Corporate governance

  • Overview
  • Board of Directors
  • Management
  • Committees
  • By-Laws and Policies
  • General Assembly

Overview

To guarantee to all our stakeholders the strength of our Corporate Governance, we adhered to the Code of Principles and Best Practices of Corporate Governance of the Business Coordinating Council (Consejo Coordinador Empresarial).

Likewise, since 2013, we have been listed on the Mexican Stock Exchange (BMV) and the New York Stock Exchange (NYSE) American Depositary Receipt Level III Program; therefore, we must also guide our structure and behavior to the provisions of these organizations and the applicable legislation.

Our corporate governance comprises the Shareholders’ Meeting, the Board of Directors, the Committees, and the Senior Management.

Volaris’ Board of Directors is comprised of 14 proprietary directors and 4 alternate directors, 64% of whom —9 proprietary and 2 alternate directors— are independent.

 

Note: Volaris has three non-regulated committees (Ethics Committee, IT and Transformation Working Group, and Sustainability Committee)

 

Diversity

14% of the members of our Board of Directors are women. Our Board of Directors is comprised of qualified members with multidisciplinary backgrounds.

Shareholders’ Meeting

It is the highest governance body, the Meetings will be chaired by the Chairman of the Board of Directors. In their absence, the Meetings will be chaired by the person designated by the shareholders in attendance by the majority of votes.

Meetings may be called at the request of the Board of Directors, the chairman or secretary of the Board of Directors; by the Audit and Corporate Governance Committee; by shareholders representing at least 10% of our outstanding capital stock, who may request any of the members of the Board of Directors or the Audit and Corporate Governance Committee to summon a Shareholders’ Meeting; by any shareholder, on the understanding that no Annual Shareholders’ Meeting has been held in two consecutive years or the matters about the annual Shareholders’ Meetings are not addressed, and by a competent Mexican judge, if the Board of Directors does not comply with a valid request of the shareholders by what is mentioned in the two previous points.

Generally, for an Ordinary General Meeting to be legally installed, at least 51% of our shares with voting rights must be represented, and its resolutions will be valid when taken by a majority of the votes in attendance. If such quorum is not met, a second call will be made for which it will be required in the same way that 51% of our shares are represented and the resolutions may be taken by the majority of the capital represented in the said meeting. Generally, for an Extraordinary General Meeting to be considered legally constituted, at least 75% of the shares must be represented. If a quorum is not present at the first call, a second call will be made and the Meeting will be considered legally constituted when at least 51% of the shares are represented. In any case, resolutions will be valid when adopted by the vote of shares representing at least 50% plus one of the shares of capital stock, except for resolutions referring to the cancellation of the registration of shares in the National Securities Registry, since these require the favorable vote of at least 95% of the outstanding capital stock with voting rights. The rights of minority shareholders, as well as information on notice of meetings, accreditation of ownership, minutes of meetings, Chairman and Secretary, types of meetings, and minority rights can be found in our By-Law.

Shareholders’ rights

Under Mexican law, all Volaris A and B shares are entitled to one vote per share(1).

Volaris is a Mexican Company and is subject to foreign investment control regulations.

The Company adopted a neutral investment structure, under the applicable law, which allows foreign investors interested in receiving economic rights, but never voting rights, to participate in securities with underlying shares of Volaris.

This structure allows majority Mexican investors to determine the voting direction of the shares underlying the neutral investment. This information has been made public and is available at all times to investors in the prospectuses and annual reports of the markets in which we are listed.

In addition, under the applicable Mexican law, Volaris is not required to adopt the Say on Pay Policy.

The Mexican Securities Market Law and our By-laws contain provisions that, among other things, require the approval of the Board of Directors before any person or group of persons directly or indirectly acquires: (i) 5% or more of our shares (directly or through the acquisition of ADSs or CPOs), or (ii) 20% or more of our shares (directly or through the acquisition of ADSs or CPOs) and in this case, if such approval is obtained, the acquirer must make an offer to purchase 100% of our
shares and CPOs (or securities representing them) at a substantial premium over the market price of our shares to be determined by the Board of Directors, based on the opinion from a financial advisor.

 

(1). Holders of ADSs and CPOs will not be entitled to vote the underlying A Shares at any time. Mexican holders of Series A shares will be entitled to vote their shares on all matters. Holders of Series B shares will be entitled to vote their shares on all matters and will have the specific voting rights described in “Shareholders’ Meetings”. The A shares underlying the CPOs and the CPOs underlying the ADSs will be voted by the trustee issuing the CPOs in the same manner as a majority of the votes of the A shares cast at the relevant Shareholders’ Meeting in all circumstances.

Board of Directors

Volaris’ Board of Directors comprises of 14 proprietary members; of these, 9 proprietary and 2 alternate directors are independent, 64.29%. In addition, 14.29% of the members are women. The average tenure of Board members is 9.78 years.

  • Brian H. Franke Chairman of the Board
  • William A. Franke Director
  • Harry F. Krensky Director
  • Marco Baldocchi Kriete Director
  • Enrique Javier Beltranena Mejicano Director
  • Alfonso González Migoya Independent Director
  • José Luis Fernández Fernández Independent Director
  • Ricardo Maldonado Yáñez Independent Director
  • Joaquín Alberto Palomo Déneke Independent Director
  • John A. Slowik Independent Director
  • Stanley L. Pace Independent Director
  • William Dean Donovan Independent Director
  • Guadalupe Phillips Margain Independent Director
  • Mónica Aspe Bernal Independent Director

Board of Directors’ duties

Our Company is managed by the Board of Directors and the Chief Executive Officer. The Board of Directors establishes the guidelines and general strategy for conducting our business and supervises compliance with these standards.

The members of the Board of Directors must carry out their duties to create value for the Company’s benefit, without favoring a particular shareholder or group of
shareholders. They must comply with various obligations, including:

  • The Company’s overall strategy
  • Overseeing our operations and those of our subsidiaries
  • Approve, with the prior opinion of the Audit and Corporate Governance Committee, each one individually: (i)Related party transactions, subject to certain limited exceptions, (ii) the appointment, election and, where appropriate, dismissal of our Chief Executive Officer and their comprehensive compensation and removal, as well as the policies for the appointment and comprehensive compensation of other Senior Management, (iii) our guidelines on internal control and internal audit, including those guidelines of our subsidiaries, (iv) our policies of accounting, (v) our financial statements and those of our subsidiaries, (vi) the operations considered as unusual or non-recurring as well as any operations that are executed, either simultaneously or successively, in the period of a fiscal year that involve: (a) The acquisition or disposal of goods with a value equal to or greater than 5% of our consolidated assets or (b) the granting of guarantees or the assumption of liabilities for a total amount equal to or greater than 5% of our consolidated assets, and (vii) the election of external auditors
  • Summon a Shareholders’ Meeting and execute its resolutions
  • Submit annually to the Shareholders’ Meeting (i) the report of the CEO and, (ii) the opinion of the Board of Directors about the report of the CEO
  • Approve the creation of special Committees and ensure or guarantee the authority of such Committees, provided that such Committees will not have those powers expressly vested to our shareholders or the Board of Directors in accordance with our By-laws
  • Determine the voting power of the shares we hold in our subsidiaries and our disclosure policies

The meetings of our Board of Directors, according to the By-laws, shall be validly convened and held if the majority of the members or their respective alternates are present. The agreements adopted in said meetings will be valid if they are approved by a majority of the members without any conflict of interest regarding the matters discussed. In the event of a tie, the Chairman of the Board of Directors will not have a tie-breaking vote.

Meetings of our Board of Directors may be summoned by (i) 25.0% of the members of our Board of Directors, (ii) the chairman of our Board of Directors, (iii) the chairman of the Audit and Corporate Governance Committee, and (iv) the Secretary of our Board of Directors.

Moreover, members may remain in office for one year and may be re-elected or removed at any time.

In 2021, the Board of Directors met 5 times in ordinary meetings with an attendance of 98.57%. On one occasion it adopted unanimous resolutions taken out of meetings.

Management

Our President and Chief Executive Officer, as well as other members of our senior management are required to direct their activities towards creating value for the Company, making decisions that significantly transcend the administrative, financial, operating and legal situation of Volaris.

  • Enrique Javier Beltranena Mejicano View Bio
    Enrique Javier Beltranena Mejicano President and Chief Executive Officer
  • Holger Blankenstein View Bio
    Holger Blankenstein Executive Vice-President Airline Commercial and Operations
  • Jaime Esteban Pous Fernández View Bio
    Jaime Esteban Pous Fernández Chief Financial Officer
  • José Luis Suárez Durán View Bio
    José Luis Suárez Durán Chief Operating Officer
  • José Alejandro de Iturbide Gutiérrez View Bio
    José Alejandro de Iturbide Gutiérrez Chief Legal Officer
  • Jimmy Zadigue View Bio
    Jimmy Zadigue Internal Audit Director

Management duties

The Senior Management are obliged, mainly, to: (i) Comply with the agreements of the shareholders meetings and of our Board of Directors; (ii) submit business strategies for approval by the Board of Directors; (iii) submit for approval of the Audit and Corporate Governance Committee the guidelines of the internal control system; (iv) disseminate relevant information to the public; (v) comply with applicable laws in connection with the repurchase and subsequent acquisitions of shares; (vi) take action with respect to liabilities caused by us; (vii) comply with the applicable legislation regarding the payment of dividends; (viii) adequately maintain the internal accounting and registration control systems and mechanisms, and (ix) establish internal mechanisms and controls that allow verifying that the acts and operations of the Company and legal entities that it controls have adhered to the applicable regulations, as well as follow-up on the results of these mechanisms and internal controls and take the necessary measures where appropriate.

The Senior Management will be responsible for the breach or lack of timely and diligent attention within the scope of their powers, in the terms established in the
applicable legislation and the Company’s By-laws.

Committees

Our Board of Directors is supported by regulated Committees, which analyze specific matters concerning the Company and issue recommendations to the Board.

Audit and Corporate Governance Committee

This Committee is comprised exclusively of independent directors, with a minimum of three members appointed or removed by the Board of Directors, at the proposal of the Chairman. In addition, the Chairman of this Committee may not preside over the Board of Directors and is selected based on his experience, ability and professional prestige. The chairman of our Audit and Corporate Governance Committee was ratified at the Annual Ordinary General Shareholders’
Meeting held on April 26, 2022.

Is responsible for, among other:

  • Supervising and evaluating our external auditors and analyzing their reports (including their audit opinion)
  • Analyzing and supervising the preparation of our financial statements and making a recommendation to the Board of Directors for their approval
  • Informing the Board of Directors of the status of our internal controls and internal audit and their adequacy
  • Supervising the execution of related party transactions and transactions representing 20% or more of consolidated assets being undertaken under applicable law
  • Requesting reports from our Executive Officers or independent experts whenever it deems appropriate
  • Investigating and informing the Board of Directors of any irregularities that it may encounter
  • Receiving and analyzing recommendations and observations made by the shareholders, members of the Board of Directors, Executive Officers or any third party and taking necessary action
  • Supervising compliance by our Chief Executive Officer with the instructions provided by our board or shareholders
  • Providing an annual report to the board in respect of our accounting policies, their sufficiency and adequacy, and consistency
  • Rendering opinions to the Board of Directors in connection with the designation, compensation, and removal of our Chief Executive Officer and policies for the description and comprehensive remuneration of other Executive Officers
  • Supervising and reporting on the performance of our key officers
  • Rendering its opinion to the Board of Directors in connection with a transaction with related parties
  • Requesting opinions from independent third-party experts
  • Calling Shareholders’ Meetings, and
  • Assisting the Board of Directors with the preparation of reports for the annual Shareholders’ Meeting
Audit and Corporate Governance Committee Members
José Luis Fernández Fernández
Chairman
Joaquín Alberto Palomo Déneke
Member
John A. Slowik
Member

Compensation and Nominations Committee

The members are appointed by the Board of Directors, and the General Shareholders’ Meeting may assume such authority. The members of this Committee shall serve for a term of one year unless relieved of their duties and may be re-elected. The current members of this Committee were appointed or ratified by the Annual Ordinary General Shareholders’ Meeting held on April 26, 2022.

The resolutions of this Committee regarding the compensation of the Chief Executive Officer and Senior Management are submitted to the Board of Directors for approval and reported to the Audit and Corporate Governance Committee.

Is responsible for, among other:

  • Submitting proposals to the Board of Directors relating to the appointment or removal of officers within the first two corporate levels
  • Proposing the creation, amendment, or termination of any incentive plan for officers
  • Consulting with third-party experts in connection with any issues related to compensation, organizational development, and other related matters
  • Proposing compensation packages for officers within the first four corporate levels
  • Proposing to our Board of Directors the entering into, amendment, or termination of any collective bargaining agreements
  • Informing our Board of Directors of any material contingencies, and
  • Submitting periodic reports to our Board of Directors
Compensation and Nominations Committee Members
Marco Baldocchi Kriete
Chairman
Brian Franke
Member
Harry F. Krensky
Member

 

Volaris has three non-regulated committees that report their recommendations to the Audit and Corporate Governance Committee, which in turn reports to the Board of Directors. Volaris’ non-regulated committees are as follows:

Ethics Committee

This committee meets monthly.

Is responsible for, among other:

  • Supervise compliance with the Volaris Code of Ethics, resolving any conflicts that may arise through effective and timely decision-making
  • Promote a culture of ethics within the organization, as well as periodically
    review and update the standards of good business practices and conduct
  • Ensure that all reports of deviations and non-compliance with regulations are received and addressed through the means indicated in the Ethics Line
  • Evaluate controversies, conflicts and breaches related to the Code of Ethics
  • Propose sanctions and action plans in cases related to breaches of the Code of Ethics
  • Review operating guidelines to ensure compliance and adherence to the Code of Ethics
  • Oversee the existence and execution of a training plan on the culture of ethics for all Ambassadors

The Ethics Committee comprises of the President, Chief Executive Officer and Director, the Chief Legal Officer, the Human Resources Director, the Internal Audit Director, the Corporate Controller and Compliance Director, and the Organizational Development Director.

IT and Transformation Working Group

This working group meets quarterly.

Is responsible for, among other:

  • Observe and discuss trends in cybersecurity and data protection issues worldwide
  • Analyze the different threats, both historical and current, and the measures that have been taken to address them
  • Observe and discuss the cybersecurity and data protection strategy that has been implemented, as well as the next evolutionary steps of the strategy
  • In coordination with the internal audit department, provide certainty to the Audit and Corporate Governance Committee regarding the measures that have been taken in terms of cybersecurity, data protection and the Company’s cyber incident recovery capabilities, as well as inform them of the evolutionary strategy of protection in this matter

The IT and Transformation Working Group is comprised by William Dean Donovan, Andrew Broderick, Joaquín Palomo Deneke, Jonathan Murray (external advisor), with support of the Chief Executive Officer, the Executive Vice-President Airline Commercial and Operations, the Chief Financial Officer, the Chief Legal Officer, the Chief Operating Officer, the Corporate Controller and Compliance
Director, the Technology and Corporate Transformation Senior Director, the Information Security and IT Internal Control Manager, and the IT Security Manager.

Sustainability Committee

This Committee meets every quarter.

Is responsible for, among other:

  • Ensure the implementation of the sustainable business strategy approved by the Board of Directors
  • Keep the Company’s management team informed in the recommendation of relevant decisions about ESG issues
  • Integrate sustainability into Volaris’ business strategy, seeking to make it transversal to all business and support areas
  • Recommend decision-making, with the information provided by the ESG Working Group, that favors the Company’s sustainability strategy and agrees on ESG goals for the future
  • Inform the Audit and Corporate Governance Committee of its recommendations on sustainability, which intern reports to the Board of Directors

The Sustainability Committee comprises of the President, Chief Executive Officer, and Director, the Executive Vice-President Airline Commercial and Operations, the Chief Financial Officer, the Chief Operating Officer, the Chief Legal Officer, and the Sustainability Director. The Sustainability Committee reports to the Audit and Corporate Governance Committee, which in turn reports to the Board of Directors on the most relevant aspects of the Company’s sustainability for its knowledge and approval.

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