Corporate Governance Report

The Board has drawn up the following report corresponding to the degree of application of the principles set out in the Code of Corporate Governance for the fiscal year ended December 31, 2019 pursuant to the CNV Rules (Sect. 1, Title I, Chapter I of Part IV), in accordance with the text restated in 2013, as amended by CNV General Res. No. 797/19.


A. The Board of Directors’ Functions: Principles i through v – Practices 1 through 5

i. The Company must be led by a professional and qualified Board of Directors, which will be in charge of laying the necessary foundations to guarantee the Company’s sustainable success. The Board is the guardian of the Company and the interests of all its shareholders.

ii. The Board will be responsible for establishing and promoting the corporate culture and values. In its actions, the Board should ensure compliance with the highest standards of ethics and integrity based on the Company’s best interests.

iii. The Board will be responsible for pursuing a strategy inspired in the Company’s vision and mission and aligned with its values and culture. The Board will constructively engage with the management to ensure the proper development, execution, monitoring and modification of the Company’s strategy.

iv. The Board will exercise a permanent control and supervision over the Company’s management, ensuring that it takes measures towards the implementation of the strategy and the business plan approved by the Board.

v. The Board will have the necessary mechanisms and policies in place to exercise its and each of its members’ duties in an efficient and effective way.

1. The Board of Directors generates an ethical working culture and sets out the Company’s vision, mission and values.
In 2017, the Company’s Board approved its Code of Business Conduct, which sets out Pampa’s vision, mission and values(1) and expresses the conduct expected of the Company members, both in their daily activities and in decisions having long-term effects. The Company permanently monitors all its policies and procedures, including the Code of Business Conduct, to keep them updated in accordance with the development of the Company and its businesses, always in observance of the highest standards of corporate governance. Based on what has been described above, the Company applies the recommended practice.
2. The Board of Directors sets the Company’s general strategy and approves the strategic plan, which is developed by the management. In doing so, the Board takes into consideration environmental, social and corporate governance factors. The Board of Directors oversees its implementation using key performance indicators and taking into consideration the best interests of the Company and all its shareholders.
As regards the Board of Directors, the Company applies the practice taking into consideration several indexes, factors, risks and projections analyzed by the management, as well as the different environmental, social, health and safety factors disclosed in the Company’s Annual Sustainability Report, and in line with Pampa’s strategy, approves an annual budget which will guide each sector’s actions in the following fiscal year. To such effect, the Planning and Strategy Department oversees devising and enforcing the strategy and its budget.
3. The Board oversees the management and ensures that it develops, implements and maintains a proper internal control system with clear reporting lines.
The Company applies the recommended practice given that, at least on a quarterly basis, a management report is submitted to the Board detailing relevant events for Pampa’s performance.

Moreover, the Board is on daily contact with the Company’s management and during the Board’s meetings with members of the different departments, who are invited so that they may raise queries regarding the specific topics to be addressed, aiming to guarantee the Board’s monitoring and follow-up of the goals set for the fiscal year.

Pampa understands that the interaction between the Board of Directors and the management (including the Board’s members exercising executive functions) enriches control over the Company’s administration and the level of understanding on its performance. The preparation and professional credentials of all Board of Directors’ members allow for an open and sincere discussion on the Company’s management(2).

Moreover, one of the duties of the Audit Committee (consisting exclusively of independent directors) is supervising the proper functioning of internal control systems.

Finally, the Board of Directors approved the Company’s organizational chart, setting out the different reporting levels to the Chief Executive Officer (CEO), establishing clearer reporting lines.

4. The Board of Directors designs the corporate governance structure and practices, appoints the responsible person for their implementation, monitors their efficiency, and suggests changes if necessary.
In line with the best practices, the Board not only approves the different corporate governance policies applicable throughout the Company, but also monitors them to adjust them to the Company’s reality, as described in Practice 1 in this Corporate Governance Report. In this sense, the Board has approved the following policies: Best Security Trading Practices, Related-Party Transactions, Material Information Disclosure, Compensation, Nomination, Dividend Distribution and Prevention Regarding QSELH. On the other hand, it periodically monitors the Company’s Integrity Program.

Moreover, the Board analyzes in each case whether specific committees are needed for the application of different policies. If it considers that a specific committee is not necessary, the Board delegates its application, monitoring and review to the area it considers competent to such effect. In the way described, the Company applies the recommended practice.

5. The Board of Directors’ members have enough time to exercise their duties in a professional and efficient manner. The Board and its Committees have clear and formalized rules for their operation and organization, which are disclosed in the Company’s website.
The Board’s members devote the time and efforts necessary to monitor issues submitted for their approval, tracking and monitoring. The Board and its Committees receive prior information on the topics submitted for their consideration to allow for an efficient decision-making process. Moreover, certain Directors serve executive functions in the Company, which allows them to have daily contact in their administration. As regards the professionalism of the Board’s members, as established in our Nomination Policy, the Company evaluates the nominees to be proposed before the Shareholders’ Meeting taking into consideration, among other aspects, their independence, diversity, age, skills, experience, knowledge of the Company’s business and industry and possible incompatibilities, to guarantee the Board of Directors’ diversity.

Moreover, the Board of Directors and its Committees (the Audit, Compensation and Nomination Committees) have their respective internal rules governing their functioning, which are available on our website. These rules primarily regulate matters concerning the directors’ powers and responsibilities and the holding of meetings. In the way described, the Company applies the recommended practice.

B. Board of Directors’ Chair and Corporate Secretary’s Office: Principles vi through viii – Practices 6 through 10

vi. The Board’s Chair oversees ensuring actual compliance with the Board’s duties and leading its members. It should generate positive working dynamic and promote constructive engagement by its members, as well as ensure that the members have the elements and information necessary for decision-making. This also applies to the Chairs of each of the Committees regarding their functions.

vii. The Board’s Chair will lead processes and establish structures seeking the Board’s members commitment, objectivity and competence, as well as the best possible performance of the body as a whole and its evolution according to the Company’s needs.

viii. The Board’s Chair will ensure that the entire Board of Directors is engaged and responsible for the General Manager’s succession.

6. The Board of Directors’ Chair is responsible for the proper organization of Board meetings, prepares the agenda ensuring collaboration by the other members, and guarantees that they receive the necessary materials with enough time to participate in meetings in an efficient and well-informed manner. Each Committee’s Chair has the same responsibilities for their meetings.
The Company applies the recommended practice as it has a Board of Directors’ corporate secretary which, pursuant the Board of Directors’ Rules and Regulations published in our website, schedules and coordinates meetings of the Board and of its different Committees within its scope. These meetings are convened pursuant to the provisions of each of the applicable regulations, attaching the necessary documentation so that directors may analyze in advance the topics to be addressed, and always under the applicable supervision of the Board’s Chair and the respective Committees(3).
7. The Board of Directors’ Chair ensures the proper internal functioning of the Board through the implementation of formal annual assessment processes.
As from 2008, Pampa’s Board of Directors has implemented a self-assessment questionnaire to annually examine and assess its own performance and management. As from that date, every director completes this self-assessment on an annual basis which is submitted to the Legal Affairs Executive Department, responsible for analyzing results and, if necessary, suggesting actions aiming to improve the functioning of this body. This allows for the evaluation of the Board proper internal functioning, thus applying the recommended practice.
8. The Chair generates a positive and constructive work environment for all the Board of Directors’ members and ensures they receive ongoing training to stay permanently updated and enabled to properly exercise their duties.
The Company applies this practice as described. The Chair leads the Board of Directors’ meetings, ensuring its orderly progress and facilitating its proper development, and coordinates the correct functioning of the body through the Board’s corporate secretary. In the Chair’s absence, meetings are presided by the vice-chair, or by any other Board of Directors’ member in case both are absent. To guarantee that the Board’s members have access to the information as well as enough time to analyze it, meetings are convened within the terms established in the regulations of such body.

Moreover, directors serving executive functions in the Company are in permanent contact with its different areas and their daily management, which allows them to get a comprehensive vision of the business and stay updated on issues affecting it. As regards independent directors who are members of the Audit Committee, this update is received within the scope of this body.

9. The Corporate Secretary’s Office supports the Board’s Chair in its administration and assists in communications among shareholders, the Board and the management.
Pampa applies the recommended practice as it has a Board of Directors’ corporate secretary within the scope of the Legal Affairs Executive Department, which main duties are as follows: (i) coordinating the preparation of the schedules for the Board’s meetings jointly with the Board’s Chair and other members, as well as with the management, so the latter may address the necessary issues for proper corporate development; (ii) coordinating the advance preparation and submittal of the necessary information for the Board’s meetings; (iii) coordinating the drawing up, circulation and approval of the minutes of meetings; (iv) ensuring communication among the Board’s members, the management and their counselors; (v) filing the documentation of the Board’s meetings; (vi) conducting the above-mentioned functions for the rest of the Company Committees created within the scope of the Board; (vii) coordinating Shareholders’ Meetings, the shareholders’ registry and the participation of directors in the meeting; and (viii) performing all administrative procedures associated with the Board of Directors, the Committees and the Shareholders’ Meeting. Thus, the Board’s Chair may supervise these functions without losing focus on its primary role.
10. The Board’s Chair ensures participation by all its members in the development and approval of a succession plan for the Company’s General Manager.
Even though there is no specific plan regulating its succession line, the Company applies this practice and the corresponding principles since the Board of Directors has considered the Company’s organizational structure and appointed both its Chief Executive Officer (CEO) and Chief Financial Officer (CFO). To such effect, it takes into consideration the candidates’ personal and professional qualifications. Moreover, the role of the Board’s Chair is different from that of the Chief Executive Officer (CEO). In this sense, the Board’s Chair, jointly with the Human Resources Department, defines, based on the Company’s mission, vision and values, the characteristics required by the successor to the Chief Executive Officer (CEO), without currently considering it necessary to establish a succession plan.
C. Composition, Nomination and Succession of the Board of Directors: Principles ix through x – Practices 11 through 14

ix. The Board of Directors should have adequate independence and diversity levels allowing it to make decisions in the Company’s best interests, avoiding group thinking and the decision-making by dominant individuals or groups within the Board.

x. The Board of Directors should guarantee that the Company has formal procedures in place for the proposal and nomination of candidates to hold positions within the Board under a succession plan.

11. The Board of Directors has at least two members with an independent status according to the current criteria established by the CNV.
The Company applies the recommended practice since, as of the issuance hereof, the Board of Directors has 4 independent directors and 1 independent alternate director. Moreover, and as mentioned in Practice 3 in this Corporate Governance Report, the Audit Committee consists exclusively of independent members, exceeding the local regulations’ requirements, which only provide for a majority of members.
12. The Company has a Nomination Committee consisting of at least three members and presided over by an independent director. If chairing the Nomination Committee, the Board’s Chair will refrain from participating in the discussions for the appointment of his or her own successor.
In 2018, Pampa’s Board of Directors approved its Nomination Policy, under which a Nomination Committee was created to assist Pampa’s Board and Shareholders’ Meeting in nomination and appointment process of the Board of Directors’ members.

The Nomination Committee reports to Pampa’s Board and is made up of three regular members and an equal or smaller number of alternate members. The Chair is independent pursuant to the independence criteria stipulated by the CNV rules. Therefore, the Company applies the recommended practice.

13. The Board of Directors, through the Nomination Committee, develops a succession plan for its members guiding the candidates pre-screening process for the filling of vacancies, and takes into consideration the non-binding recommendations made by its members, the General Manager and shareholders.
The Board approved the Nomination Policy mentioned in the previous practice, which sets the general guidelines regarding independence, incompatibilities and diversity within the Board’s members. Under this policy a Committee was created, which is responsible for describing the process for the identification and evaluation of nominees, as well as assisting the Board and shareholders so that the latter may have all the necessary elements to select nominees in the Shareholders’ Meeting, all of this in compliance with the applicable legal provisions and, especially, Section 12 of Pampa’s Bylaws, which sets out the method for the selection of directors, who are elected upon candidate lists, thus guaranteeing enhanced transparency in the selection process.

As of this date, the Company’s Board is composed of members having quite diverse professions: major in economics and business administrators, financial advisors, engineers, lawyers, among others. Moreover, there are 4 female directors in the Board. Finally, all directors receive the same compensation for the duties they perform in the Board. In this sense, diversity and a culture of inclusion are guaranteed, which strengthen analysis, discussion and decision-making processes, as well as pay equality for its members. In the way described, the Company applies the recommended practice.

14. The Board of Directors implements an onboarding program for its newly elected members.
The Company applies the recommended practice since the Board of Directors, through its corporate secretary office, provides the Board’s new members with the Code of Business Conduct, the main policies they should know, as well as the documentation and information necessary to perform their duties. Moreover, they are included in the Board’s distribution list together with the other members of the Board so that they have access to the necessary documentation before their first participation in a Board meeting. Finally, upon the members’ request, meetings are coordinated with the leaders of the different departments so that they may dispel all their doubts and get acquainted with the Company’s business. On the other hand, Pampa’s managers are available to provide answers on and supplement all the information the directors may require, all of this within the framework of permanent interaction set out in Practice 8 in this Corporate Governance Report.
D. Compensation: Principle xi – Practices 15 through 16

xi. The Board should generate incentives through compensation schemes to align the management —led by the General Manager— and the Board itself with the Company’s long-term interests so that all directors may comply with their obligations towards shareholders on an equitable basis.

15. The Company has a Compensation Committee consisting of at least three members, all of whom are independent or non-executive.
Within the framework of its Compensation Policy, in 2018 the Company’s Board of Directors created a Compensation Committee assisting it and/or the Shareholders’ Meeting regarding remunerations of the Board of Directors and the preparation and monitoring of policies and/or compensation plans and/or benefits for the Board of Directors’ members. Moreover, this policy establishes that the remuneration of the Board’s members will be in line with those received by directors of domestic peers.

The Compensation Committee reports to Pampa’s Board of Directors, and is made up of three regular members and an equal or smaller number of alternate members, who may not serve executive functions at Pampa. Currently, all its members are independent. In the way described, the Company applies the recommended practice.

16. The Board of Directors, through the Compensation Committee, establishes a compensation policy for the General Manager and the Board of Directors’ members.
Pampa applies the practice since it has a Compensation Policy in place, approved in 2018, whereby the Compensation Committee renders its prior opinion so that directors’ compensation is in line with those received by directors of domestic peers and pursuant to the limitations set forth by the applicable laws and the CNV rules. Within the framework of the approved policy, both the Board of Directors and the Shareholders’ Meeting should be informed on the opinion rendered by such committee.

Pampa’s policy on compensation and benefits seeks to ensure external competitiveness and maintain in-house equality. In this line, different surveys are used to adjust our benefit packages and wage structure to those offered in the market.

In this sense, as regards the Company’s main officers —including the Chief Executive Officer (CEO) and the Company’s key staff—, seeking that their performance should align with the Company’s strategic plans and that a clear and direct link should be established between the creation of value for shareholders and the covered employees’ compensation, in 2017 the Board of Directors approved the corresponding variable compensation plans.

E. Control Environment: Principles xii through xvi – Practices 17 through 21

xii. The Board of Directors should ensure the existence of a control environment consisting of internal controls developed by the management, the internal audit, risk management, regulatory compliance areas and external audit establishing the necessary defense lines to guarantee integrity in the Company’s operations and financial reports.

xiii. The Board should ensure the existence of a comprehensive risk management system allowing the management and the Board to efficiently direct the Company towards its strategic goals.

xiv. The Board should ensure the existence of a person or department (according to the size and complexity of the business, the nature of its operations and the risks it faces) responsible for the Company’s internal audit. This audit, conducted for the evaluation and auditing of the Company’s internal controls, corporate governance processes and risk management, should be independent and objective, and have clearly defined reporting lines.

xv. The Board’s Audit Committee will be made up by qualified and highly-experienced members and should exercise its functions in a transparent and independent manner.

xvi. The Board should establish appropriate procedures to ensure the external auditors’ independent and effective performance.


17. The Board of Directors determines the Company’s appetite for risk and supervises and guarantees the existence of a comprehensive risk management system identifying, assessing and making decisions on the course of action, and monitoring the risks faced by the Company, including, but not limited to, environmental and social risks, as well as those inherent in the business in the short and long term.
Regarding risk management, Pampa implemented a risk management methodology as a useful working tool for the identification of the main risks affecting Pampa. To such effects, Pampa’s Board of Directors approved the ‘Risk Management Handbook’, which was later updated and restated as the ‘Business Risk Management Policy’.

The most relevant aspect of this policy is the establishment of responsibilities, functions and methodologies for the detection and assessment of risks arising from activities conducted by the Company which may affect its business or operations.

Based on these policies’ guidelines, the internal control management updates Pampa’s risk map in accordance with the administered businesses.

This policy sets out responsibilities and methodologies for the determination of business risks, with the assistance of the Audit Committee, which is responsible for supervising its application. The key business risk factors taken into consideration by Pampa include, among others:

  • Strategic economic and political risks;
  • Risks associated with competitors and joint ventures;
  • Risks associated with natural disasters;
  • Risks related to social issues;
  • Corporate governance risks;
  • Compliance risks;
  • Process risks, including, but not limited to, those associated with human resources, fraud, IT and operations; and
  • Financial and reporting risks.

The Policy also provides for the role of a ‘Risk Manager’, who is responsible for: (i) including in its annual programs all the necessary tests for detecting business risk indicators and signals; (ii) monitoring the effectiveness of the process as a whole, and safeguarding compliance with and oversight of this policy; (iii) informing the General Management and the Audit Committee of the risk management process; and (iv) following up on the implementation of action plans to ensure that corrective measures are taken once a risk is detected. Moreover, the management in charge of internal control helps the Board to keep the risk matrix updated, identifying and assessing risks, as well as following up with the derived action plan, if required, and keeping the General Management and Audit Committee informed of this process.

The Company discloses its financial risk management in its Financial Statements, making a distinction by type of risks and describing, for each of them, the plans or actions implemented to mitigate them. Moreover, in preparation of the 20-F Form to be submitted before the SEC, a description is made of the risk factors the Company is exposed to. In the way described, Pampa applies the practice.

18. The Board monitors and reviews the effectiveness of the independent internal audit and guarantees the resources for the implementation of an annual risk-based audit plan and a direct reporting line to the Audit Committee.
Pampa applies the recommended practice since the Internal Audit Department reports functionally to the Audit Committee and administratively to the CEO.

At the beginning of each fiscal year, the Internal Audit area submits its proposed annual audit plan to the Audit Committee for its evaluation and approval, having the resources for its implementation. On a quarterly basis and to monitor its advancement, the Internal Audit Department submits a progress report to the Committee, which contains a summary of the completed tasks and main findings.

On an annual basis, the Audit Committee evaluates the independence level and performance of the Internal Audit in issues within its authority, and discloses its assessment in its annual report.

As a member of the Institute of Internal Auditors, the Company uses the standards it considers reasonable and/or applicable without expressly adhering to them.

19. The internal auditor or the members of the Internal Audit department are independent and highly-qualified.
The Company applies the recommended practice since, as mentioned in Practice 18 in this Corporate Governance Report, the Internal Audit Department reports directly to the Audit Committee, which evaluates its independence on an annual basis.

The Internal Audit Department is made up of highly-skilled staff in this subject-matter, not only for their education and training, but also for their experience in the area.

Pampa’s Internal Audit Department has rules, approved by the Audit Committee, regulating its activities and aligned with the most relevant standards issued by The Institute of Internal Auditors.

20. The Board of Directors has an Audit Committee in place which acts based on its rules. The Committee is mostly composed of and is chaired by independent directors and does not include the General Manager. Most of its members have professional experience in financial and accounting areas.
Pampa applies the recommended practice since it has an Audit Committee in place that acts based on its regulations, which establishes its functions and main operating rules. As mentioned in Practice 3 in this Corporate Governance Report, the Audit Committee consists exclusively of independent members, thus exceeding the local regulations’ requirements, providing that only most members should have such status. Its duties include, among others: (i) expressing its opinion on any proposal by the Board to designate external auditors and ensuring their independence, reviewing the plans submitted by external and internal auditors, assessing their performance, and issuing an opinion on the presentation and disclosure of the annual FS; (ii) supervising the operation of the internal control and risk management system; (iii) rendering its opinion on related-party transactions for a relevant amount pursuant to the legal regulations in force, disclosing such opinion to the market; (iv) expressing its opinion on the compensation proposals submitted by the Board; (v) rendering its opinion on the conditions for the issuance of shares or convertible securities in the case of a capital increase; and (vi) checking compliance with the applicable standards of conduct.

The Board of Directors seeks to ensure that most members of the Audit Committee have professional expertise in financial and/or accounting areas. This is one of the issues to assess when nominating new members to the Board of Directors and which should be taken into consideration by the Nomination Committee on issuing its prior opinion. Moreover, the Audit Committee should appoint one of its members as financial expert as required by Title 407 of the Sarbanes-Oxley Law.

21. The Board of Directors, with the Audit Committee’s opinion, approves a policy for the selection and monitoring of external auditors establishing the indicators to consider when submitting to the Shareholders’ Meeting a recommendation on the re-election or substitution of the external auditor.
Upon the presentation and publication of Pampa’s annual FS, the Audit Committee conducts an annual assessment of the external auditors’ independency, planning and performance taking into consideration different objective indicators, and issues an informed opinion pursuant to Sect. 18, Title V, Chapter III of CNV Rules (restated in 2013) and the Audit Committee’s rules. Besides, throughout the fiscal year, it holds meetings with the external auditors, at least quarterly, for the review of the Company’s interim FS and when deemed necessary.

Moreover, Pampa has an external auditor services’ pre-approval policy, which standardizes an internal process allowing the Audit Committee to fulfill its obligation of granting its prior approval for the hiring of an external auditor to render any kind of authorized service to the Company or any of its subsidiaries.

In the way described, the Company applies this practice.

F. Ethics, Integrity and Compliance: Principles xvii through xviii – Practices 22 through 24

xvii. The Board should design and establish appropriate structures and practices to promote a culture of ethics, integrity and regulation compliance which prevents, spots and address serious personal or corporate misconduct.

xviii. The Board will ensure the establishment of formal mechanisms to prevent or, failing that, deal with conflicts of interest which may arise in the Company’s administration and management. It should have formal procedures in place seeking to ensure that related-party transactions are conducted in pursuance of the best interests of the Company, as well as fair treatment to all its shareholders.

22. The Board of Directors approves a Code of Ethics and Conduct reflecting ethical and integrity values and principles, as well as the Company’s culture. The Code of Ethics and Conduct is informed to and binding on all the Company’s directors, managers and employees.
Pampa has a Code of Business Conduct in place, which lays down the ethical principles that constitute the foundation of the relationships between Pampa, its employees, and other stakeholders (customers, suppliers, government, shareholders, community, etc.) by providing guidelines and supplying instruments guaranteeing the transparency of affairs and proper Company management.

The Code of Business Conduct is publicly available at the Company’s website and should be expressly accepted by all the Company employees, as well as by the members of the Board and Supervisory Committee.

Therefore, the Company applies this recommended practice.

23. The Board establishes and periodically reviews an Ethics and Integrity Program based on the risks, dimension and financial capacity. The plan is visibly and unequivocally supported by the management with the appointment of an in-house officer responsible for the development, coordination, supervision and periodical assessment of the program’s effectiveness. The program provides for: (i) periodic training for directors, managers and employees on ethics, integrity and compliance issues; (ii) internal channels for reporting anomalies, which are open to third parties and properly communicated; (iii) a policy against retaliation protecting individuals who report a complaint; and an internal investigation system which respects the rights of the individuals under investigation and imposes effective sanctions for violations to the Code of Ethics and Conduct; (iv) policies on integrity in bidding processes; (v) mechanisms for the Program’s periodic risk analysis, monitoring and assessment; and (vi) procedures ensuring the integrity and background of third parties and business associates (including the due diligence for the verification of anomalies, illegal acts or the existence of vulnerabilities in corporate transformation and acquisition processes), including suppliers, distributors, service providers, agents and brokers.
Pampa applies the practice as it has an Integrity Program bringing together and unifying a set of internal proceedings, mechanisms and actions for integrity, supervision and control aimed at preventing, detecting and correcting anomalies and illegal acts. The Program’s design comprises both the mandatory and optional requirements set out in sections 22 and 23 of Law No. 27,401 and other applicable regulations. As regards the mandatory requirements, it is worth highlighting that they had already been implemented at Pampa before the law’s effective date. The Board has defined that Pampa’s Internal Audit Department will be the body internally responsible for the program, including its development, coordination and supervision. Pampa also offers the Ethics Hotline, an exclusive channel to report, on a strictly confidential basis, any suspected misconduct or breach to the Code of Business Conduct. This tool is available through different channels (toll-free telephone number, e-mail or website) and is managed by a third-party provider to ensure higher transparency and information integrity. Additionally, the Company has policies and procedures in place prescribing the way in which received complaints should be analyzed and dealt with. The responsibility over this channel rests with the Audit Committee, which delegates its administration to the Internal Audit Department. At least quarterly, the Internal Audit Department reports the received cases and the adopted decisions to the Audit Committee. The Committee supervises the channel’s operations and the resolution of complaints in issues within its authority.
24. The Board ensures the existence of formal mechanisms to prevent and address conflict of interest. In related-party transactions, the Board approves a policy that establishes the role of each corporate body and defines how to identify, manage and disclose transactions which are detrimental to the company or only to certain investors.
The Code of Business Conduct’s guidelines provide that individuals within the scope of this one should avoid any situation resulting in a conflict between their own personal interests and the Company’s, thus preventing their personal or family interests from exerting any influence on their decisions and/or professional performance.

Pampa has a policy on Related-Party Transactions Approval in place whereby all transactions (i) deemed high-value transactions, that is, with a value equal to or higher than 1% of Pampa’s Shareholders Equity; (ii) made with individuals and/or legal entities which, pursuant to Sect. 72 of the CMA, are considered related parties, should be subject to a specific prior authorization and control procedure carried out under the coordination of Pampa’s Legal Affairs Executive Department, with the participation of both the Board and its Audit Committee (as applicable). This Policy strictly follows the guidelines set out in the laws and regulations in force in this matter (Sect. 72 of the CMA).

Additionally, Pampa presents itemized information on any contract entered into with related parties in its annual and interim FS; moreover, in compliance with the regulations in force, all high-value transactions executed by Pampa with related parties are submitted to the consideration of the Audit Committee and promptly reported under the caption ‘relevant event’ to both the CNV and the markets where the Company quotes its shares.

Finally, the Audit Committee is responsible, among other duties, for providing the market with full information on transactions where there may be a conflict of interest with members of corporate bodies or controlling shareholders, and issuing well-founded opinion on related-party transactions in the cases provided by law; it is also responsible for disclosing them in compliance with law whenever there is or may be an alleged conflict of interest within Pampa. Moreover, every time the Board has to address an issue where a director may have a personal interest, that director is prevented from voting. In the way described, the Company applies this practice.

G. Shareholder and Stakeholder Participation: Principles xix through xxii – Practices 25 through 29

xix. The Company should give equal treatment to all its shareholders. It should guarantee equal access to non-confidential information that is relevant for decision-making at the Company’s Shareholders’ Meetings.

xx. The Company should promote the active involvement by all shareholders based on appropriate information, especially regarding the composition of the Board.

xxi. The Company should have a transparent Dividend Distribution Policy aligned with the strategy.

xxii. The Company should take into consideration the interests of its stakeholders.


25. The Company’s website discloses financial and non-financial information, providing timely and equal access to all investors. The website has a specialized area to address investors’ inquiries.
Pampa applies the recommended practice as it has a website with a special ‘Investors’ section, including all types of relevant information (FS, filings before regulatory authorities —including the SEC and the NYSE—, relevant events, corporate governance policies, etc.) for its shareholders and the general investment community, which is permanently updated by the Investor Relations office.

In turn, this special section in the website operates as a channel for inqueries, which are received and managed by the specialized area in charge of shareholder and investor relations.

Additionally, the Company has presence in social media (Facebook, Instagram, Twitter and LinkedIn) through which it not only publishes relevant information but also interacts with its followers.

26. The Board should ensure a process in place for the identification and classification of its stakeholders, as well as a communication channel for them.
Engagement and dialog with our internal or external stakeholders are an essential aspect of the process for the definition of the Company’s material topics. Before this fiscal year and following the guidelines offered by AA1000SES – Accountability, we have started developing a multidimensional assessment system to identify our main stakeholders (based on accountability, influence, proximity, dependence and representation). Moreover, the Company lists its main stakeholders in the Sustainability Report issued on an annual basis and published in our website. Through this process, the Company applies the recommended practice.

The different dialog and communication channels with Pampa’s stakeholders are detailed below:

  • Employees: information-sharing meetings with the founding shareholders, internal website
    – intranet, Nexo – Human Resources channel, ethics hotline, Sustainability Report, Kaizala internal messaging network and social media.
  • Government: accountability under the regulations in force, Annual Report and Financial Statements, meetings with government officers, ethics hotline, Sustainability Report and social media.
  • Community: Social Responsibility Committee, ethics hotline, Sustainability Report, meetings on social investment programs and social media.
  • Investors: Annual Report and Financial Statements, 20-F Form, reports requested by the CNV and the SEC, quarterly earnings releases, earnings conference calls, ethics hotline, Sustainability Report, investor website –, and social media.
  • Suppliers: meetings with suppliers, ethics hotline, Sustainability Report, SAP ARIBA platform and social media.
  • Customers: institutional website –, customer service channel, ethics hotline, Sustainability Report and social media.
  • Corporate Associations: ethics hotline, industry meetings and social media.
  • Media: institutional website –, Annual Report and Financial Statements, ethics hotline and social media
  • Unions: meetings with union representatives, ethics hotline, Sustainability Report and social media.
27. Prior to a Shareholders’ Meeting, the Board submits —through a formal communication channel— a ‘provisional information package’ allowing shareholders to make non-binding comments and to share dissenting opinions on the recommendations issued by the Board, and the latter will expressly issue its opinion on the received comments as it deems necessary.
When calling for a meeting, the Board formulates proposals regarding each item in the agenda, except in cases there may be possible conflict of interest, where it will refrain from submitting a proposal. Any information supporting the topics to be addressed in the Shareholders’ Meetings are placed at the disposal of all shareholders well in advance so that they may perform their analysis and vote accordingly.

Both the shareholders and the general investment community may make the inquiries they deem necessary through the formal channel mentioned in Practice 25 in this Corporate Governance Report. This allows shareholders to attend the Meeting with information on the topics to be discussed which is precise and has been received well in advance.

It is worth highlighting that Pampa provides the necessary means to keep a permanent and fluid dialog with its shareholders, and not only at the time of calling for a Shareholders’ Meeting. In this sense, shareholders have at their disposal: (i) the communication channel described in Practice 25 in this Corporate Governance Report; (ii) the investor relations office, which receives and manages shareholders’ concerns; (iii) throughout the fiscal year, conference calls are organized at the end of each quarter to discuss the quarterly results and allow for interaction with the management; and (iv) the attendance of management and Board members to the Shareholders’ Meeting, with the possibility to raise questions not only on each item of the agenda, but also on the Company’s management once the treatment of all formal items has concluded. In the way described, the Company applies the practice.

28. The Company’s Bylaws contemplate that shareholders may receive the information packages for Shareholders’ Meetings through electronic means and participate in Shareholders’ Meetings virtually, allowing for the simultaneous transmission of sound, images and words, ensuring compliance with the principle of equal treatment to participants.
Although they are not contained in the Company’s Bylaws, Pampa’s application of the principles since the proposals mentioned in the previous item are placed at the disposal of Shareholders and the general investment community not only through the communication maners established by the regulatory bodies (ByMA, CNV, SEC), but also on the Company’s website, Moreover, as it has been previously mentioned, shareholders have the means to keep a permanent and fluid dialog with the Company throughout the year.

Pampa’s Bylaws currently do not contemplate the holding of Shareholders’ Meetings by electronic means of communication allowing for the simultaneous transmission of sound, images and words. The Company will analyze the appropriateness of its implementation.

29. The Dividend Distribution Policy is aligned with the strategy and clearly establishes the criteria, frequency and conditions under which dividends will be distributed.
Since in 2018, the Company applies the recommended practice of Dividend Policy, approved by the Board. Said policy sets out the guidelines to be followed to reach a proper balance between distributed amounts and Pampa’s investment plans, aiming at a clear, transparent and consistent practice, allowing shareholders to make informed decisions, all of this in line with the Company’s Bylaws and the applicable legal and regulatory framework in force. Based on this policy, the Board of Directors assesses the possibility to pay dividends to Pampa’s shareholders on a prudential basis within each fiscal year, thoroughly evaluating the economic circumstances prevailing at the time.


(1) For further information, see Practices 22 and 23 in this Corporate Governance Report.

(2) For further information, see ‘C. Composition, Nomination and Succession of the Board of Directors’ of this Corporate Governance Report.

(2) For further information, see Practice 9 in this Corporate Governance Report.

Glossary of Terms

Term Definition Term Definition
Board of Directors/The Board Board of Directors/The Board FS Financial Statements
Bylaws Pampa Energía’s Bylaws Government /
National Administration / Federal Government
Federal Government of the Republic of Argentina
ByMA Bolsas y Mercados Argentinos (Buenos Aires Stock Exchange) NYSE New York Stock Exchange
CEO Chief Executive Officer Pampa / the Company /

the Group / the Issuer

Pampa Energía S.A. and its subsidiaries
CFO Chief Financial Officer QSELH Quality, Safety, Environment and Labor Health
CMA Capital Markets Act No. 26,831 Res. Resolution(s)
CNV Comisión Nacional de Valores (National Securities and Exchange Commission) SEC Security and Exchange Commission
Code Pampa’s Code of Corporate Governance Sect. Section(s)