Corporate Governance
Stedin Group
Stedin Group is the name of the group comprising Stedin Netbeheer B.V., DNWG Groep N.V. and NetVerder B.V., among others. Stedin Holding N.V. heads the group structure and is, directly or indirectly, the director under the articles of association of all its subsidiaries. Stedin Holding N.V. is a two-tier board company and applies the full two-tier board structure, consisting of a Board of Management and a Supervisory Board. The Board of Management manages Stedin Group; the Supervisory Board exercises supervision. Both boards act independently of each other.
The grid managers Stedin and Enduris act on a non-discriminatory basis, meaning that they do not favour one particular party over another.
The Corporate Governance Code and Stedin Group
Stedin Group sets great store by good corporate governance. Stedin Group naturally complies with the governance requirements arising for the grid operator from the Electricity Act and the Gas Act. The Dutch Corporate Governance Code (CGC) was drawn up for listed companies. Stedin Group is therefore not obliged to comply with it, as its shares are held by 44 Dutch municipalities. Stedin Group nonetheless decided in 2018 to apply the CGC voluntarily, where possible. In doing so, we are emphasising our responsibility for the social aspects of doing business in the public domain.
The CGC is based on the ‘comply or explain’ principle. We therefore explain which principles in the CGC are not (or cannot be) applicable to Stedin Group. The principal departures from the CGC are connected with the fact that Stedin Group is not listed. Our shares are held by local and regional authorities, while a large part of our business activities are regulated. We are subject to supervision by the Netherlands Authority for Consumers and Markets (ACM), and we pursue a long-term strategy. Furthermore, the remuneration structure of the members of the Board of Management and the Supervisory Board of Stedin Group is regulated by the Senior Executives in the Public and Semi-Public Sector (Standards for Remuneration) Act (Wet normering topinkomens, WNT).
The CGC is applied at the level of Stedin Group.
Departures from the CGC
- Provision 2.1.9 Independence of the chairman of the Supervisory Board: the previous chair of the Supervisory Board, Pieter Trienekens, had served as acting director of Stedin Netbeheer B.V. for two years. In view of his expertise, Stedin Group and its shareholders saw no impediment with regard to his position as chair of the Supervisory Board. With Doede Vierstra as the new chair from 1 February 2020, the deviation from Provision 2.1.9 of the CGC has ceased in this respect.
- Provision 2.2.1 Maximum appointment and reappointment periods – management board members: members of the Board of Management are appointed as director under the articles of association by the Supervisory Board for a maximum term of four years. They can be reappointed for successive maximum terms of four years. Such reappointments are not limited within Stedin Group. This longer term helps Stedin Group to ensure the continuity of the Board of Management.
- Provision 2.2.2 Appointment of supervisory board members: Within Stedin Group, Supervisory Board members are appointed for a term of four years and can be reappointed for a maximum of two additional four-year terms. These longer periods of appointment and reappointment help to ensure the continuity of the Supervisory Board.
- Provision 2.2.3 Publication of press release upon early retirement of supervisory board members: issuing a press release as standard practice does not serve a public interest. The Board of Management does so if required by circumstances. It goes without saying that Stedin Group informs its stakeholders about any early retirements.
- Provision 2.3.2 Establishment of committees: a combined Selection, Remuneration and Appointments Committee has been established within Stedin Group for practical reasons.
- Provision 4.2.3 Meetings and presentations: the shares of Stedin Holding are not listed; they are held by 44 municipalities. However, Stedin Group has issued bonds that are listed on the stock exchanges of Luxembourg and Amsterdam. Once a year, after the publication of its full-year results, Stedin Group organises a call for its investors. This call is publicly announced in advance to the investors. After the meeting, the presentations are posted on Stedin Group's website.
We depart from the provisions referred to below because the two-tier board structure applies and because the shares of Stedin Group are held by 44 Dutch municipalities and are therefore not listed, because the governance structure of Stedin Group is different (two-tier and not one-tier).
- 2.1.3 Executive committee
- 2.8.2–2.8.3 Takeover bid
- 3.1.3 Remuneration – executive committee
- 3.3.2–3.3.3 Remuneration of supervisory board members in shares and share ownership of supervisory board members 4.2.3–4.2.4 and 4.2.6 Analysts' meetings and anti-takeover measures
- 4.3.3 Cancelling the binding nature of a nomination or dismissal
- 4.3.4 Voting right on financing preference shares
- 4.3.5 Publication of institutional investors’ voting policy
- 4.3.6 Report on the implementation of institutional investors’ voting policy
- 4.4 Issuing depositary receipts for shares
- 5 One-tier board structure
Internal risk management and control systems
The Board of Management monitors the operation of the internal risk management and control systems. Each year, it performs a systematic assessment of the design and operation of the systems. This monitoring covers all material control measures relating to strategic, operational, compliance and reporting risks. This is described in detail in the Risk management section and in the In-control statement.
Governance roles
Board of Management
Stedin Group's Board of Management is responsible for the performance of Stedin Group and all subsidiaries within the group structure. Thus, the Board of Management determines the long-term strategy and the company's operational as well as financial objectives and designates the preconditions for delivering the strategy. In performing its duties, the Board of Management carefully weighs all interests, including those of customers, shareholders, employees, providers of capital and society in general. The Board of Management has defined customer and cultural values that contribute to a culture directed at long-term value creation.
An allocation of duties has been agreed within the Board of Management, which does not detract from the collective responsibility of the Board of Management as a whole. The Board of Management allocates the tasks within the Board of Management (and may change them if necessary), subject to approval by the Supervisory Board. Both the Board of Management as a whole and its individual members are authorised to represent the company. The internal Governance and Authority Manual sets out the procedure for obtaining mandates to represent Stedin Group and its subsidiaries externally. It also includes, for instance, threshold amounts for the performance of legal acts and other acts on behalf of Stedin.
Terms of reference of Board of Management
In addition to legal requirements and the articles of association, the Board of Management is also bound by the terms of reference of the Board of Management. These terms of reference complement those requirements and include the division of duties, responsibilities and procedures of the Board of Management. The terms of reference adhere to the principles and best practices of the Dutch Corporate Governance Code, insofar as they are applied by Stedin Group. The most recent version of the terms of reference of the Board of Management, of 24 November 2020, has been posted on the website of Stedin Group. The same applies to the terms of reference of the Supervisory Board and its committees.
Appointment and dismissal
Members of the Board of Management are appointed as director under the articles of association by the Supervisory Board for a maximum term of four years. They can be reappointed for successive maximum terms of four years. The Supervisory Board is authorised to suspend or dismiss members of the Board of Management.
Strategy Management Team
Apart from the members of the Board of Management, the members of the Strategy Management Team (MT) also include the Asset Management, HR, Strategy and Corporate Affairs directors. The Strategy MT advises the Board of Management on monitoring and delivering the organisation's strategic objectives. Unlike the Board of Management, the Strategy MT is not a decision-making body itself. A favourable opinion issued by the Strategy MT will, as a rule, be endorsed by a decision of the Board of Management.
Strategic Coalition
In addition, there is a Strategic Coalition, in which more than 20 directors, managers and members of a Works Council delegation take part, aside from the members of the Strategy MT. To develop the strategy and its implementation, they meet several times a year in sessions of one or two days. The business-and-control cycle and the annual planning cycle were recurring items on the agenda in these meetings in 2020. In addition, various strategic topics were considered in greater depth. The Strategic Coalition consists of 10 women and 15 men.
Composition
In 2020, the Board of Management consisted of four members: a Chief Executive Officer (CEO), a Chief Operating Officer (COO), a Chief Financial Officer (CFO) and a Chief Transition Officer (CTO).
The Board of Management consists of three male members and one female member (COO). This means that women make up 25% of the Board of Management. The target percentage for the composition of the Board of Management is a minimum of 30% women and a minimum of 30% men.
The COO was absent for a large part of 2020. In that period, her duties were taken care of by the other members of the Board of Management and an interim director of Operations.
Supervisory Board
Stedin Holding N.V.'s Supervisory Board advises the Board of Management and exercises supervision on the policy of the Board of Management as well as the general performance of the company and its subsidiaries. The Supervisory Board also acts as employer of the Board of Management. Accordingly, the Supervisory Board appoints members of the Board of Management and can suspend or dismiss members of the Board of Management (in consultation with the General Meeting of Shareholders). The Supervisory Board of Stedin Holding N.V. is also the Supervisory Board of the grid managers within the group, i.e. of Stedin Netbeheer B.V. and of Enduris B.V. This fact is also stated in the articles of association of both grid managers (and those of Stedin Holding).
Upon taking office, the Supervisory Board drew up terms of reference for its functioning. These apply in addition to the legal requirements and the requirements under the articles of association. The terms of reference include provisions on the Supervisory Board's composition, committees, duties and powers, meetings and decision-making.
The Supervisory Board has two permanent committees, composed as follows as of September 2020:
- a combined Selection, Remuneration and Appointments Committee (SRA Committee). This consists of Hanne Buis and Dick van Well. Hanne Buis succeeded Dick van Well as chair in September 2020;
- an Audit Committee, consisting of Theo Eysink, Annie Krist and Dick van Well. Theo Eysink is the chair.
The committees have their own meetings in preparation for the full Supervisory Board meetings. The committees report verbally in the Supervisory Board meetings and/or present their draft or adopted minutes. The recommendations of the committees form the basis for decision-making in the meetings of the Supervisory Board. The Audit Committee and the SRA Committee each have separate terms of reference, setting out provisions on their functioning. The terms of reference can be consulted on the Stedin Group website.
The members of the Supervisory Board are appointed by the General Meeting of Shareholders, after being nominated by the Supervisory Board. There is an adopted profile for the size and composition of the Supervisory Board. In connection with nominations and appointments, we take account of the nature of the company, its activities and the desired expertise and background of the Supervisory Board members.
Supervisory Board members are appointed for a term of four years and can be reappointed for a maximum of two additional four-year terms. The Supervisory Board can suspend members of the Supervisory Board. The Netherlands Enterprise Court at the Amsterdam Court of Appeal can dismiss Supervisory Board members. The General Meeting of Shareholders can withdraw its trust in the full Supervisory Board or in individual Supervisory Board members.
The members of the Supervisory Board retire periodically in accordance with the retirement schedule that it has drawn up in order to avoid, as much as possible, too many Supervisory Board members retiring simultaneously. The retirement schedule as shown in the Report of the Supervisory Board applies with effect from 30 September 2020.
Composition
The Supervisory Board temporarily consisted of six members from September 2020, two of whom were women; before September 2020 and from February 2021, the Supervisory Board consisted and consists of five members, and the ratio of men to women is 3:2. With this ratio of men to women, the Supervisory Board complies with the diversity requirement. In addition, a variety of age categories are represented in the Supervisory Board. In recent years, the search for new Supervisory Board members deliberately targeted greater diversity in terms of gender, partly by expressly designating this in the profile in advance and by communicating this aim to the recruitment and selection agency. Lastly, diversity in terms of composition is also included in the annual evaluation of the Board of Management and the Supervisory Board.
Internal audit function
Internal audit consists of a team of independently operating internal auditors. Internal Audit supports the organisation by providing insight, advice and supplementary assurance on the extent of risk management.
Internal Audit is part of the CEO's responsibilities and has direct access to the Audit Committee of the Supervisory Board as well as to the external auditor. The Internal Audit manager attends the meetings of the Audit Committee. The Audit Committee supervises the IA function and advises the Supervisory Board on its performance.
Each year, Internal Audit draws up an annual audit plan that is based on a risk analysis and interviews with senior management as well as the Board of Management. It also incorporates the input of the Audit Committee and the external auditor. Internal Audit submits the annual audit plan for approval to the Board of Management and then to the Supervisory Board.
Internal Audit reports to the Board of Management on auditrelated topics, such as key findings on the effectiveness of the internal controls, follow-up of recommendations and realisation of the annualaudit plan, and reports the main features to the Audit Committee of the Supervisory Board. Internal Audit also informs the external auditor about this matter.
The external auditor
The external auditor is nominated by the Supervisory Board and appointed by the General Meeting of Shareholders (AGM). Deloitte Accountants B.V. is the external auditor of Stedin Group. The external auditor attends all meetings of the Audit Committee. The external auditor in any case attends the part of the meetings of the Supervisory Board in which the report of the external auditor on the audit of the financial statements is discussed and a resolution concerning the approval of the financial statements is adopted. The external auditor also annually attends the Annual General Meeting in which the financial statements are adopted. The auditor can be questioned there by the AGM about their report on the true and fair view provided by the financial statements.