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Corporate governance

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					Romande Energie Group
2010




Corporate
governance
The following is an English translation of the original French text
                               .
“Gouvernement d’entreprise” The official French text is the only
authentic version recognized by Romande Energie Group.
                            Corporate
                            governance
                            1. Group structure and shareholders

                            2. Capital structure

                            3. Board of Directors

                            4. Executive Board

                            5. Compensation, shareholdings and loans

                            6. Shareholders’ voting rights

                            7.   Changes in control and defence measures

                            8. Auditors

                            9. Information policy

                            10. Report of the statutory auditor




                            www.romande-energie.ch
                            URL 194.124.254.13




2   Corporate governance Romande Energie Group 2010
    The numbering system refers to the relevant chapters of the “Directive on Information relating
                              ,
    to Corporate Governance” issued by the SIX Swiss Exchange on 29 October 2008.
    Romande Energie Group complies with the recommendations contained in the Swiss Code
    of Best Practice for Corporate Governance.




1   Group structure and shareholders
    1.1 – 1.1.1                                                                            1.3   Cross-shareholdings
            Romande Energie Holding SA, which has its registered                                 Romande Energie Holding SA has no cross-sharehold-
            office in Morges, Switzerland, is listed on the SIX Swiss                             ings. Nor is there any cross-representation on the
            Exchange in Zurich (Security number 2.560.733, ISIN                                  boards of directors of listed companies.
            code CH 0025607331). It was established in 1901 under                                Alpiq Holding SA in Neuchâtel holds 10.53% of the
            the name “Compagnie Vaudoise des Forces Motrices                                     capital of Romande Energie Holding, Groupe E SA in
            des Lacs de Joux et de l’Orbe” and was originally listed                             Fribourg 5.8%, Banque Cantonale Vaudoise in Lausanne
            on the Lausanne Stock Exchange. Excluding holdings                                   3.54% and BKW FMB Energie AG in Bern 5.001%.
            of own shares, its market capitalization amounted to                                 Romande Energie Holding SA does not own any shares
            CHF 1.674 billion at 31 December 2010.                                               in these companies.
            Romande Energie Holding SA is the holding company of
            Romande Energie Group. It has no operating activities. It                            Further information:
            is located at Rue de Lausanne 53 in CH-1110 Morges.                                  Romande Energie SA has a shareholding of 28.72% in
            Romande Energie SA, a subsidiary of Romande Energie                                  EOS Holding SA, which owns 31.4% of Alpiq Holding
            Holding SA, is the Group’s largest operating company.                                SA, which, as mentioned above, holds 10.53% of the
            The Group focuses primarily on the production, distribu-                             capital of Romande Energie Holding SA. Guy Mustaki,
            tion and sale of electricity.                                                        Chairman of the Board of Directors of Romande Energie
                                                                                                 Holding SA, also chairs the board of EOS Holding SA
    1.1.2   Romande Energie Holding SA is the only Group company                                 and has a seat on the board of Alpiq. Jean-Yves Pidoux,
            with a stock exchange listing (SIX).                                                 a director of Romande Energie Holding, also sits on the
                                                                                                 board of EOS Holding in his capacity as a delegate of SI
    1.1.3   Information on companies included in the scope of                                    Lausanne, and is a board member of Alpiq Holding.
            consolidation at 31 December 2010 can be found in                                    Giovanni Leonardi, CEO of Alpiq, is a member of the
            note 36 of the “Notes to the consolidated financial                                   Board of Romande Energie Holding.
            statements” on page 44 of the 2010 Financial Review.


    1.2     Major shareholders at 31 December 2010
            Vaud Canton *                                                      440 047 shares *             38.60%
            Vaud municipalities *                                              161 145 shares *             14.14%
            Banque Cantonale Vaudoise **, Lausanne                              40 331 shares **             3.54 %
            Groupe Alpiq, Neuchâtel                                            119 994 shares               10.53 %
            Groupe E SA, Fribourg                                               66 080 shares                5.80 %
            BKW FMB Energie AG, Bern                                            57 019 shares                5.00 %
            Romande Energie Group, Morges                                       42 174 shares                 3.7 %
            Tradeable shares                                                   213 210 shares               18.69 %
            Total                                                           1 140 000 shares               100.00 %

            * Parties to an agreement relating to reciprocal pre-emptive rights.
            ** Of which 9 900 shares covered by the agreement relating to reciprocal pre-emptive rights.




                                                                                                                  Corporate governance Romande Energie Group 2010   3
6       C O R P O R AT E G O V E R N A N C E




    2   Capital structure
        2.1   Capital                                                             “Five percent of the profit for the financial year shall be
              The share capital amounts to CHF 28.5 million and is                allocated to the general reserve until the reserve reaches
              divided into 1 140 000 registered shares with a nominal             twenty percent of the share capital. The following items
              value of CHF 25 each. There is an authorized capital of             shall also be allocated to this reserve even if it has
              CHF 10.125 million. Romande Energie Holding SA has no               reached the statutory limit:
              conditional capital.                                                1. after payment of issuance costs, the proceeds of
              All the shares are vested with the same ownership and                   shares issued that exceed the nominal value, inas-
              voting rights. There are no transfer restrictions.                      much as they are not allocated to amortization or
                                                                                      pension objectives;
        2.2   Authorized and conditional capital                                  2. the balance of the payments made on cancelled
              The Annual General Meeting of 21 May 2010 approved                      shares, less the loss that would have been incurred
              an authorized capital of CHF 10.125 million, consisting                                                ”
                                                                                      on shares issued in their stead.
              of 405 000 registered shares with a nominal value
              of CHF 25 each, for a period expiring 21 May 2012.                  Articles 671(2)(3) and 671(3) do not concern holding
                                                                                  companies and therefore do not apply.
              Terms and conditions for subscription of authorized
              capital Article 6 of the Articles of Association
                                                                                         restrictions and registration of
                                                                            2.6.1 Transfer
               ...
              “ The Board of Directors shall decide the price and
                                                                                  nominees
              paying-in method (payment in cash, by set-off, in kind or
                                                                                  • There are no transfer restrictions on registered shares.
              by takeover of assets).
                                                                                  • Natural and legal persons are registered with no
              The Board of Directors may exclude the pre-emptive
                                                                                     limitation on voting rights.
              rights of shareholders and confer them on third parties
                                                                                  • Fiduciary registrations are entered without voting rights.
              if the new shares are used for the acquisition of compa-
                                                                                  • General authorizations for registration are accepted.
              nies, parts of companies, equity participations or new
                                                                                  • The Company does not print applications for
              investment projects in the energy field or related sectors,
                                                                                     registration.
              or to finance such transactions, or for employee profit-
                                                                                  • The Company no longer prints physical certificates.
              sharing schemes.  ”
                                                                                  • Nominee SIS (NS): with no entry in the share register.
              There is no conditional capital.
                                                                                  • AREG-data compatible (electronic transmission).
                                                                                  The Articles of Association have been amended to comply
        2.3   Changes in capital during the past three years
                                                                                  with the requirements of the Federal Act (Articles, Art. 5.)
              None.
                                                                                  on Book-Entry Securities, which entered into force early
        2.4 - 2.5
                                                                                  in 2010.
              Shares – participation and profit-sharing
                                                                            2.6.2 - 2.6.4
              certificates – dividends
                                                                                  Derogations during the financial year –
              The capital consists of 1 140 000 shares with a nominal
                                                                                  admissibility of nominee registrations –
              value of CHF 25 each. All the shares are vested with the
                                                                                  procedures and conditions pertaining to the
              same ownership and voting rights. There are no participa-
                                                                                  lifting of restrictions and privileges under the
              tion or profit-sharing certificates.
                                                                                  Articles of Association
              Dividends – allocation of net income                                The Articles of Association do not contain any specific
              Net income may be freely allocated by the Annual Gen-               provisions concerning these points.
              eral Meeting subject to the provisions of Article 25 of the
              Articles of Association, which partly incorporate Article     2.7   Convertible bonds and options
              671 of the Code of Obligations.                                     Romande Energie Holding SA has not issued any convert-
                                                                                  ible bonds or options.
              Movements in shareholders’ equity                                                                                         Total
                                                              Share          General              Reserve           Retained    shareholders’
              CHF 000                                        capital         reserve        for own shares          earnings          equity
              Balance at 1 January 2008                      28 500               5 859              15 268          243 153          292 780
              Net income                                                                                             148 833           148 833
              Dividend paid                                                                                          -33 025           -33 025
              Balance at 31 December 2008                    28 500               5 859              15 268          358 961          408 588
              Net income                                                                                              87 998            87 998
              Dividend paid                                                                                          -24 218           -24 218
              Balance at 31 December 2009                    28 500               5 859              15 268          422 741          472 368
              Net income                                                                                             128 041           128 041
              Own-share purchases                                                                     4 581           -4 581                 -
              Dividend paid                                                                                          -35 226           -35 226
              Balance at 31 December 2010                    28 500               5 859              19 849          510 975          565 183

4       Corporate governance Romande Energie Group 2010
3   Board of Directors
    The Board of Directors normally meets for half a day at least              3.3    Election and term of office
    five times a year and each of its committees holds several                         The Board of Directors comprises eleven members, six
    meetings a year, depending on the business at hand and the                        of whom are appointed by the Vaud Cantonal Govern-
    recommendations to be submitted to the Board.                                     ment. Of these six directors, two are drawn from the
    In 2010, the Board held seven meetings lasting an average                         ranks of shareholding municipalities.
    of three hours. The main focus of its work was on monitor-                        The other five members of the Board are elected to
    ing business developments, formulating corporate strategy,                        office by the General Meeting of Shareholders for a
    examining complementary production opportunities and as-                          term of three years. They are eligible for re-election.
    sessing the medium-term financial outlook.                                         There is no provision for staggered terms of office or
    Directors assiduously attend meetings of the Board as well                        for series of elections. Directors are required to step
    as those of the committees to which they belong.                                  down no later than at the General Meeting held in the
                                                                                      year in which they reach the age of 70.
                                                                               3.1 - 3.2
                                                                                      Composition – qualifications and functions of
                                                                                      members of the Board of Directors
                                                                                      All Board members are Swiss citizens. They have no
                                                                                      executive management role within the companies of
                                                                                      Romande Energie Group and have not performed any
                                                                                      such role during the past three years.


    3.1 - 3.2
          Composition, activities, interdependencies
                                                                 Expiry
                                      Year of        In office   of term
          Name                        birth          since       of office   Board functions    Committee functions

          Guy Mustaki *               1960           2005        (2013)      Chairman           Chairman, Strategy and Corporate Development
          Wolfgang Martz              1954           2003        2012        Vice Chairman      Chairman, Appointments and Human Resources
          Laurent Ballif *            1951           2007        (2013)      Director           Member, Appointments and Human Resources
          Christian Budry             1957           2003        2012        Director           Chairman, Finance and Audit
          Paola Ghillani *            1963           2009        (2012)      Director           Member, Finance and Audit
          Bernard Grobéty             1950           2002        2012        Director           Member, Finance and Audit
          Antoine Lattion *           1946           1997        2011**      Director           Member, Finance and Audit
          Giovanni Leonardi           1960           2008        2011        Director           Member, Strategy and Corporate Development
          Jean-Jacques Miauton        1951           1997        2012        Director           Member, Appointments and Human Resources
          Jean-Yves Pidoux *          1956           2007        (2013)      Director           Member, Appointments and Human Resources
          Daniel Schmutz *            1943           1992        (2013)      Director           Member, Strategy and Corporate Development

          * Director appointed by the Cantonal Government.
             Expiry of term of office at the discretion of the Cantonal Government.
          ** Stepping down at the 2011 General Meeting.




                                                                                                    Corporate governance Romande Energie Group 2010   5
6   C O R P O R AT E G O V E R N A N C E




                                                                     another four years. He was appointed CEO of the Minoteries
                                                                     Group in April 1990, a position which he occupied until 2005.
                                                                     Mr Martz was president of the Montreux local council in 2007 .
                                                                     He is vice chairman of the Swiss Employers’ Federation and
                                                                     the Vaud Chamber of Commerce and Industry.
                                                                     A member of the Board of Romande Energie Holding SA
                                                                     since 2003, he became Vice Chairman in 2004 and chairs
                                                                     the Appointments and Human Resources Committee. He
                                                                     is invited to all the meetings of the Strategy and Corporate
                                                                     Development Committee.
                                                                     In the electricity field, Mr Martz is a Board member of
                                                                     Romande Energie Commerce SA and EOS Holding SA,
                                                                     Lausanne.
                                                                     He is chairman of the board of Construction SA in Yverdon-les-
                                                                     Bains, vice chairman of the Bex Salt Mines, SOCIM (Société
    Guy Mustaki, Chairman                                            Cooperative Immobilière Montreux), Montreux, and CRPM
    Guy Mustaki holds a doctorate in law from Lausanne Uni-          Centre Romand de Promotion du Management, and a board
    versity, and has been a member of the Bar and a practising       member of Schenk Holding SA, Rolle, and the Vaud Cantonal
    lawyer since 1991. He has been a professor at Lausanne Uni-      Pension Plan.
    versity since 1991, specializing in commercial law, corporate
    law and corporate governance.
    A member of the Board of Romande Energie Holding SA
    since the 2005 Annual General Meeting, Mr Mustaki took
    over the chairmanship on 19 May 2006. He also chairs the
    Strategy and Corporate Development Committee.
    In the electricity field, Mr Mustaki is chairman of EOS Holding
    SA, Lausanne. He is a board member of Alpiq Holding SA,
    where he chairs the appointments and compensation com-
    mittee. He is a director and member of the executive com-
    mittee of Grande Dixence SA, Sion, and chairs the steering
    committee for the new hydroelectric power plant project on
    the Rhône at Bex-Massongex.
    He sits on the board of Lausanne Palace SA and various
    foundations, and is also a member of the Economic Council
    of Vaud Canton.

                                                                     Laurent Ballif
                                                                     Laurent Ballif holds a political science degree from Lausanne
                                                                     University. He has a diploma in sports management from the
                                                                     Swiss Graduate School of Public Administration (IDHEAP),
                                                                     Lausanne, where he was one of the first students to com-
                                                                     plete this course of study.
                                                                     Mr Baliff began his career as a journalist in Montreux and then
                                                                     worked for nearly twenty years as a swimming instructor in
                                                                     Vevey. After training to become a national coach, he went on
                                                                     to play a leading role in this sport.
                                                                     Mr Ballif has been active in politics since the mid-1980s, and
                                                                     served as cantonal secretary of the Vaud Socialist Party for
                                                                     seven years before working as secretary general of IDHEAP
                                                                     from 1995 to 2000. He became a member of the Vaud
                                                                     Cantonal Parliament in 1994 and was elected to the Vevey
                                                                     municipal council in 2001. Since then he has devoted himself
    Wolfgang Martz, Vice Chairman                                    exclusively to his political duties. He was made mayor of
    Wolfgang Martz holds a degree in agronomy from the Swiss         Vevey in 2006.
    Federal Institute of Technology in Zurich.                       He joined the Board of Romande Energie Holding SA in 2007     ,
    After first working in the development aid sector in Africa       and is a member of the Appointments and Human Resources
    for four years, Mr Martz was employed in the dairy division      Committee.
    of Nestlé (Nestec) for a further four years before becoming      In the energy field, Mr Ballif represented the shareholding
    a partner in a management consultancy, where he spent            municipalities on the board of Société électrique Vevey-


6   Corporate governance Romande Energie Group 2010
Montreux from 2006 to 2008 (the year in which Romande              After starting her career at Ciba/Novartis and spending the
Energie Holding acquired all the shares of this company). It was   first part of her professional life with multinational companies,
in this capacity that the Vaud Cantonal Government first appoint-   Ms Ghillani became CEO of the Max Havelaar Foundation, a
ed him as a director of Romande Energie Holding SA. As mayor       leading organization in the fair trade field, in 1999. During the
of Vevey, he sits on the boards of several semi-public companies   same period, she was a board member of FLO International
in connection with his administrative responsibilities.            (Fair Trade Labelling Organizations), where she served as
                                                                   chair from 2001 to 2005. On 1 September 2005, Ms Ghillani
                                                                   established her own company, Paola Ghillani & Friends Ltd,
                                                                   which advises on corporate strategy and management as
                                                                   well as promoting and implementing sustainable develop-
                                                                   ment and ethics in business. She was appointed to the Board
                                                                   of Directors of Romande Energie Holding SA by the Vaud
                                                                   Cantonal Government and is a member of the Finance and
                                                                   Audit Committee.
                                                                   Ms Ghillani is a director of various companies, including
                                                                   Migros and Helvetia Holding AG, and also sits on committees
                                                                   of experts in sustainable development funds.




Christian Budry
Christian Budry is a graduate in economics and social sci-
ences from Fribourg University and a Swiss certified ac-
countant.
Mr Budry started his career with Ernst & Young SA as an
auditor. He was then made director of the audit department
for Western Switzerland before being appointed head of
“Manufacturing, Technology & Energy” for the Swiss market
(1983-2001). He has been CFO and a member of the execu-
tive committee of Bobst Group (Prilly, Vaud) since 2001.
Mr Budry joined the Board of Romande Energie Holding SA
in 2003 and has chaired the Finance and Audit Committee            Bernard Grobéty
since 1 January 2005.                                              Bernard Grobéty is a certified accountant.
He sits on the boards of various companies of Bobst Group.         Mr Grobéty was deputy general manager in the financial
Since 2005, he has also been a director of Publigroup SA,          division of Vaudoise Assurances. He spent the greater part
Lausanne, where he chairs the audit committee.                     of his career with this company, which he joined in 1972
                                                                   and left in mid-2009. Following his retirement from Vaudoise
                                                                   Assurances, he has served as a company director.
                                                                   Mr Grobéty has been on the Board of Romande Energie
                                                                   Holding SA since 2002 and is a member of the Finance and
                                                                   Audit Committee. He sits on the Board of Romande Energie
                                                                   Commerce SA.
                                                                   In addition to his work as a judge at the Lausanne District
                                                                                                                            A
                                                                   Court, he is a director of the Fonds de Compensation de l’ VS
                                                                   in Geneva, Hotela Assurances SA, Montreux, the Clinique de
                                                                   la Source, Lausanne, and the Coopérative Romande de Cau-
                                                                   tionnement CRC PME, Pully. He is also chairman of Loginco,
                                                                   a housing cooperative in Lausanne.




Paola Ghillani
Paola Ghillani holds a degree in pharmacy from Lausanne
University and completed her business training at the IMD
in Lausanne, with a diploma in International General Manage-
ment for Executives and the International Program in Board
Management.

                                                                                      Corporate governance Romande Energie Group 2010   7
6   C O R P O R AT E G O V E R N A N C E




                                                                     In the electricity field, Mr Lattion is chairman of Société
                                                                     Electrique du Bas-Valais and a Board member of Romande
                                                                     Energie Commerce SA. However, having reached the legal
                                                                     retirement age, he wishes to relinquish his offices in the
                                                                     electricity industry at the 2011 General Meetings.
                                                                     Mr Lattion chairs the Lower Valais Regional Development
                                                                     Association and the management committee of the Hôpital du
                                                                     Chablais, in addition to serving on the boards of several Swiss
                                                                     semi-public corporations, institutions and foundations.

                                                                       At the same time as he retires from professional
                                                                       life, Mr Lattion also wishes to step down from the
                                                                       Board of Romande Energie Holding SA at the 2011
                                                                       Annual General Meeting.
                                                                       The Board would like to take this opportunity
    Giovanni Leonardi                                                  to thank him most sincerely for the exceptional
    Giovanni Leonardi is an electrical engineer and a graduate of      contribution he has made to Romande Energie
    the Swiss Federal Institute of Technology in Zurich.               Group by virtue of his extensive know-how and
    Mr Leonardi worked in various engineering offices before join-      interpersonal skills, as well as for having been a
    ing the Atel Group in1991, where he was made CEO in 2004.          strong and efficient link between the Group and
    Following the merger of EOS Holding and Atel Holding, the          the interests of Valais Canton in his capacity as
    latter company became the Alpiq Group in January 2009. In          chairman of Société Electrique du Bas-Valais.
    addition to his role as CEO, Mr Leonardi is a board member
    of several subsidiaries and affiliated companies of Alpiq. He
    is chairman of Società Elettrica Sopracenerina in Locarno, and
    a board member of Swisselectric in Bern.
    Mr Leonardi joined the Board of Directors of Romande
    Energie Holding SA at the 2008 Annual General Meeting and
    is a member of the Strategy and Corporate Development
    Committee.




                                                                     Jean-Jacques Miauton
                                                                     Jean-Jacques Miauton received a business education, spe-
                                                                     cializing in steelworks in 1974.
                                                                     Mr Miauton spent a large part of his career as manager of
                                                                     the Miauton Group in Villeneuve and CRH Gétaz Holding
                                                                     (formerly Gétaz Romang in Vevey). Since 2008, he has ac-
    Antoine Lattion                                                  quired and developed a group of six companies specializing
    Antoine Lattion received a business education.                   in micromechanics and subcontracting for the watchmaking
    He has recently retired from his position as manager of the      industry: Swiss Madeness Solutions Group SA. Mr Miauton
    Collombey-Muraz branch of Banque Cantonale du Valais,            is managing director and CEO of this group, which is located
    which he joined in 1985.                                         in La Chaux-de-Fonds.
    He has been Prefect of Monthey since 2002.                       He joined the Board of Romande Energie Holding SA in
    Mr Lattion was municipal secretary of Collombey-Muraz from       1997 and sits on the Appointments and Human Resources
                 ,
    1968 to 1977 administrative director from 1977 to 1985 and       Committee. He has been a director of Romande Energie
    president from 1985 to 2000. He was a member of the Valais       Commerce SA since end-2007       .
    Cantonal Parliament from 1977 to 1993.                           Mr Miauton chairs the Vaud-Valais Consultative Committee
    He has been a member of the Board of Romande Energie             of the Swiss National Bank and holds directorships at other
    Holding SA since 1997 and sits on the Finance and Audit          Swiss companies, including CDM Hôtels et Restaurants SA,
    Committee.                                                       Lausanne, Décision SA, Ecublens, RAK Composites in the
                                                                     United Arab Emirates, etc.

8   Corporate governance Romande Energie Group 2010
                                                                   Mr Schmutz was deputy chair of political economy at the HEC
                                                                   for two years, and worked for the Swiss Bureau of Statistics
                                                                   in 1967-1968. He was secretary to the Vaud Fruit Producers’
                                                                   Association (1968-1973) and the Vaud Federation of Health In-
                                                                   surance Funds (1974-1981). During his 17 years as a member
                                                                   of the Cantonal Government, he headed the departments of
                                                                   finance, social welfare and public works. Since his retirement
                                                                   from politics, he has held various other offices in semi-public
                                                                   corporations.
                                                                   He joined the Board of Romande Energie Holding SA in 1992
                                                                   and sits on the Strategy and Corporate Development Com-
                                                                   mittee.
                                                                   In the electricity field, Mr Schmutz has been a board member
                                                                   of EOS Holding SA in Lausanne since 2001.

Jean-Yves Pidoux
Jean-Yves Pidoux holds a doctorate in sociology and anthro-
pology from Lausanne University (UNIL).
Mr Pidoux was an associate professor at the UNlL Faculty of
Social and Political Sciences and also a member of the board
of Trustees and the Executive Committee of Pro Helvetia, the
Swiss Arts Council.
Mr Pidoux was a Lausanne local councillor from 1998 to 2006
and has been a member of the Vaud Cantonal Parliament
since 2002. He was put in charge of the City’s public utilities
department in 2006.
He has been a member of the Board of Romande Energie
Holding SA since the 2007 Annual General Meeting, and sits
on the Appointments and Human Resources Committee.
In his capacity as head of the Lausanne public utilities depart-
ment, Mr Pidoux is a board member of several companies in
which the City of Lausanne has a direct or indirect financial       Olivier Rapin, Board secretary (non-member)
interest; these include EOS Holding SA, Lausanne, Alpiq            Olivier Rapin holds a law degree from Lausanne University.
Holding SA, Neuchâtel, Grande Dixence SA and, Forces               After working as a lawyer for the Lausanne social security
motrices Hongrin-Léman SA, Château d’Oex, and Gaznat               department and running the City’s labour inspectorate for
SA, Vevey. He is Lausanne’s representative on the Board of         eight years, Mr Rapin was employed as corporate secretary
Directors of Romande Energie Commerce SA.                          by the Vaud Chamber of Commerce and Industry and Société
                                                                   du Tunnel du Grand-St-Bernard from 1982 to 1985.
                                                                   He joined CVE as head of general services and corporate
                                                                   secretary in 1986, and has also been Secretary to the Board
                                                                   of Romande Energie Holding SA since 1996. He is a director
                                                                   of Enerbois SA and Romande Energie Commerce SA. He acts
                                                                   as board secretary for these two companies.




Daniel Schmutz
Daniel Schmutz, a former member of the Vaud Cantonal
Government (1981-1998), has a business degree from the
Ecole des Hautes Etudes Commerciales (HEC) and a political
science degree from Lausanne University.



                                                                                      Corporate governance Romande Energie Group 2010   9
6    C O R P O R AT E G O V E R N A N C E




     3.4   Board Committees                                               • Risk management, particularly with respect to whole-
           Under the by-laws, each committee is vested with a role,         sale buying and selling of energy.
           functions and responsibilities. The frequency of meet-         • Proposals concerning closure of the accounts and the
           ings is determined by the Board’s agenda. Committee              draft for the financial section of the annual report.
           members receive the necessary documents in good time           • Validation of the internal audit schedule.
           for them to prepare the debates. In principle, the CEO         • Any other subject area which the Board may assign
           attends committee meetings, as do in-house or external           to it.
           experts who are called in to advise on particular points.      The Committee, acting upon the recommendation of the
           The committees have no decision-making powers (see             Executive Board, approves the internal audit programme
           exceptions under Appointments and Human Resources              and reviews the reports submitted to it by the auditors.
           Committee and section 3.5 below).                              The Committee may order other audits.

           Strategy and Corporate Development Committee                   Appointments and Human Resources Committee
           The Committee consists of the Chairman of the Board,           The Committee has four members and normally meets
           two members and the Vice Chairman, and normally                four to six times a year (four times in 2010).
           meets four to six times a year (six times in 2010). It is      Meetings last for two hours on average.
           chaired by the Chairman of the Board.                          The Committee is responsible for providing the Board
           Meetings last for three hours on average.                      with recommendations and advice pertaining to:
           The Committee is responsible for tracking new develop-         • Members of the Board of Directors of Romande
           ments and providing the Board with recommendations                Energie Holding SA and its various committees, direc-
           and advice in the following key areas:                            tors of subsidiaries and delegates to the boards of
           • Group strategy for marketing, distribution and production.      other companies and foundations.
           • Electricity market and economic environment.                 • Appointment of Executive Board members.
           • Alliances with other companies.                              • Job descriptions of the CEO and Executive Board
           • Shareholder base.                                               members.
           • Relations with Vaud Canton and municipalities served         • General staff remuneration policies.
              by the Group.                                               • General rules concerning annual pay rises.
           • Any other subject area which the Board may assign to it.     Furthermore, the Committee decides on the remunera-
           In 2010, the main focus of the Committee’s work was on         tion of Executive Board members in accordance with
           studying the different alternatives for supplying electric-    generally accepted practice and the principles adopted
           ity, alone or through EOS Holding or Alpiq, and on com-        by the Board of Directors, upon the recommendation of
           pleting a revision of the Group’s strategy.                    the CEO. These decisions are subject to control by the
                                                                          Board of Directors.
           Finance and Audit Committee                                    In 2010, the Committee drew up a code of conduct for
           The Committee has four members and normally meets              the Group.
           four to six times a year (six times in 2010).
           Meetings last for three hours on average.                      For special committee powers, see second paragraph of
           The Committee is responsible for providing the Board           section 3.5 below.
           with recommendations and advice on the following is-
           sues:
           • Budget estimates, the budget and the medium-term
             financial plan.
           • Treasury management, cash flow and the financial
             plan.
           • Selection of external auditors, their terms of reference
             and any special assignments entrusted to them. The
             Committee may hold discussions directly with the
             auditors. It analyses management letters, monitors
             implementation of the measures adopted and submits
             reports to the Board of Directors.
           • Internal control and audit procedures.




10   Corporate governance Romande Energie Group 2010
3.5   Powers of the Board of Directors                             3.6   Supervision of the Executive Board
      and the Executive Board                                            The Board of Directors is informed of current business
      The Board of Directors derives its powers from Art. 716a           trends at every meeting. Particular attention is paid to
      of the Swiss Code of Obligations. It sets corporate policy         the consolidated financial statements and the accounts
      and strategy, approves annual operating and investment             of individual subsidiaries. Twice a year, the financial
      budgets, establishes financial policy, defines risk policy           statements are accompanied by a detailed projection of
      – particularly with respect to the wholesale buying and            estimated annual results. Reports on holdings in which
      selling of energy – and is responsible for the creation            Romande Energie has financial interests, together with
      or disposal of subsidiaries and the acquisition or sale of         a risk management report covering all the Group’s
      significant shareholdings.                                          activities, are also prepared for the Board of Directors
      Furthermore, special decision-making authority is                  twice a year.
      vested in an informal group of Board members. In order             The Executive Board submits its action plans to the
      that the Group can seize an opportunity without losing             Board of Directors. These are the basic reference docu-
      time, the following powers have been granted for strate-           ments that are used by the Board of Directors to monitor
      gic acquisitions and investments:                                  Executive Board activities, supplemented with regular
      • Up to CHF 10 million – a committee consisting of the             information on the main projects undertaken by the
        Chairman of the Board (who is also Chairman of the               Executive Board and on the Group’s business develop-
        Strategy and Corporate Development Committee),                   ments: revenues, margins by client segment, cash flow,
        the Vice Chairman of the Board (Chairman of the Ap-              capital investment, guarantees and sureties, risks and
        pointments and Human Resources Committee) and                    manpower levels.
        the Chairman of the Finance and Audit Committee.                 Romande Energie Holding SA has an internal audit struc-
        These transactions may not exceed CHF 30 million per             ture in place to supplement the risk management func-
        calendar year and are only authorized if the financial            tion. The internal auditor reports independently to the
        situation so permits.                                            Finance and Audit Committee. He attended four of the
      • For amounts above CHF 10 million (or the annual ceiling          Committee’s meetings in 2010. An internal audit charter
        of CHF 30 million), the decision has to be approved by           has been drawn up and is applied rigorously. It is based
        the Board of Directors in accordance with the normal             on international standards such as those issued by the
        procedure.                                                       Institute of Internal Auditors and incorporates the main
      The CEO is responsible for organizing and exercising               precepts: “the audit helps the organization to accomplish
      the powers of the Executive Board, in particular: making           its objectives by bringing a systematic, disciplined ap-
      recommendations on strategy, applying the principles of            proach to evaluate and improve the effectiveness of risk
      corporate policy and strategy, and implementing plans              management, control and governance processes”      .
      and projects; defining missions; managing the Company;              Five internal audits were performed in 2010. Further
      ensuring the achievement of objectives, the profitability           information can be found on page 18 of the 2010 Annual
      and expansion of the Company’s business, and enhanc-               Report (available in French only).
      ing its reputation; preparing operating, investment and            The Board of Directors is kept regularly informed of the
      cash budgets; hiring and remuneration; representing the            Group’s business developments and receives reports at
      Company in its dealings with third parties; and organizing         each of its meetings.
      the flow of information within and outside the Company.             The minutes of Executive Board meetings are submit-
      The CEO chairs the Management Committee, which                     ted to the Chairman and Vice Chairman of the Board of
      consists of the members of the Executive Board plus                Directors.
      the Corporate Secretary (the Secretary to the Board of             A daily press review is sent to each member of the Board
      Directors) and the Head of Communications.                         of Directors.
      The Chairman of the Board of Directors and the CEO                 With regard to risk management, a description of the pro-
      maintain close contact with one another in order to coor-          cedures adopted in this area can be found on page 18 of
      dinate their actions and review ongoing business.                  the 2010 Annual Report, as mentioned above, and more
                                                                         detailed information is provided in note 5 on pp. 17-19 of
                                                                         the 2010 Financial Review.




                                                                                       Corporate governance Romande Energie Group 2010   11
6    C O R P O R AT E G O V E R N A N C E




 4   Executive Board
     The Executive Board, whose members are appointed by the Board of Directors, is made up as follows:

     Name                           Role                                                      Year of birth         With Group since
     Pierre-Alain Urech             CEO                                                             1955                   2004
     Denis Matthey                  Finance, IT and Logistics Manager,                              1958                   2004
                                    Deputy CEO
     Jean-Pierre Mitard             Manager of Romande Energie Commerce SA                          1966                  2000
     Philippe Mueller               Environment Manager                                             1970                  2009
     Claude Ruch                    Human Resources,                                                1947                  2004
                                    General Services and Security Manager
     Yves Zumwald                   Distribution Manager                                            1967                   2009

     4.1 - 4.2
          Qualifications and functions of members of the Executive Board
          None of the senior managers act as consultants for major interest groups in Switzerland and/or abroad. All the members
          of the Executive Board are Swiss citizens. None of them worked for the Group or any of its companies before their ap-
          pointment to the Board.

     Management Committee 2011
     Pierre-Alain Urech, CEO
          Pierre-Alain Urech holds an undergraduate civil engineering degree from the Swiss Federal Institute of Technology in Zurich
          and a postgraduate degree from the Swiss Federal Institute of Technology in Lausanne. He has been CEO of Romande
          Energie Group since 1 July 2004. Before joining the Group, Mr Urech had spent his entire career at Swiss Federal Railways
          (CFF), where he occupied a variety of executive positions. He was in charge of the Rail 2000 project and headed the CFF
          area management in Lausanne. He became a member of the management board in Bern in 1995, and was appointed
          deputy chief executive officer of CFF SA in 1999. He ran the infrastructure division for nine years, with overall responsibility
          for the energy sector and hydroelectric plants, and was chairman or board member of numerous companies associated
                    ,
          with CFF the electricity business in Switzerland and railway operators in Europe. Mr Urech chairs the boards of Forces
          motrices Hongrin-Léman SA, Château d’Oex, Société des Forces Motrices du Grand-St-Bernard SA, Bourg-St-Pierre,
                                A
          Forces Motrices de l’ vançon, Bex, and Romande Energie Commerce SA. He is vice chairman of Cisel Informatique SA,
          Matran, and Centrale Thermique de Vouvry SA, Vouvry. Mr Urech has been chairman of Société électrique Vevey-Montreux
          since the Group purchased all this company’s shares in summer 2008. He is a board member of Hydro Exploitation SA,
          Sion, and is also chairman of Regiogrid (an association of Swiss cantonal and regional distributors) and vice chairman of
          the committee of AES (Association des Entreprises Electriques Suisses). In a private capacity, he sits on the board of
          Télé Villars-Gryon SA; since 31 March 2011, he has also been a board member of RailCare AG, Härkingen, a rail transport
          company owned by the COOP group.




        Ph lippe M
              p
        Philippe Mueller                     e Zumw ld
                                                 u wald
                                                     l
                                           Yves Zumwald                             Kar Deval
                                                                                    Karin Devalte
                                                                                     a      val                      Pierre-Alain Ure
                                                                                                                      ierre A in
                                                                                                                            Al
                                                                                                                     Pierre-Alain Urech



12   Corporate governance Romande Energie Group 2010
Denis Matthey, Finance, IT and Logistics Manager and Deputy CEO
Denis Matthey holds a business degree from the Ecole des Hautes Etudes Commerciales of Lausanne University and
is a Swiss certified accountant. He joined Romande Energie Group on 1 January 2004, and is CFO and Deputy CEO.
Mr Matthey started his career as an auditor with PWC Zurich and KPMG Geneva (1981-1987). He then occupied the post
of financial and administrative manager at STS, a subsidiary of the Shipley Group based in Boston, from 1987 to 1990.
During this period he was made a director of STS, which designs and manufactures galvanoplastic equipment for the
IT industry. Between 1990 and 2002 he worked as financial manager and then as CEO of the Matthey Group, a leading
European manufacturer of stainless steel pipes for the automotive industry, which was sold to the Arcelor Group in 2002.
Four years later Arcelor merged with the Mittal Group, creating the world’s largest steelmaker. Mr Matthey was financial
manager of a business unit at Arcelor from 2002 to 2003. He is a member of the boards of Société Electrique du Bas-Valais
SA, Romande Energie Renouvelable SA (Vice Chairman), Forces Motrices du Grand-St-Bernard SA, neo technologies SA,
Lausanne (chairman), Cisel Informatique SA, Matran, Spontis SA, Granges-Paccot, and Romande Energie Commerce SA,
Morges. All these companies are related to Romande Energie Group.

Jean-Pierre Mitard, Manager of Romande Energie Commerce SA
Jean-Pierre Mitard holds an MBA from the Ecole des Hautes Etudes Commerciales (EDHEC), Lille, France, and has at-
tended the Executive Program at Stanford University in the United States. He has been Sales and Marketing Manager of
Romande Energie Group since 1 July 2000, and Manager of Romande Energie Commerce SA since its creation at the end
       .
of 2007 Mr Mitard first worked as a salesman in the French-speaking part of Switzerland in the field of IT solutions, then
moved to Zurich to run the Swiss sales and marketing operation of a US computer manufacturer. Subsequently, he set up
and directed the marketing and product management function for business telecoms solutions at Lucent Technologies in
Brussels, with responsibility for Europe, the Middle East and Africa. He was appointed to the board of neo technologies SA
when the company was founded in January 2004, first as chairman and founder, and subsequently as vice chairman. He
has been a director of Enerbois SA since its creation, and he also sits on the boards of Société Electrique du Bas-Valais,
Forces motrices Hongrin-Léman SA, Château d’Oex, and Energie Solaire SA, Sierre.

Philippe Mueller, Environment Business Unit Manager
Philippe Mueller holds a degree in geothermal engineering from the Lucerne University of Applied Sciences and Arts,
and a degree in economics and political science from Geneva University. Mr Mueller took up his duties as Manager of the
Environment Business Unit and member of the Executive Board of Romande Energie Group in January 2009. He began
his career in Pakistan before joining the Geneva-based firm RG Riedweg & Gendre SA as an engineering consultant. He
spent eight years with this company. In 2003, he moved to BKW FMB Energie SA in Bern, where he was head of projects
and analysis in the energy sector. Two years later, he was appointed head of contracting and new renewable energies. In
             ,
August 2007 Mr Mueller became COO and an executive board member of sol-E Suisse SA, a new energy company affiliated
to BKW FMB Group. He sits on the boards of Enerbois SA, Romande Energie Renouvelable SA (Chairman), Gazobois SA,
Cossonay, and Eneftech Innovation SA, Nyon.




Denis M    e
Denis Matthey                   Jean-Pierre Mitard
                                   n-
                                   n-
                                Jean-P                                 Cla
                                                                       Cl
                                                                       Claude Ruch
                                                                       Claude Ruch                         Olivier Rapin
                                                                                                            livie api
                                                                                                           Ol v     ap



                                                                               Corporate governance Romande Energie Group 2010   13
6    C O R P O R AT E G O V E R N A N C E




           Claude Ruch, Human Resources, General Services and Security Manager
           Claude Ruch obtained a Federal Proficiency Certificate as an office clerk before going on to study finance (IMD), man-
           agement control and human resources in Switzerland and abroad. He has been in charge of human resources, general
           services and security at Romande Energie Group since 10 May 2004. Mr Ruch began his career at Swissair, where he
           held various positions in the financial department. He was first based in Zurich, then spent 18 years in Europe and Asia
           as a country financial officer before taking over responsibility for the Far East region in Hong Kong. After returning to
           Switzerland, he worked as a management controller in Geneva, then switched to personnel management at the company’s
           offices in Geneva and Zurich, where he was made vice president of human resources for the Group’s logistics division,
           SAir Logistics. He left SAirGroup in 1999 and took up the post of human resources manager first at DHL Switzerland,
           then at McDonald’s Switzerland. Mr Ruch chairs the board of Effitec SA, Morges, and is a director of Société Electrique
                           A
           des Forces de l’ ubonne SA, Aubonne.

           Yves Zumwald, Distribution Manager
           Yves Zumwald has a Swiss Federal Proficiency Certificate as a fitter/electrician, and holds a degree in electrical engineering
           and a postgraduate degree in Economics and Management from the Swiss Federal Institute of Technology in Lausanne.
           Mr Zumwald joined Romande Energie as Manager of the Distribution Business Unit on 1 September 2009. He is a mem-
           ber of the Executive Board. From January 2005, he was head of infrastructures at EOS Réseau SA and a member of the
           management committee of this subsidiary of Alpiq Group. Previously, he was National Electrical Design Manager at Orange
           Communications after having spent more than seven years at OAS as an operating engineer.

           Karin Devalte, Head of Communications, member of the management team

           Olivier Rapin, Corporate Secretary, member of the management team



     4.3   Management agreements
           Romande Energie SA has not entered into any management agreements.




14   Corporate governance Romande Energie Group 2010
5   Compensation, shareholdings and loans
    BOARD OF DIRECTORS

    5.1   Under Art. 22 of the Articles of Association, the Board of   At the 2011 Annual General Meeting of Shareholders,
          Directors is empowered to set the remuneration of its        Romande Energie Group will organize its first consultative
          members in accordance with generally accepted practice.      vote on remuneration policy for members of the Board of
          Board members receive a fixed annual compensation             Directors and the Executive Board.
          (independent of the Group’s results) and fees for
          their attendance at Board meetings. The absence of           Emoluments in 2010 were as follows:
          performance-linked remuneration is due, in particular, to
          the composition of the Board, certain members of which       Overall remuneration                                        CHF
                                                                       (including remuneration by other Group
          are appointed by the public authorities. Directors do not    companies (> 50%) where applicable                          2010
          receive lump-sum payments for representation expenses
          but are reimbursed for actual expenses incurred.             Guy Mustaki, Chairman                                    102 400
          Remuneration is not set at any particular intervals. Pro-    Wolfgang Martz, Vice Chairman                             73 400
          posals are submitted to the Board by the Appointments        Laurent Ballif *                                          40 800
          and Human Resources Committee, which bases its               Christian Budry                                           48 000
          decisions on usual practice in Switzerland. No distinction   Paola Ghillani                                            43 200
          is made between directors. A comparative study was           Bernard Grobéty                                           53 400
          commissioned from CEPEC (Centre d’Etude de Projets           Antoine Lattion                                           66 600
          Economiques), Lausanne, in 2010. The remuneration paid       Giovanni Leonardi **                                      42 000
          by Romande Energie Group is clearly in line with custom-     Jean-Jacques Miauton                                      51 500
          ary business practice, and even considerably lower in        Jean-Yves Pidoux *                                        52 800
                                                                       Daniel Schmutz                                            43 200
          relation to other listed companies of comparable size.
          Attendance fees of CHF 600 per half-day meeting and          Total                                                    617 300
          CHF 900 per full-day meeting have been increased to          * Paid to Vaud Canton or the municipality represented.
          CHF 1 200 and CHF 1 800 respectively with effect from        ** Paid to Alpiq.
          1 July 2010. This is the only change made to the 2009
          compensation figures.                                         These amounts are shown without social insurance costs
          Directors receive an allowance of CHF 0.70 per kilometre     (see note 8 on page 51 of the Financial Review).
          for the distance covered between their place of work or      The remuneration paid by third parties for offices held in
          residence and the meeting venue.                             affiliated companies (Group shareholdings of less than
          Fees may be paid to the Chairman, the Vice Chairman          50%) are not included in the above amounts.
          and any other Board member for attendance at external
          meetings or special preparatory meetings.
          There are no directors’ profit-sharing bonuses, and no
          allotments of shares or other forms of profit-sharing.
          Total emoluments paid in 2010 by Romande Energie
          Holding SA and its subsidiaries (see page 43, note 33
          and page 51, notes 8 and 9 of the Financial Review) to
          the eleven directors who held office in that year were
          CHF 656 000.

          Emoluments in 2010 were as follows:
          Annual compensation and fees                       en CHF
          Chairman                                           70 000
          Vice Chairman                                      37 500
          Director                                           30 000
          Chairman of a specialized committee
          (on top of basic compensation)                       6 000
          Attendance fees since 1 July 2010:
          - half-day meeting                                   1 200
          - full-day meeting                                   1 800

          These amounts are shown without social insurance costs
          (see note 8 on page 51 of the Financial Review).




                                                                                         Corporate governance Romande Energie Group 2010   15
6    C O R P O R AT E G O V E R N A N C E




     EXECUTIVE BOARD                                                      1.   Introduction
                                                                               The success of Romande Energie Group largely depends
     5.1   Report on the remuneration of                                       on the abilities and commitment of its employees. As an
           Executive Board members                                             employer, we aim to set the standard for attracting, keep-
                                                                               ing and motivating the most talented and outstanding
           Total emoluments paid to the six members of the Execu-              employees. We want to establish a direct and objective
           tive Board in 2010 were as follows:                                 relationship between remuneration policy, the financial
                                                                               results of the Group and its subsidiaries, and the indi-
           CHF                                         2010       2009         vidual performance of employees.
           Remuneration                          2 251 225    2 001 677
                                                                          2. Governance
           Representation expenses                 101 400      96 400       The Board of Directors has overall responsibility for estab-
           Social security costs                   458 371     438 618       lishing the principles of remuneration applied within the
           Remuneration incl. costs              2 810 996    2 536 695      Group. It has delegated some of its powers in this area
           *of which variable component            861 100     731 336       to the Appointments and Human Resources Committee,
                                                                             which consists exclusively of non-executive directors.
                                                                             This Committee monitors the application of established
           The highest remuneration was received by Pierre-                  remuneration principles, examines the periodic propos-
           Alain Urech, CEO: CHF 675 909 (CHF 613 009 in 2009)               als relating to trends in overall remuneration and submits
           + representation expenses of CHF 18 000 (CHF 18 000)              them to the Board, reviews the appropriateness of sala-
           + social security costs of CHF 134 345 (CHF 134 063).             ries paid to Executive Board members, and determines
           The variable component of this remuneration amounted              such salaries. Remuneration practices in other compa-
           to CHF 303 000 in 2010 and CHF 253 000 in 2009.                   nies serve as a basis of comparison. The last survey
                                                                             was conducted in 2008, with comparisons drawn from a
                                                                             selection of Western Swiss companies operating in the
                                                                             energy, banking, insurance and industrial sectors.

                                                                          3. Principles of remuneration for
                                                                             Executive Board members
                                                                             Since 2010, overall remuneration has consisted of the
                                                                             following components:
                                                                             • base salary,
                                                                             • variable salary,
                                                                             • share in Group profits.
                                                                             In 2009, remuneration was based on a fixed salary, and a
                                                                             variable component determined by the Company’s profits
                                                                             (EBITDA) and members’ individual performance.

                                                                               a) Annual base salary
                                                                               The annual base salary is the cornerstone of overall remu-
                                                                               neration and also serves as a reference for determining
                                                                               the variable salary.
                                                                               Every year, the Appointments and Human Resources
                                                                               Committee examines the possibility of increasing the
                                                                               total annual payroll on the basis of economic criteria
                                                                               and unchanged staff. Executive Board members receive
                                                                               proportionally the same increase as that granted to all
                                                                               the Group’s employees. Adjustments are made in terms
                                                                               of members’ individual performance (role mastery) relat-
                                                                               ing to leadership and management qualities as well as
                                                                               technical and relationship skills.




16   Corporate governance Romande Energie Group 2010
b) Variable salary                                                 d) Other compensation
As is the case for all Romande Energie employees, the              Representation expenses
variable component of remuneration is expressed as a               Representation expenses take the form of a lump-sum
percentage of the annual base salary. The level of perfor-         payment of CHF 1 250 per member per month (1 500 for
mance, which has a direct impact on the variable salary,           the CEO). In return, members pay their recurrent out-of-
may be distributed as follows:                                     pocket expenses themselves up to an amount of CHF 50
                                                                   per day (CHF 75 for the CEO).
                           Share            Level of               Company cars
                        of variable       performance              Members are provided with a company car if they want
                          salary      Minimum Maximum              one, and they reimburse the Company for any private
Role mastery               30 %         60 %     120 %             use of the vehicle.
Individual objectives      70 %          0%      150 %
                                                                   Payments in connection with activities on boards of
Individual objectives are set at the start of the year and         directors
are linked to the implementation of corporate strategy.            All amounts (annual compensation and attendance fees)
Their evaluation at the end of the year reflects the extent         received by members in connection with directorships
to which they have been achieved.                                  are remitted in full to Romande Energie SA.
The target values for variable remuneration are shown
below. The level of performance may affect these values            e) Retirement benefits
as follows (as % of the annual base salary):                       Management staff belong to the Fondation de prévoyance
                                                                   Romande Energie pension scheme and receive benefits
                        Minimum       Target   Maximum             similar to those provided for all Group employees.
CEO                      7.2 %        40.0 %    56.4 %
Members                  5.4 %        30.0 %    42.3 %       5.5   Other benefits for members of the Board of
                                                                   Directors and the Executive Board
Example: The achievement of individual objectives means
that the variable component of remuneration will be 70%            Share ownership
of the annual base salary.                                         Shares held by Group
The variable remuneration is paid in cash in the month of          companies                            42 174 shares      3.7 %
April following the reference year.                                Shares held by other
                                                                   shareholders                      1 097 826 shares     96.3 %
c) Share in Group profits                                          Of which:
The share in Romande Energie Group profits for all em-                - Held by members of the
                                                                       Board of Directors                   24 shares      < 1%
ployees is determined every year by the Board of Direc-
                                                                     - Held by members of the
tors on the basis of EBITDA, to which are added ordinary               Executive Board                      32 shares      < 1%
dividends on the Group’s shareholdings (EBITDA+).
• The method of calculating the total amount proposed              There were no management transactions in 2010.
  applies as soon as ordinary depreciation and amortiza-
  tion are covered by EBITDA+. In principle, there is no           No shares or stock options were granted to members of
  payment below this level. The Board of Directors may             the Board of Directors or the Executive Board during the
  decide otherwise.                                                2010 financial year.
• The maximum overall amount attributable to the six               As in previous years, no benefits in the form of options,
  members of the Executive Board is CHF 520 000, i.e.              additional fees, loans, waiving of repayments, or other
  between 0 and 32% of the base salary.                            financial benefits or benefits in kind were granted to
                                                                   members of the Board of Directors or the Executive
In order that profit-sharing should be seen from a long-            Board, or to parties closely related to them in 2010.
term perspective, the total amount generated by EBITDA+            The company in which Mr Leonardi (Alpiq) is active holds
for the reference year is distributed as follows:                  shares of Romande Energie Group. Alpiq owns 119 994
• two-thirds of the amount is paid in full;                        shares, or 10.53% of the capital. The municipalities of
• one-third is paid on the average EBITDA+ for the                 Vevey and Lausanne, where Messrs Ballif and Pidoux
  reference year and the two previous years (i.e. three            exercise political functions, hold 13 320 and 16 474 shares
  years).                                                          respectively.
The amount is paid in cash in the month of April following
the reference year.




                                                                                  Corporate governance Romande Energie Group 2010   17
6    C O R P O R AT E G O V E R N A N C E




 6   Shareholders’ voting rights
     Each share entitles the holder to one vote. Shareholders may       6.3 - 6.4
     be represented by another shareholder, a person designated               Convening of meetings and agenda
     by the Board of Directors, the independent representative or             These are governed by law, but one or several share-
     a third party.                                                           holders representing together no less than 5% of the
     At the Annual General Meeting of Shareholders in 2010,                   share capital may also request the convening of a General
     the Articles of Association were amended to comply with                  Meeting.
     the Federal Act on Book-Entry Securities, which entered                  An ordinary General Meeting of Shareholders is con-
     into force on 1 January 2010. At the end of the year 2010,               vened by way of a notice published in the Swiss Official
     Romande Energie Holding SA offered to pay the manage-                    Gazette of Commerce, at least twenty days prior to the
     ment fees for shareholders who deposited their shares with               appointed date, and by way of an individual notice to
     SIX-SAG in Olten.                                                        shareholders entered in the share register. An advance
                                                                              notice is published approximately three months before
     6.1   Restrictions on voting rights and                                  the date of the meeting.
           representation                                                     One or several shareholders representing shares with
           There are no restrictions on voting rights.                        an aggregate nominal value of 1 million francs or 5% of
                                                                              the share capital may request that an item of business
     6.2   Quorums and qualifying majorities                                  be entered on the agenda. This request must be made
           An absolute majority vote is required to pass resolutions,         to the Board of Directors in writing no later than 30 days
           except in the cases requiring a two-thirds majority pur-           before the date of the Meeting, indicating the purpose
           suant to Art. 704 (1) of the Swiss Code of Obligations.            of the debates and the motions submitted.
           Elections require an absolute majority of votes in the
           first round, and a relative majority in the second round.     6.5   Registration in the share register
           For resolutions and elections, the Chair of the General            Shareholders are required to register no later than 8-10
           Meeting has the casting vote in the case of a tie.                 days before the appointed date in order to take part
                                                                              in the Annual General Meeting or appoint a proxy. The
                                                                              deadline for registration is shown in the official notice
                                                                              convening the Meeting and in the individual notice sent
                                                                              to shareholders.




 7   Changes in control and defence measures
     7.1   Obligation to present an offer                               7.2   Clauses relating to changes in control
           This point is not covered in the Articles of Associa-              There is no clause relating to this matter in the Articles of
           tion. There is no opting-out or opting-up clause. There            Association. Nor is there any agreement or programme
           is a shareholders’ agreement between Vaud Canton,                  in favour of the members of the Board of Directors or the
           Banque Cantonale Vaudoise and 128 Vaud municipalities              Executive Board in such cases. The employment contract
           confirming reciprocal pre-emptive rights on their shares.           of the CEO may be terminated upon 12 months’ notice
           These shareholders hold 53.6% of the capital and voting            for the end of each two-year period; the notice period for
           rights.                                                            other senior managers is 6 months for any month-end.




18   Corporate governance Romande Energie Group 2010
8   Auditors
    8.1   Appointment and duties                                             and supervision of the implementation or updating of
          Ernst & Young SA are the independent auditors appointed            accounting methods. This work also covers examining
          by Romande Energie Group since the 1997 financial year              this corporate governance chapter and the preparation
          (the previous auditors were Société Fiduciaire Lémano, of          of auditors’ reports.
          the same group). The auditor in charge, Serge Clément,
          took up his duties in May 2008. The maximum rotation pe-     8.4   Supervision of external auditors
          riod for lead auditors is seven years, as required by law.         See under Finance and Audit Committee, Section 3.4.
    8.2 - 8.3                                                                The auditors are invited to every meeting of the Finance
          Audit fees in 2010                                                 and Audit Committee. In 2010, they attended two of
                                                                CHF
                                                                             these meetings.
                                                                             Their comments form the basis of action plans, and
          Audit                                             278 500
                                                                             the conclusions are all re-submitted to the Committee
          Audit-related services                             28 750
          Tax consultancy                                     3 896
                                                                             for verification and control. The auditors’ work is totally
          Consultancy in respect of transactions             36 378          independent of the Board of Directors and the Executive
                                                                             Board.
          Total                                              347 524         The auditors’ fees and services are also checked by the
                                                                             Finance and Audit Committee, which submits a report to
          Audit and audit-related services comprise the basic work           the Board of Directors.
          required each year to audit the accounts of individual             The auditors offer all the guarantees of professional quali-
          Group companies and the consolidated financial state-               fication required by a listed company. They have all the
          ments of Romande Energie Group. They include services              necessary resources available to fulfil their mission.
          rendered by auditors in connection with pension plans




9   Information policy
    Romande Energie Group pursues an open information policy           A financial calendar containing the publication dates for the
    in keeping with its size and importance. The communication         annual and interim financial statements and the annual report,
    measures adopted by the Group are designed to enhance              as well as the date of the press conference, is posted on the
    its credibility and public image. Particular care is also taken    Group’s website early in the financial year.
    to ensure that executives are provided with timely and accu-
    rate information to enable them to carry out their leadership      The head of external and internal communications is
    responsibilities.                                                  Ms Karin Devalte. She can be contacted at
    Shareholders are kept informed of the basic aspects of the
    Group’s business by the annual report, the half-yearly report      Romande Energie SA,
    and press releases. Sensitive data that may affect the share       Rue de Lausanne 53,
    price is disclosed on an ad hoc basis in accordance with the       1110 Morges 1,
    relevant directives of the SIX Swiss Exchange.                     Switzerland,
    Information is compiled by the executive communications            on +41 21 802 95 67
    service and the investor relations team. Information about         and by e-mail: karin.devalte@romande-energie.ch.
    the Group is also posted on the internet at www.romande-
    energie.ch.                                                        The investor relations officer is Mr René Lauckner,
    Official notices are published in the Swiss Official Gazette         who can be reached
    of Commerce; notices convening the Annual General Meet-            on +41 21 802 95 24
    ing are sent personally to shareholders entered in the share       and by e-mail: rene.lauckner@romande-energie.ch
    register.
                                                                       The links to register for our push and pull services
                                                                       for Group communications are:
                                                                       http://investor.romande-energie.ch/website-services/alert-
                                                                       service.aspx?sc_lang=en




                                                                                            Corporate governance Romande Energie Group 2010   19
 10   Report of the statutory auditor


                                                                                Ernst & Young Ltd
                                                                                Place Chauderon 18
                                                                                P.O. Box
                                                                                CH-1002 Lausanne

                                                                                Phone    +41 58 286 51 11
                                                                                Fax      +41 58 286 51 01
                                                                                www.ey.com/ch



               To the Board of Directors of
               Romande Energie Holding SA, Morges



               Lausanne, 25 March 2011


               Review of Corporate Governance Disclosures

               You engaged us to review the corporate governance disclosures of Romande Energie Holding
               SA made pursuant to the Corporate Governance Directive of the SIX Swiss Exchange for the
               period ended 31 December 2010. These disclosures are made in a separate section, on pages
               46 to 63 of the annual report. The board of directors is responsible for the content of these
               disclosures. Our responsibility is to issue a report based on our review.

               A review, which provides less assurance than an audit, seeks to obtain moderate assurance
               about whether the corporate governance disclosures are complete and free from material
               misstatement. A review is limited primarily to inquiries of company personnel that partici-
               pated in the preparation of the disclosures, to reviews of pertinent documents, and analytical
               procedures related to the corporate governance disclosures. We have not performed an au-
               dit, and, accordingly, we do not express an audit opinion.

               Regarding the data for Chapter 5 (Compensations, shareholdings and loans) of the Corpo-
               rate Governance Directive, we have also examined the information gathering processes. In
               addition, we have requested a representation letter from the persons concerned.

               In our opinion, the corporate governance disclosures comply with the formal requirements of
               the Corporate Governance Directive. During our review, nothing has come to our attention
               that causes us to believe that the disclosures are not complete or contain material misstate-
               ments.


               Ernst & Young Ltd




               Serge Clément                            Christelle Sierro Fardel
               Licensed audit expert                    Licensed audit expert
               (Auditor in charge)




20    Corporate governance Romande Energie Group 2010
Romande Energie Group
Romande Energie SA
Rue de Lausanne 53
Case postale
CH-1110 Morges 1
T +41 21 802 91 11
F +41 21 802 95 95
www.romande-energie.ch

				
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