Hera is a multi-utility company with public sector majority shareholders and a markedly diversified shareholder base. Regarding corporate governance, the Group has adopted statutory procedures, with specific attention to the implementation of the principles contained in the code of conduct prepared by Borsa Italiana.
The main governance bodies of Hera are the Board of Directors, the Executive Committee, the Board of Statutory Auditors, the internal committees and the Shareholders’ Meeting. The Board of Directors is supported in its duties by two committees: The Remuneration Committee and the Control and Risks Committee. The Board of Directors has also established a Supervisory Body pursuant to Legislative Decree no. 231/2001, as well as an Ethics Committee to monitor the dissemination and implementation of the principles in Hera Group’s Code of Ethics.
The Board of Directors
The articles of association currently in force establish that the Board of Directors be comprised of 15 members elected on the basis of lists. Specifically, they provide that 11 members be selected from a majority list while the remaining 4 members be selected from a minority list. Composition by gender complies with the provisions of Italian Law 120/2011 whereby at least one third of the members must be women, for the renewals after the first renewal after entry into force of the law.
The new voting trust and share transfer rules agreement has been in force as from 1 July 2015. It was entered into by 118 local authorities holding shares on 26 June 2015. The agreement provides clauses on the method of forming the majority list and has a duration of three years, until 30 June 2018. Another agreement between the Modena public shareholders became effective as of the same date and with the same duration, with the aim of governing the presentation modalities of the candidates on the majority list proposed by the Modena public shareholders. There is an additional agreement entered into by 33 public shareholders belonging to the Bologna area on 20 November 2017, expiring on 30 June 2018, concerning – with reference to those entering into it – the discipline of the methods for consulting and joint adoption of the decisions relating to their participation in Hera, as well as the formalities for the circulation of the shares granted to the agreement.
According to the articles of association, the Board of Directors is to meet at least on a quarterly basis, or every time the Chairman deems it necessary or when requested by at least one third of its members or by the Board of Statutory Auditors. The articles of association also provide that the Board of Directors be endowed with broad and unrestricted powers for ordinary and extraordinary administration of the company. It is empowered to carry out all such actions as it deems necessary for and conducive to achieving the company purpose except for those expressly reserved to the Shareholders’ Meeting by law or according to the articles of association.
The Board of Directors met ten times in 2017.
The current Board of Directors, renewed on 27 April 2017, will remain in office until the Shareholders’ Meeting for approval of the financial statements as at 31 December 2019.
Among the 15 members of the Board of Directors of Hera Spa, eight directors (53%) are aged between 30 and 50, five directors (33%) are aged between 50 and 60, and two directors (13%) are over 60 years of age. 5 members of the Board of Directors are women.
As set forth in the Code of Conduct of Borsa Italiana, the annual report on corporate governance sets out the requisites for the non-executive, independent directors of Hera Spa. The remuneration paid to Hera Spa directors is illustrated in the remuneration report.
|Office||Name and Surname||Executive Director||Independent Director||Committees*|
|Chairman||Tomaso Tommasi di Vignano (1)||X||EXEC|
|Managing Director||Stefano Venier (1)||X||EXEC|
|Vice Chairman||Giovanni Basile (1)||X||EXEC, REM, CONT|
|Director||Francesca Fiore (2)||X||REM|
|Giorgia Gagliardi (1)||X|
|Massimo Giusti (3)||X||REM, ET|
|Sara Lorenzon (1)||X||CONT|
|Stefano Manara (1)||X||REM|
|Danilo Manfredi (1)||X|
|Alessandro Melcarne (1)||X|
|Erwin P.W. Rauhe (2)||X||CONT|
|Duccio Regoli (2)||X||CONT|
|Federica Seganti (1)||X||EXEC|
|Marina Vignola (1)||X|
|Giovanni Xilo (1)||X|
* EXEC: Executive Committee; REM: Remuneration Committee; CONT: Control and Risks Committee; ET: Ethics Committee (1) Name taken from list presented by the majority shareholders
(2) Name taken from list presented by the minority shareholders which obtained the greatest number of votes
(3) Name taken from list presented by the minority shareholders which obtained the second greatest number of votes
The Board of Statutory Auditors
The Board of Statutory Auditors is the corporate body that monitors correct administration, especially insofar as the adequacy of the organisational, administrative and accounting structure adopted by the directors and its operation. The Board of Statutory Auditors, appointed by the Shareholders’ Meeting held on 27 April 2017, will remain in office until the Shareholders’ Meeting for approval of the financial statements for the year ended 31 December 2019.
The Articles of Association establish that the members of the Board of Statutory Auditors are appointed on the basis of the lists submitted by the shareholders in order to ensure that the minority appoints the Chairman and an alternate auditor, and that the majority appoints the remaining two permanent members and one alternate member. Members are appointed in compliance with the equal balance of gender required by current laws and regulations.
The Executive Committee
The Executive Committee has the duty to express to the Board of Directors an opinion prior to submission of the yearly definition of the Group’s business plan and the proposed appointments of top level managers. Furthermore, it adopts resolutions concerning contracts and agreements related to the corporate purpose by specific amount brackets. It also resolves on consultancy relationships with outside professional experts and on the company’s membership in organisations, associations and other bodies, as well as on the settlement of disputes and releases of creditor claims. Further acts subject to resolution by the Board of Statutory Auditors regard those that amend or terminate contracts for credit lines and loans; acts that launch tenders and/or the stipulation, amendment and termination of investment contracts; and lastly, the quarterly review of the reports for the analysis and monitoring of financial risks.
The Executive Committee is composed of the Chairman, Vice Chairman and Managing Director, as well as a director appointed together by the Municipalities of Padua and Trieste: The Committee was appointed by the Board of Directors on 10 May 2017, pursuant to art. 23.3 of the articles of association. The Executive Committee met four times in 2017.
The Remuneration Committee
The task of this committee is to make proposals to the Board of Directors with regard to remuneration of the Chairman, the Managing Director and directors who cover specific roles; it also puts forward proposals to define the general remuneration criteria for senior management and managers.
The Committee is made up of four non-executive independent directors; upon invitation by the Committee Chairman, the Managing Director and the Chairman of the Board of Directors may participate in its meetings. It was appointed by the Board of Directors on 10 May 2017 and met three times in 2017.
The Ethics Committee
The Ethics Committee has the task of monitoring the dissemination and implementation of the code of ethics: it receives the reports on violations of the code and assesses whether to begin proceedings. Appointed by the Board of Directors of Hera Spa on 10 May 2017, the Ethics Committee is composed of an independent director of Hera Spa (Committee Chairman), the Corporate Social Responsibility Director and an external member.
The Committee met seven times in 2017.
On 21 February 2018, the Ethics Committee submitted to the Hera Spa Board of Directors the annual report set forth by article 72 of the code of ethics on the activities carried out and reporting received during 2017.
In 2017, the Ethics Committee met seven times and examined overall 23 reports, one more than in 2016. Twelve reports were received from employees, 10 from customers and one from suppliers; the Ethics Committee has examined 205 reports since 2008.
The 12 reports of the employees concerned the response times to the reports, the development and training of the employees and the relationship between the managers and the co-workers. In three cases, within the sphere of the reporting evaluation, the Ethics Committee met with/contacted the reporter, the Committee promoted solutions for 3 reports by involving the structure of reference and/or fostered cooperation and dialogue between the individuals involved; in 1 case the decision was made not to proceed with the implementation of the evaluation while in another case the employee disclosed that they no longer wished to proceed. In 4 cases, the Committee submitted recommendations to the departments involved with regard to the need to provide a reply to the internal customer, provide said reply within a suitable timescale and improve the procedures.
Customer reports, which fell from 14 in 2016 to 10 in 2017, regarded the suspension of the supply of water, estimated consumption and the billing errors, and the clarity of the commercial proposals via telephone. With regard to two reports, the Committee requested Hera Comm to meet so as to look in-depth at the formalities for handling the databases, for 1 report the Ethics Committee deemed it appropriate to involve the Legal and Corporate Affairs Division which confirmed the adequacy from a legal standpoint of the current meter reading and supply suspension methods; for one report steps were not taken to carry out the evaluation. In 2 cases, detailed investigations with the divisions of reference led to solving the customers’ requests, and in 6 cases, they led to providing a reply clarifying the company’s position. In one case the Committee confirmed the need to proceed with the limitation of the water supply instead of suspension, in compliance with the current procedures.
In 2017, the Corporate Social Responsibility and Code of Ethics in day-to-day management seminar continued, now in its fourth edition, involving 24 individuals with the aim of explaining the importance of the ethical aspects in the day-to-day activities establishing an increasingly larger group of experts «informed» on the Code. The initiative focused on the discussion of the cases of “ethical dilemmas” developing considerations with the colleagues of the various Companies and Group units which cover roles of responsibility and co-ordination. Two days of training were organised and the satisfaction level of the sessions was appraised, reaching a very positive score: 4.5 out of 5.