About CG

THE CORPORATE GOVERNANCE REPORT

For the year ending December 31, 2010, the Energy Development Corporation continued its corporate governance activities with the aim of becoming the benchmark for good corporate governance in the industry and in the country.

RECOGNITION AND AWARDS FOR EDC’S CORPORATE GOVERNANCE ACTIVITIES IN 2010

In 2010, EDC received its third consecutive recognition for exemplary corporate governance practices in the Philippines from the Institute of Corporate Directors (ICD). EDC was given a Gold Award for obtaining an overall Corporate Governance rating of 95.4%.

That same year, the Management Association of the Philippines (MAP) cited not only EDC’s corporate governance practices but also the company’s financial reporting and disclosures when EDC’s “Greenergized” Annual Report was awarded as one of the Top 20 Best Annual Reports. It was the second consecutive year where EDC’s Annual Report has been recognized as among the top Annual Reports in the country, and also the second consecutive year that the award for Best in Visual Design was given for EDC’s Annual Reports.

In 2011, EDC received its 2nd Gold Award from the Institute of Corporate Directors for exemplary Corporate Governance activities and practices. Garnering a rating of 98.5% in the CG Scorecard, EDC obtained excellent scores in every sub-category (Rights of Shareholders-96%, Equitable Treatment of Shareholders-100%, Role of Stakeholders-100%, Disclosure and Transparency-100%, and Board Responsibility-97%).

COMPLIANCE WITH POLICIES, RULES AND REGULATIONS ON CORPORATE GOVERNANCE

Pursuant to the governance principles of transparency and disclosure, EDC fully complied with the SEC and PSE’s reportorial requirements on Corporate Governance, such as: the Compliance Officer’s certification of compliance to the company’s CG Manual, certification on Board Attendance, and numerous structured reports involving, among others, public ownership report and financial statements, not to mention the various and timely disclosure of unstructured reports, such as material information and important events in the Company.

The Company likewise made sure that the compliance requirements under its Manual on Corporate Governance have been faithfully observed, such as, but not limited to, training requirements for the members of the Board and Key Officials.

Likewise, other reports required from the company by other regulators are constantly monitored and prepared for their timely submission and compliance.

THE CORPORATE GOVERNANCE MANUAL

The Company’s Corporate Governance Manual was originally adopted and approved by the Board of Directors on November 15, 2006 in compliance with the Corporate Governance Code of the SEC under SEC Memorandum Circular No. 2, series of 2002 dated April 5, 2002.

Since its adoption, the Corporate Governance Manual has undergone several revisions in order to include best practices on corporate governance as well as to comply with the changes in the regulatory requirements of the SEC. In 2010, the Manual underwent two revisions: in March, in compliance with the requirements of the SEC’s Revised CG Code pursuant to SEC Memorandum No. 6, series of 2009, and in September, for the amendments to the Board Committee provisions.

The latest revision to EDC’s CG Manual was effected in July 2011 on the Board Committee provisions.

THE BOARD OF DIRECTORS

Election of the Board of Directors and Composition

Last July 13, 2011, the stockholders of the Energy Development Corporation elected eleven (11) highly-qualified and very experienced professionals from the field of business, local and international finance and power generation to its Board of Directors. Of the 11 directors elected to the Board, eight (8) are regular directors, comprising of a good combination of executive and non-executive directors, and three (3) independent directors.

The election of 3 Independent Directors is compliance beyond the corporate governance requirement on the number of Independent Directors in the board. For the year 2011-2012, EDC’s Independent Directors are Atty. Francis Ed. Lim, Mr. Edgar O. Chua, and Mr. Arturo T. Valdez.

All EDC Directors, most specially its Independent Directors, are active participants during meetings and in major corporate undertakings. For the detailed profile of EDC’s Directors, click here.

Definition of Independent Directors

More than going beyond the required number of independent directors, EDC fully adheres to the definition of an Independent Director.

The Board Committees and their Composition

The Board of Directors of EDC has created five (5) Committees to handle specific oversight functions on matters which would require careful study and deliberation prior to elevating the same to the Board of Directors for final decision or approval.

EDC’s Board Committees are the Audit and Governance, Nomination and Compensation, Risk Management, Corporate Social Responsibility and Operations. For the details on EDC’s Board Committees, click here.

Beyond compliance with the governance regulations and issuances, independent directors figure prominently in the following Committees:

• In the Audit and Governance Committee, majority of the Independent Directors are members of the AGC, with the Chairmanship being held by an Independent Director;
• In the Nomination and Compensation Committee, one of the Committee members is an Independent Director and he is likewise eligible for Chairmanship in the Committee;
• In the CSR Committee, majority of the Independent Directors are Committee members.

Further, as a sign of commitment to governance, the Chairman of the Board is an active member of a majority of the Board committees (Nomination and Compensation, CSR, and Operations Committees) and even sits as Chairman of the Corporate Social Responsibility (CSR) Committee.

CORPORATE GOVERNANCE EVALUATION

Since 2008, the Company has adopted an annual Board Self-assessment Evaluation and President’s Evaluation, with majority of the Board providing their inputs and insights on the Board’s overall performance as well as their assessment of the President’s performance, leadership, operational management, working relationship with the Board, and financial management

For 2010, in addition to the Board’s Self-Assessment, the Board of Directors conducted two President’s Evaluation to cover the performance of the both the outgoing and incoming Presidents.

With the conduct of the annual governance evaluations, the Board of Directors and the President were afforded insights on their expected roles in governing the Company which was evidenced by marked improvements in the ratings for every year the governance evaluations were undertaken.

RISK MANAGEMENT

Beyond Enterprise-wide Risk Management (ERM) awareness, EDC has adopted a system in its budget and work planning activities which incorporate risk management and risk treatment. The treatment and measures to address the various identified risks have also been made as integral parts of the process of preparing the Company’s 2011 plans, programs and budget. The Risk Management Committee of the EDC Board of Directors likewise acts as the oversight Committee on the Committee’s Risk Management Projects.

VISION, MISSION AND VALUES

In 2011, the Company launched its reenergized vision, mission and core values, emphasizing its objective of becoming a global leader in geothermal energy while strengthening its leadership in the Philippine renewable energy industry.

Its commitment to providing present and future generations clean and renewable energy is likewise guided by the company’s core values of bias for action, excellence, integrity, entrepreneurial spirit, stewardship, fairness and results-driven teamwork.

The Company is fully committed to effectively implement these values by institutionalizing and identifying the President and all the Vice-Presidents as the Company’s Values Champions.

DISCLOSURE AND TRANSPARENCY

The Company, through its Investor Relations Office, fully complied with the requirement of full, fair and accurate disclosures to the investing public via immediate disclosures with the Philippine Stock Exchange (PSE) and the Securities and Exchange Commission (SEC). EDC’s website likewise includes a Disclosures page to reflect what has been disclosed to the public via SEC and PSE.

Further, the Company’s website (www.energy.com.ph) is kept updated at all times to comply with the requirement of providing accurate and timely disclosures, as well as full information and disclosure on the company’s corporate governance activities.

PLANS TO IMPROVE

EDC, through the Board of Directors, recognizes the stockholders and other stakeholders’ expectations of high standards of behavior and accountability from directors and officers, and firmly requires strict adherence to the governance principles of fairness, accountability, transparency and integrity. All Directors, Officers and employees of EDC are required and expected to carry out their respective duties and responsibilities effectively and in compliance with these governance principles.

EDC is continually reviewing its policies and processes for further improvements in corporate governance practices within the Company and to address the changes in government legislation, administrative regulations and international best practices.

To this end, EDC has likewise strengthened its partnership with regulatory government agencies and SEC-accredited corporate governance institutions. Through the Compliance Office, EDC has likewise affiliated itself with good corporate governance advocates and practitioners in the country composed of representatives from publicly-listed corporations with known good corporate governance practices.