GRI 2-9: Governance structure and composition

The governance principles and detailed set-up are defined in the Articles of Association and the Organisational Regulations.

The highest governance body is the Board of Directors, consisting of seven non-executive members. The profiles and the other significant mandates of the members of the Board of Directors are published in the Annual Report 2022.

After election by the Annual General Meeting, the Board of Directors constitutes itself and elects the Chairman and the Deputy Chairman of the Board of Directors from among its members, as well as the Secretary who is not a member of the Board of Directors.

The Board of Directors nominates the members of the Nomination and Remuneration Committee (NRC), the Audit and Risk Committee (ARC) as well as the Governance Committee (GC), including their Chairs. The latter committee will only be constituted in the case described in “GRI 2-11: Chair of the highest governance body”. Further committees can be set up on an ad-hoc basis.

The Committees consist of at least two members. Currently, each Committee consists of three members, representing each shareholder group, with the Chairman of the Board of Directors as permanent guest.

GRI 2-10: Nomination and selection of the highest governance body

The members of the Board of Directors are elected annually by the General Assembly at the ordinary Annual General Meeting, which takes place within six months after the end of the previous year.

The candidates for the Board of Directors are proposed by the three shareholder groups, which each represent one third of the total share capital, according to the following guidance: each shareholder group has the right to propose two candidates and the shareholders agree on one independent candidate who will be elected as the seventh member.

The shareholders are responsible for ensuring gender diversity and the balanced set of skills required for the task as member of the Board of Directors.

The members of the Board of Directors are elected for one year, until the next ordinary Annual General Meeting. The members of the Board of Directors step down from their position at the age of 70.

GRI 2-11: Chair of the highest governance body

The Board of Directors constitutes itself and elects the Chairman and the Deputy Chairman of the Board of Directors from among its members, as well as the Secretary who is not member of the Board of Directors. The Chairman has to be the member of the Board of Directors who is independent from any of the shareholder groups.

In the case that the Chief Executive Officer (CEO) of the company is unable to fulfil his/her tasks, or if the CEO position is vacant, the Chairman of the Board of Directors can be appointed in a double role as the Board of Directors’ Delegate (BoDD). In this case the Board of Directors will form a Governance Committee (GC) with the role of ensuring that corporate governance, in particular checks and balances, continue to work properly with respect to the double mandate. In this case, the Board of Directors also appoints one non-executive member of the Board of Directors as the Lead Director, to ensure the independence of the Board of Directors towards the Board of Directors’ Delegate. The Lead Director can be the Deputy Chairman.

GRI 2-12: Role of the highest governance body in overseeing the management of impacts

In accordance with the Organisational Regulations, the Board of Directors, upon proposal by the CEO, decides on the corporate policies, the group strategy and long-term objectives, medium-term development programmes, business policies and financial and risk policies.

The CEO, together with the Executive Board elaborates the company purpose, mission statements and strategy, based on internal know-how and outside-in market information and benchmarking. These elements are then discussed and aligned in several sessions with the Board of Directors.

Prior to final approval of major strategic and business orientations, the Chairman of the Board of Directors and the CEO present these projects to a defined group of shareholder representatives in shareholder sounding sessions. The feedback collected is then integrated, where appropriate and feasible, paying special attention to not violating any compliance rules (e.g. competition laws).

With a view to contributing to sustainability and security of supply, Alpiq’s business decisions, such as investments, divestments or contracts are closely monitored with respect to legal and financial risks, financial impact, compliance and environmental impact. In accordance with the authority regulation, decisions are taken at division, Executive Board or Board of Directors levels.

Continuous monitoring of market, credit, liquidity risks as well as legal and compliance risks and health, safety and environment (HSE) issues, is ensured at Executive Board level. The Audit and Risk Committee is informed at least twice a year with a full-fledged reporting. Management reporting at every Board of Directors meeting or even on ad-hoc basis ensures efficient information flow. The Board of Directors can mandate executive management to implement corrective measures where necessary.

GRI 2-13: Delegation of responsibility for managing impacts

The Board of Directors has delegated operational management of the company to the CEO, in alignment with the respective laws, the Articles of Association and the Organisational Regulations.

The CEO leads the Executive Board, which consists of the CEO, the Chief Financial Officer (CFO) and three business division heads. All members of the Executive Board are nominated by the Board of Directors.

The CEO, together with the Executive Board, takes all management decisions required to ensure the continued existence and development of the company, unless they fall within the authority of another governing body of the company.

At each meeting of the Board of Directors, the CEO and the members of the Executive Board report about current business performance, deviation from the budget, significant business incidents and transactions that affect business performance, risk exposure, HSE aspects, as well as major development projects.

After the end of each reporting period, the CEO and the Executive Board provide written quarterly reports on the same elements.

In the event of major incidents or if decisions need to be taken, the Board of Directors or the members of one of the committees may be informed on an ad-hoc basis.

GRI 2-14: Role of the highest governance body in sustainability reporting

The sustainability report is elaborated, based on information gathered among all business and functional entities of the company, taking into account all existing reports such as business performance, risk assessment, HSE reporting and environmental impact analyses.

The sustainability report is compiled and edited under the lead of the Executive Board. Once finalized, the Executive Board submits the sustainability report to the Board of Directors for final approval. The Board of Directors can be involved during the editing phase.

GRI 2-15: Conflicts of interest

The Organisational Regulations and Alpiq’s Code of Conduct both set out the correct conduct in case of conflicts of interest. These rules are applicable to all employees and to the governance body. In addition, all new employees receive training in e-learnings on the rules set out in the Code of Conduct.

Conflicts of interest must be avoided and communicated. Members of the Boards of Directors must inform the Chairman of the Board or the Secretary of the Board, employees must inform compliance. When making appointments to the Board of Directors, any possible conflicts of interest must be disclosed before the position is accepted.

Should a conflict of interest appear the Chairman of the Board must call for a decision by the Board of Directors corresponding to the intensity of the conflict of interest, which will be made without the Board Member concerned being present. Any person with a conflict of interest or who has to represent such interests on behalf of a third party may not participate in the decision-making process. Dealings between the company and the members of the executive bodies or affiliated persons are subject to the principle of transactions contracted under third-party conditions; they will be authorized without the persons concerned being present. If necessary, an impartial assessment may be ordered.

If employees report conflicts of interest, they may be excluded from decision making and/or in the case of outside-employment/public functions the prior written consent of their supervisor and HR to carry out employment outside or public functions is required.

In accordance with Alpiq’s Code of Conduct, all employees and members of the Board of Directors are responsible for declaring potential conflicts of interest.

Regarding the highest governance bodies, the Board of Directors and the Executive Boards, all additional mandates in other companies and/or associations are tracked and published yearly in the annual report. During the decision-making process in the Board of Directors and the Executive Boards all potentially conflicted members are recused from the respective agenda items, including access to the information, the relevant part of the discussion as well as the related decisions.

GRI 2-16: Communication of critical concerns

In 2022, the war in Ukraine and the problems related to the availability of the power production in France had a significant impact on the European energy sector in general, including the Swiss power utilities, such as Alpiq.

The prices for gas and power had reached previously unconceivably high levels. For Alpiq this situation led to a significant increase in the risks related to the performance of counterparties (credit risk). The extremely high prices and the related high margining requirements on the European Energy Exchanges as well as in the over-the-counter (OTC) markets impacted heavily on the liquidity situation (liquidity risk), while the overall profitability remained intact. In this context, some shareholder support was required in the form of loan facilities.

Throughout the entire year, the Board of Directors was informed on a weekly and in some cases even on a daily basis about the critical issues related to market development, counterparties and liquidity situation in full transparency. When immediate measures had to be coordinated and approved, the Board of Directors was convened at very short notice.

The shareholder representatives were informed with the same frequency, weekly or daily, with the exception of competition sensitive information on counterparties.

GRI 2-17: Collective knowledge of the highest governance body

In the context of the elaboration of the new enhanced internal requirements on sustainable development and environmental, social and governance (ESG) standards, the members of the Board of Directors were informed by the Executive Board on the proposed targets in several meetings. The members of the Board of Directors contributed with their experience in other countries and companies, in order to enable a common understanding of the priorities.

The Board of Directors and the Executive Board jointly agreed on the priority targets to be implemented based on the UN sustainable development goals (SDG). The shareholder representatives were then informed about the proposed five SDG goals and were invited to provide feedback and suggestions.

Following this alignment of Executive Board, Board of Directors and shareholders, the goals for sustainable development are being further implemented in all areas of the company. This process will be accompanied by information and training sessions in meetings or by means of the company’s electronic learning platform.

Each new member of the Board of Directors undergoes an introduction program with several meetings and workshops in order to know the main business activities, key personnel, processes and challenges of the company. In 2022, the new Chairman of the Board of Directors joined the company.

In the current geopolitical and economic context the learning focus has been on compliance, cyber security, physical security and resilience. These learning sessions are mandatory for all employees and the members of the Board of Directors.

GRI 2-18: Evaluation of the performance of the highest governance body

In accordance with the Swiss Code of Best Practice for Corporate Governance, the Board of Directors conducts an annual self-evaluation and jointly discusses measures and initiatives to be implemented.

In 2022, the performance of the Board of Directors was evaluated by the Chairman of the Board of Directors, individually, focusing on the performance during the year 2022, the skill set required as well as the outlook for the year 2023.

GRI 2-19: Remuneration policies

Members of the Board of Directors receive a fixed compensation plus lump-sum expenses and statutory pension benefits. These components are not performance related. The amount of the fixed compensation depends on the office held as Chairman or member and on memberships on board committees. Apart from the legally required social security contributions, members of the Board of Directors do not receive any other pension benefits, except for pension contributions if they are insured with the “PKE Vorsorgestiftung Energie”. See also Annual Report 2022 “Corporate Governance, Remuneration”.

GRI 2-20: Process to determine remuneration

To ensure that the remuneration of members of the Executive Board and the Board of Directors conforms to standard market practice, Alpiq regularly engages independent external consultancy firms to evaluate overall remuneration packages relative to the market environment. The most recent market comparison of remuneration of the Board of Directors and Executive Board was performed by HCM Hostettler & Company in mid-2018 at Alpiq’s instigation. The amount and structure of remuneration were analysed, using listed electricity and energy companies in Switzerland and Europe of a similar size with comparable structures and operations, as well as industrial companies as a benchmark.

GRI 2-21: Annual total compensation ratio

Alpiq’s compensation philosophy is aimed at promoting and reinforcing the quality and commitment of employees. Alpiq is generally committed to paying its employees fair and appropriate compensation in the form of wages and salaries, social components and other fringe benefits. This compensation should meet minimum statutory standards and generally exceeds them in each country in which Alpiq is active.

The spread of salaries between Alpiq employees varies from one country to another. This depends to a large extent on the relevant local managerial and employment structure and is frequently culturally influenced. For this reason, local salary structures cannot be used to address compensation issues. On a global level, the ratio between the average annual total compensation and the highest annual total compensation is 1:10.

There was no general wage round at Alpiq in 2022. Adjustments were made in some countries due to inflation, and there were isolated structural adjustments. The highest-paid individual did not receive a pay adjustment in 2022.