business and financial performance; overseeing risk management frameworks and risk appetite, and fostering regulatory compliance.

Links/Sources:  COPRORATE GOVERNANCE MANUAL “Specific Duties and Responsibilities of the Board”, Sec II.A.7, pp. 21-25 https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf  ANNUAL REPORT “Senior Management and Corporate Governance, Duties and Responsibilities”, p.91 https://www.bpiexpressonline.com/media/uploads/5b3b0c0283739 _BPI_IR_2017_Senior_Management_and_Corporate_Governance_6. pdf Corporate Vision/Mission

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 4 of 36 E.1.4 Does the company have an updated vision and mission statement? OECD PRINCIPLE 6 (P58) ICGN:3.2 Integrity Yes Links/Sources:  BPI WEBSITE “About BPI”, Mission, Vision, “Review of Vision and Mission statements” https://www.bpiexpressonline.com/p/1/776/about-bpi E.1.5 Does the board of directors play a leading role in the process of developing and reviewing the company's strategy at least annually?

Yes The Board reviews and approves strategies and objectives and monitors its implementation by monitoring business and financial performance of the Bank.

Management provides the Board with regular reports and works with the Board on strategic issues through the different board-level committees. Relevant information on the Company’s vision and mission statement and the Board of Directors’ periodic review of the foregoing as well as continuing oversight in implementation of the corporate strategy is disclosed in the reports below.

Links/Sources:  MANUAL OF CORPORATE GOVERNANCE “General Responsibility of the Board of Directors, Specific Duties and Responsibilities of the Board of Directors”, p.23 https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf  BPI WEBSITE “Board matters” https://www.bpiexpressonline.com/p/1/782/board-matters E.1.6 Does the board of directors have a process to review, monitor and oversee the implementation of the corporate strategy? ICGN:3.2 Integrity The board is responsible for overseeing the implementation and maintenance of a culture of integrity.

The board should encourage a culture of integrity permeating all aspects of the co., and secure that its vision, mission and objectives are ethically sound.

Yes Duties and Responsibilities of the Board include: Define BPI’s principal mission, vision, and strategic objectives, and properly communicate these to the entire organization. In this regard, the Board shall periodically undertake a fundamental review of and approve changes in the Bank's mission and vision to ensure that these continue to embody the role, function and strategic direction of BPI that is also aligned and consistent with the Board and Senior Management’s assessment of the Bank’s future direction, proper recognition of sustainability concerns and desired response to stakeholders both on a domestic and global scale.

The Board shall also review and approve annually the Bank’s corporate strategy. i. Ensure that BPI contributes positively to the economy and the national well-being.

ii. Take into account the Bank’s long-term financial interests, its level of risk tolerance, and ability to manage risks effectively. In this

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 5 of 36 respect, the Board of Directors shall establish a system for measuring performance against plans iii. Approve budget plans and monitor expenditures. Links/Sources:  MANUAL OF CORPORATE GOVERNANCE https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf E.2 Board structure Code of Ethics or Conduct E.2.1 Are the details of the code of ethics or conduct disclosed?

OECD PRINCIPLE VI (C) The board should apply high ethical standards. It should take into account the interests of stakeholders. The board has a key role in setting the ethical tone of a company, not only by its own actions, but also in appointing and overseeing key executives and consequently the management in general. High ethical standards are in the long term interests of the company as a means to make it credible and trustworthy, not only in day-to-day operations but also with respect to longer term commitments. To make the objectives of the board clear and operational, many companies have found it useful to develop company codes of conduct based on, inter alia, Yes Written affirmation of compliance by directors, employees and officers with the respective Codes of Conduct forms part of the Bank’s compliance with BSP Cir.

969 on “Enhanced Corporate Governance Guidelines for BSP Supervised Financial Institutions” and BSP Cir. 900 on “Guidelines on Operational Risk Management. Affirmation of the Board is implemented and monitored through the Office of the Corporate Secretary and the Corporate Governance unit of the Bank while the Human Resources Management Group implements and monitors affirmation and compliance of all employees. All directors, officers and employees are required to comply with the respective Codes and provide written affirmation of this annually. Currently, there are no cases of non-compliance among the Board of Directors.

Any instances of non-compliance or code violations among officers and employees are monitored or reported to and dealt with by the Human Resources Management Group.

E.2.2 Are all directors/commissioners, senior management and employees required to comply with the code/s? Yes

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 6 of 36 E.2.3 Does the company have a process to implement and monitor compliance with the code/s of ethics or conduct? professional standards and sometimes broader codes of behaviour. The latter might include a voluntary commitment by the company (including its subsidiaries) to comply with the OECD Guidelines for Multinational Enterprises which reflect all four principles contained in the ILO Declaration on Fundamental Labour Rights.

Company-wide codes serve as a standard for conduct by both the board and key executives, setting the framework for the exercise of judgement in dealing with varying and often conflicting constituencies. At a minimum, the ethical code should set clear limits on the pursuit of private interests, including dealings in the shares of the company. An overall framework for ethical conduct goes beyond compliance with the law, which should always be a fundamental requirement. Yes Links/Sources:  BPI WEBSITE “Code of Business Conduct and Ethics” “Code of Business Conduct and Ethics”, “Overview of the Employee’s Code of Conduct”, “Overview of the Director’s Code of Conduct”, III.A.B, pp.74-76 https://www.bpiexpressonline.com/p/1/806/code-of-businessconduct-and-ethics  MANUAL OF CORPORATE GOVERNANCE “Overview of the Director’s Code of Conduct”, “Related Policies under the Code of Business Conduct and Ethics”, pp.

75-76 https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf Board Structure & Composition E.2.4 Do independent directors/commissioners make up at least 50% of the board of directors/commissioners? OECD PRINCIPLE VI (E) In order to exercise its duties of monitoring managerial performance, preventing conflicts of interest and balancing competing demands on the corporation, it is essential that the board is able to exercise objective judgement. In the first instance this will mean independence and objectivity with respect to management with important implications for the composition and structure of the board.

Board independence in these circumstances usually requires that a sufficient number of board members will need to be independent of management. The ASX Code recommends at least a majority of independent directors, while the UK Code recommends at least half of the board, excluding the Chairman, be independent directors. The minimum of three independent directors is to ensure that No Our 2018 board currently has seven directors classified as independent or having no interest or relationship with BPI at time of election, appointment, or re-election. Fourteen of the 15-member board, are non-executive directors of the bank who are not part of the day-to-day management of banking operations.

Currently, the one executive director is the bank's President and CEO. Links/Sources:  ANNUAL REPORT (Glossy), p. A155 https://www.bpiexpressonline.com/media/uploads/5b3c5e77eb313_ BPI_IR_2017_Appendices.pdf  ANNUAL REPORT (SEC Form 17-A), pp.31-38 https://www.bpiexpressonline.com/media/uploads/5b173c7a6c5a7_S EC17A_2017_PSE_Upload_FINAL.pdf

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 7 of 36 companies with small boards have enough independent directors (note that stock exchange rules often require at least two independent directors). E.2.5 Does the company have a term limit of nine years or less or 2 terms of five years each for its independent directors/ commissioners? (The five years term must be required by legislation which pre-existed the introduction of the ASEAN Corporate Governance Scorecard in 2011) OECD PRINCIPLE VI (E) In order to exercise its duties of monitoring managerial performance, preventing conflicts of interest and balancing competing demands on the corporation, it is essential that the board is able to exercise objective judgement.

In the first instance this will mean independence and objectivity with respect to management with important implications for the composition and structure of the board. Board independence in these circumstances usually requires that a sufficient number of board members will need to be independent of management.

The variety of board structures, ownership patterns and practices in different countries will thus require different approaches to the issue of board objectivity. In many instances objectivity requires that a sufficient number of board members not be employed by the company or its affiliates and not be closely related to the company or its management through significant economic, family or other ties. This does not prevent shareholders from being board members. In others, independence from controlling shareholders or another controlling body will need to be emphasised, in particular if the extant rights of minority shareholders are weak and Yes Links/Sources: Term Limits of Independent Directors.

BPI complies with the term limit for an Independent Director (ID) in accordance with SEC Memorandum Circular No. 4, s2017 and in adherence to Recommendation 5.3 of the SEC Code of Corporate Governance for Publicly-Listed Companies, IDs can serve for a maximum cumulative term of nine (9) years, provided that service for a period of at least six (6) months shall be equivalent to one (1) year, regardless of the manner by which the ID position was relinquished or terminated. After serving as ID for nine (9) years, the ID shall be perpetually barred from being elected as such in the same company, but may continue to serve as a regular director, without prejudice to being elected as ID in other companies outside of the business conglomerate, where applicable, under the same conditions as provided for in the Circular.

Reckoning of the cumulative nine-year term is from 2012. Independent Directors (IDs) elected in 2012 may be reelected as such until 2021. However, if there are no suitable replacements, in the instance that an Independent Director who has served for nine years is to be retained, the Board shall provide meritorious justification/s and seek shareholders’ approval for the said re-election during the Annual Stockholders Meeting.

Board Seats of Independent Directors. Also stated in the Bank’s Manual of Corporate Governance in its section on the Board of Directors, as required by SEC Memo Circular No. 9, Series of 2011, the Bank has adopted limits for Independent Directors (ID) in business conglomerates where an ID can be elected to only five (5) companies of the conglomerate, i.e. parent company, subsidiary or affiliate. Links/Sources:  COPRORATE GOVERNANCE MANUAL “Specific Policies for Independent Directors”, “Term limit of Independent Directors”, I.ii.ii, p.41

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 8 of 36 opportunities to obtain redress are limited.

This has led to both codes, and the law in some jurisdictions, to call for some board members to be independent of dominant shareholders, independence extending to not being their representative or having close business ties with them. https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf E.2.6 Has the company set a limit of five board seats that an individual independent/nonexecutive director/commissioner may hold simultaneously? OECD PRINCIPLE VI (E) (3) Board members should be able to commit themselves effectively to their responsibilities.

Service on too many boards can interfere with the performance of board members. Companies may wish to consider whether multiple board memberships by the same person are compatible with effective board performance and disclose the information to shareholders.

Yes A Non-Executive Director may concurrently serve as director in a maximum of five (5) publicly-listed companies. In applying this provision to directorships in entities within a conglomerate, each publicly-listed company where the Non-Executive Director concurrently serves as director shall be separately considered or assessed. An Independent Director may likewise serve as director in a maximum of five (5) publiclylisted companies, whether or not these are within one conglomerate. Links/Sources:  COPRORATE GOVERNANCE MANUAL “Policies on Directorships, Policy on multiple board seats”, II.B.2.a.1.2, https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf E.2.7 Does the company have any executive directors who serve on more than two boards of listed companies outside of the group?

No Links/Sources: The only Executive Director, Cezar P. Consing, is an Independent Director of Jollibee Corporation and regular Director of National Reinsurance Corporation for the year 2017.  BPI WEBSITE “About Us> “Leadership”> “Board of Directors” https://bpiexpressonline.com/p/1/751/board-of-directors Nominating Committee E.2.8 Does the company have a Nominating Committee (NC)? OECD PRINCIPLE II (C) (3) Effective shareholder participation in key corporate governance decisions, such as the nomination and election of board members, should be facilitated. Shareholders should be able to make their views known on the remuneration policy for board members and key executives.

The equity component of compensation schemes for board members and employees should be subject to shareholder approval.

Yes Links/Sources:  ANNUAL REPORT “Nomination Committee”, A155 https://www.bpiexpressonline.com/media/uploads/5b3c5e77eb313 _BPI_IR_2017_Appendices.pdf  MANUAL OF CORPORATE GOVERNANCE “Nomination Committee”, “Duties and Responsibilities of Nomination Committee” II.C.2, pp.45-46 https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf  BPI WEBSITE

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 9 of 36 With respect to nomination of candidates, boards in many companies have established Nominating Committees to ensure proper compliance with established nomination procedures and to facilitate and coordinate the search for a balanced and qualified board.

It is increasingly regarded as good practice in many countries for independent board members to have a key role on this committee. To further improve the selection process, the Principles also call for full disclosure of the experience and background of candidates for the board and the nomination process, which will allow an informed assessment of the abilities and suitability of each candidate. OECD PRINCIPLE VI (E) (1) Boards should consider assigning a sufficient number of non-executive board members capable of exercising independent judgement to tasks where there is a potential for conflict of interest.

Examples of such key responsibilities are ensuring the integrity of financial and non-financial reporting, the review of related party transactions, nomination of board members and key executives, and board remuneration. https://www.bpiexpressonline.com/p/1/784/committees-andcharters https://www.bpiexpressonline.com/p/1/787/nominationscommittee E.2.9 Is the Nominating Committee comprised of a majority of independent directors/commissioners? No The Board has established committees to heighten the efficiency of board operations and assist in exercising its authority for oversight of internal control, risk management and performance monitoring of the Bank.

The committees provide organized and focused means for the directors to achieve specific goals and address issues, including those related to governance. In particular, the committees enhance the objectivity and independence of the board’s judgment, insulating it from undue influence of management and major shareholders. Currently, the Bank has nine (9) Board-level Committees: Executive, Audit, Risk Management, Nomination, Related Party Transactions, Corporate Governance, Personnel and Compensation, Trust and Pension/Retirement. In 2017 and 2018, two directors out of the five-member of the Nomination Committee were independent, including the Chairman.

Links/Sources:  ANNUAL REPORT “Nomination Committee”, A155 https://www.bpiexpressonline.com/media/uploads/5b3c5e77eb313 _BPI_IR_2017_Appendices.pdf  BPI WEBSITE https://www.bpiexpressonline.com/p/1/784/committees-andcharters https://www.bpiexpressonline.com/p/1/787/nominationscommittee E.2.10 Is the chairman of the Nominating Committee an independent director/commissioner? This item is in most codes of corporate governance.

Yes In 2017 and 2018, two directors out of the five-member of the Nomination Committee were independent, including the Chairman. Links/Sources:  ANNUAL REPORT “Nomination Committee”, A155 https://www.bpiexpressonline.com/media/uploads/5b3c5e77eb313 _BPI_IR_2017_Appendices.pdf  BPI WEBSITE https://www.bpiexpressonline.com/p/1/784/committees-andcharters

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 10 of 36 https://www.bpiexpressonline.com/p/1/787/nominationscommittee E.2.11 Does the company disclose the terms of reference/ governance structure/charter of the Nominating Committee? OECD PRINCIPLE VI (E) (2) When committees of the board are established, their mandate, composition and working procedures should be well defined and disclosed by the board.

While the use of committees may improve the work of the board they may also raise questions about the collective responsibility of the board and of individual board members. In order to evaluate the merits of board committees it is therefore important that the market receives a full and clear picture of their purpose, duties and composition. Such information is particularly important in an increasing number of jurisdictions where boards are establishing independent Audit Committees with powers to oversee the relationship with the external auditor and to act in many cases independently. Other such committees include those dealing with nomination and compensation.

The accountability of the rest of the board and the board as a whole should be clear. Disclosure should not extend to committees set up to deal with, for example, confidential commercial transactions Given the responsibilities of the NC spelt out in codes of corporate governance, the NC is unlikely to be fulfilling these responsibilities effectively if it is only meeting once a year. Globally, the NC of large companies would meet several times a year.

Yes Links/Sources:  BPI WEBSITE “Charter of the Nominating Committee” https://bpiexpressonline.com/media/uploads/56ea6462db5bb_BPI_ Nomination_Committee_Charter.pdf  ANNUAL REPORT (Glossy) “Nomination Committee”, p. 94 https://www.bpiexpressonline.com/media/uploads/5b3b0c0283739 _BPI_IR_2017_Senior_Management_and_Corporate_Governance_6. pdf E.2.12 Is the meeting attendance of the Nominating Committee disclosed and if so, did the Nominating Committee meet at least twice during the year? Yes “The Nominating Committee members held two meetings in 2017.” Links/Sources:  ANNUAL REPORT (Glossy) “Nomination Committee”, p.

94 https://www.bpiexpressonline.com/media/uploads/5b3b0c0283739 _BPI_IR_2017_Senior_Management_and_Corporate_Governance_6. pdf  BPI WEBSITE https://www.bpiexpressonline.com/p/1/787/nominationscommittee Remuneration Committee/ Compensation Committee

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 11 of 36 E.2.13 Does the company have a Remuneration Committee? OECD PRINCIPLE VI (D) (4) Aligning key executive and board remuneration with the longer term interests of the company and its shareholders. It is considered good practice in an increasing number of countries that remuneration policy and employment contracts for board members and key executives be handled by a special committee of the board comprising either wholly or a majority of independent directors. There are also calls for a Remuneration Committee that excludes executives that serve on each others’ Remuneration Committees, which could lead to conflicts of interest.

Yes The Company has a Personnel and Compensation Committee. In 2017, one director out of the 6-member Personnel and Compensation Committee was independent; the Chairman was a non-executive but not independent. All board-level committee charters, detailing purpose, membership, structure, and duties and responsibilities, are disclosed and posted on the company website. In 2017, the Committee had 6 meetings with 97% average attendance.

Links/Sources:  BPI WEBSITE https://www.bpiexpressonline.com/p/1/784/committees-andcharters https://www.bpiexpressonline.com/p/1/791/personnel-andcompensation-committee E.2.14 Is the Remuneration Committee comprised of a majority of independent directors/commissioners? No The Company has a Personnel and Compensation Committee. In 2017, one director out of the 6-member Personnel and Compensation Committee was independent; the Chairman was a non-executive but not independent. All board-level committee charters, detailing purpose, membership, structure, and duties and responsibilities, are disclosed and posted on the company website.

In 2017, the Committee had 6 meetings with 97% average attendance.

Links/Sources:  BPI WEBSITE “Committee composition and meetings” https://www.bpiexpressonline.com/p/1/784/committees-andcharters https://www.bpiexpressonline.com/p/1/791/personnel-andcompensation-committee E.2.15 Is the chairman of the Remuneration Committee an independent director/commissioner? No The Company has a Personnel and Compensation Committee. In 2017, one director out of the 6-member Personnel and Compensation Committee was independent; the Chairman was a non-executive but not independent. All board-level committee charters, detailing purpose, membership, structure, and duties and responsibilities, are disclosed and posted on the company website.

In 2017, the Committee had 6 meetings with 97% average attendance.

Links/Sources:  BPI WEBSITE https://www.bpiexpressonline.com/p/1/784/committees-andcharters

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 12 of 36 https://www.bpiexpressonline.com/p/1/791/personnel-andcompensation-committee E.2.16 Does the company disclose the terms of reference/ governance structure/ charter of the Remuneration Committee? OECD PRINCIPLE VI (E) (2) When committees of the board are established, their mandate, composition and working procedures should be well defined and disclosed by the board.

While the use of committees may improve the work of the board they may also raise questions about the collective responsibility of the board and of individual board members. In order to evaluate the merits of board committees it is therefore important that the market receives a full and clear picture of their purpose, duties and composition. Such information is particularly important in an increasing number of jurisdictions where boards are establishing independent Audit Committees with powers to oversee the relationship with the external auditor and to act in many cases independently. Other such committees include those dealing with nomination and compensation.

The accountability of the rest of the board and the board as a whole should be clear. Disclosure should not extend to committees set up to deal with, for example, confidential commercial transactions Given the responsibilities of the Remuneration Committee (RC) which are spelt out in codes of corporate governance, the RC is unlikely to be fulfilling these responsibilities effectively if it only meets once a year. Globally, the RC of large companies would meet several times a year.

Yes Links/Sources:  BPI WEBSITE “Personal and Compensation Committee Charter”, https://bpiexpressonline.com/media/uploads/56ea6462df2ab_Perso nnel_and_Compensation_Committee_Charter.pdf E.2.17 Is the meeting attendance of the Remuneration Committee disclosed and, if so, did the Remuneration Committee meet at least twice during the year? Yes Links/Sources:  BPI WEBSITE “Committee composition and meetings” https://www.bpiexpressonline.com/p/1/791/personnel-andcompensation-committee Audit Committee

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 13 of 36 E.2.18 Does the company have an Audit Committee? OECD PRINCIPLE VI (E) (1) Boards should consider assigning a sufficient number of non-executive board members capable of exercising independent judgement to tasks where there is a potential for conflict of interest.

Examples of such key responsibilities are ensuring the integrity of financial and non-financial reporting, the review of related party transactions, nomination of board members and key executives, and board remuneration. Yes The Company has an Audit Committee as mandated by the Bangko Sentral ng Pilipinas.

As contained in the Audit Committee Charter, the Audit Committee oversees the appointment of the Internal Auditor and the External Auditor. The Audit Committee reviews the internal audit function of BPI including its independence and the authority of its reporting relationships. It ensures that the Chief Audit Executive is not dependent on any Bank executive or operating officer for the security of his or her position. Additionally, it ensures that the Chief Audit Executive has access to the Board, on a confidential basis, and that the Internal Audit is independent of Bank management, both by intent and actual practice.

The Audit Committee also appoints a BSP-accredited external auditor for the purpose of preparing or issuing an audit report or related work. It also assesses the external auditor's effectiveness, independence and objectivity, ensuring that key partners are rotated at appropriate intervals; and removes the external auditors if circumstances warrant. The Committee also oversees the resolution of disagreements between management and the external auditors in the event that they arise. In 2017, the Audit Committee’s members were all independent nonexecutive directors including the chairman. One of the directors is a Certified Public Accountant.

The committee charter is disclosed and posted on the company website. In 2017, the Committee had 14 meetings with 100% average attendance.

Links/Sources:  BPI WEBSITE “Audit Committee” https://www.bpiexpressonline.com/p/1/788/audit-committee E.2.19 Is the Audit Committee comprised entirely of nonexecutive directors/commissioners with a majority of independent directors/commissioners? OECD PRINCIPLE VI (E) (2) When committees of the board are established, their mandate, composition and working procedures should be well defined and disclosed by the board. While the use of committees may improve the work of the board they may also raise questions about the collective responsibility of the board and of individual board members. In order to evaluate the merits of board committees it is therefore important that the Yes In 2017, the Audit Committee’s members were all independent nonexecutive directors including the chairman.

Links/Sources:  BPI WEBSITE “Committee composition and meetings” https://www.bpiexpressonline.com/p/1/788/audit-committee E.2.20 Is the chairman of the Audit Committee an Yes In 2017, the Audit Committee’s members were all independent nonexecutive directors including the chairman.

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 14 of 36 independent director/commissioner? market receives a full and clear picture of their purpose, duties and composition. Such information is particularly important in the increasing number of jurisdictions where boards are establishing independent Audit Committees with powers to oversee the relationship with the external auditor and to act in many cases independently.

Other such committees include those dealing with nomination and compensation. The accountability of the rest of the board and the board as a whole should be clear. Disclosure should not extend to committees set up to deal with, for example, confidential commercial transactions.

Links/Sources:  BPI WEBSITE “Committee composition and meetings” https://www.bpiexpressonline.com/p/1/788/audit-committee E.2.21 Does the company disclose the terms of reference/governance structure/charter of the Audit Committee? Yes Links/Sources:  BPI WEBSITE “Audit Committee Charter” https://www.bpiexpressonline.com/media/uploads/5a264a4a61c05_ BPI_Audit_Committee_Charter_as_of_Nov_2017.pdf E.2.22 Does at least one of the independent directors/commissioners of the committee have accounting expertise (accounting qualification or experience)?

Most codes specify the need for accounting/finance expertise or experience.

UK CODE (JUNE 2010) C.3.1. The board should satisfy itself that at least one member of the Audit Committee has recent and relevant financial experience. As many of the key responsibilities of the Audit Committee are accounting-related, such as oversight of financial reporting and audits, it is important to have someone specifically with accounting expertise, not just general financial expertise. Yes In 2017, the Audit Committee’s members were all independent nonexecutive directors including the chairman. One of the directors is a Certified Public Accountant. The committee charter is disclosed and posted on the company website.

In 2017, the Committee had 14 meetings with 100% average attendance.

Dolores B. Yuvienco (ID), is a Certified Public Accountant Links/Sources:  BPI WEBSITE https://www.bpiexpressonline.com/p/1/905/board-of-directors-2 E.2.23 Is the meeting attendance of the Audit Committee disclosed and, if so, did the Audit Committee meet at least four times during the year? Yes In 2017, the Audit Committee’s members were all independent nonexecutive directors including the chairman. One of the directors is a Certified Public Accountant. The committee charter is disclosed and posted on the company website. In 2017, the Committee had 14 meetings with 100% average attendance.

Links/Sources:  BPI WEBSITE “Committee composition and meetings” https://www.bpiexpressonline.com/p/1/788/audit-committee E.2.24 Does the Audit Committee have primary Yes Recommends to the Board of Directors the appointment, reappointment, and removal of a BSP-accredited external auditor for the

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 15 of 36 responsibility for recommendation on the appointment, and removal of the external auditor? UK CODE (JUNE 2010) C.3.6 The Audit Committee should have primary responsibility for making a recommendation on the appointment, reappointment and removal of the external auditor. If the board does not accept the Audit Committee’s recommendation, it should include in the Annual Report, and in any papers recommending appointment or reappointment, a statement from the Audit Committee explaining the recommendation and should set out reasons why the board has taken a different position.

purpose of preparing or issuing an audit report or related work. The appointment, re-appointment, and removal of the external auditor must be ratified by the shareholders.2 Assess the external auditor's effectiveness, integrity, independence and objectivity, ensuring that key partners are rotated at appropriate intervals; and remove the external auditors if circumstances warrant. The Committee shall oversee the resolution of disagreements between management and the external auditors in the event that they arise.

Links/Sources:  BPI WEBSITE “Audit Committee Charter, Duties and Responsibilities, External Audit”, Section 5.3, p.3 https://www.bpiexpressonline.com/media/uploads/5a264a4a61c05_ BPI_Audit_Committee_Charter_as_of_Nov_2017.pdf E.3 Board Processes Board meetings and attendance E.3.1 Are the board of directors meeting scheduled before the start of financial year? Scheduling board meetings before or at the beginning of the year would allow directors to plan ahead to attend such meetings, thereby helping to maximise participation, especially as non-executive directors often have other commitments.

Additional ad hoc meetings can always be scheduled if and when necessary. It is common practice for boards in developed markets to schedule meetings in this way. Yes Board of Director’s meetings are scheduled at the beginning of the year, immediately after the annual stockholders meeting, to cover the full term of the newly elected or re-elected members of the Board, reckoned from the date of the current year’s annual stockholders’ meeting to that of the following year.

Meetings. Our board meets as often as is necessary for the effective discharge of its obligations. Currently, regular board meetings are convened in accordance with a monthly cycle, and special meetings may be called for as needed. Board of Director’s meetings are scheduled at the beginning of the year, immediately after the annual stockholders meeting, to cover the full term of the newly elected or re-elected members of the Board, reckoned from the date of the current year’s annual stockholders’ meeting to that of the following year. Links/Sources:  BPI WEBSITE “Governance, “Board and Governance”, “Board Matters”, “Board Governance, Meetings, Quorum and Attendance” https://www.bpiexpressonline.com/p/1/794/board-governancemeetings-quorums-and-attendance

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 16 of 36 E.3.2 Does the board of directors/commissioners meet at least six times during the year? WORLDBANK PRINCIPLE 6 (VI.I.24) Does the board meet at least six times per year? INDO SCORECARD E.10. How many meetings were held in the past year? If the board met more than six times, the firm earns a 'Y' score. If four to six meetings, the firm was scored as ’fair’, while less than four times was scored as ‘N’ Yes During 2017, the Board reported attendance in its respective meetings as shown in the table below.

Where a Director could not attend meetings owing to prior commitments or other unavoidable circumstances, he or she provided input to the Chairman so that his or her views were known. Average attendance at the Board's 14 meetings in 2017 was 94%.

Links/Sources:  BPI WEBSITE “Board Governance, Meetings, Quorum and Attendance” https://www.bpiexpressonline.com/p/1/794/board-governancemeetings-quorums-and-attendance E.3.3 Has each of the directors/commissioners attended at least 75% of all the board meetings held during the year? OECD PRINCIPLE VI (E) (3) Board members should be able to commit themselves effectively to their responsibilities. Specific limitations may be less important than ensuring that members of the board enjoy legitimacy and confidence in the eyes of shareholders. Achieving legitimacy would also be facilitated by the publication of attendance records for individual board members (e.g.

whether they have missed a significant number of meetings) and any other work undertaken on behalf of the board and the associated remuneration.

Yes During 2017, the Board reported attendance in its respective meetings as shown in the table below. Where a Director could not attend meetings owing to prior commitments or other unavoidable circumstances, he or she provided input to the Chairman so that his or her views were known. Average attendance at the Board's 14 meetings in 2017 was 94%. Links/Sources:  BPI WEBSITE “Board Governance, Meetings, Quorum and Attendance” https://www.bpiexpressonline.com/p/1/794/board-governancemeetings-quorums-and-attendance E.3.4 Does the company require a minimum quorum of at least 2/3 for board decisions?

WORLDBANK PRINCIPLE 6 (VI.I.28) Is there a minimum quorum of at least 2/3 for board decisions to be valid? No The minimum quorum requirement for Board decisions is set at a majority of board members. The provisions of the Bank’s By-Laws are as follows: “A majority of the members of the Board of Directors shall constitute a quorum at any meeting for the transaction of corporate business, and every decision of a majority of the quorum duly assembled as a board shall be valid as a corporate act, unless otherwise provided in these By-Laws.” Links/Sources:  BPI WEBSITE “Quorum” https://www.bpiexpressonline.com/p/1/794/board-governancemeetings-quorums-and-attendance  MANUAL OF CORPORATE GOVERNANCE, 12.B.IV, P.

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 17 of 36 https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf E.3.5 Did the non-executive directors/commissioners of the company meet separately at least once during the year without any executives present? WORLDBANK PRINCIPLE 6 (VI.E.1.6) Does the corporate governance framework requires or encourages boards to conduct executive sessions? Yes Monthly Board of Directors meetings are usually set on the third Wednesday of the month unless reset to another date due to holidays.

The independent and non-executive directors of the bank also meet at least once a year without the presence of any executive director and/or management.

Links/Sources:  BPI WEBSITE “Board Governance, Meetings, Quorum and Attendance” https://www.bpiexpressonline.com/p/1/794/board-governancemeetings-quorums-and-attendance Access to information E.3.6 Are board papers for board of directors/commissioners meetings provided to the board at least five business days in advance of the board meeting? OECD PRINCIPLE VI (F) In order to fulfil their responsibilities, board members should have access to accurate, relevant and timely information. Board members require relevant information on a timely basis in order to support their decision-making. Non-executive board members do not typically have the same access to information as key managers within the company.

The contributions of nonexecutive board members to the company can be enhanced by providing access to certain key managers within the company such as, for example, the company secretary and the internal auditor, and recourse to independent external advice at the expense of the company. In order to fulfil their responsibilities, board members should ensure that they obtain accurate, relevant and timely information.

WORLDBANK PRINCIPLE 6 (VI.F.2) Does such information need to be provided to the board at least five business days in advance of the board meeting? Yes “Board packages for board of director’s meetings are to be provided to the members, normally five (5) days in advance.” Board reference materials are made available to the directors at least five days in advance of the scheduled meeting. Links/Sources:  ANNUAL REPORT “Meetings and Attendance” https://www.bpiexpressonline.com/media/uploads/5b3b0c0283739 _BPI_IR_2017_Senior_Management_and_Corporate_Governance_6. pdf  MANUAL OF CORPORATE GOVERNANCE “Access to information”, II.A.12.d.ii, p.35 https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf  BPI WEBSITE “Governance” https://www.bpiexpressonline.com/p/1/794/board-governancemeetings-quorums-and-attendance

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 18 of 36 E.3.7 Does the company secretary play a significant role in supporting the board in discharging its responsibilities? OECD PRINCIPLE VI (F) ICSA Guidance on the Corporate Governance Role of the Company Secretary Yes The Corporate Secretary, who is not a member of the Board of Directors and who is a separate individual from the Bank’s Chief Compliance Officer, shall have the following functions: i. Serve as an adviser to the directors on their responsibilities and obligations; ii.

Keep the minutes of meetings of the stockholders, the Board of Directors, the Executive Committee, and all other committees in a book or books kept for that purpose, and shall furnish copies thereof to the Chairman, the President and other members of the Board as appropriate; iii. Keep in safe custody the seal of BPI and affix it to any instrument requiring the same; Links/Sources:  MANUAL OF CORPORATE GOVERNANCE “Duties and Responsibilities – Executive Officers of BPI, Corporate Secretary”, II.D.2, pp. 67-68 https://www.bpiexpressonline.com/media/uploads/5ae94beaa7698_ BPI_Corporate_Governance_Manual_030218.pdf  BPI WEBSITE “Role of Corporate Secretary” https://www.bpiexpressonline.com/p/1/1349/role-of-corporatesecretary

Bank of the Philippine Islands 2018 ASEAN Corporate Governance Scorecard Questionnaire As of July 2018 Page 19 of 36 E.3.8 Is the company secretary trained in legal, accountancy or company secretarial practices? WORLDBANK PRINCIPLE 6 (VI.D.2.12) Do company boards have a professional and qualified company secretary? Yes Angela Pilar B. Maramag Corporate Secretary Our Corporate Secretary is suitably trained, experienced and professionally qualified for these responsibilities. Our Corporate Secretary is also Corporate Secretary or Deputy Corporate Secretary of various BPI subsidiaries and affiliates, including BPI Family Savings Bank, BPI Capital, BPI Forex, BPI/MS Insurance Corp., and BPI Century Tokyo Lease and Finance Corp.

Prior to joining BPI, she was Senior Counsel at the Bank for International Settlements (BIS) in Basel, Switzerland from 2001 to 2008, and Head of Finance and Administration at the BIS Representative Office in Hong Kong from 2008 to 2011. She was a Legal Officer at the United Nations Compensation Commission in Switzerland from 1998 to 2001.

Our Corporate Secretary is admitted to the Philippine Bar (1995) and New York State Bar (1998). She received her Master in Laws (LL.M) from the University of Chicago in 1997, Juris Doctor (J.D) in 1994 from Ateneo de Manila School of Law, and AB Honors Program in Economics in 1990 from Ateneo de Manila University. Links/Sources:  BPI WEBSITE https://www.bpiexpressonline.com/p/1/905/board-of-directors-2 Board Appointments and Re-Election E.3.9 Does the company disclose the criteria used in selecting new directors/commissioners? OECD PRINCIPLE II (C) (3) To further improve the selection process, the Principles also call for full disclosure of the experience and background of candidates for the board and the nomination process, which will allow an informed assessment of the abilities and suitability of each candidate.

OECD Principle VI (D) (5) Ensuring a formal and transparent board nomination and election process. These Principles promote an active role for shareholders in the nomination and election of board members. The board has an essential Yes A director of BPI shall have the following qualifications: Ownership of at least ten (10) shares of the capital stock of BPI; 21 1) At least twenty five (25) years of age at the time of his election or appointment; 2) A college degree or its equivalent or adequate competence and understanding of the fundamentals of doing business or membership in good standing in relevant industry, and membership in business or professional organizations or sufficient experience and competence in managing a business to substitute for such formal education; 3) Must be fit and proper for the position of a director, taking into consideration integrity/probity, physical/mental fitness, relevant education/financial literacy/training, possession of competencies relevant to the job such as knowledge and experience, skills, diligence

Next part ... Cancel