Governance

In 2013, IP Latin America continued with its determined efforts of previous years to update and disclose the policies and procedures aligned with International Paper Company's practices. It is through this set of policies and guidelines that the Company, in its role as a corporation linked to an American publicly-held company, aims to comply with the governance rules and controls established by the Sarbanes-Oxley Act and the Securities and Exchange Commission (SEC), as well as other pertinent national and international legislation. It also aims to ensure that all its activities and relationships with clients, suppliers, communities, governments and shareholders follow the sound ethical standards laid down in its Code of Conduct, in the belief that this approach is the foundation for sustaining good corporate governance.

Code of Conduct

The IP Code of Conduct presents our essential values and defines what we wish to be collectively as a company, and what we expect of ourselves as individuals.

[G4-56 / G4-57 / G4-58]

IP Latin America adopts the Code of Conduct prepared by International Paper Company, which is followed by all its units in all the countries where it operates. The Code is available on the Company’s website and intranet, being distributed and applicable to all employees, including executive offers and members of the Board of Directors. Board members, together with the CEO and all other leaders, are fully behind the Code and committed to putting it into practice on a daily basis.

In 2013, IP’s Board approved and adopted the new version of the Code of Conduct, which included changes that were discussed internally in 2012. The document aims to clarify and disseminate the Organization’s values, principles, opinions and culture, as well as determining policies for ensuring ethical conduct.

Organizational structure

[G4-34 / G4-38 / G4-45]

The Lead Team, which consists of the Board of Executive Officers (seven officers, one general manager and the CEO), convenes every month to address matters related to the Company’s various areas (Commercial, IT and Projects, Supply Chain, Sourcing & Forestry, Industrial, Legal & Sustainability, Financial, Human Resources, and Corporate Communications). Also on a monthly basis, the Team meets to discuss results in association with the figures presented by the United States.

IP’s governance is managed by a series of committees that convene periodically to address specific issues, namely the Ethics Committee (meets every two months), Government Relations Committee (meets every three months), Sustainability Committee (meets every month), Health, Safety and the Environment (HSE) Committee (meets every three months) and Tax Committee (meets every month). More information on the Company’s committees can be found in the following paragraphs.

IP Committees

Ethics Committee: comprises the Legal and Sustainability Officer (Committee Chairman), Human Resources Officer, Audit Manager, and the Ethics and Compliance Legal Manager (Committee Secretary). It is mainly responsible for receiving and investigating reported breaches of International Paper’s Code of Conduct, confirming and monitoring the execution of corrective measures, recommending preventive to prevent ethical violations to the Lead Team, deciding on the content and process of communications related to the occurrence of ethical violations, as well as recommending and supporting ethical education programs.

Sustainability Committee: comprises representatives of the Legal & Sustainability, Forestry, Human Resources, Commercial, Supply and Financial areas. Its overall goal is to present strategic sustainability management, while its specific goals include the creation of an IP corporate  governance unit dealing with sustainability issues, the establishment of a corporate positioning to oversee the Company’s strategic stakeholder initiatives, and the establishment of short, medium and long-term strategies and priorities to be considered in the Company’s decision making process.

Government Relations Committee: comprises representatives of the Fiscal, Legal, Forestry, Industrial, Commercial, Human Resources, Corporate Communications, Sustainability, Ipex and Strategic Planning areas. Its main goals are to present the Government Relations area in detail to the Committee members, promote discussions on matters that are relevant to the Company, act as an open channel, so that people can clarify their doubts and bring important suggestions, help people include the government relations issue in their decision-making processes, and support each department/location in regard to related issues.

HSE (Health, Safety and the Environment) Committee: comprises the Lead Team of the areas related to occupational health and safety, as well as the environment. Its main goals are to help the Company achieve international health, safety and environmental standards, to continuously improve health and safety indicators, and to expand the LIFE (Life-changing Injury and Fatality Elimination) program, which aims to eliminate fatal and life-changing accidents.

Tax Committee: comprises members of the Lead Team and invitees who are chosen in accordance with the subject to be addressed. Meeting every month, this Committee aims to share the main tax-related issues impacting the Organization, such as new projects, changes in laws related to IP’s business sector, etc.

International Paper also possesses certain Board of Directors advisory committees, with the following responsibilities:

Audit and Finance Committee: appointed by the Board of Directors, this Committee provides advice on five key oversight roles: monitoring the integrity of the Company’s financial statements and information concerning financial procedures; reviewing the qualifications and Independence of the auditors; supervising the performance of the company’s internal audit and independent auditors; and coordinating compliance with legal and regulatory requirements related to the use and development of the Company’s financial resources.

Corporate Governance Committee: appointed by the Board of Directors, this Committee has four main responsibilities; ensuring that the Company operates in accordance with the best principles of corporate governance; acting as the Board’s nomination committee, identifying and evaluating persons equipped to become Board members; ensuring that communications with shareholders are handled in an appropriate manner by the Board; and ensuring that the current processes for evaluating the Board, its committees and the Company’s management are adequate.

Public Policy and Environmental Committee: also appointed by the Board, its function is to help top management with overseeing the problems and risks related to public policies and potential environmental impacts. It also reviews and evaluates the risks and opportunities related to issues such as health, safety, the environment and sustainability that impact IP’s business.

Executive Committee: the Executive Committee is authorized to take certain decisions in the name of the Board of Directors. It presents the Board with any measure taken by it and every year analyzes its own performance and presents a report to the Board in order to ensure that decisions are aligned.

Administrative Development and Compensation Policy Committee: this Committee is responsible for overseeing the Company’s overall compensation programs and approving the compensation of the senior vice-presidents. It also recommends the compensation of the Chief Executive Officer (“CEO”) for approval by the independent Board members, prepares a written evaluation of the CEO’s performance and ensures that the Company maintains policies and programs for the local development of senior management and for a succession plan.