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Corporate
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Del Monte Pacific is committed to the highest standards of
corporate governance and supports the principles of openness,
integrity and accountability advocated by the Singapore
Exchange Securities Trading Limited (“SGX-ST”) and the 2005
Code of Corporate Governance (“Code”).
BOARD MATTERS
PRINCIPLE 1
THE BOARD’S CONDUCT OF AFFAIRS
The Board of Directors provides entrepreneurial leadership and
sets the strategic direction for the Company. It is
responsible for the overall policies of the Group to ensure
success.
The Board has adopted guidelines specifying matters that
require board approval. These include the approval of the
Group’s strategic plans, appointment of directors and key
managerial personnel, annual budgets, major investment
proposals, and the review of the financial performance of the
Group.
Certain material corporate actions also require the Board’s
approval as follows: approval of quarterly results
announcements, approval of annual results and accounts,
declaration of dividends, convening of shareholders’ meetings,
authorisation of merger and acquisition transactions, and
authorisation of major transactions. The Board likewise
reviews and approves all corporate actions for which
shareholder approval is required.
Certain board matters such as remuneration and
detailed discussion of financial reports to the Singapore
Exchange, are delegated to the Remuneration and Share Option
Committee, and Audit Committee, respectively.
To achieve its goals, the Board ensures that
the Company is equipped with the necessary financial,
technical and human resources. A number of key positions had
been filled in 2006 following the change in major
shareholders. Talented and energetic Management and staff
assumed office during the year.
The Board, together with Management, is shaping
the Company’s values and standards to be more innovative and
global in mindset.
The Board works closely with Management to
drive the Group’s business to a higher level of growth.
Management is accountable to the Board which reviews
Management’s performance annually.
The Board has also put in place a framework of
prudent and effective controls that allow risk to be assessed
and managed.
The Board ensures that obligations to
shareholders and other stakeholders are understood and met.
With the Company Secretary’s assistance, the Board and the
Management team are apprised of their compliance obligations
and new duties arising from regulatory requirements.
As a Board, the directors meet quarterly, or
more often as required, to review and evaluate the Group’s
operations and performance and to address key policy matters.
Board meetings are scheduled to enable the
Board to perform its duties. During the year in review, the
Board held five meetings. To ensure meetings are held
regularly with maximum Board participation, the Company’s
Articles of Association allow for tele- and video-conference
meetings.
The Board provides each newly appointed
director with a formal letter and a kit, setting out the
director’s duties and obligations and information about the
Company.
New
directors also go through an orientation programme whereby
they are briefed by the Company Secretary on their obligations
as directors, as well as the Group’s governance practices, and
relevant statutory and regulatory compliance issues. They are
also briefed by Management on the Group’s industry and
business operations, including a tour of the Group’s
plantation and manufacturing facilities, as well as visits to
the trade.
Timely updates on developments in accounting matters,
legislation, jurisprudence, government policies and
regulations affecting the Group’s business and operations are
likewise provided to all directors.
The Board is of the view that the Company’s
directors make objective decisions in the interests of the
Company.
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PRINCIPLE 2
BOARD’S COMPOSITION AND GUIDANCE
The Board comprises seven directors, only one
of whom is an executive director while the majority are
independent directors. The roles of Chairman and CEO are
assumed by different persons.
Our non-executive directors contribute to the
Board process by monitoring and reviewing Management’s
performance against goals and objectives. Their views and
opinions provide alternative perspectives to the Group’s
business. Our directors bring independent judgment to bear on
business activities and transactions involving conflicts of
interest and other complexities.
Our directors also bring with them invaluable
experience, extensive business networks and expertise in
specialised fields such as strategic planning, M&As, corporate
finance
and restructuring, accounting, marketing and business
development, risk and crisis management and
investor relations.
The size, composition and range of experience
of our current Board allow discussions on matters of policy,
strategy and performance to be critical, informed and
effective.
Our non-executive directors also meet regularly
without the presence of Management to discuss strategy,
policies and issues.
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PRINCIPLE 3
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
There is a clear division of executive duties and
responsibilities in the Company, providing checks and balances
to ensure that no one individual represents
a considerable concentration of power, and that
accountability is increased. The Company’s business is managed
and administered by the Managing Director and CEO, Joselito D
Campos Jr, while the Board is headed by Rolando C Gapud as
Chairman.
Our Chairman leads Board meetings to ensure its
effectiveness on all aspects of its role and sets its agenda.
He ensures that directors receive accurate, timely and clear
information. He encourages constructive relations between the
Board and Management. He facilitates the effective
contribution of non-executive directors in particular and
encourages constructive relations between executive directors
and non-executive directors. He also ensures effective
communication with shareholders and promotes high standards of
corporate governance.
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PRINCIPLE 4
BOARD MEMBERSHIP
The Nominating Committee (“NC”) was set up on
7 February 2003 and currently comprises the following members,
a majority of whom, including the Chairman, are independent
directors:
Godfrey E Scotchbrook
Chairman & Independent Director
Patrick L Go
Independent
Director
Emil Quinto Javier
Independent Director
Rolando C Gapud
Non-Executive Director
Edgardo M Cruz Jr Non-Executive
Director
Under its terms of reference, the NC is responsible for
reviewing the Board’s composition and effectiveness and for
determining if a director has the requisite qualifications,
and if he is independent. All candidates for appointment or
re-election as directors are considered by the Committee and
recommended for approval by the Board.
The NC will review and implement a process for the selection
and appointment of new directors, when the need to induct a
new Board member arises. This may include initiating a
professional search for suitably qualified candidates.
In cases where a director has multiple board representations,
the Committee also determines if a director is able to and has
been adequately carrying out his/her duties as a director of
the Company.
The Committee reviews and determines the
independence of each of the directors on an annual basis.
All directors may hold office for a maximum period of three
years whereupon they shall retire, but are eligible for
re-election.
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PRINCIPLE 5
BOARD PERFORMANCE
The NC has established processes and objective performance
criteria for evaluating the effectiveness of the Board as a
whole. A performance evaluation was initiated during the year
and a report on its findings will be presented to the NC and
the Board.
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PRINCIPLE 6
ACCESS TO INFORMATION
Management provides the Board with timely and complete
information prior to board meetings and on an ongoing basis.
These include explanatory notes for matters that are presented
to the Board, such as budgets and forecasts.
At Board meetings, the Group’s actual results are compared
with budgets, and material variances are then explained. The
strategy and forecast for the following months are discussed
and approved as appropriate.
The directors have separate and independent access to
Management, and also to the Company Secretary. The Company
Secretary is responsible for ensuring that Board procedures
are followed and that applicable rules and regulations are
complied with.
The Company Secretary attends and prepares minutes of all
Board and Board committee meetings. She assists the Chairman
in ensuring that Board procedures are followed and regularly
reviewed to ensure the effective functioning of the Board, and
that the Company’s Memorandum and Articles of Association and
relevant rules and regulations, including requirements of the
BVI International Business Company Act and the Singapore
Exchange, are complied with.
The Company Secretary also ensures good
information flows within the Board and its committees and
between senior Management and non-executive directors. She is
the primary channel of communication between the Company and
the Singapore Exchange.
The Company Secretary also administers the
orientation programme for newly appointed directors where they
are briefed on their obligations as directors, the Group’s
governance practices, and relevant statutory and regulatory
compliance issues. She assists with the professional
development of Board members as required.
The appointment and the removal of the Company
Secretary is a Board matter.
Aside from access to the advice and services of
Management and the Company Secretary, the directors may, in
appropriate circumstances, seek independent professional
advice concerning the Company’s affairs at the Company’s
expense.
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REMUNERATION MATTERS
PRINCIPLE 7
PROCEDURES FOR DEVELOPING REMUNERATION POLICIES
The Remuneration and Share Option Committee (“RSOC”)
was set up on 7 February 2003 and currently comprises the
following members, all of whom are non-executive directors and
a majority of whom, including the Chairman, are independent
directors:
Godfrey E Scotchbrook
Chairman & Independent Director
Patrick L Go
Independent Director
Benedict Kwek Gim Song
Independent
Director
Rolando C Gapud
Non-Executive
Director
Edgardo M Cruz Jr
Non-Executive Director
The RSOC’s principal function is to ensure that a formal and
transparent procedure is in place for fixing the remuneration
packages of the directors as well as key senior executives of
the Group. It is at liberty to seek independent professional
advice as appropriate.
Under its terms of reference, the RSOC is responsible for
reviewing and recommending a remuneration framework for the
Board and key senior executives, and has assumed the role of
the ESOP Committee in administering the Del Monte Pacific
Executive Stock Option Plan, the Del Monte Pacific Restricted
Share Plan (RSP) and the Del Monte Pacific Performance Share
Plan (PSP). The RSOC considers all aspects of remuneration -
director’s fees, salaries, allowances, bonuses, options,
benefits in kind, etc.
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PRINCIPLE 8
LEVEL AND MIX OF REMUNERATION
The remuneration of the Company’s directors is set to attract,
retain and motivate the directors to run the company
successfully.
The RSOC reviews the service contracts of the Company’s
executive directors and key Management. The compensation
commitments in service contracts are reviewed and notice
periods for termination do not exceed six months.
In reviewing the recommendation for non-executive directors’
remuneration for 2006, the RSOC has adopted a framework, based
on guidelines recommended by the Singapore Institute of
Directors, which comprises a base fee, fees for membership in
Board committees, as well as fees for chairing Board
committees, taking into consideration the amount of time and
effort that each Board member may be required to devote to the
role and the fees paid in comparable companies.
The compensation structure for executives of
Group
subsidiaries consists of two key components, that is, fixed
cash and annual variable incentive. The fixed component
includes salary, pension fund contributions and other
allowances. The variable component comprises a
performance-based bonus which is payable upon the achievement
of individual and corporate performance targets.
The Company had put in place the Del Monte Pacific Executive
Stock Option Plan in 1999 (“Scheme”). The terms of the Scheme
are described in the Directors’ Report. However, following the
close of the Options Proposal (“Proposal”) pursuant to the
mandatory general offer on 20 January 2006, option holders who
had accepted the Proposal were required to surrender all of
their relevant options for cancellation. Some options lapsed
in the second quarter of 2006; hence, there were no more
outstanding options at the end of 2006.
The Company has in place two other share plans - the RSP and
PSP – also administered by the RSOC. These are long-term
incentive schemes based on achieving pre-set operating unit
financial goals as well as individual performance, and
additionally, achieving corporate financial goals in the case
of the PSP.
The purpose of these plans is to increase the Company’s
flexibility and effectiveness in its continuing efforts to
reward, retain and motivate employees, currently targeted at
executives at key positions, to excel in their performance.
These are also designed to align interests of executives with
those of shareholders.
Depending on the plan, shares are either delivered after the
participant has served the Group for a specific number of
years or delivered after a further period beyond completion of
prescribed performance targets.
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PRINCIPLE 9
DISCLOSURE ON REMUNERATION
The remuneration of each director has been disclosed in the
respective bands. The Board is of the opinion that it would
not serve a purpose to disclose the exact remuneration of each
director given the confidentiality of remuneration matters.
Please refer to pages 29-30 of the Company’s 2006 Annual
Report.
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ACCOUNTABILITY AND AUDIT
PRINCIPLE 10
ACCOUNTABILITY
There are comprehensive management reporting disciplines and
structured financial approval authorities to govern the
implementation of agreed Company policies and Board decisions,
and the day-to-day management of the Group’s operating units.
For effective monitoring of the Group’s business and affairs,
management and financial information are provided to the
Board. This information includes disclosure documents,
quarterly results, forecasts for profit and cash flow, working
capital and borrowing levels, compared to approved budgets and
the prior year’s results. These have been provided on a
monthly basis to the Board. A new reporting template is being
developed to further facilitate the dissemination of this
information to the Board.
The Group’s annual budget is reviewed and approved by the
Board. A strategic plan, which defines business development
goals and overall business objectives, is prepared and updated
periodically.
Based on Management’s reports, the Board provides a balanced
and fair assessment of the Company’s
performance, position and prospects for interim reports, other
price sensitive public reports and other reports to regulators
as required.
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PRINCIPLE 11
AUDIT COMMITTEE
The Audit Committee (“AC”) was set up on 9 July 1999 and
currently comprises the following members, all of whom are
non-executive directors and a majority of whom, including the
Chairman, are independent directors.
Benedict Kwek Gim Song
Chairman & Independent Director
Godfrey E Scotchbrook Independent
Director
Patrick L Go
Independent
Director
Rolando C Gapud Non-Executive
Director
Edgardo M Cruz Jr
Non-Executive
Director
The members of the AC are highly qualified with at least two
members having the requisite accounting and financial
management experience.
Under its terms of reference, the AC is responsible for
reviewing the scope and results of the audit and its cost
effectiveness. The AC also ensures the independence and
objectivity of the external auditors. Likewise, it reviews the
non-audit services provided by the Company’s external
auditors. In 2006, the AC reviewed the audit and non-audit
services of the external auditors and was satisfied with their
independence.
The AC reviews the significant financial reporting issues and
judgments so as to ensure the integrity of the financial
statements of the Company and any formal announcements
relating to the Company’s financial performance. It further
conducts periodic reviews of all related party transactions.
The AC has the authority to investigate any matter within its
terms of reference, has unrestricted access to Management and
the Head of the Corporate Auditing department, and has full
discretion to invite any director or executive officer to
attend its meetings, with reasonable resources to enable it to
discharge its functions properly.
The
AC is also tasked to monitor the adequacy and effectiveness of
the Group’s internal control system and internal audit
function. It has set in place arrangements to ensure
independent investigation of matters such as improprieties in
financial reporting.
A Whistleblower Policy was put in place in 2004
to promote the highest standards of business and personal
ethics in the conduct of the Group’s affairs. The Board,
together with the Chairman of the AC, had appointed a
Protection Officer as well as an Investigations Officer to
administer the Company’s Whistleblower programme.
The AC also makes recommendations to the Board
on the appointment, re-appointment and removal of the external
auditor, and approving the remuneration and terms of
engagement of the external auditor.
The AC meets with the Group’s external auditors
and with the head of the Corporate Auditing department without
the presence of Management at least once a year.
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PRINCIPLE 12
INTERNAL CONTROLS
The Group maintains internal controls and systems designed to
provide reasonable assurance as to the integrity and
reliability of its financial statements and to adequately
safeguard, verify and maintain accountability of its assets.
These internal controls include financial, operational and
compliance controls, and risk management policies and systems
established by the Management.
The effectiveness of these controls and systems is subject to
the annual review of the Group’s Corporate Auditing department
and is monitored by the AC. In addition, the Company’s
external auditors also review the effectiveness of the Group’s
key internal controls as part of their audit plan for the
year.
The directors and the Group’s Corporate Auditing department
are of the view that the Company has proper and adequate
internal control procedures.
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PRINCIPLE 13
INTERNAL AUDIT
The Group’s Corporate Auditing department is staffed by
trained personnel with appropriate segregation of duties from
the activities it audits. This department has a respectable
standing within the Company and is responsible for ensuring
that risk management, control and governance processes are
effectively implemented and maintained, and that such internal
controls and systems are adequate and functioning effectively.
The head of the Corporate Auditing department reports
functionally to the AC. It is the Group’s policy to support
the Corporate Auditing department to comply with and exceed
the Standards for the Professional Practice of Internal
Auditing set by The Institute of Internal Auditors.
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COMMUNICATION WITH SHAREHOLDERS/investor relations
PRINCIPLE 14
The Company places importance on strengthening shareholder
relations through regular dialogues with the investing
community, based on the principle of effective and fair
communication. The Company is committed to providing easy
access to timely and relevant information about the Company.
The Company encourages shareholders to share their views or
inputs, and endeavours to address their concerns.
To maintain an open channel of communication, the Company has
an email alert system whereby emails on the Company’s
developments and updates are sent regularly via an
investor-friendly Del Monte template. To ensure fairness, this
is also broadcast to the public via the SGXNET system. The
Company does not practice selective disclosure.
The Company announces its financial results on
a quarterly basis within the prescribed periods and holds
briefings on its half-year and full-year results performance.
The report on the Company’s financial results are disseminated
(together with other materials provided in the briefings held)
through the SGXNET, the Company’s email alerts and website.
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PRINCIPLE 15
In general meetings, shareholders are given the opportunity to
communicate their views and direct questions to directors and
Management regarding the Company. The Chairpersons of the
Board Committees and the external auditors are present at the
AGMs and other general meetings of shareholders, to assist the
Board in addressing shareholders’ questions. The minutes of
AGMs are available to shareholders upon their request.
Shareholders have the opportunity to participate effectively
and to vote in AGMs either in person or by proxy.
We have separate resolutions at general meetings on each
distinct issue.
The Company is reviewing the feasibility of amending its
Articles of Association to avoid imposing a limit on the
number of proxies for nominee companies.
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DEALINGS WITH SECURITIES
The Company has adopted and implemented a Best Practices Guide
which is made known to directors, officers and staff of the
Company and the Group. In particular, it has been highlighted
that it is an offence to deal in the Company’s securities when
the officers (directors and employees) are in possession of
unpublished material price sensitive information in relation
to those securities. The officers are also discouraged from
dealing in the Company’s securities on short-term
considerations.
The Directors and the Company’s employees are not allowed to
deal in the Company’s securities during the period commencing
two weeks before the announcement of the Company’s financial
results for each of the first three quarters of its financial
year; and one month before the announcement of the Company’s
full-year financial results. This restriction ends one day
after the Company’s announcements of the relevant results.
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