Management and Supervision
15. CORPORATE GOVERNANCE MODEL
EDPR is a Spanish Company listed in a regulated stock exchange in Portugal. EDP Renováveis’ corporate organization is subject to its personal law and to the extent possible, to the recommendations contained in the Portuguese Corporate Governance Code, (“Código de Governo das Sociedades”) approved by the Comissão do Mercado de Valores Mobiliários (CMVM- Portuguese Securities Market Commission-) in July 2013. This governance code is available to the public at CMVM’s website (www.cmvm.pt).
The organization and functioning of EDPR corporate governance model aims to achieve the highest standards of corporate governance, business conduct and ethics referenced on the best national and international practices in corporate governance.
EDPR has adopted the governance structure in effect in Spain. It comprises a General Shareholders’ Meeting and a Board of Directors that represents and manages the Company.
As required by law and the Articles of Association, the Company’s Board of Directors has set up four committees. These are the Executive Committee, the Audit and Control Committee, the Nominations and Remunerations Committee and the Related-Party Transactions Committee.
In order to ensure a better understanding of EDPR corporate governance by its shareholders, the Company posts its updated Articles of Association as well as its Committees Regulations at www.edprenovaveis.com.
The governance model of EDPR was designed to ensure the transparent, meticulous separation of duties and the specialization of supervision. EDPR’ bodies for the management and supervision model are the following:
- General Shareholders’ Meeting
- Board of Directors
- Executive Committee
- Audit and Control Committee
- External auditor
The purpose of the choice of this model is to adapt, to the extent possible, the Company’s corporate governance structure to the Portuguese legislation. The governance model adopted by EDPR therefore seeks, as far as it is compatible with its personal law, to correspond to the so-called “Anglo-Saxon” model set forth in the Portuguese Commercial Companies Code, in which the management body is the Board of Directors, and the supervision and control duties are of the responsibility of an Audit and Control Committee.
The experience of institutional operating indicates that the governance model adopted by the shareholders is appropriate to the corporate organization of EDPR activity, especially because it affords transparency and a healthy balance between the management functions of the Executive Committee, the supervisory functions of
the Audit and Control Committee and oversight by different Board of Directors special committees.
The institutional and functional relationship between the Executive Committee, the Audit and Control Committee and the other non-executive members of the Board of Directors has been of internal harmony conductive to the development of the Company’s business.
16. RULES FOR THE NOMINATION AND REPLACEMENT OF DIRECTORS
According to Article 29.5 of the Company’s Articles of Association, the Nominations and Remunerations Committee is empowered by the Board of Directors to advise and inform the Board regarding nominations (including by co-option), re-elections, dismissal and remuneration of Board Members and of its duties, as well as regarding the composition of the several Committees of the Board. The Committee also advises on the appointment, remuneration and dismissal of top management officers. The Committee proposes the nomination and re-election of the Directors and of the members of the various Committees by presenting a proposal with the names of the candidates that considers have the best qualities to fulfil the role of Board Member. The Board of Directors submit a proposal to the General Shareholders’ Meeting, which should be approved by majority for an initial period of three (3) years and may re-elect these members once or more times for further periods of three (3) years.
Pursuant to Articles 23 of the Articles of Association and 243 of the Spanish Companies Law, shareholders may group their shares until constituting an amount of capital equal or higher than the result of dividing the company’s capital by the number of Directors, and in such case said shareholders are entitled to nominate a number of Directors equal to the result of the fraction using only whole amounts. Those making use of this power cannot intervene in the nomination of the other members of the Board of Directors.
In case of a vacancy, pursuant to Articles 23 of the Articles of Association and 244 of the Spanish Companies Law, the Board of Directors may co-opt a shareholder, who will occupy the position until the next General Shareholders’ Meeting, to which a proposal will be submitted for the ratification of said co-option. Pursuant to Article 248 of the Spanish Companies Law, the co-option of Directors must be approved by absolute majority of the Directors at the meeting.
17. COMPOSITION OF THE BOARD OF DIRECTORS
Pursuant to Articles 20 and 21 of the Company’s Articles of Association, the Board of Directors shall consist of no less than five (5) and no more than seventeen (17) Directors. The term of office shall be of three (3) years, and may be re-elected once or more times for equal periods.
The number of Board Members was established in seventeen (17) members according to the decision of the General Shareholders’ Meeting held on June 21st, 2011. The current members of the Board of Directors are:
*On May 5th 2015, Miguel Amaro was elected by co-option as Member of the Board of Directors. The co-option proposal was made in accordance to the Article 23.2 of EDPR’s Articles of Association. The term of this co-option will be in full force until the next General Shareholder’s Meeting, to which a proposal of ratification will be submitted according to the terms explained in the topic 16 above.
At the last Ordinary General Shareholder’s Meeting, which took place on April 9th, 2015 fourteen (14) Members of the Board were re-elected for a three-year term (3), and two new directors were nominated. Likewise, during 2015, Rui Teixeira, Jose Araújo e Silva, Rafael Caldeira Valverde and João Marques da Cruz ceased to be Members of the Board.
18. EXECUTIVE, NON-EXECUTIVE AND INDEPENDENT MEMBERS OF THE BOARD OF DIRECTORS
EDPR’s Articles of Association, which are available for consultation on the Company’s website (www.edprenovaveis.com), contain the rules on independence for the fulfilment of duties in any body of the Company. The independence of the Directors is evaluated according to the Company’s personal law, the Spanish law.
Following the recommendations of CMVM, Article 12 of the Board of Directors regulations requires that at least twenty-five percent (25%) of the Members of the Board have to be independent. Article 20.2 of EDPR’s Articles of Association defines independent members of the Board of Directors as those who are able to perform their duties without being limited by relations with the Company, its shareholders with significant holdings, or its Directors and comply with the other legal requirements.
In addition, pursuant to Article 23 of the Articles of Association, the following may not be Directors:
- People who are Directors of or are associated with any competitor of EDPR and those who are related to the above. A Company shall be considered to be a competitor of EDPR if it is directly or indirectly involved in the generation, storage, transmission, distribution, sale, or supply of electricity or combustible gases and also those that have interests opposed to those of EDPR, a competitor or any of the companies in its Group, and Directors, employees, lawyers, consultants, or representatives of any of them. Under no circumstances shall companies belonging to the same group as EDPR, including abroad, be considered competitors;
- People who are in any other situation of incompatibility or prohibition under the law or EDPR’s Articles of Association. Under Spanish law, people, who are i) aged under eighteen (18) years, (ii) disqualified, iii) competitors; (iv) convicted of certain offences, or (v) hold certain management positions, among others, are not allowed to be Directors.
The Chairman of EDPR’s Board of Directors does not have executive duties.
The following table includes the executive, non-executive and independent members of the Board of Directors.
The independent members mentioned below meet the independence and incompatibility criteria’s required by the law and the Articles of Association.
19. PROFESSIONAL QUALIFICATIONS AND BIOGRAPHIES OF THE MEMBERS OF THE BOARD OF DIRECTORS
The positions held by the members of the Board of Directors in the last five (5) years, those that they currently hold, positions in Group and non-Group companies and other relevant curricular information is available in the Annex of this Report.
20. FAMILY, PROFESSIONAL AND BUSINESS RELATIONSHIPS OF THE MEMBERS OF THE BOARD OF DIRECTORS WITH QUALIFYING SHAREHOLDERS
Qualifying Shareholders in EDPR are subject to the Spanish Law, which regulates the criteria and thresholds of the shareholder’s holdings. As of December 31st 2015, and as far as the Company was informed, there are no family or business relationships of Members of the Board of Directors with qualifying shareholders but only professional relationships due to the fact that some of the Members of EDPR’s Board of Directors are currently Members of the Board of Directors in other companies belonging to the same group as EDP Energias de Portugal S.A., which are the following:
- António Mexia;
- João Manso Neto;
- Nuno Alves;
- Manuel Menéndez Menéndez;
Or employees in other companies belonging to EDP’s group, which are the following:
- Miguel Dias Amaro;
- João Paulo Costeira.
21. MANAGEMENT STRUCTURE
According to the Spanish Law and Spanish companies’ practices, the daily management of the business is guaranteed by a Chief Executive Officer who is empowered to ensure the day-to-day management of the Company. This type of organization is different from what occurs on the Portuguese companies in which a ”Conselho de Administração Executivo” takes the assignment of areas of business and each Executive Director is responsible to and for an area of business.
22. BOARD OF DIRECTORS REGULATIONS
EDPR’s Board of Directors Regulations is available to the public on the Company’s website at www.edprenovaveis.com and at the Company’s Headquarters at Plaza de la Gesta, 2, Oviedo, Spain.
23. NUMBER OF MEETINGS HELD BY THE BOARD OF DIRECTORS
The Board of Directors held seven (7) meetings during the year ending on December 31st, 2015. Minutes of all meetings were drawn. The table below expresses the attendance percentage of the participation of the Directors to the meetings held during 2015:
24. COMPETENT BODY FOR THE PERFORMANCE APPRAISAL OF EXECUTIVE DIRECTORS
The Nominations and Remunerations Committee is the body responsible for the evaluation of the performance of the Executive Directors. According to Article 249 BIS of the Spanish Companies Law, the Board of Directors supervises de effective functioning of its Committees as well as the performance of the delegated bodies and Directors designated.
25. PERFORMANCE EVALUATION CRITERIA
The criteria for assessing the Executive Directors’ performance are described on topics 70, 71 and 72 of this Report.
26. AVAILABILITY OF THE MEMBERS OF THE BOARD OF DIRECTORS
EDPR’s members of the Board of Directors are fully available for the performance of their duties having no constraints for the execution of this function simultaneously with other positions. The positions held at the same time in other companies within and outside the group, and other relevant activities undertaken by members of the Board of Directors throughout the financial year are listed in the Annex of this report.