Board composition evaluation and director selection protocol / process

Transcription

1 Board composition evaluation and director selection protocol / process Board composition Western Power s directors are appointed by the Governor of Western Australia on the nomination of the Minister for Energy 1. Accordingly, the composition of the Board, and the independence of its nonexecutive directors, is not something over which the Board has ultimate control. However, the Minister is required to consult with the Board before making any nomination for appointment and the Board may recommend suitable candidates to the Minister. In making recommendations to the Minister regarding nominations for non-executive directors, the Board will have regard to the following criteria: 1. The Chair and the Deputy Chair must be independent, non-executive directors 2. The role of the Chair and the Chief Executive Officer cannot be filled by the same person 3. The Chief Executive Officer is to be resident in, or near, the town in which Western Power s head office is located 4. A majority of the Board will be independent directors as detailed in the Board charter (see below) 5. The Board should have the required mix of skills, experience and expertise in the following disciplines: 5.1. accounting and/or finance 5.2. business 5.3. human resources / change management 5.4. electricity transmission and/or distribution (including the regulatory environment) 5.5. legal skills (especially when not present in the company secretary role) 5.6. CEO-level responsibility and decision making 6. The need for diversity, including but not limited to gender diversity, should also be considered. The Board, through the People & Performance Committee will also: Regularly evaluate the mix of skills, experience, expertise and diversity that will best complement Board effectiveness, with a view to ensuring that it has a proper understanding of, and the competence to deal with, the current and emerging issues of Western Power s business (see appendix one for a composition matrix that the People & Performance Committee will use when conducting this evaluation) Develop and implement a plan for identifying, assessing and enhancing director competencies. In evaluating the skills and experience that each director contributes to the overall Board composition, the People & Performance Committee will recognise both professional expertise and also substantial experience in a particular skill-set. 1 Sub-section 8(1) of the Electricity Corporations Act. Board composition evaluation and director selection protocol/process Page 1

2 Director independence The following extract from the Board charter outlines the criteria against which the independence of directors will be assessed. In these standards, a reference to "Western Power", includes any subsidiary of Western Power, as well as the former Western Power Corporation. In judging whether a director is an "independent director, the Board will have regard to whether or not: 1. The director is not, and has not within the past three years been: 1.1. employed by Western Power in an executive capacity 1.2. a principal, director or senior employee of a material professional adviser, or a material consultant, to Western Power, or been an employee materially associated with services provided by such adviser or consultant 2. The director is a material supplier, or customer, of Western Power, or is an officer, or employee, of, or otherwise associated with, a material supplier, or customer. 3. The director has received any remuneration from Western Power, other than directors' fees. 4. The director has a material contractual, or other material relationship, with any Western Power subsidiary, other than as a director. 5. The director has close family ties with any person who falls within any of the categories described above. 6. The director has been a director of Western Power for such a period that his or her independence may have been compromised. 7. The director is free from any other interests and any business, or other relationships, that could, or could be perceived to, interfere with the director's unfettered and independent judgment and ability to act in the best interests of Western Power. These criteria are based on the premise that a director must be independent of management and free of any business or other relationship that could materially interfere with (or be seen to interfere with) the exercise of his or her unfettered and independent judgment. The People & Performance Committee (as delegate of the Board) has determined 2 that $1.5 million in any 12 month period is the threshold for a customer or supplier to be regarded as material. However, this threshold is not conclusive and the Board will examine both the qualitative and quantitative nature of a director s relationship with any particular customer or supplier when assessing director independence. Selection process for identifying potential director candidates As soon as reasonably practical after it becomes apparent that a vacancy will arise on the Western Power Board, the following steps will be taken: 2 People & Performance Committee resolution PPC/03/2007, dated 17/04/2007. Board composition evaluation and director selection protocol/process Page 2

3 Process step 1. Determine skills and experience required to support Western Power s strategic direction Responsibility P&PC / CEO / 2. Assess / confirm skills and experience of existing directors P&PC / CEO/ 3. Use gap analysis to determine selection criteria for new director(s) 4. Update role description as required 5. Briefing by Board chair and consider sourcing strategy: e.g. executive search firm, AICD directors register and/or Board member recommendations Board Chair / P&PC / CEO / 6. Commence search activities 7. Collate potential candidates and prepare individual profiles for consideration 8. Identify selection team Chair / P&PC / CEO / General Counsel 9. Selection team shortlists candidates Selection team 10. Conduct preliminary discussions with short listed candidates Selection team member/search firm 11. Selection team identifies preferred candidate(s) Selection team 12. Conduct selection interviews Board chair / CEO 13. Identify preferred candidate & make recommendation to Board P&PC / CEO / 14. Endorse recommendation to Minister Board 15. Obtain consent(s) from the proposed new director 16. Undertake appropriate checks in relation to the proposed new director, including checks as to the person s character, experience, education, criminal record and bankruptcy history 17. Prepare relevant Ministerial and Cabinet submissions 18. On confirmation of appointment by Governor, prepare formal letter of appointment for signature by Minister 19. Make media announcements as required Board chair / CEO 20. Draft and send engagement documents 21. Schedule induction and handover activities as appropriate Board composition evaluation and director selection protocol/process Page 3

4 Approval history Version Approved by Date Resolution no. Notes 1. P&PC 17/04/2007 PPC/03/ P&PC 07/08/2007 PPC/17/ P&PC 21/10/ /2008/PPC 9. Board 17/12/ /2010/BD 11. P&PC 21/02/ A. P&PC 14/08/ /2012/PPC 14B. Board 05/08/ /2015/BD Board 02/09/ /2015/BD EXECUTED under seal by ELECTRICITY NETWORKS CORPORATION ABN in accordance with paragraph 135(2)(a) of the Electricity Corporations Act and Board resolution BD/09/2006: Alan Mulgrew (Chairman and non-executive director) John Pease ( and executive officer) 3 Prior to this version of the document, earlier version numbering was not subject to standard formatting. Board composition evaluation and director selection protocol/process Page 4

5 Appendix 1 Board composition analysis preferred skills / experience matrix The following matrix outlines the skills and experience considered by the Board. The accounting/finance area of expertise relates to the suggestion in the commentary to the ASX corporate governance principles that the members of the audit committee should, between them, have accounting and financial expertise, namely a person who is a qualified accountant or other financial professional with experience of financial and accounting matters, including an understanding of financial statements, Australian equivalents to International Financial Reporting Standards (AIFRS) and experience in preparing or auditing financial statements, in internal accounting controls and in the functioning of audit committees. Asset/infrastructure (incl. project management Safety focussed industry Access / regulatory regime Government & stakeholder relations Legal / corporate governance Risk management Strategic leadership Accounting / finance Electrical engineering HR / ER & change management CEO level corporate management Independent Board Chair Non-executive director Expert Experienced Average Low Nil Board composition evaluation and director selection protocol/process Page 5