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Who We Are

 

Governance

The Board of Directors of Pacific Hydro (Pacific Hydro or the Company) 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.

To this end, the Board of Pacific Hydro is committed to the Australian Stock Exchange Corporate Governance Council's "Corporate Governance Principles and Recommendations" (ASX Standards). The ASX Standards identify 8 principles and 28 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.

While the ASX Standards are not prescriptive, non-listed companies are encouraged to comply with the ASX Standards as they capture many aspects of good practice.

In addition, and to increase your understanding of the extent to which Pacific Hydro satisfies the ASX Standards, this section of the website details the level and nature of compliance that Pacific Hydro aims to achieve, against each of the 10 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 and Charters for the Board Committees. Among other things, these Charters list the matters reserved to the Board and those delegated to Board Committees and to management.

Principle 2 - Structure the board to add value

The ASX Standards state that a majority of the Board should be independent directors. Pacific Hydro complies with this recommendation, as representatives of the Company's shareholder currently hold 2 Board positions (non-executive directors) and the remaining 4 positions are held by independent non-executive directors, one of the latter holding the Chairmanship.

The Remuneration Committee was established in 1999. The Remuneration Committee's role, among others, is recommending and deciding upon Board and CEO appointments and employee remuneration policies and remuneration. It also establishes and discloses the process for evaluating the performance of the Board, its committees and individual directors.

A Projects  Committee was established in 2008. The Projects  Committee's role is monitoring the Company's approach to new projects and important contracts as well as to provide governance and review of projects under construction.

The Board also has a Sustainability and Risk Committee with responsibility for overseeing the Company's risk, management, health, safety and environment and sustainability policies and practices. The Finance and Audit Committee is discussed under Principle 4, below.

Principle 3 - Promote ethical and responsible decision-making

Pacific Hydro's Code of Conduct guides employee and Director behaviour in relation to the practices necessary to maintain confidence in the Company's integrity, ensuring compliance with our legal obligations and that we meet  the reasonable expectations of our stakeholders. It also describes the responsibility and accountability of individuals for reporting and investigating reports of unethical practice.

Principle 4 - Safeguard integrity in financial reporting

To safeguard the integrity of financial reporting, an Audit Committee was established at the original formation of Pacific Hydro. It has since become the Finance and Audit Committee, with its own Charter and composed entirely of  non-executive directors (the majority of whom are independent). 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, and is in accordance with relevant accounting standards.

Principles 5 and 6 - Make timely and balanced disclosure; and Respect the rights of shareholders

While Pacific Hydro has only one shareholder, continual disclosure to that shareholder occurs through the shareholder's representation on the Board, and senior executive accountability for compliance and disclosure thereof is set out in written policies. Pacific Hydro also makes disclosures to its other stakeholders through its website and other media.

Principle 7 - Recognize and manage risk

The Board has established a comprehensive Enterprise Wide Risk Management Framework (EWRMF).  The Sustainability and Risk Committee oversees and reviews the effectiveness  of this policy.  The CEO and General Management team are responsible for implementing the appropriate risk-mitigation strategies in accordance with the EWRMF.

The EWRMF identifies the business risks that may materially affect the delivery of the Company's business plan and  financial performance in the short to medium term. Such risks are:

  • objectively evaluated in terms of likelihood, financial consequence and ability to mitigate;
  • assessed on a profit-centre basis; and
  • reflective of the various lifecycle stages of major projects (development, construction and operation).

The Sustainability and Risk Committee regularly reviews risk management strategies and makes appropriate recommendations to the Board, and as part of the strategic planning process, the Company undertakes an annual portfolio review to update its risk profile.

The CEO and CFO are required to sign a written statement to the Board, confirming that the statement given in relation to the financial reports (under Principle 4) is founded on a sound system of risk management and internal compliance and control which reflects the policies adopted by the Board. These statements also confirm to the Board that the risk management and internal compliance and control systems are operating efficiently and effectively.

Principle 8 - Remunerate fairly and responsibly

The Remuneration Committee sets out the Company's remuneration and benefits framework, recruitment, incentives, retention and termination policies and procedures for senior executives and directors. No individual is directly involved in deciding their own remuneration.

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;
  • short-term performance-based cash bonuses; and
  • participation in a Long Term Incentive Scheme.

This mix of remuneration aligns the interests of Pacific Hydro's executives with those of its shareholders, with the objective of increasing shareholder value.

Non-Executive Director Remuneration Policy

Non-Executive Directors are paid Directors' fees at a level in line with the market.  Non-Executive Directors receive a fixed amount for Board membership, including membership and/or chairing of Board committees.  Non-Executive Directors are entitled to statutory superannuation, payable from their base fees, but do not receive performance based bonuses.