Governance and risk management
TenneT complies with the Dutch Corporate Governance Code in accordance with our shareholder’s requirements. This provides TenneT and our subsidiaries with clear operating guidelines.
Corporate governance structure
TenneT's corporate governance bodies comprise the Executive Board, Supervisory Board and General Meeting of Shareholders. Our internal audit department and external auditor also play an important role in the corporate governance structure.
The Executive Board of TenneT Holding B.V. has four statutory and two non-statutory directors. The Executive Board members have joint authority to represent the company. Each board member also holds limited individual power of attorney. Two members of the Executive Board of TenneT Holding B.V. are managing directors of TenneT TSO B.V.; two other members of the Executive Board are managing directors of TenneT TSO GmbH and one other member of the Executive Board is managing director of TenneT Offshore GmbH.
The Executive Board is responsible for the general policies and strategy of TenneT, which includes regulated and unregulated activities.
The Supervisory Board of TenneT Holding B.V. oversees TenneT's general policies and strategy. It carries out its duties in the interests of the company and its stakeholders and also takes into account relevant aspects of CSR. TenneT has a two-tier board structure as specified in the Electricity Act.
All information about the Supervisory Board (such as its rules and resignation rota) is available on the corporate website.
General Meeting of Shareholders
All shares in the capital of TenneT are held by the Dutch State, which is represented by the Ministry of Finance. Under the Electricity Act, only the Dutch state may hold voting interests in the company. A General Meeting of Shareholders is held within six months of the end of each financial year. The agenda includes a discussion on the integrated annual report, adoption of the financial statements and a dividend proposal. The meeting also discharges the Executive Board and Supervisory Board members from liability from their respective activities in the past year. Other shareholder meetings are held as and when deemed necessary by the Executive Board, Supervisory Board or shareholder.
The General Meeting of Shareholders has the power to appoint external auditors to audit the financial statements prepared by the Executive Board. The external auditors report to the Supervisory Board and the Executive Board. They present their findings in an independent auditor's report and assurance report, management letter and audit results report.
The performance of the external auditors is evaluated by the Executive Board and the Audit, Risk and Compliance Committee and, if necessary, also by the Supervisory Board.
The external auditors attend relevant meetings of the Audit, Risk and Compliance Committee. They also attend Supervisory Board meetings when the management letter or the external auditor's report on the financial statements are discussed and the financial statements are approved.
Related parties transactions are disclosed in note 7.3 to the consolidated financial statements and TenneT complies with the best practice principles II.3.2 till II.3.4.
Deviations from the Corporate Governance Code
Certain principles and best-practice provisions in the Corporate Governance Code do not apply to TenneT. The reasons why and to what extent TenneT decided not to adopt certain principles and best-practice provisions are explained below:
II. 1.10 to II. 1.11. Provisions regarding a takeover bid do not apply to TenneT because all shares are held by the Dutch state.
II.2.4 to II.2.7. TenneT does not operate a system of remuneration in the form of share options, because TenneT is state-owned.
III.2.2. Two of the three dependence criteria concern Supervisory Board members with shareholdings in the company, which does not apply to TenneT. The third criterion relates to a Supervisory Board member who has temporarily been charged with managing the company in the event of the Executive Board being unavailable or incapacitated (see III.6.7).
III.5. If the Supervisory Board has more than four members, the Corporate Governance Code stipulates it shall appoint from among its members an Audit, Risk and Compliance Committee, a Remuneration Committee, and a Selection and Appointments Committee. The TenneT Supervisory Board has combined the tasks of the latter two key committees in a Remuneration and Appointments Committee. The Supervisory Board has also established an Audit, Risk and Compliance Committee and a Strategic Investments Committee, both made up of Supervisory Board members.
III.5.11. Ms. Hottenhuis is the chair of our Remuneration and Appointments committee and she is a board member at another listed company. In accordance with the Corporate Governance code the remuneration committee may not be chaired by, amongst others, a supervisory board member who is a member of the executive board at a listed company. The Supervisory Board carefully considers appointments of chairs of its committees and preferred Ms Hottenhuis as chair of the Remuneration and Appointments Committee in light of her capabilities and experience in this field. The fact that Ms Hottenhuis is an executive director of a listed company has in 2016 not hampered in any way her functioning as chair of the Remuneration and Appointments Committee.
III.6.6. No delegated Supervisory Board member is in office at TenneT.
III.6.7. A Supervisory Board member who temporarily takes charge of the company in the event of the unavailability or incapacity of the Executive Board will in principle step down temporarily from the Supervisory Board. On completion of these managerial duties, the Supervisory Board and the General Meeting of Shareholders will decide whether this director can re-join the Supervisory Board. The duration of the director's managerial duties may be one of their considerations.
III.7.1 and III.7.2. These provisions deal with shareholdings of Supervisory Board members and do not apply to TenneT.
III.8.1 to III.8.4. These provisions concern single-tier management; as TenneT has a two-tier system, these provisions do not apply.
The following best-practice provisions pertaining to the General Meeting of Shareholders do not apply to TenneT:
- IV.1.1. Non-structure-regime company
- IV.1.2. Voting rights in respect of financing preference shares
- IV.1.3. Public disclosure of a bid
- IV.1.7. Registration date of voting rights
- IV.2.1 to IV.2.8. Depositary receipts for shares
- IV.3.1 Dealings with analysts, financial press and institutional investors
- IV.3.7. Shareholder circular
- IV.3.11. Protective mechanisms
- IV.3.12. Voting proxies and voting instructions
- IV.4.1 to IV.4.3. Responsibility of institutional investors
- IV.3.13. Policy governing bilateral contacts with shareholders.
Future changes in the Corporate Governance Code
In 2017, we will further assess the impact of the revised Dutch Corporate Governance Code as published by the Dutch Corporate Governance Code Monitoring Committee in December 2016.