Meridian Annual Report - Meridian Energy

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Governance
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
separate 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:
• as profitable and efficient as a comparable business not owned by
the Crown
• a good employer
• an organisation which exhibits a sense of social responsibility having
regard to the interests of the communities in which it operates and by
endeavouring to accommodate or encourage those interests when
able to do so.
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 , the provision of
advanced metering with Arc Innovations Limited and energy efficiency
consulting and products with Right House Limited. Meridian Energy
operates primarily in New Zealand and through subsidiaries and joint
venture arrangements has operations in Australia, the United Kingdom
and Spain.
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. 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 changes in the composition of the Board in the past year.
Polly Schaverien was appointed from 1 November 2007 and Tim Lusk
resigned as at 1 April 2008. Another appointment is expected to take
the Board to eight non-executive members.
Wayne Boyd, Anne Urlwin and Ray Watson’s appointments were
renewed for further terms of three years each.
In accordance with the Companies Act the Board maintains an up to
date interests register to ensure that conflicts of interest are avoided.
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.
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 2007/08 year the Board met 12 times.
The Board meets to review and approve:
• strategic planning and corporate strategies
• the annual business plan and review of corporate performance
• business opportunities and risks
• financial and dividend policies
• management’s performance against established goals and plans
In terms of the State-Owned Enterprises Act 1986 the Board is
responsible for:
• strategic planning and corporate strategies
• the annual business plan and review of corporate performance
• business opportunities and risks
• financial and dividend policies
• management’s performance against specified goals and plans.
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 refurbishment and Project West Wind and approving
business cases on issues such as the Company’s decision to re-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.