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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 has been listed on the Ho Chi Minh Stock Exchange.
Vinamilk is proud to be recognized as a National Brand, ranking among the "Top
10 Most Valuable Milk Brands in the World" Vinamilk has made important contributions to the expansion of the Vietnamese dairy sector and has effectively earned its global reputation during the last 45 years of sustainable development.
At present, Vinamilk functions in over 60 nations and territories, and it holds the 36th position in the "Top 50 World's Leading Dairy Manufacturers" list, representing Southeast Asia Vinamilk provides a wide selection of more than 250 items to satisfy customers' dietary requirements Vinamilk's customer-centric strategy prioritizes quality and innovation, with the goal of fulfilling all client demands The company's quality philosophy is to constantly adapt to and take responsibility for the demands of the customer by offering a wider range of goods and services, guaranteeing food safety and quality at reasonable costs, upholding the law, and following business ethics.
Vinamilk thinks that strong financial stability, investor trust, and operational efficiency are all based on competent management The organization always emphasizes effective management as the cornerstone of long-term growth This not only demonstrates a company's financial stability but also fosters shareholder confidence and guarantees the effectiveness of its operations
The organization is dedicated to matching corporate expansion with preservation of the environment, advancement of humankind, and advancement of society Vinamilk is 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 and overseas.
Vinamilk is more than simply a company; it is a symbol of achievement and creativity in the food and drink sector Vinamilk continues to contribute to the global community and inspire sustainable development with its remarkable accomplishments and steadfast commitments.
Corporate Governance Analysis
Board of Directors: Duties and Liabilities
As outlined in Article 2 of the Regulation on Operation of the Board of Directors of the Vietnam Dairy Products Joint Stock Company, the Board operates under the principle of collective responsibility Every member of the Board has personal accountability for the duties delegated to them and joint accountability to the General Meeting of Shareholders and legal duties for the decisions and resolutions adopted for the Company's advancement In addition, the General Director may be appointed by the Board of Directors, giving them charge of planning and supervising the execution of the decisions and resolutions that the Board has approved
Each member of the Board of Directors pledges to carry out their duties with the greatest honesty and diligence, striving for the best interests of the Company and its shareholders, in addition to the obligations outlined in the Company's Charter Ensuring the efficacy of board decisions requires both constructive feedback and active involvement at all meetings.
Specifically, the immediate and comprehensive notification of remunerations from subsidiary companies, associate companies, and other organizations of the Company is vital to maintaining transparency and integrity in governance Regular reporting at the nearest meeting regarding significant transactions, especially those involving Board members and/or their associates, as well as transactions with companies where a Board member has been a founder or manager within the preceding three years, establishes a high standard for transparency and accountability.
Furthermore, adhering to regulatory requirements of information disclosure while trading business shares is not only necessary to comply with the law but also a prerequisite for fostering transparency and confidence in the management environment As independent decision-makers, independent Board members are accountable for reporting on and assessing the Board's operations Collectively, these pledges and deeds create a professionally run atmosphere that guides the company's steady and long-term growth.
The committee system at Vinamilk plays a crucial role in optimizing management and supervision by dividing tasks and responsibilities to ensure transparency and comprehensive efficiency in the company's operations The Audit Committee, among other committees like the Strategy Committee, a Nomination Committee and a Compensation and Benefit Committee, is established to support the Board of Directors in its management and oversight activities Each committee, according to regulations, must have at least three members, including directors and external members, with a majority being independent/non-executive members, and one designated as the committee's Chair. The formation and operation of each committee are decided by the Board of Directors and subsequently approved at the Annual General Meeting, reflecting the will and guidance of the shareholders, who are the ultimate owners of the company Decisions made by each committee must be presented as resolutions and require majority approval from participating members, followed by confirmation from the Board of Directors for consistency and compliance.
The Audit Committee, in particular, assumes a vital role Apart from conducting requested audits within specified timelines without disrupting regular business activities, the committee reports findings on examined issues to the Board of Directors and shareholders or shareholder groups upon request Additionally,the committee establishes a mechanism for receiving feedback and complaints11 from company employees regarding irregularities in management, business operations, risk management, and internal control This mechanism prioritizes the security and protection of legitimate rights for those providing feedback, coupled with provisions for independent investigations and subsequent handling procedures The committee also undertakes responsibilities such as ensuring the reasonability, legality, truthfulness, and prudence in financial management, business operations, accounting, statistics, and financial reporting It reviews accounting records and other company documents as per decisions made by the Annual 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-party transactions subject to the approval authority of the Board of Directors or the Annual General Meeting, providing recommendations on transactions requiring such approvals It monitors compliance with legal regulations, regulatory requirements, and internal regulations of the company, contributing to the overall governance framework The Audit Committee is instrumental in building and presenting its operating regulations for approval by the Board of Directors These regulations outline the committee's specific rights and responsibilities and adhere to legal provisions.
Overall, the committee system, particularly the Audit Committee, at Vinamilk serves as a cornerstone for effective governance, financial management, and business oversight, ensuring alignment with legal requirements and the best interests of the company and its shareholders.
Board of Directors: Selection, Compensation, and Removal
In the business world, which is increasingly leaning towards diversity and professionalism in the Board of Directors, the race to find outstanding leaders is facing unique challenges Despite efforts to enhance diversity within the Board, only a few CEOs of Fortune 500 companies come from minority ethnic backgrounds, and the number of women in these positions is also limited. Ensuring diversity is not just about improving the quality of decisions but also reflects the company's commitment to education and equal opportunities. Furthermore, members of a professional Board bring deep expertise from various fields This diversity can provide a rich perspective and experience in managing diversity However, managing multiple Boards also comes with risks, such as the
12 busy schedule that can reduce the effectiveness of supervision and lack of independence if professional members are not carefully considered.
For Vinamilk, a leading conglomerate in Vietnam, the process of selecting directors is not only about expertise but also about diversity and innovation in the management environment The high criteria and thorough evaluation set by Vinamilk create a unique managerial landscape where excellence and strategic vision are highly valued.
Facing global challenges, Vinamilk understands that diversity in terms of ethnicity, gender, technological knowledge, and international experience is crucial for success in an increasingly diverse business environment The flexible supervisory model with advisory or observational directors is an intelligent solution, not only ensuring support but also avoiding unnecessary legal pressure.
In summary, the 'Market for Directors' is not just a place to find leadership talent but also reflects Vinamilk's commitment to strong management, ethical leadership, and innovation to create long-term value in an ever-diverse and challenging business world This journey is not only robust but also showcases creativity and innovation in today's business environment.
Compensating members of the Board of Directors is not only an important aspect but also a clear acknowledgment of the time, responsibility, and financial commitment associated with their crucial role The compensation amount should be designed to be attractive, compelling enough to retain and attract experts with sufficient knowledge to guide and supervise the company effectively A well- structured compensation plan is crucial not only to foster consensus among Board members but also to ensure the interests of both shareholders and stakeholders. Compensation involves not only the time spent directly on Board matters but also the costs to maintain flexibility for unexpected events While there is some variation in compensation structures across industries, it needs to align with the business's objectives and encourage consensus among Board members.
Many companies even implement additional fees for members participating in committees, including non-executive Chairs and independent directors Ownership guidelines require Board members to hold company shares, ensuring alignment between their interests and those of ordinary shareholders they represent, motivating careful oversight by the governing board However, this may not always be ideal, as a Board member may oppose a project or acquisition deal that could negatively impact the company's stock price in the short term, even if it creates long-term value.
At Vinamilk, where the strength of the dairy industry is prominent, the role of the Compensation Director faces not only numerous challenges but also promising opportunities With its unique position, Vinamilk demands a flexible and nuanced compensation strategy, particularly crucial to adapting to the specificities of each business unit
In his indispensable role at Vinamilk, Mr Nguyen Hanh Phuc not only holds responsibility for compensation but actively contributes to addressing issues related to fairness and transparency in the compensation structure He reviews Vinamilk's credential requirements, designs innovative compensation packages, and evaluates performance-related metrics His profound understanding of Vinamilk's corporate governance landscape not only aids in successfully navigating the complexity of his role but also emphasizes Vinamilk's steadfast commitment to fairly compensating executives based on performance This not only ensures fairness and transparency in the compensation process but also contributes positively to sustainable growth and long-term value creation for Vinamilk This combination truly reflects Vinamilk's unwavering commitment to maintaining a robust and sustainable management environment.
Furthermore, in the broader context of compensating Board members, Vinamilk demonstrates a special commitment to designing a well-structured compensation plan This not only highlights the importance of time and responsibility but also ensures a level of attractiveness that retains and attracts knowledgeable experts.Vinamilk has also taken specific measures, such as additional fees for committee participation and motivating consensus among Board members All these efforts not only ensure fairness and transparency in the compensation process but also make a significant contribution to Vinamilk's sustainable development and success This clearly illustrates Vinamilk's continuous commitment to building a strong and comprehensive team management system.
Board of Directors: Structure and Consequences
The Chairman of the Board plays a crucial role in shaping and maintaining corporate governance at Vinamilk, under the leadership of Mr Nguyen Hanh Phuc This position extends beyond merely presiding over meetings and daily planning, encompassing significant tasks such as long-term strategic planning, risk management, evaluating management performance, determining salaries for
14 executives and directors, succession planning, recruiting board members, and overseeing merger-related activities.
Electing an Independent Chairman brings about clear benefits This not only establishes a clear divide between management and the board of directors but also resolves conflicts arising in areas like CEO performance evaluation, executive compensation determination, and long-term succession planning Moreover, an Independent Chairman helps define the board's representative role in communication with shareholders, management, and the public, enabling the CEO to focus entirely on the company's strategy, operations, and culture.
At Vinamilk, electing an Independent Chairman becomes particularly crucial in special situations, such as when there is a new CEO, especially one promoted internally without prior CEO experience Or when the company is facing declining performance and requires significant changes, the Independent Chairman helps management focus on this without being distracted by uncertainties about leadership.
Supporters argue that having an Independent Chairman is also crucial when the company faces an unwanted acquisition proposal An Independent Chairman ensures that this decision is independently evaluated, avoiding the influence of management on personal job status and protecting the interests of shareholders and investors.
However, there are potential challenges when having an Independent Chairman The division between the Chairman and CEO, especially when the company already has an effective Chairman/CEO, could create challenges in management Recruiting a new CEO could also become challenging when the individual expects to hold both positions This could lead to confusion and inefficient costs as decisions become more complex, and in-depth information is not easily transferable from CEO to Chairman (information gap) Additionally, the arrival of a new Chairman could enhance monitoring costs due to the possibility of agent issues.
In conclusion, in emergency situations, an Independent Chairman may weaken leadership However, at Vinamilk, the Independent Chairman of the Board not only assumes a crucial decision-making role but also ensures independence, transparency, and objectivity in business management, serving as a cornerstone for sustainable development and building trust among shareholders.
The compromise between maintaining a dual Chairman/CEO position and the need for distinct roles has given rise to a particularly crucial solution - the appointment of an independent lead director This is not just a routine balancing measure 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 of Vinamilk's most important independent directors; they are vital in determining the company's strategy and guaranteeing efficient governance Since April 2022, Mr. Nguyen Hanh Phuc has served as Chairman, an independent member, and the head of the nomination committee for Vinamilk He brings a wealth of expertise in government administration to his roles.
With an experience in financial monitoring, Mr Do Le Hung, an Independent Board Member and the Chair of the Audit Subcommittee since April 2017, actively contributes Mr Nguyen Ba Duong has been replaced as a board member by Ms Tieu Yen Trinh, who increases transparency by bringing variety and creativity to the board's decision-making.
In a context where the top executive of a business concurrently holds two significant positions, namely Chairman and CEO, having an independent lead director becomes a principle of independent control, helping to maintain equilibrium and create a more stringent decision-making structure.
With significant responsibilities, the independent lead director not only plays a role in evaluating business performance but also exerts profound influence in CEO succession planning, the recruitment of board members, and the assessment of both the board and its members Their tasks are not confined to chairing the board's executive sessions but extend to ensuring effective communication and active participation.
To become an effective independent lead director, they need to possess ideal qualities such as strong communication skills, excellent listening skills, diplomatic16 abilities, and, most importantly, the ability to build trust They are not just robust control factors but also individuals willing to express dissenting views, promoting positive change within the organization.
The contributions of an independent lead director are not just to increase business performance but also to take responsibility for improving the board's performance, building relationships with the CEO, supporting communication with shareholders, and ensuring the board's active involvement in the business development strategy In this way, the appointment of an independent lead director is not just a crucial balancing solution but also a positive motivator for effective corporate management.
In the context of international business management, the role of an external board of directors plays a crucial role, defined by regulations and standards set to ensure independence and professionalism However, this journey is not without its challenges and risks.
One of the significant challenges faced by external boards is the "information gap." Despite their independence, these members may lack profound knowledge about the company compared to internal stakeholders, posing the risk of ineffective decision-making due to a lack of in-depth information This raises questions about the external board's ability to contribute effectively to the strategic decision-making process.
Executive compensation and Ownership structures
Executive Equity Ownership
Alongside conventional stakeholders, Vinamilk is also experiencing active involvement from professional investment funds like Vanguard International Value Fund, Federated Hermes Asia Ex-Japan Equity Fund, and esteemed insurance companies such as Prudential and Manulife This not only validates the appeal of major partners but also showcases faith in Vinamilk's potential for sustainable development within the international investment community.
In the ever-changing stock market milieu, the adaptability and steadiness in Vinamilk's ownership structure not only aid in retaining decision-making authority in strategic matters but also play a pivotal role in the company's comprehensive and enduring growth Specific details about shareholders and shares from preceding periods stand as proof of Vinamilk's adaptability and readiness to confront challenges on its developmental path.
Ownership Sturcture of Vinamilk Nguồn: Vietstock