Corporate Governance

Introduction

The following is an overview of the corporate governance structure at Veridian.

The Board of Directors and management of Veridian are committed to providing a corporate governance framework to focus on our responsibilities to shareholders, customers, employees and the communities in which Veridian operates.

The document Framework for Effective Governance provides greater detail on:

  • Roles and Responsibilities of the Board
  • Director Orientation and Continuous Education
  • Committee Mandates and Charters
  • Board Policies

Veridian’s corporate governance structure is subject to ongoing review, assessment and improvement.

Contents:

  • Corporate Structure
  • Functions of the Board/Board Mandate
  • Chair of the Board
  • Board Members and Committee Structure
  • Director Independence
  • Board Policies
  • Orientation and Continuing Development
  • Assessments
  • Diversity

Corporate Structure

Veridian Corporation is the parent company to Veridian Connections Inc. (Veridian Connections) and Veridian Energy Inc. (Veridian Energy).

Veridian Connections distributes electricity to more than 120,000 residential and commercial customers in the cities of Belleville and Pickering, the towns of Ajax, Gravenhurst, Port Hope and Uxbridge, and the communities of Beaverton, Bowmanville, Cannington, Newcastle, Orono, Port Perry and Sunderland.

Veridian Energy is the non-regulated subsidiary.

The four municipalities that own Veridian Corporation and its subsidiaries are the City of Pickering (41%), the Town of Ajax (32.1%), the Municipality of Clarington (13.6%) and the City of Belleville (13.3%).

Functions of the Board/Board Mandate

The central responsibility of the Board is to provide good governance and stewardship to the Corporation. It oversees management of the business and affairs of the Corporation – maximizing shareholder value. It appoints the CEO who supervises the executive management team that runs the day-to-day operations of the Corporation.

The specific responsibilities of the Board are detailed in the document, Framework for Effective Governance, and includes:

  • Executive Management and Human Resources
  • Strategic Planning
  • Risk Management and Critical Events
  • Financial Stewardship and Systems Integrity
  • Performance Monitoring
  • Stakeholder Relations and Communications
  • Ethics and Integrity

Chair of the Board

The Chair provides governance leadership in all aspects of the Board’s work, and is responsible for effective performance of the Board of Directors in fulfilling its responsibilities to all stakeholders.

Board Committees

To assist in delivering its mandate, the Board has established five standing committees:

  1. Audit and Risk Management
  2. Governance
  3. Human Resources and Compensation
  4. Business Development
  5. Nominating

Board Members and Committee Structure

 Audit & Risk  Governance   Human
Resources 
 Business
Development 
 Nominating 
A. Foster  Board Chair √  Board Chair √  Board Chair √  Board Chair √  Board Chair √
K. Ashe  Vice Chair √
T. Baker  √
R. Chatterton  √
D. Pickles  Chair √  √
D. Ryan  √  Chair √
J. Alexander  √
T. Christopher  Chair √  √
D. Parker  √
S. Collier  √
J. Dies  √  √
J. Macpherson  Chair √
D. McGregor  √  Chair √
S. deBoer  √
K. Fisher  √

Each committee has a written charter that sets out its roles and responsibilities. Each committee reviews its charter at least annually, and recommends changes to the Board for approval. Committee Charters can be found in Veridian’s Framework for Effective Governance.

Following each meeting, the Chair of each committee reports to the Board and makes recommendations as deemed appropriate.

The Chair of the committee, along with committee members and senior management, establish work plans for the year.

Committees assess their effectiveness annually.

Audit and Risk Management Committee

With respect to the audit function, the Committee is responsible for reviewing the integrity of Veridian’s financial statements, management’s discussion and analysis and internal control over financial reporting, monitoring the system of internal control, monitoring compliance with legal and regulatory requirements, selecting the external auditors for shareholder approval, and reviewing the independence and performance of the external auditors.

With respect to risk management, the Committee is responsible for defining Veridian’s risk profile and performance against the profile. The Committee oversees the identification, measurement and control of Veridian’s principal business risk.

Governance Committee

The Governance Committee oversees Veridian’s governance framework through the establishment and maintenance of governance policies and procedures as formally documented in the Board’s Framework for Effective Governance. These policies include a Director Code of Conduct and Governance Practices, and a Directors’ Conflict of Interest Policy.

The Committee also oversees the Orientation program for new directors, makes recommendations to the Board on director compensation, and ensures an annual evaluation of the performance of the Board and its committees. Further, it supports the Board’s Nominating Committee with establishing a process for new director identification and selection.

Human Resources and Compensation Committee

The Human Resources and Compensation Committee ensures that appropriate human resource systems and polices are in place to recruit, motivate and train personnel as required to meet the business objectives of Veridian.

The committee oversees leadership development, has responsibility for succession planning, and reviews the development plans for high potential and succession candidates.

The committee reviews the corporate goals and objectives relevant to the President and CEO, and evaluates the President and CEO’s performance with regards to those goals and objectives. It also oversees the development and application of a balanced corporate scorecard used to assess annual corporate performance for the purpose of performance incentive payments to eligible staff.

Business Development Committee

The Business Development Committee oversees the pursuit, evaluation and ongoing monitoring of new business opportunities, including merger and acquisition opportunities.

Nominating Committee

The Nominating Committee is responsible for recommending to the shareholders individuals who are qualified to become directors.

A competency matrix that lists desired skills and experience is used in the selection process to ensure the current and future needs of the Board are met.

The Nominating Committee is assisted by outside consultants in its search for candidates for appointment to the Boards.

Director Independence

An effective Board must operate independently of management. For this reason none of Veridian’s directors are part of management.

The Ontario Energy Board requires that at least one-third of the Veridian Connections directors be independent.  The OEB’s definition of independence excludes the following individuals:

  • A shareholder, director, officer or employee of an affiliate; and
  • where the affiliate is a municipality, the mayor, a member of the municipal council, a member of a “local board” as defined in the Municipal Act, 2001 or an employee of the municipality.

The composition of the Veridian Connections Board of Directors meets these requirements.

Board Policies

Code of Conduct and Governance Practices

Veridian is committed to the highest standards of ethical and professional conduct. The Code of Conduct and Governance Practices Policy applies to all directors.  This policy statement establishes practices for the directors concerning conflicts of interest, gifts and gratuities.

Directors’ Conflict of Interest Policy

The Board has a process in place to identify and deal with director conflicts of interest which involves:

  • Disclosure of the interest;
  • Leaving the meeting during Board or committee discussion; and
  • Not voting on the matter.

In Camera Meeting Policy

The Board and each of its committees set aside time for in camera sessions at their meetings to have open and candid discussions without the President and CEO or other members of management.

Whistleblower Policy

Veridian has adopted a Whistleblower Policy that provides staff with a means of reporting incidents of dishonest or illegal activity, and to do so without fear of reprisal. The policy identifies all corporate directors as potential reporting authorities. Complaints registered at the Board of Director level are investigated by the Board’s Audit and Risk Management Committee.

Orientation and Continuing Development

It is the responsibility of the Governance Committee to provide an orientation and continuing education program for directors.

Newly appointed directors attend an orientation session that familiarize them with Veridian’s business and operations, management structure, strategic plans and finances. New directors are provided a package of detailed information, and have the opportunity to meet with other members of the Board and management.

Continuing education may take place at regularly scheduled or special meetings of the Board, or from outside resources.

All directors are expected to complete a minimum of 20 hours of Continuing Education/Development per year.

Assessments

The Corporate Governance Committee is responsible for establishing an effective evaluation process. The Board annually evaluates the effectiveness of the Board, its Chair, its committees and their chairs.

Diversity

Veridian’s Board recognizes the benefits of promoting diversity both within Veridian and the Board of Directors. The Nominating Committee acknowledges diversity in assessing candidates for the Board.