Meralco | Ang Liwanag ng Bukas

The following are the key players in ensuring the application of good governance practices and policies within Meralco:

1. SHAREHOLDERS
2. BOARD OF DIRECTORS
3. BOARD COMMITTEES
4. MANAGEMENT
5. EXTERNAL AUDITOR
6. INTERNAL AUDITOR
7. EMPLOYEES
8. SUBSIDIARIES
9. OTHER STAKEHOLDERS

A. SHAREHOLDERS

Meralco recognizes its responsibility to protect its shareholders' rights by creating value and ensuring sustainable growth in business. Meralco upholds their rights to obtain relevant information about Meralco in a timely and regular basis.

Meralco's financial performance and prospects are regularly reported to the SEC and PSE. These reports are immediately made public through press releases and postings in the Meralco's website.

Investors' briefings are held quarterly, where equity and credit analysts of both local and foreign-based institutions are invited. Analysts who are unable to attend in person participate through a teleconference facility with playback feature available up to three days after the event. Members of Senior Management make themselves available for meetings with institutional investors through Company visits, teleconferences, briefings and attendance in local and international investor conferences.

Press/media briefings are likewise held regularly to report on Meralco's operating and financial results to the various representatives of media, particularly from the television, print and wire agencies. Such briefings are venues for Management to answer questions and clarify issues prior to the release of information to the public.

Shareholders and investors are provided with adequate facilities to communicate with Meralco through telephone, mail, electronic mail, and website, www.meralco.com.ph. The Investor Relations Office supervises the investors' briefings and attends to institutional investors' needs. Stockholder Affairs Office attends to the inquiries and other concerns of shareholders, including the distribution of Notice and Agenda of the Annual General Meeting, or AGM, at least 30 days before the said meeting. Notices were sent on April 27, 2011, 34 days before the 2011 AGM on May 31, 2011.

Meralco also adheres to its commitment to maintain a fair and competitive return to its investors. Meralco has a dividend policy approved by the Board which was ratified by the shareholders in 2010. The policy provides for payment of regular dividends equivalent to 50% of core earnings, which may be supplemented by a special dividend determined on a “look-back" basis. Any declaration and payment of special dividend shall be dependent on the availability of unrestricted retained earnings and availability of free cash. The details of the cash dividend pay-outs are included in Note 18 to the Audited Consolidated Financial Statements.

Annual General Meeting

The AGM serves as a venue to report to and engage the shareholders, as well as to clarify issues in the presence of the Board, Management, external auditors, and shareholders. Shareholders are encouraged to personally attend the AGM and if unable to do so, are advised of their right to appoint a proxy on their behalf. Notarization of a proxy is not required but has to comply with the requirements of law, in particular, the Corporation Code and SRC, pertinent rules and regulations, By-Laws, and rules and policies adopted by the Board.

The AGM held on May 31, 2011 was attended, in person or proxy, by stockholders who owned or held a total of over 949 million shares or approximately 84% of the 1,127 million total issued and outstanding common shares of Meralco entitled to vote.

The Chairman of the Board, Ambassador Manuel M. Lopez, presided over the meeting. All of the members of the Board elected at the AGM, except for Mr. Ray C. Espinosa and Mr. Napoleon L. Nazareno, were present.

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B. BOARD OF DIRECTORS

The Board is primarily responsible for the governance of Meralco. Corollary to setting the policies for the accomplishment of the corporate objectives, the Board also provides an independent oversight on Management. The Board establishes Meralco's vision, mission, strategic objectives, policies and procedures that guide its activities, including the mechanisms for effective monitoring of Management's performance. The Board also ensures that internal control mechanisms for good governance are adequate.

Board Composition

The Board consists of 11 directors which are elected by the stockholders during the AGM. The Board represents a mix of disciplines in the area of business, finance, operations and legal competencies, with each director capable of adding value and exercising independent judgment. Of these directors, two are independent directors, seven are non-executive directors, and two are executive directors. The composition of the Board clearly delineates their responsibilities with those of Management.

The Board of Directors is composed of:

Manuel V. Pangilinan	Chairman
Ramon S. Ang	Vice Chairman & Director
Manuel M. Lopez	Director
Jose Ma. K. Lim	Director
Ray C. Espinosa	Director
Estelito P. Mendoza	Director
(Ret.) Chief Justice Artemio V. Panganiban	Independent Director
Vicente L. Panlilio	Director
Eric O. Recto	Director
Oscar S. Reyes	Director & President & CEO
Pedro E. Roxas	Independent Director

Manuel M. Lopez, 70
Director (since April 14, 1986 - 26 yrs¹.)
Chairman and CEO (from July 1, 2001 to June 30, 2010)
Chairman (from July 1, 2010 to May 28, 2012)

Mr. Lopez is the Philippine Ambassador to Japan. He is concurrently the Chairman and CEO of Lopez Holdings Corporation² and is the Chairman of Indra Philippines, Inc., Bayan Telecommunications, Inc., Bayan Telecommunications Holdings Corporation, Rockwell Land Corporation² and Rockwell Leisure Club. He is the Vice Chairman of First Philippine Holdings Corporation² and a member of the Board of Directors of ABS-CBN Corporation2, ABS-CBN Holdings Corporation², Sky Cable Corporation and First Philippine Realty Corporation. He is also the President of Eugenio Lopez Foundation, Inc.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Manuel V. Pangilinan, 66
Director (since May 26, 2009 – 3 yrs¹.)
President and CEO (July 1, 2010 to May 28, 2012)
Chairman (since May 29, 2012)

Mr. Pangilinan is the Chairman of Beacon Electric Asset Holdings, Inc., Philippine Long Distance Telephone Company², Smart Communications, Inc., Metro Pacific Investments Corporation², PLDT Communications and Energy Ventures Inc. (formerly Piltel), Landco Pacific Corporation; Medical Doctors, Inc. and Colinas Verdes Corporation (operating Makati Medical Center and Cardinal Santos Medical Center, respectively), Davao Doctors Inc., Riverside Medical Center, Inc. in Bacolod City, Our Lady of Lourdes Hospital, Asian Hospital, Inc., Maynilad Water Services Corporation, Mediaquest, Inc., Associated Broadcasting Corporation (TV5), Philex Mining Corporation² and Manila North Tollways Corporation. He is the Chief Executive Officer and Managing Director of First Pacific Company Limited, a publicly-listed company in Hong Kong and Co-Chairman of the newly-organized US-Philippines Business Society. He was a member of the Board of Overseers of The Wharton School, University of Pennsylvania. He is the Chairman of the Board of Trustees of San Beda College and was Chairman of the Board of Trustees of the Ateneo de Manila University. Mr. Pangilinan holds a Bachelor of Arts degree, cum laude, in Economics from the Ateneo de Manila University and a Masters in Business Administration from Wharton School of Finance and Commerce, University of Pennsylvania, where he was a Procter & Gamble Fellow.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Oscar S. Reyes, 66
Director,(since July 1, 2010 - 2 yrs¹.)
Chief Operating Officer (July 1, 2010 to May 28, 2012)
President and Chief Executive Officer (since May 29, 2012)

Mr. Reyes is a member of the Advisory Board of Philippine Long Distance Telephone Company² and of the Board of Directors of the Bank of the Philippine Islands², Manila Water Company, Inc.², Ayala Land, Inc.², Smart Communications, Inc., Pepsi Cola Products Philippines, Inc.², Sun Life Financial Phils, Inc., Basic Energy Corporation² and Alcorn Gold Resources Corporation², among other firms. He is also President of Meralco PowerGen Corporation and Chairman of Meralco Industrial Engineering Services Corporation (MIESCOR), CIS Bayad Center, Meralco Energy, Inc. (MEI), Redondo Peninsula Energy, Inc. and Link Edge, Inc. He served as Country Chairman of the Shell Companies in the Philippines and concurrently President of Pilipinas Shell Petroleum Corporation and Managing Director of Shell Philippines Exploration B.V. He is a member of the Board of Trustees of One Meralco Foundation, Inc., Pilipinas Shell Foundation, Inc., SGV Foundation, Inc. and El Nido Foundation, Inc. He holds a Bachelor of Arts degree, cum laude, in Economics from the Ateneo de Manila University and finished post-graduate studies at the Ateneo Graduate School of Business Administration, Waterloo Lutheran University and the Harvard Business School.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Ramon S. Ang, 58
Director and Vice Chairman (since February 1, 2009 – 3 yrs¹.)

Mr. Ang is the Vice Chairman, President and Chief Operating Officer of San Miguel Corporation². He is the Chairman and Chief Executive Officer of Petron Corporation², Petron Marketing Corporation and SMC Global Power Holdings Corporation. He is the President and Chief Operating Officer of PAL Holdings, Inc.² and Philippine Airlines, Inc. He is the Vice Chairman of Ginebra San Miguel, Inc.², San Miguel Pure Foods Company, Inc.² and San Miguel Yamamura Haiphong Glass Co. Limited (Vietnam) and a Director of Air Philippines Corporation. He is the Chairman and President of San Miguel Properties, Inc., San Miguel Consolidated Power Corporation, San Miguel Electric Corporation, San Miguel Energy Corporation, SMC Consolidated Power Corporation, SMC Power Generation Corporation, SMC PowerGen Inc. and Cyber Bay Corporation². He is the Chairman of San Miguel Brewery, Inc.² and Liberty Telecoms Holdings Inc.² and a Director of Philweb Corporation². Mr. Ang is a Director of other subsidiaries and affiliates of the San Miguel Group of Companies in the Philippines and Southeast Asia. He holds a Bachelor of Science degree in Mechanical Engineering from Far Eastern University.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Ray C. Espinosa, 56
Director (since May 26, 2009 - 3 yrs¹)

Atty. Espinosa is the President and Chief Executive Officer of Mediaquest Holdings, Inc., ABC Development Corporation (TV5), Mediascape, Inc. (Cignal TV), Nation Broadcasting Corporation, and other subsidiaries of Mediaquest Holdings Inc. He is a member of the Board of Directors of Meralco PowerGen Corporation, Beacon Electric Asset Holdings, Inc., Philippine Long Distance Telephone Company², Metro Pacific Investments Corporation², Lepanto Consolidated Mining Corporation ^2/3 and Wolfpac Mobile, Inc.; and Vice Chairman of Philweb Corporation². Atty. Espinosa holds a Bachelor of Laws degree, salutatorian, from the Ateneo de Manila University and a Master of Laws degree from the University of Michigan Law School as a Clyde Alton Dewitt Fellow. He placed first in the Philippine Bar examinations in 1982.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Estelito P. Mendoza, 83
Director (since February 1, 2009- 3 yrs¹)

Atty. Mendoza is the Managing Partner of Estelito P. Mendoza and Associates. He is a member of the Board of Directors of San Miguel Corporation², Petron Corporation², Philippine National Bank² and Philippine Airlines, Inc. A practicing lawyer for more than 60 years, he was consistently listed as a "Leading Individual in Dispute Resolution" among lawyers in the Philippines in the following directories/journals: "The Asia Pacific Legal 500", "Chambers of Asia" and "Which Lawyer?" yearbooks for several years. He has also been a Professorial Lecturer of law at the University of the Philippines and served as Solicitor General, Minister of Justice, Member of the Batasang Pambansa and Provincial Governor of Pampanga. He was also the Chairman of the Sixth (Legal) Committee, 31st Session of the UN General Assembly and the Special Committee on the Charter of the United Nations and the Strengthening of the Role of the Organization. He holds a Bachelor of Laws degree from the University of the Philippines and Master of Laws degree from Harvard Law School.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Jose Ma. K. Lim, 60
Director (since May 29, 2012 - 6 mo.¹)

Mr. Lim is the President and Chief Executive Officer of Metro Pacific Investments Corporation². He is the Chairman of Davao Doctors Hospital and Riverside Medical Center in Bacolod City. He is a member of the Board of Directors of of Meralco PowerGen Corporation, Beacon Electric Asset Holdings, Inc., Metro Pacific Tollways Corporation, Manila North Tollways Corporation, Tollways Management Corporation, Maynilad Water Services, Inc., Medical Doctors, Inc., Cardinal Santos Medical Center, Our Lady of Lourdes Hospital and Asian Hospital. He is a Founding Member and Treasurer of the Shareholders Association of the Philippines. Mr. Lim holds a Bachelor of Arts degree in Philosophy from the Ateneo de Manila University and a Masters in Business Administration from the Asian Institute of Management.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Artemio V. Panganiban, 76
Independent Director (since May 27, 2009 - 3 yrs¹)

Justice Panganiban was a former Chief Justice of the Supreme Court of the Philippines. He was a Chairperson of the Presidential Electoral Tribunal, Judicial and Bar Council and Philippine Judicial Academy. He is an Independent Director of Petron Corporation ^2/3, Bank of the Philippine Islands^2/3, First Philippine Holdings Corporation^2/3, Metro Pacific Investments Corporation^2/3; Metro Pacific Tollways Corporation, Robinsons Land Corporation^2/3, GMA Network, Inc.^2/3,GMA Holdings, Inc. ^2/3 and Asian Terminals, Inc.^2/3; and Independent Adviser of Philippine Long Distance Telephone Company. He is a Director of Jollibee Foods Corporation², a Senior Adviser of Metropolitan Bank and Trust Company, Chairman of the Board of Advisers of Metrobank Foundation and a columnist for the Philippine Daily Inquirer. He holds a Bachelor of Laws degree, cum laude, from the Far Eastern University and was awarded the degree of Doctor of Laws (Honoris Causa) by the University of Iloilo, Far Eastern University, University of Cebu, Angeles University and Bulacan State University. He placed sixth in the Philippine Bar Examinations in 1960.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Vicente L. Panlilio, 66
Independent Director (from May 27, 2008 to May 25, 2010)
Director (since June 28, 2010 - 2 yrs¹)

Mr. Panlilio is a member of the Board of Directors of San Fernando Electric Light and Power Company and Bank of Commerce. He was a Director of the Philippine Stock Exchange, the Philippine Dealing Exchange Corporation, Equitable PCIBank and the Philippine National Bank. He was also Chief Operating Officer and a member of the Advisory Board of Far East Bank and Trust Company. Mr. Panlilio holds a Bachelor of Arts degree in Economics from the University of the Philippines and attended the Advanced Bank Management Program of the Asian Institute of Management.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Pedro E. Roxas, 56
Independent Director (since May 25, 2010 - 2 yrs¹)

Mr. Roxas is the Chairman, President and Chief Executive Officer of Roxas and Company, Inc.²; Chairman and President of Roxaco Land Corporation; Chairman of Roxas Holdings, Inc.², Central Azucarera Don Pedro, Inc., Central Azucarera de la Carlota, Inc., Roxol Bioenergy Corporation, Club Punta Fuego, Inc. and Fuego Land Corporation. He is a member of Board of Directors of Philippine Long Distance Telephone Company^2/3, BDO Private Bank and Brightnote Assets Corporation. Mr. Roxas holds a Bachelor of Science degree in Business Administration from the University of Notre Dame in Indiana, USA.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Eric O. Recto, 49
Director (since June 28, 2010 -2 yrs¹)

Mr. Recto is the Chairman of Philippine Bank of Communications²; President of Petron Corporation²; Vice Chairman of Alphaland Corporation² Atok-Big Wedge Co., Inc.² and Philweb Corporation². He is a member of the Board of Directors of San Miguel Corporation²; and President and Director of Top Frontier Investment Holdings, Inc., ISM Communications Corporation² and Q-Tech Alliance Holdings, Inc. Mr. Recto holds a Bachelor of Science degree in Industrial Engineering from the University of the Philippines and a Masters in Business Administration from Cornell University, Johnson Graduate School of Management, Ithaca, New York, USA.

1 Up to December 31, 2012 2 Publicly-listed Companies 3 Independent Director

Board Independence

Meralco complies with Rule 38 of the Implementing Rules of the SRC on the qualifications, nomination and election of independent directors. Each elected independent director has no business or other relationship with Meralco that could, or could reasonably be perceived to, materially interfere with the exercise of his independent judgment in carrying out his responsibilities as a director.

The Chairman of the Board and the President and CEO

To further strengthen the Board’s independence, the position of the Chairman of the Board is separated from the President and CEO. Each position has distinct and separate duties and responsibilities in accordance with Meralco’s amended By-Laws and Revised Manual of Corporate Governance. The Chairman of the Board is Manuel V. Pangilinan, while the President and CEO is Mr. Oscar S. Reyes.

Election of Directors

In accordance with the provisions of the Company's By-Laws and Manual of Corporate Governance, the Corporation Code of the Philippines and the SRC, nominees for board directorship go through a nomination and screening process. The final list of nominees is determined after pre-screening and evaluation. The directors are elected by stockholders who are entitled to vote during the AGM. They serve for a period of one year and until their successors are qualified and elected.

Board Remuneration

Meralco's directors do not receive any compensation other than the Board-approved per diem for their attendance in Board and Committee Meetings. In 2011, each director was entitled to a director's fee of Php120,000 for each Board meeting attended. Each member or advisor of the Audit and Risk Management, Remuneration and Leadership Development (formerly Compensation and Benefits), Finance, Nomination and Governance Committees was entitled to a fee of Php20, 000 for every committee meeting attended.

Board Performance

The Board holds monthly meetings and special Board meetings, if so required, with agenda that include updates by the Chairman of the Board and the Board committees, reports on financial performance by the Chief Finance Officer or CFO, and operational performance by the President and CEO, the Senior Executive Vice President and Chief Operating Officer, or COO, among other major issues of Meralco.

The Board has separate and independent access to the Corporate Secretary, who oversees the adequate flow of information to the Board prior to meetings and advises directors about their duties. During Board meetings, discussions are open and independent views are given due consideration. Average attendance in the Board's 12 meetings last year was more than 89%.

The following table shows the participation of the Board in the AGM, Organization Meeting and its regular meetings:

The Board recognizes the importance of a regular performance assessment, individually and collectively as part of their accountability. Assessments were done to evaluate their specific and overall performance for the past calendar year. The assessment of their 2011 performance was conducted on February 3, 2012.

On May 20, 2011 the Board also assessed the performance of the different committees. The Board evaluated their individual and collective performances regarding the Board and its committees' structures, processes and responsibilities. The assessment likewise identified the training and skills development program needed by the Board. As a result, an orientation on the regulatory process and related issues was held on November 28, 2011.

The Board reviewed the 2011 performance of the President and CEO during the January 30, 2012 Board meeting. It was based on the attainment of target corporate goals for 2011.

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C. BOARD COMMITTEES

The Board of Directors shall form Board Committees to aid in ensuring compliance with the principles of good corporate governance. The members of such Committees shall be appointed by the Board of Directors annually.

The Company's Board has five standing committees:

1. Executive Committee;
2. Nomination and Governance Committee;
3. Audit and Risk Management Committee;
4. Remuneration and Leadership Development Committee; and
5. Finance Committee.

All committees have approved charters defining and specifying the scope of their responsibilities.

1. Executive Committee (ExCom) –The ExCom may act, by majority vote of all its members, on such specific matters within the competence of the Board, as may be delegated to it in the By-Laws or on a majority vote of the Board, subject to the limitations provided by the Corporation Code of the Philippines.

See Executive Committee Charter.

The following are the members of the ExCom:

Member	Designation
Manuel V. Pangilinan	Chairman
Ramon S. Ang	Vice Chairman
Manuel M. Lopez	Member
Artemio V. Panganiban	Member(Independent Director)
Eric O. Recto	Member

See Meetings and Seminars section for the attendance to the ExCom meetings.

2. Nomination and Governance Committee (Nom & GovCom) –is responsible for screening qualified nominees for election as directors; assessing the independence of directors; introducing improvements on Board organization and procedures; setting-up of mechanisms for performance evaluation of the Board and Management; and providing programs for continuing education of the Board.

See Nomination and Governance Committee Charter.

The following are the members of the Nom&GovComm:

Member	Designation
Pedro E. Roxas	Chairman (Independent Director)
Estelito P. Mendoza	Vice Chairman
Ray C. Espinosa	Member
Jose Ma. K. Lim	Member

In 2011, the Nom & GovCom: a) screened and selected the nominees for election as members of the Board; b) reviewed the rules on nomination of candidates, validation of proxies, and appreciation of ballots; c) reviewed revisions in the Manual of Corporate Governance; d) reviewed the committee charter; e) conducted Board and Board Committee self-assessment and evaluated its results; f) facilitated Board orientation on regulatory processes; and g) assessed skills and training needs of the Directors.

See Meetings and Seminars section for the attendance to the Nom & GovCom meetings.

3. Audit and Risk Management Committee (AuditCom) – it assists the Board in its oversight responsibility in the financial reporting process, system of risk management and internal control, audit process, and monitoring compliance with applicable laws, rules and regulations

See Audit and Risk Management Committee Charter.

The AuditCom is composed of the following members:

Member	Designation
Artemio V. Panganiban	Chairman (Independent Director)
Vicente L. Panlilio	Vice Chairman
Jose Ma. K. Lim	Member
Eric O. Recto	Member
Pedro E. Roxas	Member (Independent Director)
Anabelle L. Chua	Non-Director

In 2011, the AuditCom was able to accomplish the following: a) review of the Company's 2010 audited financial statements and 2011 quarterly financial statements; b) review and approval of the 2010 Audit and Risk Management Committee Report to the Board; c) evaluation of external auditor's performance and endorsement of the nomination of the external auditor and its fees for 2011; d) review of 2010 internal audit performance and status report; e) approval of external quality assessment review for the internal audit activity; f) review and approval of external auditor's 2011 audit plan; g) evaluate Board Committee self-assessment results; h) review the AuditCom Charter; and i) evaluate the Company's risk profile and management structure, systems and processes.

See Meetings and Seminars section for the attendance to the AuditCom meetings.

4. Remuneration and Leadership Development Committee (Remuneration & LDCom) – Remuneration and LDCom, formerly Compensation and Benefits Committee, assists the Board in the development of the Company's overall compensation and retirement policies and programs based on the Board approved philosophy and budget.

See Remuneration & LDCom Charter.

Remuneration & LDCom is composed of the following members:

Member	Designation
Manuel V. Pangilinan	Chairman
Eric O. Recto	Vice Chairman
Jose Ma. K. Lim	Member
Pedro E. Roxas	Member (Independent Director)

In 2011, the Remuneration and LDCom a) reviewed and endorsed to the Board new remuneration policy, philosophy, design and programs of Meralco; b) recommended the implementation of the Long-term Incentive Plan; c) evaluated the 2010 employee performance results and proposals for the 2011 and 2012 performance management system and incentive plans; d) conducted the 2010 performance evaluation of the President and CEO; e) reviewed and recommended improvements to the Remuneration and LDCom charter, including renaming the committee to Remuneration and Leadership Development Committee to align with its expanded responsibilities; and f) nominated the Board of Trustees of the Meralco Pension Fund.

See Meetings and Seminars for the attendance to the Remuneration & LDCom meetings.

5. Finance Committee (FinCom) – It reviews the financial operations of the Company and matters regarding acquisition of or investments in companies, businesses or projects.

See Finance Committee Charter.

The FinCom is composed of the following members:

Member	Designation
Ray C. Espinosa	Chairman
Manuel M. Lopez	Member
Eric O. Recto	Member
Pedro E. Roxas	Member (Independent Director)
Ferdinand K. Constantino	Non-Director
Anabelle L. Chua	Non-Director

In 2011, FinCom a) reviewed and recommended the approval of the 2012 consolidated corporate budget; b) reviewed and recommended the approval of the medium-term financial plans; c) recommended the approval of cash dividend declarations for common and preferred shares; d) reviewed quarterly cash projections and finance operations report; e) recommended the redemption on the callable preferred shares; f) reviewed the proposals for new debts and refinancing of existing obligations; g) reviewed investment plans; h) reviewed and recommended the funding of the Meralco Pension Fund; i) recommended the approval of the divestment from the real estate business; j) reviewed and recommended major purchase contracts; k) approved the disposal of asset no longer needed in the operations; and l) recommended approval of bank accreditation and signing authorities.

See Meetings and Seminars section for the attendance to the FinCom meetings.

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D. MANAGEMENT

Management is primarily accountable to the Board. It is responsible for the Company's successful implementation of the strategy and direction as approved by the Board. Management is represented by a Management Committee (ManCom) composed of the corporate officers and executives headed by the President and CEO, or in his absence, the Senior Executive Vice President and COO. Weekly meetings are conducted by the ManCom to ensure implementation of major policies and directions governing the Company and its subsidiaries. It reports to the Board during regular Board meetings or during special meetings through the President and CEO and/or the Senior Executive Vice President and COO.

The annual performance of Management is assessed through the achievement of the Company's established Balanced Scorecard indicators. To ensure continued success in managing Company operations, Management attended a structured executive training and development, including training on compensation and benefit plans and on succession planning. In addition, similar training programs were provided for senior management and the executive levels.

Following are the officers of Meralco since May 31, 2012:

Presented below is a snapshot of Meralco's table of organization.

Click here to enlarge image.

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E. EXTERNAL AUDITOR

SyCip Gorres Velayo & Co. (SGV & Co.) was reappointed as the independent external auditor of the Company, through the approval of the shareholders in the Annual General Meeting on May 31, 2011.

The engagement partner assigned to the Company since 2008 is Mr. Gemilo J. San Pedro, who has extensive accounting and auditing experience. The appointment is in accordance with the SEC regulation on the qualification of external auditors.

The AuditCom ensures that the independence of the external auditors is maintained. In line with this, the AuditCom does not allow engagement of SGV in any non-audit work that (i) will conflict with their duties as external auditors or (ii) may impair or pose a threat to their independence. Any non-audit work, if allowed, is disclosed in the Meralco Annual Report.

During the year, the external auditors provided the following audit and permissible non-audit services to Meralco and its subsidiaries.

There has been no disagreement with the external auditors on any matter of accounting principles or practices or auditing scope or procedure, and financial statement disclosure.

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F. INTERNAL AUDITOR

The internal audit activities conform to the concepts and principles enunciated in the definition of internal auditing as an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. Internal audit services are performed in accordance with the International Standards for the Professional Practice of Internal Auditing.

The internal audit group is led by a chief audit executive and includes 23 other staff with professional qualifications, which include Certified Internal Auditors, Certified Information Systems Auditors and Certified Public Accountants. The tasks of the internal audit group are set out in the Corporate Audit Charter and the Code of Corporate Governance of Meralco. To provide for independence of the internal audit group, the chief audit executive reports functionally to the AuditCom and administratively to the President and CEO in a manner outlined in the Corporate Audit Charter.

Ms. Helen T. de Guzman, the First Vice President and Chief Audit Executive of the Manila Electric Company or MERALCO, heads our Corporate (Internal) Audits. Prior to her internal audit posting, she has held other positions within the MERALCO group and other companies as external auditor, accounting officer, finance and administrative officer, comptroller, assistant general manager, treasury operations officer & assistant treasurer and compliance officer.

Ms. De Guzman is a Certified Internal Auditor, a Certified Public Accountant, an Executive MBA degree holder from the Asian Institute of Management and a Fellow of the Institute of Corporate Directors of the Philippines. She likewise belongs to the core group of independent validators of the Institute of Internal Auditors Philippines or IIAP and a qualified team leader for external quality assessment reviews.

Annually, a risk-based internal audit plan is prepared and approved by the AuditCom.

In 2011, the internal audit group issued reports to Senior Management and the Audit and Risk Management Committee to communicate the results of reviews and audits covering various operational units of the Company and its subsidiaries including specific areas of concern identified by Management. Significant concerns, which have been reported by the internal audit group, and the implementation of responsive remedial measures, are monitored by Management and by the AuditCom.

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G. EMPLOYEES

Meralco is committed to the development and welfare of its employees. As the Company sustains its efforts in building a high performance culture to fully respond to the requirements of the new business environment, employees are continuously trained and developed to enable them to achieve excellent performance founded on our corporate values. Career development programs are implemented to ensure professional growth through skills and job enrichment opportunities, learning and development programs, performance management and promotions systems. Employees are compensated based on performance and over-all qualifications and market competitiveness. Adequate provisions for medical, health and other essential benefits; and workplace safety are provided to promote employee welfare and well-being. Uprightness and impartiality are observed in conflict resolution. HR Programs for our employees are continuously reviewed and enhanced to ensure their over-all effectiveness and responsiveness.

The Company is further committed in sustaining and/or further enhancing the high level of engagement of employees. Guided by the results of an employee engagement survey conducted, focused and deliberate initiatives are undertaken to help ensure employees job satisfaction and motivation. Employee communication is strengthened to keep employees well-informed on significant developments. Employees are likewise encouraged to give feedback and suggestions to Management to further improve corporate and operational performance, promoting employee accountability and empowerment.

Click link to Revised Manual of Corporate Governance for more details.

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H. SUBSIDIARIES

As one of Meralco's five strategic business pillars, the subsidiaries contribute significantly in boosting shareholder value.

The Subsidiary Management Policy continues to serve as the guidebook in creating and managing subsidiaries based on the criteria and principles embodied in the Revised Manual of Corporate Governance, Code of Ethics, and existing laws, rules and regulations.

In 2011, Meralco continued to strengthen the good governance practice of its subsidiaries by strongly advocating the need for each subsidiary to adopt its own Manual of Corporate Governance. Specifically, the subsidiaries were provided with a template based on the requirements stipulated in the SEC Revised Code of Corporate Governance and the Revised Manual of Corporate Governance to assist each subsidiary in developing and adopting its own manual.

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I. OTHER STAKEHOLDERS

Meralco seriously considers the impact of business decisions on the interests of its shareholders and other stakeholders. The Declaration of Corporate Principle of the Company's Revised Manual of Corporate Governance specifically mentions:"The Company…uphold(s) an ethical culture that will protect and promote the best interest of the Company for the common benefit of the Company's stockholders and other stakeholders. " The Company also protects and maintains good relations with its suppliers and creditors based on mutual respect and benefit. The Company strives to foster long-term stability, direct and open relation, and continuous development with suppliers to attain quality, competitiveness, process efficiency and performance reliability; foster governance principles in all of its business dealings with them; and seek, encourage and prefer suppliers whose business practices respect human dignity and the environment.