Passion flower tree. Passion flower tree.

Nomination and selection of the Board of Directors

(102-24) (102-37) During the year 2016, the Appointment and Compensation Committee worked on the drafting of the Appointments, Succession and Compensation Policy of the Board of Directors, which establishes the basic principles, the overall and individual competencies, and limitations for the candidates of the Board of Directors. This policy will be submitted for approval by the Board of Directors in the first semester of 2017.

Currently, for the election of members of the Board of the General Shareholders’ Meeting must take into account, among others, the following aspects: Directors cannot be older than 72 years old and must have participated on boards of directors, demonstrate specific knowledge in corporate governance, environmental and social matters, as well as experience related to human management processes.
In addition, they must contribute some professional expertise which would be relevant for the activities conducted by Grupo Argos.

At the moment of integrating the Board of Directors, it is expected that there will be independent Directors with experience in corporate finance and internal control; those who can demonstrate this experience should be appointed to be part of the Audit Committee. All Directors will have basic skills that will enable them to properly perform their duties. Within these duties are: analytical and management skills, strategic business vision, objectivity and ability to express their opinion, and ability to evaluate senior managers. In addition, they must have the ability to understand and question financial information and business proposals, as well as work in an international environment.

In addition to the core competencies, each Director will have other specific competencies that will allow him/her to contribute to one or more dimensions due to his/her special knowledge of the industry, financial aspects and risks, legal issues, business issues and crisis management. At a minimum, 50% of the Directors elected to a certain time period must meet the requirements to be considered as independent members, and so must state it the moment they accept their inclusion in the list of potential candidates. The independent members shall lose their status as such when they have been board members for three consecutive periods of three years each.

Additionally, during 2016 one of the world’s leading consultants was hired for the executive search, in order to define the profiles and skills required for the selection of the Directors, based on which a series of technical and behavioral competencies have been preliminarily determined (e.g.: leadership, strategic vision, global perspective, etc.), all of which will be submitted for discussion to the Appointments and Compensation Committee in order to establish the profiles of the members of the Board of Directors that will be elected in 2018

Assessment and Compensation
Board of Directors Assessment

(103-3) (102-27) (102-28) The Board of Directors is assessed yearly, alternating external evaluations with self-assessments.
The external assessment is performed by an independent firm selected by the Board according to management recommendation.
These assessments cover both quantitative and qualitative aspects. During 2016, the independent firm AT Kearney conducted the Board of Directors evaluation.

Compensation of the Board of Directors

(102-35) (102-36) Board of Directors’ compensation is set by the Shareholders Meeting in accordance with the responsibilities and time spent by its members. These members are paid on a monthly basis, regardless of whether or not they attend Board meetings, as the company considers that their functions are not solely based on attendance, since their performance and functions outside the meetings are of equal importance.
Notwithstanding the foregoing, the Directors shall annually attend at a minimum of 80% of the meetings of the Board of Directors to which they are convened. Members who participate in any of the support committees of the Board receive additional compensation for their participation in the respective meetings.
The Good Governance Code allows for members of the Board of Directors to be paid in shares of the company, but this option has not been implemented yet.

Within the next year special importance and priority will be given to develop the Policy for the Management of Operations with Related Parties that shall provide the guidelines to regulate business relationships between Grupo Argos and its affiliates. After the Relationship between Linked Companies Policy is approved, Grupo Argos will move forward to clearly define the guidelines and policies that will determine the framework for corporate performance for transactions between related parties, always keeping the principle of providing
value to all shareholders and not to make transfers between linked companies. The transactions are carried out according to market values.

In the short term, Grupo Argos shall continue the implementation of the different policies and practices included in the new Country Code which are still in the approval process; likewise, it shall continue with the consolidation of updates already implemented, which are being disseminated within the organization.

Among the policies that will be submitted for approval of the Board of Directors during 2017 are the following:

  1. Appointment, Succession and Compensation Policy of the Board of Directors.
  2. Information Management and Disclosure Policy.
  3. Administration and Resolution of Conflicts of Interest Policy.

In the medium and long term it shall continue reviewing the various international benchmarks that allow it to be at the forefront of best corporate governance practices, such as the Organization for Economic Cooperation and Development (OECD) and the World Bank, among others.
In addition, it shall maintain its active local and regional participation in different forums such as the Circle of Companies of the Latin American Roundtable of Corporate Governance and the Colombian Stock Exchange Issuers Committee, where various topics of corporate governance for issuers of securities are addressed