| Governance |
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The Company's governance framework is designed to ensure that the Company is effectively managed and that statutory obligations are met. The governance framework ensures a clear understanding of the roles of the Board and management and demonstrates a shared commitment to the culture and success of the Company. The following sections provide information about the Company's governance framework and provide examples of the governance activities undertaken in the year. Meridian Energy Limited Meridian Energy is a limited liability company and a State-Owned Enterprise (SOE) under the State-Owned Enterprises Act 1986. As an SOE all shares are owned by the Crown. The Crown's shares are held in equal proportions by the Minister of Finance and the responsible Minister, as appointed by the Prime Minister from time to time (currently this is the Minister for State-Owned Enterprises).
Consistent with the SOE Act, Meridian Energy's principal objective is to operate as a successful company, which is:
The principal objective underpins the activities of the Company. Meridian Energy's core business is the generation and retailing of electricity, however the Company and its subsidiaries are involved with a number of wider, complementary activities, such as dam surveillance with DamWatch Services Limited and the provision of advanced metering with Arc Innovations Limited. Meridian Energy operates primarily in New Zealand and through subsidiaries has operations in Australia and the United Kingdom. Appointment and Independence of Meridian Energy's Board The Board is appointed by Shareholding Ministers and can comprise up to nine non-executive directors, including the Chairman. There are currently seven non-executive directors of the Company. Click here to view the directors' biographies. Under the Company's constitution, the Shareholding Ministers may appoint directors for a fixed term not exceeding three years and may choose to renew any Board appointments for further fixed terms of up to three years. The Shareholding Ministers also set the directors' remuneration. There were no changes in the composition of the Board in the past year. Anne Blackburn's appointment was renewed for a further term of 3 years. In accordance with the Companies Act the Board maintains an up to date interests register to ensure that conflicts of interest are avoided. To see the interests register click here. External Audit Meridian Energy's Board has adopted a strict policy to maintain the independence of the Company's external auditors. Under section 29 of the Public Finance Act 1989 the Auditor-General appointed Deloitte to audit Meridian Energy on his behalf. The Company ensures that Deloitte does not perform any work for the Group other than work that forms part of its external audit brief. Board Information and Evaluation All Board members undertake a comprehensive induction process to enhance their understanding of the industry and Meridian's business, including familiarisation tours of Meridian's assets and operations with the Chief Executive and Chairman. The Board receives information papers from Meridian management on an ongoing basis to ensure that the Board is kept appraised of the Company's activities. During the year the Board received information papers on activities throughout the group, including such things as the Company's customer satisfaction surveys. The Board conducts a self-evaluation each year. The evaluation examines the performance of the Board, the Chairman and each director. The results of each evaluation are provided to the Crown Company Monitoring and Advisory Unit (CCMAU) which in turn supplies the report to the Shareholding Ministers the Shareholding Ministers. Roles and Responsibilities of the Board The Board has a responsibility to protect and enhance the value of the Group in the interests of the Group and of the Crown as shareholder. The Board will normally hold up to eight scheduled meetings per year. In the 2006/07 year the Board met eight times. The Board meets to review and approve:
In terms of the State-Owned Enterprises Act 1986 the Board is responsible for:
The Board is kept appraised of issues throughout the Company by regular reporting and through the Board's business case approval function. Each division of the Company provides a monthly report of activities undertaken including performance against key objectives. Any material non-compliance with policies or law is also reported to the Board. The Board also receives major project reports such as those relating to the Benmore and Manapouri refurbishment and approving business cases on issues such as the Company's decision to certify the generation and retailing of its electricity as carbon neutral.. The reporting and business case processes enable the Board to oversee Meridian's economic, environmental and social performance. Meridian Energy Management's involvement with Governance Framework There is an excellent working relationship between Meridian Energy's management and the non-executive Board. All management are employees of the Company. Management are involved in the governance framework of the Company to ensure the Companys objectives are met. In addition to their day to day roles within the Company, Meridian management are involved with a number of professional organisations including: Institute of Professional Engineers, New Zealand Council for Sustainable Development, Energy Law Association. All authority conferred on management is delegated by the Board through the Chief Executive. The Board agrees to the levels of delegated authority for those who report directly to the Chief Executive and throughout the Company. Board Committees To ensure efficiency the Board specifically delegates some of its roles to Board Committees. Board Committees observe the same rules of conduct and procedure as the Board unless the Board determines otherwise. They also act as standing committees to the full Board on specific issues. The Board considers the balance of skills, experience and other qualities required when appointing directors to a particular committee. The two standing committees of the Board are the Audit & Risk Committee and the Remuneration and Human Resources Committee. Audit & Risk Committee The Audit & Risk Committee is chaired by Anne Urlwin and sets the principles and standards for internal controls, accounting policies and the nature, scope, objectives and functions of external and internal audit. It also evaluates post implementation reviews of investments, major capital expenditure projects and funding arrangements. With respect to risk it is responsible for ensuring the efficient and effective management of all business risk and compliance with the relevant legal, market and group policy requirements. Remuneration & Human Resources Committee The Remuneration & Human Resources Committee is chaired by Anne Blackburn and sets the principles and standards for remuneration structure, policy and practice and the human resources policy. It approves company-wide remuneration policy and reviews remuneration of senior executives as well as reviewing the succession strategy and conditions of employment. In the past year this committee has reviewed and reported on a variety of issues including the introduction of the Company's KiwiSaver scheme. Board and Committee composition & attendance (as at 30 June 2007)
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