Activity of the board – financial year 2023

Improving the recommendations of the Corporate governance code, according to which the Board of directors must meet on a regular basis, the company by-laws envisage that the Board meets at least on a quarterly basis, and whenever the Chairman considers its necessary or when a request is made by at least one-third of its members or by the Board of statutory auditors.

Comparison with FTSE Mib index

The Board of Directors met on 13 occasions in 2023: all the directors took part in six of these meetings, while almost all of them took part in the other seven; all the statutory auditors took part in 10 of the meetings, while almost all of them took part in three. The average length of the meetings of the Board of Directors was approximately two hours and 30 minutes.

In 2023, as in financial years since 2019, the directors again displayed a high level of attendance at the meetings of the Board of Directors (equal to more than 97%), a figure higher than the average level of attendance recorded for FTSE MIB Index companies.

In accordance with Principle XII of the Code, each director consequently ensured that he or she has adequate time available to diligently perform the duties assigned to him or her.

The Head of Legal and Corporate Affairs, in his capacity as Secretary of the Board of Directors, attended twelve of the thirteen meetings.

When so required, the managers responsible for the various departmental areas participated in the meetings of the Board of Directors to refer on matters falling under their competence that are part of the agenda.

Below are the attendance records of managers invited to attend board meetings:

1. the Administration, Finance and Control Central Director attended seven meetings;
2. the Strategy Regulation and Local Authorities Central Director attended two meetings;
3. the Networks Central Director attended one meeting
4. the Innovation Central Director attended two meetings;
5. the Market Central Director attended one meeting;
6. the Personnel and Organisation Central Director attended one meeting
7. the Corporate Services Central Director attended one meeting;
8. the Administration Director attended one meeting;
9. the IT Systems Director attended one meeting;
10. the Shared Value and Sustainability Director attended two meetings.

Regarding the current financial year, as of 26 March 2024, a total of three Board of Directors meetings have been held: almost all of the members took part in two meetings while all of the members took part in one meeting. As of that date, another eight Board of Directors meetings had been planned for the remainder of the year. 

In 2023, average attendance in the B.o.D. meetings stood at 97%.

This high level of attendance is proof of the strong commitment of the Directors to guiding the company and is above the average figure of the companies included in the FTSE Mib index.

* Source: Report on Corporate Governance in Italy: the implementation of the Italian Corporate Governance Code (2023) di Assonime, published on 05/02/2024

Minimum attendance

The number and attendance of members at the B.o.D. meetings guaranteed the ordinary and extraordinary management of the company, enabling Hera to carry out all the actions required in pursuit of the corporate purposes.

Self  assessment

In application of the provisions of Principle XIV of the Code, the Board of Directors periodically assesses the effectiveness of its activities and the contribution made by its individual members through formalised procedures the implementation of which it supervises.

More specifically, in line with Recommendation 22 of the Code, the Board of Directors carries out an annual self-assessment of the size, composition and functioning of the Board itself and its committees, with the support of an independent external advisor who is an expert in governance issues and advising management bodies, also taking into account the role the Board has played in defining strategies and monitoring management performance and the effectiveness of the internal audit and risk management system, as set out in Recommendation 21 of the Code.
This assessment was carried out in 2024 with the support of Management Search Srl, a special-purpose consulting firm; lastly, the assessment was presented and discussed during the meeting of the Board of Directors on 26 March 2024.

The methodology used for the evaluation process was as follows:

1. compilation - by the Directors and the Chairman of the Board of Auditors - of an online interview questionnaire, with an individual interview subsequently carried out for in-depth analysis of the topics shown in the questionnaire;
2. The questionnaire examined the following topics: (i) structure and composition of the Board of Directors; (ii) functioning of the Council; (iii) adequacy of the time dedicated to discussing issues relevant to the Company; (iv) functioning of the Committees; (v) relations with top management and the Directors’ knowledge of said relations; (vi) the assessment made by the Directors on the work they carried out within the Board of Directors and on their contribution to the board debate and the decision-making process; (vii) sensitivity to ESG and sustainability-related issues and principles, as well as dissemination/integration of these issues into the corporate organisation and business. Each question in the questionnaire could be answered through different levels of consensus;
3. sample examination of the Company’s documentation (i.e. the minutes of the 2023 meetings of the Board of Directors and the Committees). The examination revealed the compliance of the overall functioning of the Board of Directors and the Committees with the guidelines and provisions contained: (i) in the legislative and regulatory provisions applicable to issuers; (ii) in the Corporate Governance Code; (iii) in the internal regulatory system adopted by the Company (Statute, Code of Ethics, internal regulations and procedures);
4. benchmarking, with a comparison of Hera Spa’s results with those of ten listed Italian companies operating in the energy sector.

Analysis of international best practices

The findings that emerged highlighted a highly positive picture of the functioning and composition of the Board of Directors and the Company’s Committees.

This was confirmed by the high level of consensus (mostly above 90%) expressed by the directors on various macro-areas of interest (composition and diversity of the administrative body, organisation and decision-making processes, flow of information and training, internal climate and team spirit, vision and strategic support to top management, functioning of the Committees) and by the absence of topics with low consensus levels.

Specifically, as part of the self-assessment activity:

on the composition of the Board of Directors

• the number of directors was considered appropriate overall and the ratio between executive/non-executive/independent directors was well balanced and adequate. The mix of professional skills present on the Board is believed to represent good heterogeneity and is adequate;

• the division of delegations (between the Executive Chairman and the CEO) and the balance of powers (of supervision of the Board and management of the delegated subjects) were deemed adequate;

on the functioning of the Board of Directors

• attendance at Board meetings was very assiduous (97% average attendance);

• the time dedicated by the Board to issues relevant to the Company and the participation of all Directors in the Board debate as well as the quality of the discussions were considered adequate;

• the important support for the work (both in terms of specific skills and organizational aspects) from the Secretary of the Board of Directors and the Company Secretariat was recognised and highly appreciated;

• the information and documentation provided by the Company Secretariat were considered exhaustive and of high quality; the minutes of the meetings represented the progress of the debate in a clear and timely manner while the pre-meeting documentation and minutes of the minutes of the sessions were promptly received;

• the in-depth business activities, carried out regularly, were well planned and effective; the Board of Directors received complete and timely information on the areas of greatest strategic importance for the Company and the pre-meeting documentation was extensive and clearly presented;

• during the Board’s work, a very favourable climate was found in terms of collaboration and interaction between the directors;

• the Executive Chairman, having a profound knowledge of the Company, plays a central role within the Board and exercises a decisive impetus on its functioning;

• the interaction between the Board of Statutory Auditors, the Board and the other bodies was considered constructive and well balanced;

on the risks and relative controls

• it was recognized that risk control and management are relevant and priority issues for the Group and the internal control and risk management system was considered efficient and effective;

relations with management

• it was recognized that risk control and management are relevant and priority issues for the Group and the internal control and risk management system is considered efficient and effective;

• the relationship of the Executive Chairman and the CEO with the Board of Directors was considered very open and constructive;

• the Directors interact with the management continuously and the presentations to the Board by the top management are clear and useful for increasing the level of knowledge of the most relevant issues for the Company and the Group;

functioning of the Committees

• the evaluation regarding the composition and functioning of the Committees was overall positive and the structure of the Committees was also adequate; furthermore, the mission and methods of appointment and functioning of each Committee have been clearly defined;

• the members of each Committee believe that the respective meetings had adequate frequency and duration in relation to the tasks and topics covered;

on ESG and sustainability issues

• the Board of Directors was recognised as having particular sensitivity regarding the issues of sustainability and corporate social responsibility, while the issues that will represent a priority for the Group were highlighted (environmental protection through the contribution to decarbonisation, energy efficiency and the transition to renewables, the circular economy, the development of networks and the relationship with the regions, the sustainability of supplies and services offered and their social impact);

on the Dialogue with Shareholders ad Bondholders

• overall, it is believed that the Dialogue with the pool of Shareholders and Bondholders is carried out adequately and that the Board of Directors is kept up to date on its progress and contents. 

The following areas for improvement emerged from the directors’ assessments:

• improve the level of participation and active contribution to the debate by all the Directors through the following suggested actions - in order to further increase the knowledge of the Group and the various businesses by the new Directors -: (i) continue the planning of in-depth activities on business topics of shared interest, calibrating them in relation to the professional characteristics present within the Board of Directors by providing meetings with top management (including off-site) on a regular basis; (ii) evaluate whether to carry out - for topics or operations of particular complexity and importance to be addressed by the Board of Directors - a preliminary investigation to allow the Directors to gain greater elements of knowledge; (iii) combine the documentation provided to the Directors, in preparation for the meetings, with effective fact sheets prepared for the most important topics to contextualise the content and to focus attention on the most relevant aspects; (iv) improve the use of the investigative activity of the Committees by providing them with more complete information to the Board of Directors on the topics examined to encourage more debate;
• consider the establishment of the Appointments Committee in order to carry out preliminary activities in relation to the appointment and replacement of top management.

In the past year the Board has acted as precise control over financial activities, specifically overseeing all the operations, services supplied to customers, M&A processes and especially it guaranteed that all activities and relations with stakeholders were carried out with the greatest respect for sustainability policies and following an approach oriented to the creation of shared value.

All the initiatives carried out by Hera in order to support the global UN agenda are submitted to the attention of the Board of Directors.

In order to pursue an effective deliberative activity, the Executive Chairman and the CEO have worked throughout the year 2021 to assure that the Board of Directors was informed about the main legislative and regulatory changes related to the Company and to the corporate bodies, as well as on most relevant topics related to Group’s business.

Page update 30 April 2024