The Board of Directors of Pacific Hydro is responsible for ensuring that the Company maintains an appropriate corporate governance structure. The key objective of Pacific Hydro’s corporate governance structure is to protect and further enhance shareholder value by ensuring the integrity of reporting, and by maintaining appropriate internal controls.
Although Pacific Hydro is unlisted, its Board of Directors refers to the Australian Stock Exchange Corporate Governance Council’s “Corporate Governance Principles and Recommendations” (ASX Standards) as the benchmark for standards of good governance practice. The ASX Standards identify 8 principles and 29 recommendations, which are intended to maximise corporate performance and accountability for the benefit of shareholders and for the overall protection of the integrity of the broader economy.
This section of the website details the level and nature of compliance that Pacific Hydro aims to achieve against each of the principles identified in the ASX Standards. Where appropriate, and as recommended by the ASX Standards, links to documents which demonstrate such compliance have been included.
Principle 1 – Lay solid foundations for management and oversight
The Board of Directors of Pacific Hydro recognizes the importance of clearly defining its role and the role of management. Accordingly, the Board has devised and adopted the Pacific Hydro Board Charter that describes the respective roles and responsibilities of the Board and Management and those matters expressly reserved to the Board and those delegated to Management.
Principle 2 – Structure the board to add value
The ASX Standards state that a majority of the Board should be independent directors. Given the unique holding structure of Pacific Hydro under the management of State Power Investment Corporation (SPIC), the Board is comprised of six members; a Non-Executive Chairman, two Independent Directors, a Managing Director and two Shareholder (SPIC) Representative Non-Executive Directors.
The Board Charter states that the PH Board will meet at least six times a year with a quorum consisting of two Directors and voting by majority.
Principle 3 – Act ethically and responsibly
Pacific Hydro has a Code of Conduct, which guides directors, senior management and employees on values, behaviours and responsibilities required to conduct its business affairs with honesty, integrity and in a manner that is consistent with reasonable expectations of its shareholder (SPIC) and the broader community.
Pacific Hydro has a Whistleblower Disclosure and Investigation Procedure that describes the process and protection of employees who report unethical practice.
Principle 4 – Safeguard integrity in corporate reporting
The responsibility for Pacific Hydro’s financial statements rests with the PH Board, which verifies and safeguards the integrity of the company’s corporate reporting, including the process for the appointment and removal of the external auditor.
The Chief Executive Officer and Chief Financial Officer are required to sign an annual written statement to the Board, confirming that the Company’s financial report presents a true and fair view of the Company’s financial condition and operational results, in accordance with relevant accounting standards. The statement also requires reporting on the adequacy or otherwise of the operation of risk management and internal compliance and control systems.
Principles 5 and 6 – Make timely and balanced disclosure; and respect the rights of security holders
Continual disclosure to SPIC, which owns Pacific Hydro, occurs through the shareholder’s representation on the Board. Pacific Hydro also makes disclosures to its other stakeholders through its website and other media.
Principle 7 – Recognise and manage risk
The Board and senior management have mandated the development and implementation of a Risk Management Framework, as reflected and stated in the company’s Risk Management Policy. The Board is responsible for the oversight of Pacific Hydro’s Risk Management Framework.
Pacific Hydro senior management are responsible for maintaining an effective Risk Management Framework and keeping the Board fully informed about material risks.
The Board sets the risk appetite of the company via Risk Statements that are agreed during the annual Business Planning process. Pacific Hydro senior management regularly report to the Board on the top tier risks of the company.
Principle 8 – Remunerate fairly and responsibly
The Board determines the company’s remuneration and benefits framework, recruitment, incentives, retention and termination policies and procedures for senior executives and directors.
Executive Remuneration Policy
Pacific Hydro is committed to remunerating its executives in a manner that is market competitive, consistent with best practice and supportive of the interests of shareholders. Accordingly, executives are remunerated through a combination of:
– base salary;
– performance-based incentive scheme cash bonuses.
This mix of remuneration aligns the interests of Pacific Hydro’s executives with those of its owners, with the objective of increasing shareholder value.
Independent Director Remuneration Policy
Independent Directors are paid Directors’ fees at a level in line with the market. Independent Directors receive a fixed amount for Board membership, including membership and/or chairing of Board committees. In circumstances of substantial additional workload committee fees are paid. Independent Directors are entitled to statutory superannuation, payable from their base fees, but do not receive retirement benefits or performance based bonuses.