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 and Sustainability Committee to monitor the dissemination and implementation of the principles in Hera Group’s Code of Ethics and the supervision of the sustainability aspects linked to the business activities.
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 2018 between 111 local authorities holding shares. It was entered into on 26 June 2018 and concerns the methods for exercising the right to vote and the transfer of the shareholdings held in Hera to those complying; this agreement, with a three-year duration until 30 June 2021 has, in particular, the aim of regulating the methods for the formation of the majority lists.
3 additional second level agreements are also in force, entered into between the public shareholders already subscribers of the voting trust and share transfer rules agreement mentioned above, as indicated below:
- agreement between the Bologna area public shareholders, in force as from 1 July 2018 between 32 local authorities holding shares, entered into on 26 June 2018 and concerning the discipline of the method for joint consultation and adoption of the decisions of those participating in relation to their investment in Hera; this agreement, with a three-year duration until 30 June 2021 has, in particular, the aim of regulating the methods for the presentation of the candidates in the majority list proposed by the Bologna public shareholders;
- agreement between the Modena area public shareholders, in force as from 1 July 2018 between 20 local authorities holding shares, entered into on 26 June 2018 and concerning the discipline of the method for joint consultation and adoption of the decisions of those participating in relation to their investment in Hera; this agreement, with a three-year duration until 30 June 2021 has, in particular, the aim of regulating the methods for the presentation of the candidates in the majority list proposed by the Modena public shareholders;
- agreement between the Municipality of Padua and Municipality of Trieste public shareholders, entered into and in force as from 26 June 2018 and concerning the establishment of a voting and consultation trust agreement instrument for implementing, amongst other aspects, the provisions on Hera’s corporate governance; this agreement has a three-year duration until 26 June 2021.
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 10 times in 2018.
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, five directors are aged between 30 and 50, eight directors are aged between 50 and 60, and two directors are over 60 years of age.
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||EXEC|
|Erwin P.W. Rauhe (2)||X||CONT|
|Duccio Regoli (2)||X||CONT|
|Federica Seganti (1)**||X||ET|
|Marina Vignola (1)||X|
|Giovanni Xilo (1)||X|
* EXEC: Executive Committee; REM: Remuneration Committee; CONT: Control and Risks Committee; ET: Ethics and Sustainability Committee
** on 8 November 2018, further to the resignation as from the same date of Prof. Federica Seganti as member of the Executive committee, Hera’s Board of Directors appointed Mr. Alessandro Melcarne as her replacement. As of the same date Prof. Federica Seganti was appointed as member of the Ethics and Sustainability 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 Article 23.3 of the articles of association, and up-dated with regard to its composition on 8 November 2018 further to the resignation of a member.
The Executive Committee met six times in 2018.
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 four times in 2018.
The Ethics and Sustainability Committee
The Ethics and Sustainability 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. Renewed by the Board of Directors of Hera Spa on 10 May 2017, the Ethics and Sustainability Committee, in accordance with the indications of the code, was composed of three members, an independent director of Hera Spa (Committee Chairman), and two experts with regard to corporate social responsibility and Italian Legislative Decree No. 231/01 (the Shared value and Sustainability Director) and an external member.
On 8 November 2018, Hera’s Board of Directors – in accordance with the recommendations of the current Code of Conduct for listed companies of Borsa Italiana Spa – deemed it appropriate to assign the Ethics Committee the supervisory functions on the sustainability aspects associated with the performance of the business activities and the interaction dynamics with all the stakeholders; and in particular: i) monitor the implementation of the sustainability policies, ii) formulate, upon the request of the Board of Directors, an opinion on specific aspects regarding sustainability; iii) examine the company procedures of a social and environmental nature; and iv) examine the sustainability report in advance, to be submitted to the Board of Directors.
The Board of Directors has also changed the name of the Ethics Committee to the “Ethics and Sustainability Committee” and has extended the composition, taking the members from three to four, of which two Hera Spa Directors.
The Committee met eight times in 2018.
On 20 February 2019, the Ethics Committee submitted to the Board of Directors of Hera Spa the annual report on the activities carried out and reports received during 2018.
In 2018, the Ethics Committee examined overall 18 reports. Ten reports were received from employees, 7 from customers and 1 from suppliers; the Ethics Committee has examined 223 reports since 2008.
The 10 reports of the employees concern the relationship between colleagues and between manager/workers, the collaboration between company departments and the communication to the employees, the valorisation of the human resources, the safeguarding of the individuals and equal opportunities and the work environments. With regard to seven reports, in the preliminary investigative phase, the Ethics and Sustainability Committee assessed the need to involve the Central Personnel and Organisation Department as well as the reference structures of the reporting party. In five cases, within the sphere of the preliminary investigation of the report, the Committee contacted/met the person making the report. Four reports as of 31 December 2018 were not yet concluded while for one the Ethics and Sustainability Committee resolved not to proceed with the opening of the preliminary investigative phase due to limits of the competence of the Committee (Art. 70). Consequent to one report, the Committee resolved to adopt a disciplinary measure vis-à-vis a worker who was responsible for seriously offensive conduct vis-à-vis the party making the report.
Customer reports regarded the commercial conduct of sales agencies and the response times and/or the time required to carry out the services (payment instalments, termination of supply, invoicing adjustments). With regard to one report, the Ethics Committee requested Hera Comm to include the failure to observe the principles of the Code of Ethics among the clauses for termination of the agency mandate. With regard to five reports, thanks to the collaboration of the structures involved, a positive response to the request of the customers was achieved. With regard to one report, the intervention of the Ethics and Sustainability Committee led to the formulation of a reply clarifying the position of the company.
The only report from suppliers did not lead to any preliminary investigation since, in agreement with the Procurement and Tenders Department, the firm in question was included in the 2018 suppliers audit plan, drawn up in accordance with the matters envisaged by the integrated management system.