tiểu luận analyze the quality of themanagement system executivecompensation and ownership struture ofvinamilk

intrinsic elements of the corporate environment are significant in forming thegovernance system:Efficiency of local capital marketsExtent to which the legal system provides protection to

ĐẠI HỌC UEHTRƯỜNG KINH DOANH

KHOA TÀI CHÍNH

BÀI TIỂU LUẬN CUỐI KỲ

MÔN: CORPORATE GOVERNANCE ANDETHICS IN FINACE

ĐỀ TÀI: ANALYZE THE QUALITY OF THE

COMPENSATION AND OWNERSHIP STRUTURE OFVINAMILK

Giảng viên hướng dẫn :TS Vũ Việt Quảng Sinh viên thực hiện:Vũ Vân Anh

MỤC LỤC

Executive Summary 1

I.Introduce about the company 2

II.Corporate Governance Analysis 2

2.1.Analysis of factors that shape the quality of governance system in Vietnam 2

2.1.1.Efficiency of local capital markets 3

2.1.2.Extent to which the legal system provides protection to all shareholders 4

2.1.3.Enforcement of regulations 6

2.1.4.Societal and cultural values 6

2.2.Board of Directors: Duties and Liabilities 8

2.2.1The operations of the Board 10

2.2.2.Board Committees 10

2.3.Board of Directors: Selection, Compensation, and Removal 12

2.3.1Market for directors 12

2.3.2.Director for compensation 12

2.4.Board of Directors: Structure and Consequences 14

2.4.1Board Independence 14

2.4.1.1.Independence of the chairman 14

2.4.1.2.Lead independent director 15

2.4.1.3.Non-executive directors 16

2.4.1.4.Independence standards 18

2.4.1.5.Independent committees of the board 19

2.4.1.6.Representation on the board by selected constituents 20

2.4.2.The size and structure of a board of directors 21

Executive Summary

The essay will conduct a thorough examination of Vinamilk corporate governance,drawing on the knowledge gained during the course This study will incorporate crucialinformation from chapters 2, 3, 4, 5, 8, and 9, as well as significant insights from othertextbook chapters.

We will pay special attention to understanding the management system andanalyzing both macro and micro variables that impact management quality throughoutthe examination of Vinamilk's quality control environment This is a thorough processaiming at establishing the management system's performance and efficacy, with thepurpose of optimizing management and ensuring that procedures are carried out robustlyand efficiently.

First and foremost, we shall concentrate on researching Vinamilk's externalsurroundings This entails determining how legal, social, and business variables affect thecompany's management system The major goal is to prevent and mitigate the dangersthat these elements may cause, while also ensuring that management is objective and notself-serving.

Following that, we will conduct a thorough examination of Vinamilk's Board ofDirectors Their tasks, powers, and responsibilities will be extensively investigated, aswill their organizational structure and operating methods This allows us to judge thestability and quality of leadership at the highest level.

The audit and evaluation of Vinamilk's internal audit department will be a criticalaspect of this assessment We shall evaluate permitted approvals to ensure that theinternal audit procedure is carefully and properly carried out This is critical in order toprovide transparency and access to accurate and trustworthy information.

Finally, after thoroughly studying both the external and internal components ofVinamilk, the research will undertake an overall review of the management system'sperformance The findings will be utilized to make important suggestions to improvemanagement quality and overall business performance.

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I.Introduce about the company

Vinamilk is a significant company in Vietnam's food and beverage business,focusing on the manufacture and marketing of dairy products Since 2006, the firm hasbeen listed on the Ho Chi Minh Stock Exchange.

Vinamilk is proud to be recognized as a National Brand, ranking among the "Top10 Most Valuable Milk Brands in the World" Vinamilk has made importantcontributions to the expansion of the Vietnamese dairy sector and has effectively earnedits global reputation during the last 45 years of sustainable development.

At present, Vinamilk functions in over 60 nations and territories, and it holds the36th position in the "Top 50 World's Leading Dairy Manufacturers" list, representingSoutheast Asia Vinamilk provides a wide selection of more than 250 items to satisfycustomers' dietary requirements Vinamilk's customer-centric strategy prioritizes qualityand innovation, with the goal of fulfilling all client demands The company's qualityphilosophy is to constantly adapt to and take responsibility for the demands of thecustomer by offering a wider range of goods and services, guaranteeing food safety andquality at reasonable costs, upholding the law, and following business ethics.

Vinamilk thinks that strong financial stability, investor trust, and operationalefficiency are all based on competent management The organization always emphasizeseffective management as the cornerstone of long-term growth This not onlydemonstrates a company's financial stability but also fosters shareholder confidence andguarantees the effectiveness of its operations

The organization is dedicated to matching corporate expansion with preservationof the environment, advancement of humankind, and advancement of society Vinamilkis a proud supplier of premium goods to customers in Vietnam and throughout the world,with 46 units comprising 16 contemporary factories and 14 dairy farms in Vietnam andoverseas.

Vinamilk is more than simply a company; it is a symbol of achievement andcreativity in the food and drink sector Vinamilk continues to contribute to the globalcommunity and inspire sustainable development with its remarkable accomplishmentsand steadfast commitments.

II.Corporate Governance Analysis

II.1 Analysis of factors that shape the quality of governance system in Vietnam.

Corporate governance is the term used to describe the collection of controls that anorganization uses to stop or make it more difficult for management to take actions thatare harmful to the interests of stakeholders and shareholders An organization's choiceof governance structure is influenced by its business environment The following

intrinsic elements of the corporate environment are significant in forming thegovernance system:

Efficiency of local capital markets

Extent to which the legal system provides protection to all shareholdersReliability Of Accounting Standards

Enforcement RegulationsSocietal and cultural values

The variances in these variables have a major influence on the frequency and gravityof representation-related problems as well as the kinds of governance structuresrequired to keep an eye on and rein in management self-interest.

We next demonstrate these ideas using a summary of the governing frameworksfound in a few chosen nations International governance systems continue to be variedeven though globalization has a tendency to standardize some aspects, such as theindependence requirements for the board of directors This variety represents theparticular way that legal, cultural, economic, and other forces have interacted overtime Thus, comprehending the national context is essential to understanding thepractical workings of governing systems.

II.1.1.Efficiency of local capital markets

The costs of labor, capital, and natural resources are set by markets Theseassessments are supposed to appropriately represent available knowledge in highlyefficient capital markets, guaranteeing well-informed transactions Precise pricingis necessary for businesses to manage their money However, values may becomedistorted in less efficient capital markets, which might have a detrimental effect onhow corporations make decisions.

Effective capital markets have two functions: they encourage reasonable pricingand operate as a check on managers' actions When included into remunerationagreements, this aligns the interests of shareholders and managers, as is clear.Effective capital markets operate as a catalyst for accountability by providingincentives for corporate leaders to make responsible decisions, and they alsoguarantee that management choices are in line with the organization's overarchingobjectives.

Vietnam's capital market is currently in a phase of positive development,characterized by both favorable aspects and challenges In recent times, the markethas experienced rapid expansion in both scale and liquidity, effectively channeling

substantial financial resources to support the Government, businesses, and localauthorities Notably, the market's scale is on a continuous upward trajectory,supported by an improved legal framework that ensures a vital supply of capitalfor the overall economy As of June 2023, the market scale has reached animpressive 166% of the GDP for the entire year 2022, a clear indicator of thepositive strides made in the developmental journey.

This progress is further underscored by the proactive and decisive actions takenby the Government, exemplified through the issuance and amendment of keyregulations like the Securities Law and Decree No 153/2020/NĐ-CP Thesemeasures have played a significant role in fostering a robust and transparentenvironment within the capital market The operationalization of the individualcorporate bond trading system at the Hanoi Stock Exchange (HNX) is anothertestament to the concerted efforts toward market enhancement Moreover, thestock market has exhibited encouraging signs of recovery throughout the first ninemonths of 2023, establishing itself as a reliable source of medium and long-termcapital for the economy while reducing reliance on traditional banking channels.

However, there are still certain difficulties facing Vietnam's capital market.There are obstacles that must be solved, including the capital market's lack ofdiversity in products and goods and unclear information Latent hazards stillinclude things like stock market manipulation and disclosure breaches pertainingto company finances Businesses are faced with the general challenges of theglobal economy, which include the need to reduce operations and manage thepressure of debt repayment.

The outlook for Vietnam's capital market remains favorable, though Attractingforeign investment and international investors is facilitated by a stable politicaland economic climate With an emphasis on the capital market's growingsignificance in providing medium- and long-term finance for the economy, thegovernment has been putting various measures into place to promote and grow thecapital market.

II.1.2.Extent to which the legal system provides protection to all shareholders

In corporate governance, the legal system is vital to maintaining the interestsand rights of shareholders Building confidence and fairness in a company'sfinancial and management structure hinges on how well shareholders are protectedby the legal framework The legal framework offers a framework to safeguardshareholders' ownership and voting rights by defining their rights and obligations

in plain terms In addition, it requires corporate management to act in the bestinterests of all shareholders by demanding the disclosure of pertinent informationand guaranteeing openness.For example, whereas minority shareholders may beless concerned with securing legal protection for their ownership rights andcurbing any abusive behavior by dominant owners, significant corporate ownersmust be very vigilant about safeguarding their assets from hostile takeovers.

Regulations that guard against the misuse of voting rights, shield against unjustimportant decisions, and guarantee that shareholders may voice their thoughts andparticipate in management are examples of the level of protection afforded by thelegal system This degree of protection promotes the company's sustainablegrowth and strengthens shareholder confidence by emphasizing equity and cautionin corporate governance.

With changes and modifications to the 2020 Enterprise Law from the 2014version, the Vietnamese legal system is placing more emphasis on safeguardingthe interests of shareholders, particularly those who own 5% to 10% of the shares.With regard to corporate management and operations, these modifications areintended to strengthen this shareholder group's rights and supervisory powers.Reducing the continuous ownership threshold from 10% to 5% is one of the mostimportant changes, since it grants shareholders the ability to exercise certainprivileges like proposing candidates for the Supervisory Board and the Board ofDirectors This offers benefits to new shareholders and also allows them toexercise their rights whenever they choose, without having to wait a long time tojoin the management team.

Major shareholders now have greater access to contracts and transactionsthrough the BOD, with the exception of trade secret-related papers, thanks to the2020 Enterprise Law This helps to create an atmosphere that is fair andtransparent for business by giving shareholders more visibility and monitoringpower over important corporate transactions.

Additionally, it is a step in the right direction because the new clause givesshareholders who own at least 1% of the shares the ability to suit By doing awaywith the six-month continuous ownership requirement, shareholders may actquickly to safeguard their interests and lower the possibility that this clause wouldbe abused in mergers and acquisitions.

Assuring these adjustments' actual efficacy still presents a number ofdifficulties, though To guarantee openness and justice in Vietnamese companymanagement, extra care must be taken with the implementation of these new rulesand the provision of comprehensive guidelines Vietnam ranks 97th out of 190

countries in the Doing Business 2020 report, indicating that significant workremains to be done to strengthen investor and shareholder protection in Vietnam.

II.1.3.Enforcement of regulations

The efficacy of a legal system is contingent upon the presence of enforcementmechanisms Enforcing rules and regulations is essential to corporate governancebecause it protects shareholders' rights and upholds the integrity of businessoperations Diverse legal frameworks and regulations are in place to offerstockholders complete security Government representatives must be ready toapply these laws consistently and equitably According to Hail and Leuz (2006),nations with strong legal protections and developed securities laws often havelower capital costs than those without these characteristics.

Vietnam has made great strides in the enforcement of business rules in recentyears, which is indicative of the government's determination to enhance thebusiness climate and draw in foreign investment The simplification of businessprocesses, which lowers complexity and the time needed to launch a firm, is onenoteworthy feature Vietnam's efforts were acknowledged by the 2022 GlobalEase of Doing Business Index, which ranked the country 42nd and showed asignificant improvement over prior years.

In terms of foreign direct investment (FDI), the government continues to placelimitations and requirements on a number of industries, including fireworks,chemicals, minerals, biotechnology, pharmaceuticals, and biological businessactivities This is true even though FDI has increased significantly in recent years.The goal of this is to protect national security and interests.

Nonetheless, protecting intellectual property rights continues to be difficult.Vietnam is ranked 11th in the world for the greatest rates of software piracy,despite having laws in place to safeguard these rights Abuse of these rightsnonetheless happens in Vietnam The government has put in place regulations,such Decree 31/2021/ND-CP, to direct the new Investment Law's execution andlimit access to particular markets for foreign companies.

All things considered, Vietnam's business environment is becoming morebeneficial for businesses and appealing to international investment thanks to theadvancements and enforcement of business legislation But in order to maintainand accomplish sustainable growth, this procedure still has to be improved inplaces with constraints and enforced consistently and effectively.

II.1.4.Societal and cultural values

The social environment in which a business works has a big impact on howmanagers behave Certain behaviors that are regarded as suitable in one societymight be viewed as unacceptable in another, which could influence participationdecisions and managers' self-serving actions The connection between thecorporation and its stakeholders, including shareholders, is influenced by culturalvalues.

Cultural standards, such humiliation or "loss of face," function as disciplinarytools to stop self-serving behavior, just like legal threats do in other nations Onthe other hand, showing personal riches and corruption are considered normalparts of conducting business in nations such as Russia.

Some nations place a strong emphasis on the viewpoints of shareholders,believing that a company's main duty is to maximize its assets Only whendemonstrating long-term financial performance are initiatives like bettering laborconditions, lessening environmental effect, and treating suppliers fairly taken intoconsideration Conversely, alternative viewpoints give precedence to the concernsof all parties involved, stressing the significance of workers, vendors, consumers,and the nearby community in the process of reaching decisions This variety is theresult of a special fusion of cultural, legal, economic, and other factors that havechanged over time In order to comprehend how management systems functionand are developed in reality, it is imperative to grasp the national context.

Cultural values are categorized using a variety of methods, one well-knownexample being Geert Hofstede's approach This approach produces five indicescharacterizing cultural traits, including power distance, individualism, masculinity,uncertainty avoidance, and long-term orientation, using survey data from morethan 70 nations In conclusion, social and cultural norms have a significantinfluence on how managers behave In order to have a deeper understanding ofhow management systems function in particular situations, a thorough analysis isrequired.

These days, Vietnam is not only one of Southeast Asia's most sought-aftercommercial destinations, but it also has a distinctive cultural background wheresocial and cultural values are integral to all facets of life These ideals have asignificant impact on how individuals interact and form connections outside of theeconomic world.

Vietnamese culture places a strong emphasis on hierarchy and respect, with aspecial emphasis on seniority and authority When interacting with others, theVietnamese people show respect in all that they do, including bowing, grinning,

and using suitable titles These behaviors are not only outward manifestations;they also convey respect for tradition and authority.

Building trust and fostering personal relationships are important aspects in thecorporate world A focus on interpersonal connections is essential for effectivecommunication and for achieving success in the workplace Establishing andpreserving intimate connections, as well as understanding partners, are seen to be agood starting point for developing consensus and confidence in business choices.

The use of non-verbal cues and indirect ways is essential in communicating.Since non-verbal cues and gestures are frequently used in Vietnamesecommunication, participants must pay close attention to what is being said in orderto understand what is being said Being humble and polite are not only personalqualities; the community as a whole shares these qualities.

In addition to being a personal quality, remaining composed and cool inconversation is crucial for fostering a productive communication atmosphere.Effective communication in a society that places a high emphasis on stability andcivility requires paying close attention to others' feelings and reactions.

Vietnam's socioeconomic and cultural values continue to be reflected in theemphasis on establishing confidence and exhibiting respect during businessmeetings and negotiations Personal connections and understanding partners areprioritized above everything else, and decision-making hierarchies are frequentlyarticulated In addition to being a method for sharing commercial information,negotiations provide a chance to establish and maintain durable, solid partnerships.The secret to winning understanding and support in the Vietnamese businessprocess is to place a strong emphasis on developing relationships of trust andcommunicating with respect.

As a result, in the contemporary context, Vietnamese social and cultural valuesare essential for fostering a favorable and distinctive business climate whileengaging with the global business community Understanding and upholding theseprinciples is essential for any Vietnamese business to succeed and last, as well asfor opening doors to commercial prospects Not only does international businessprofit from integration with local social and cultural values, but it also plays aconstructive role in the overall growth of the international business community inVietnam.

II.2 Board of Directors: Duties and Liabilities

The General Meeting of Shareholders (AGM), the Board of Directors (BOD) andthe Audit Committee under the Board of Directors, and the General Director

comprise the Vinamilk Company's management hierarchy In accordance with theArticles of Association and the Resolution of the General Meeting of ShareholdersNo 01/NQ-CTS.GMS/2023 on April 25, 2023, this organization has been foundedand approved Consisting of all shareholders with voting rights, the General Meetingof Shareholders is the highest decision-making body In addition to choosing theBoard of Directors (BOD) and making important choices like dividends and companystrategy, the General Meeting of Shareholders also has this responsibility Foropenness and good government, this lays the groundwork.

The daily management body of Vinamilk is the BOD, which operates under thedirection of the General Meeting of Shareholders The Board of Directors and theAudit Committee make up the BOD, which oversees the efficient application of plansand risk control This method strikes a compromise between making strategic choicesand guaranteeing financial stability and openness Overseeing the BOD, the GeneralDirector is in charge of carrying out company plans and overseeing day-to-dayoperations These organizational levels work together to create a tight managementstructure that supports Vinamilk's sustained growth and competitiveness in an ever-complex business environment.

2.2.1 The operations of the Board

As outlined in Article 2 of the Regulation on Operation of the Board ofDirectors of the Vietnam Dairy Products Joint Stock Company, the Board operatesunder the principle of collective responsibility Every member of the Board haspersonal accountability for the duties delegated to them and joint accountability tothe General Meeting of Shareholders and legal duties for the decisions andresolutions adopted for the Company's advancement In addition, the GeneralDirector may be appointed by the Board of Directors, giving them charge ofplanning and supervising the execution of the decisions and resolutions that theBoard has approved

Each member of the Board of Directors pledges to carry out their duties withthe greatest honesty and diligence, striving for the best interests of the Companyand its shareholders, in addition to the obligations outlined in the Company'sCharter Ensuring the efficacy of board decisions requires both constructivefeedback and active involvement at all meetings.

Specifically, the immediate and comprehensive notification of remunerationsfrom subsidiary companies, associate companies, and other organizations of theCompany is vital to maintaining transparency and integrity in governance Regularreporting at the nearest meeting regarding significant transactions, especially thoseinvolving Board members and/or their associates, as well as transactions withcompanies where a Board member has been a founder or manager within thepreceding three years, establishes a high standard for transparency andaccountability.

Furthermore, adhering to regulatory requirements of information disclosurewhile trading business shares is not only necessary to comply with the law but alsoa prerequisite for fostering transparency and confidence in the managementenvironment As independent decision-makers, independent Board members areaccountable for reporting on and assessing the Board's operations Collectively,these pledges and deeds create a professionally run atmosphere that guides thecompany's steady and long-term growth.

2.2.2.Board Committees

The committee system at Vinamilk plays a crucial role in optimizingmanagement and supervision by dividing tasks and responsibilities to ensuretransparency and comprehensive efficiency in the company's operations TheAudit Committee, among other committees like the Strategy Committee, aNomination Committee and a Compensation and Benefit Committee, isestablished to support the Board of Directors in its management and oversightactivities Each committee, according to regulations, must have at least threemembers, including directors and external members, with a majority beingindependent/non-executive members, and one designated as the committee's Chair.The formation and operation of each committee are decided by the Board ofDirectors and subsequently approved at the Annual General Meeting, reflectingthe will and guidance of the shareholders, who are the ultimate owners of thecompany Decisions made by each committee must be presented as resolutions andrequire majority approval from participating members, followed by confirmationfrom the Board of Directors for consistency and compliance.

The Audit Committee, in particular, assumes a vital role Apart fromconducting requested audits within specified timelines without disrupting regularbusiness activities, the committee reports findings on examined issues to the Boardof Directors and shareholders or shareholder groups upon request Additionally,the committee establishes a mechanism for receiving feedback and complaints

from company employees regarding irregularities in management, businessoperations, risk management, and internal control This mechanism prioritizes thesecurity and protection of legitimate rights for those providing feedback, coupledwith provisions for independent investigations and subsequent handlingprocedures The committee also undertakes responsibilities such as ensuring thereasonability, legality, truthfulness, and prudence in financial management,business operations, accounting, statistics, and financial reporting It reviewsaccounting records and other company documents as per decisions made by theAnnual General Meeting or upon request from shareholders or shareholder groups,ensuring transparency and reliability in the company's financial reporting.

Furthermore, the committee plays a significant role in reviewing related-partytransactions subject to the approval authority of the Board of Directors or theAnnual General Meeting, providing recommendations on transactions requiringsuch approvals It monitors compliance with legal regulations, regulatoryrequirements, and internal regulations of the company, contributing to the overallgovernance framework The Audit Committee is instrumental in building andpresenting its operating regulations for approval by the Board of Directors Theseregulations outline the committee's specific rights and responsibilities and adhereto legal provisions.

Overall, the committee system, particularly the Audit Committee, at Vinamilkserves as a cornerstone for effective governance, financial management, andbusiness oversight, ensuring alignment with legal requirements and the bestinterests of the company and its shareholders.

2.3.Board of Directors: Selection, Compensation, and Removal 2.3.1 Market for directors

In the business world, which is increasingly leaning towards diversity andprofessionalism in the Board of Directors, the race to find outstanding leaders isfacing unique challenges Despite efforts to enhance diversity within the Board,only a few CEOs of Fortune 500 companies come from minority ethnicbackgrounds, and the number of women in these positions is also limited.Ensuring diversity is not just about improving the quality of decisions but alsoreflects the company's commitment to education and equal opportunities.Furthermore, members of a professional Board bring deep expertise from variousfields This diversity can provide a rich perspective and experience in managingdiversity However, managing multiple Boards also comes with risks, such as the

busy schedule that can reduce the effectiveness of supervision and lack ofindependence if professional members are not carefully considered.

For Vinamilk, a leading conglomerate in Vietnam, the process of selectingdirectors is not only about expertise but also about diversity and innovation in themanagement environment The high criteria and thorough evaluation set byVinamilk create a unique managerial landscape where excellence and strategicvision are highly valued.

Facing global challenges, Vinamilk understands that diversity in terms ofethnicity, gender, technological knowledge, and international experience is crucialfor success in an increasingly diverse business environment The flexiblesupervisory model with advisory or observational directors is an intelligentsolution, not only ensuring support but also avoiding unnecessary legal pressure.

In summary, the 'Market for Directors' is not just a place to find leadershiptalent but also reflects Vinamilk's commitment to strong management, ethicalleadership, and innovation to create long-term value in an ever-diverse andchallenging business world This journey is not only robust but also showcasescreativity and innovation in today's business environment.

2.3.2 Director for compensation

Compensating members of the Board of Directors is not only an importantaspect but also a clear acknowledgment of the time, responsibility, and financialcommitment associated with their crucial role The compensation amount shouldbe designed to be attractive, compelling enough to retain and attract experts withsufficient knowledge to guide and supervise the company effectively A well-structured compensation plan is crucial not only to foster consensus among Boardmembers but also to ensure the interests of both shareholders and stakeholders.Compensation involves not only the time spent directly on Board matters but alsothe costs to maintain flexibility for unexpected events While there is somevariation in compensation structures across industries, it needs to align with thebusiness's objectives and encourage consensus among Board members.

Many companies even implement additional fees for members participating incommittees, including non-executive Chairs and independent directors Ownershipguidelines require Board members to hold company shares, ensuring alignmentbetween their interests and those of ordinary shareholders they represent,motivating careful oversight by the governing board However, this may notalways be ideal, as a Board member may oppose a project or acquisition deal thatcould negatively impact the company's stock price in the short term, even if itcreates long-term value.

At Vinamilk, where the strength of the dairy industry is prominent, the role ofthe Compensation Director faces not only numerous challenges but also promisingopportunities With its unique position, Vinamilk demands a flexible and nuancedcompensation strategy, particularly crucial to adapting to the specificities of eachbusiness unit

In his indispensable role at Vinamilk, Mr Nguyen Hanh Phuc not only holdsresponsibility for compensation but actively contributes to addressing issuesrelated to fairness and transparency in the compensation structure He reviewsVinamilk's credential requirements, designs innovative compensation packages,and evaluates performance-related metrics His profound understanding ofVinamilk's corporate governance landscape not only aids in successfullynavigating the complexity of his role but also emphasizes Vinamilk's steadfastcommitment to fairly compensating executives based on performance This notonly ensures fairness and transparency in the compensation process but alsocontributes positively to sustainable growth and long-term value creation forVinamilk This combination truly reflects Vinamilk's unwavering commitment tomaintaining a robust and sustainable management environment.

Furthermore, in the broader context of compensating Board members, Vinamilkdemonstrates a special commitment to designing a well-structured compensationplan This not only highlights the importance of time and responsibility but alsoensures a level of attractiveness that retains and attracts knowledgeable experts.Vinamilk has also taken specific measures, such as additional fees for committeeparticipation and motivating consensus among Board members All these effortsnot only ensure fairness and transparency in the compensation process but alsomake a significant contribution to Vinamilk's sustainable development andsuccess This clearly illustrates Vinamilk's continuous commitment to building astrong and comprehensive team management system.

2.4 Board of Directors: Structure and Consequences

2.4.1 Board Independence

2.4.1.1.Independence of the chairman

The Chairman of the Board plays a crucial role in shaping and maintainingcorporate governance at Vinamilk, under the leadership of Mr Nguyen HanhPhuc This position extends beyond merely presiding over meetings and dailyplanning, encompassing significant tasks such as long-term strategic planning, riskmanagement, evaluating management performance, determining salaries for

executives and directors, succession planning, recruiting board members, andoverseeing merger-related activities.

Electing an Independent Chairman brings about clear benefits This notonly establishes a clear divide between management and the board of directors butalso resolves conflicts arising in areas like CEO performance evaluation, executivecompensation determination, and long-term succession planning Moreover, anIndependent Chairman helps define the board's representative role incommunication with shareholders, management, and the public, enabling the CEOto focus entirely on the company's strategy, operations, and culture.

At Vinamilk, electing an Independent Chairman becomes particularlycrucial in special situations, such as when there is a new CEO, especially onepromoted internally without prior CEO experience Or when the company isfacing declining performance and requires significant changes, the IndependentChairman helps management focus on this without being distracted byuncertainties about leadership.

Supporters argue that having an Independent Chairman is also crucial whenthe company faces an unwanted acquisition proposal An Independent Chairmanensures that this decision is independently evaluated, avoiding the influence ofmanagement on personal job status and protecting the interests of shareholders andinvestors.

However, there are potential challenges when having an IndependentChairman The division between the Chairman and CEO, especially when thecompany already has an effective Chairman/CEO, could create challenges inmanagement Recruiting a new CEO could also become challenging when theindividual expects to hold both positions This could lead to confusion andinefficient costs as decisions become more complex, and in-depth information isnot easily transferable from CEO to Chairman (information gap) Additionally, thearrival of a new Chairman could enhance monitoring costs due to the possibility ofagent issues.

In conclusion, in emergency situations, an Independent Chairman mayweaken leadership However, at Vinamilk, the Independent Chairman of the Boardnot only assumes a crucial decision-making role but also ensures independence,transparency, and objectivity in business management, serving as a cornerstone forsustainable development and building trust among shareholders.

2.4.1.2.Lead independent director

The compromise between maintaining a dual Chairman/CEO position and theneed for distinct roles has given rise to a particularly crucial solution - theappointment of an independent lead director This is not just a routine balancingmeasure but also a key to establishing a robust and flexible management structure.Mr Nguyen Hanh Phuc, Mr Do Le Hung, and Ms Tieu Yen Trinh are three ofVinamilk's most important independent directors; they are vital in determining thecompany's strategy and guaranteeing efficient governance Since April 2022, Mr.Nguyen Hanh Phuc has served as Chairman, an independent member, and the headof the nomination committee for Vinamilk He brings a wealth of expertise ingovernment administration to his roles.

With an experience in financial monitoring, Mr Do Le Hung, an IndependentBoard Member and the Chair of the Audit Subcommittee since April 2017,actively contributes Mr Nguyen Ba Duong has been replaced as a board memberby Ms Tieu Yen Trinh, who increases transparency by bringing variety andcreativity to the board's decision-making.

In a context where the top executive of a business concurrently holds twosignificant positions, namely Chairman and CEO, having an independent leaddirector becomes a principle of independent control, helping to maintainequilibrium and create a more stringent decision-making structure.

With significant responsibilities, the independent lead director not only plays arole in evaluating business performance but also exerts profound influence in CEOsuccession planning, the recruitment of board members, and the assessment ofboth the board and its members Their tasks are not confined to chairing theboard's executive sessions but extend to ensuring effective communication andactive participation.

To become an effective independent lead director, they need to possess idealqualities such as strong communication skills, excellent listening skills, diplomatic