Corporate governance within Acea

Acea has adopted a governance model complying with the  principles of accountability, balance and separation between the policy, management and control activities, aspiring to the indications contained in the Code of Best Practice for listed companies.

Acea SpA’s Board of Directors has the function of defining the strategic policies of the Group and is responsible for governing the operations thereof. Within the parent company, there are also two Committees established  with proposal and advisory functions, which interact with senior company management. The Board of Auditors carries out supervisory activities.

Box – The main stages of the corporate governance of the Acea Group

1999

  • Corporate governance document approved and gradual application of the Code of Best Practice for listed companies established
  • Establishment and start of operations of the Internal Auditing Committee and the Remuneration Committee
  • Establishment of the Investor Relations function

2000-2002 

  • Adoption of the Regulations for General Shareholders’ Meetings
  • Adoption of the Values Charter (2001) and the Code of Conduct concerning Internal Dealing (2002)

2003-2005 

  • Approval of the Tender Ethic Code(2003) and the Code of Ethics (2004), establishment of the Ethics Committee
  • The Chairman was entrusted with the task of auditing and monitoring the social and environmental performances of the Group (2003) and the setting up of the Risk control Unit and Customer care division (2005)
  • Adoption of the first Organisation, management and control model in accordance with Italian Legislative Decree No. 231/2001 and establishment of the Supervisory Body starting with the Parent Company (2004) and, consequently, within the main Acea operating companies involved in water, network and energy services.
  • Adoption of the Guidelines for the handling of personal details, in accordance with Italian Legislative Decree No. 196/03, protecting privacy (2005)
  • Implementation of the “System of Internal Regulations” (group policies, strategic governance processes, procedures for handling shareholdings, operating processes and functioning processes) (2005)

2006-2008 

  • Acknowledgement of the new version of the Code of Best Practice for Listed Companies (Borsa Italiana, 2006)
  • Adaptation of the Articles of Association to the regulations introduced by Italian Law No. 262/05 (2006)
  • New Regulations for the internal handling and communication outside the company of documents and corporate information) and new provisions concerning Internal Dealing (2006)
  • The adoption of a Procedure for the decision-making process of the transactions with related parties (OPC), in observance of the principles of correctness and transparency (2008)

2009-2011 

  • Review of the Internal Audit System (SCI) and its Guidelines approved (2010)
  • Newregulationsadopted on the composition and functioning of the Committees (2010)
  • A new procedure for transactions with related parties approved and the Committee for Transactions with Related Parties (OPC) set up (2010, effective as from 1 January 2011)
  • Articles of Association adapted to the most recent legislative provisions (Italian Law No. 34/08, Italian Legislative Decree No. 27/10) concerning the methods for choosing and electing the corporate bodies and participation in shareholders’ meetings (2010)
  • The new organisational macro-structure approved (2011)
  • Position of General Manager introduced, becoming operative in February 2011
  • Winding up of the joint venture between Acea SpA and GdF Suez Energia Italia SpA finalised on 31 March 2011
  •  Composition of the Ethics Committee completed with the appointment of two external members. The Ethics Committee, in the meeting held on 21 November 2011, approved theRSI and reporting lines of development, which were used to formalise the wishes of senior company management to align the publication of the sustainability report with the annual financial statements
  • Introduction or adaptation, also in previous years, of the Organization, management and control models in accordance with Italian Legislative Decree No. 231/2001, within numerous Acea Group companies, in response to organisational changes and extension of the offences contemplated, introduced by means of Italian Legislative Decree No. 121/11.

2012 

  • New Ethical Code approved, which integrates in a single document the pre-existing Acea value codes (Values Charter, Ethical Code, and Tender Ethics Code), and the procedure for the handling of reports which disciplines the formalities for receiving, administrating and analysing the reports of alleged violations and inobservances of said Code and Acea’s corporate governance regulations
  • Adaptation of the Internal Dealing procedure
  • Appointment of the new Executive Appointed to draw up the Company Accounting Documents
  • Acknowledgement of the new version of the Code of Best Practice for Listed Companies (Borsa Italiana, 2011) with consequent: updating of the Internal Audit and Risk Management System; renaming and updating of the duties of the Internal Audit Committee with the Audit and Risks Committee; supplementing of the duties of the Appointments Committee into the Appointments and Remuneration Committee
  • Updating of the Organization, management and control models ,in accordance with Italian Legislative Decree No. 231/2001, of all the Acea SpA subsidiaries with reference to environmental offences, also taking steps to plan the activities for the integration of the Models with the alleged offences introduced by the legislator in 2012 relating to: use of the work services of citizens from countries outside European with irregular stay permits, undue incitement to provide or promise benefits and corruption and bribery between private parties.
  • The Group executive provisions for antitrust compliance were approved.
  • The Operating Risk Committee was set up in the Energy area, so as to oversee and monitor the risks associated with the management of the commodities

The management of the company is the exclusive responsibility of the Board of Directors (BoD), made up of between 5 and 9 members according to the matters established by the shareholders’ meeting. The members of the BoD can be re-appointed and remain in office for three accounting periods. The method adopted for their election (criteria of ratios on the basis of the votes obtained from the minority lists) is able to ensure the appointment of an appropriate number of Directors to represent the minority shareholders (equal to two, three or four depending on whether the Board is made up of five, seven or nine members) and a minimum number of independent Directors as per the law17.

The Board in office is made up of nine members and was appointed by the shareholders’ meeting held on 29 April 2010 (see related box); during the year, the Board of Directors met nine times. The Chairman and the Chief Executive Officer are executive Directors while the other seven directors are not, since they lack management powers.

  The Report on corporate governance and the ownership set-ups, which can be consulted on-line on the company website (www.acea.it) provides the stakeholders with detailed information on the Acea SpA Directors: résumés, the independence qualifications, the presence during Board Meetings and those of any Committees which they are members of and, in conclusion any appointments covered in other companies. The fee for the Board members is established by the shareholders’ meeting while the additional fee for the members of the Committees is established by said Board upon the proposal of the Appointments and Remuneration Committee and having consulted the Board of Statutory Auditors. The emoluments received by the directors are illustrated in a specific table attached to the 2012 Consolidated financial statements18.

Box – Acea SpA’s Board of Directors  (as of 31 December 2012)

Giancarlo Cremonesi(Chairman)
Marco Staderini(Chief Executive Officer)
Paolo Giorgio Bassi(Chairman of the Control and Risks Committee)
Andrea Peruzy(Member of the Control and Risks Committee and the Appointments and Remuneration Committee)
Luigi Pelaggi(Member of the Control and Risks Committee and the Appointments and Remuneration Committee)
Francesco Caltagirone(Member of the Control and Risks Committee)
Paolo Di Benedetto(Chairman of the Appointments and Remuneration Committee)
Jean Louis Chaussade 
Giovanni Giani (*)(Member of the Control and Risks Committee and the Appointments and Remuneration Committee)
(*) The Director Giovanni Giani was appointed member of the Appointments and Remuneration Committee on 11 May 2012, in replacement of Jean Louis Chaussade.

 

17 On the basis of Article 147 ter, section 4 of Italian Legislative Decree No. 58/98, the so-called Finance Consolidation Act (TUF), the minimum number of independent Directors must be 1 in the event of a BoD of up to 7 members, 2 in the case of a BoD with more than 7 members. During 2012, the BoD checked that the Directors comply with the conditions required so as to be qualified as independent: as of 31 December 2012, 5 Directors out of 9 were independent. During the year under review, Acea implemented the stages necessary for acknowledging, within the organisation, the innovations introduced by Italian Law No. 120/11 on so-called gender quotas in the corporate bodies. In light of the above, at the end of January 2013, the BoD approved the Article of Association amendments necessary for applying the afore-mentioned law at the time of the renewal procedures for the next corporate bodies which shall take place in April 2013 (4.3, 4.6, 4.7)
18 Published each year on the company website, Shareholders section.

Box – The roles and the powers of the Board of Directors within Acea

The powers assigned by law, the Articles of Association and in compliance with the recommendations contained in the Code of Best Practice, to the Board of Directors include:

  • the definition of the strategic and general policy and the formulation of the Company’s development lines; the economic-financial co-ordination of the activities of the Group via the approval of the strategic and financial plans, investments and the annual budget;
  • the definition of the nature and level of risk compatible with the company’s strategic objectives
  • the approval and amendment of the internal regulations relating to the general organisational structure of the company;
  • the establishment of the Committees envisaged by the Code of Best Practice and the appointment of their members;
  • the adoption of the Organisation, management and control model in accordance with Italian Legislative Decree No. 231/01;
  • the assessment of the adequacy of Acea’s organisational, administrative and accounting set-up and that of the subsidiaries which are strategically important;
  • the dialogue with the shareholders and the furthering of initiatives useful for encouraging their participation and the assisted exercise of their rights;
  • the establishment of safeguards to protect the processing of personal details or sensitive third-party data, with the annual drafting of a data security planning document (Italian Legislative Decree No. 196/03);
  • the adoption of the procedures necessary for protecting the health of workers and the appointment of the parties who will see to safety in the workplace (Italian Legislative Decree No. 81/08);

Box - Roles of the Chairman, the Chief Executive Officer and the General Manager

The Chairman is the Company’s legal representative and is authorised to sign on behalf of the same, and also has the powers to call and chair Board and shareholders’ meetings. The duties he is delegated with include: overseeing the Group’s activities and checking the implementation of the Board resolutions and the corporate governance regulations; the assessment of the activities and corporate processes with reference to supplied and perceived quality aspects, the environmental impacts and social sustainability (corporate social responsibility); the supervision of the corporate secretariats of the Parent Company and the subsidiaries.

The Chief Executive Officer is entrusted with the ordinary business of the Company, the corporate signature, legal and trial representation as well as any other responsibility delegated within the limits of the law and the Articles of Association. He operates on the basis of long-term plans and annual budgets approved by the Board and guarantees and ascertains the observance of the management guidelines, implementing the organisational and procedural changes to the Parent Company’s activities, on a consistent basis with the guidelines resolved by the BoD. Furthermore, he chairs the Management Committee, an advisory body for the checking of the economic operating situation of the Group and the individual business areas and any deviations with respect to the objectives. In conclusion, he ensures the correct handling of the corporate information.

The Chairman and the Chief Executive Officer report at least quarterly to the BoD and the Board of Statutory Auditors on the general trend in operations and the expected outlook for the future.

The Chairman and Chief Executive Officer can jointly adopt, if need be, acts reserved for the BoD with regard to contracts, purchases, participation in tenders, issue of sureties and appointment of members of the Boards of Directors and Boards of Statutory Auditors of the most important subsidiary and investee companies, when the urgency involved does not allow for calling, informing the Board in the first subsequent meeting applicable, which will check the legitimacy of the transactions entered into.

The General Manager is entrusted with the operational management of the structures he heads up - in a functional or hierarchical sense - specifically: the 4 business areas - Water, Networks, Waste Management and Energy - the Regulatory Division, the Planning and Management Control Division, the Personnel and Organisation Division, the Safety and Protection Division, the Purchasing and Logistics Division, the ICT Division and the Engineering and Services Division.

Box – The Operating Risks Committee in the Energy area

An adequate risk policy represents an element of sound corporate management, encouraging the adoption of informed decisions by management. Starting off from this observation, in light of the risk profile undertaken by Acea in the energy sector after the winding up of the joint venture with GdF Suez Energia Italia SpA, which led to the Group becoming fully autonomous with regard to electricity and gas generation, trading and sales activities, with the companies Acea Produzione, Acea Energia Holding and Acea Energia, and in consideration of the operating specificities of these companies, in 2012 the Operating Risks Committee was set up in the Energy sector. The establishment of the Committee was functional to ensuring the supervision of the risks which characterise the activities for handling energy commodity contractual negotiation:

  • market, linked to the price changes of the commodities and the related volumes, now more than ever;
  • credit, linked to the observance of the obligations of the counterparts;
  • operative, referring to possible critical episodes on processes, systems and individuals which take place during the purchase/sale activities;
  • legal, related to the negotiation and signing of contracts and related support.

Thanks to the activities of the Committee, Acea endows itself with an efficient and dedicated governance structure in a sensitive business area and with specific guidelines for handling the risk, consistent and integrated with the documents on this subject in force within Acea such as the Ethical Code, the Management, Organisational and Control Model pursuant to Italian Legislative Decree No.  231/2001 and other internal Group regulations.

The shareholders’ meeting, in ordinary and extraordinary session, can be called not only by the Board of Directors but also upon the request of shareholders who represent, as per current legislation, at least 5% of the share capital; furthermore, in observance of the terms envisaged by legislation, shareholders who represent at least 2.5% of the share capital may request that the business to be dealt with be added to, proposing additional matters.The following are also envisaged by way of example: computerised methods of interaction, such as electronic notification of the representation proxies of the shareholders at the meeting and publication of the notice of calling on the website. In conclusion, before the date of the shareholders’ meeting, the shareholders can pose questions on the business on the agenda, sending them in by means of registered letter, or e-mail. There are no shares with a limited right to vote or lacking such as right19.

With the exception of the City of Rome shareholder, the Articles of Association envisage a limit to the right to vote on holdings exceeding the extent of 8% of the share capital. There are no shareholders’ agreements or special powers of veto or any other aspect influencing the decisions which are the exclusive result of the corporate shareholding held.

  Acea SpA’s Board of Directors, in December 2012, approved a new edition of the Guidelines of the Internal Audit and Risk Management System which acknowledges the principles and criteria of the new edition of the Code of Best Practice. Already with regard to name, the Internal Audit and Management Risk System reflects a new concept of controls, which revolve around the concept of business risk and in particular the activities for the identification, gauging, management and monitoring of the same, for the purpose of:

  • supplying elements of policy so as to ensure that the Group adopts conduct consistent with the risk profile identified by the Board of Directors and is able to handle the events which might hinder the achievement of the corporate purposes;
  • providing elements of policy for co-ordination between the divisions involved in the internal audit and risk management system;
  • identifying the risk governance, management and monitoring principles and responsibilities associated with the business activities;
  • ensuring the observe of the Code of Best Practice and reference legislation;

The Internal Audit and Risk Management System (IARM), an essential element of the Corporate Governance system, is made up of a series of rules, policies, procedures and organisational structures whose function is to:

  • identify the event which may have a positive (opportunity) or negative (risk) influence on the pursuit of the objectives established by the Board of Directors;
  • encourage the adoption of informed decisions and contribute towards the running of the company on a consistent basis with the business objectives;
  • contribute towards ensuring the protection of the company assets, the efficiency and efficacy of the processes, the reliability of the financial information and the observance of the laws, regulations, Articles of Association and internal procedures.

This system permeates the entire business structure, involving the following parties for various purposes:

  • the Board of Directors (BoD), which pursues the primary objective of safeguarding the interests of the company and the creation of value for the shareholders over a medium/long-term period, furthering action aimed at implementing the provisions of the law, the Articles of Association, the Code of Best Practice, as well as the principles contained in the Acea SpA Ethical Code. With the support of the Control and Risks Committee, the BoD defines the Guidelines of the IARM so that the main risks pertaining to Acea SpA and its subsidiaries are identified, gauged and handled. The BoD has the power to appoint and remove the members of the Committees and the parties who operate within the system: the Director appointed to oversee the IARM; the individual in charge of the Audit division and the Executive Appointed to draw up the corporate accounting documents;
  • the Control and Risks Committee, which performs proposal and advisory functions vis-à-vis the Board of Directors with reference to the duties defined by the Code of Best Practice. During 2012, the Committee met 5 times; the body has an annual budget of Euro 25 thousand;

19 With the exception of 416,993 own shares (corresponding to around 0.2% of total shares) for which the voting right is suspended in accordance with Article 2357 ter of the Italian Civil Code.  Also see the Report on corporate governance and the ownership set-ups.

  • the Appointments and Remuneration Committee, which has proposal and advisory functions vis-à-vis the Board of Directors with regard to the determination of the remuneration of the directors and executives with strategic responsibilities and with regard to the size and composition of said BoD, with particular reference to the professional figures whose presence therein is deemed appropriate. During the year, the Committee met four times; the body has an annual budget of Euro 25 thousand;
  • the Board of Statutory Auditors which exercises the powers and fulfils the duties envisaged by legislation in force, performing the general function of supervision of legislative compliance, the correctness of the administration and the effective implementation of the Code of Best Practice for listed companies. The shareholders’ meeting appointed the Chairman from among the Acting Statutory Auditors appointed by the minority shareholders;
  • the Managing Director, coinciding with the Director in charge of the IARM, who executes the Policies of the System defined by the BoD and sees to - availing him/herself of the Audit division - the identification of the main business risks, submitting them periodically to the BoD;
  • the Executive appointed to draw up the accounting and corporate documents, is responsible for establishing and maintaining the Internal Audit System on Financial Disclosure and issuing a specific declaration, together with the Chief Executive Officer;
  • the Supervisory Body (SB), which is endowed with full and independent decision-making and control powers with regard to the functioning and efficacy of the Organisation, management and control model pursuant to Italian Legislative Decree No. 231/2001, for the purpose of preventing the risk of offences which involve the Company’s administrative liability. The SB of the parent company and those of the subsidiaries carry out monitoring activities on significant transactions at risk as per Italian Legislative Decree No. 231/03, which also contemplate offences in the sphere of the environment, workers’ safety and corruption and bribery, by means of systematic information flows, transmitted by the corporate structures, accompanied by risk indicators. In relation to the activities at risk of offence, the SB draws up an annual plan of checks; furthermore, it may envisaged specific control activities in relation to the periodic or spot information received. The SB has an annual budget of Euro 25 thousand;
  • the Ethics Committee20which is appointed to further awareness of the Ethical Code adopted by the Group, oversee its implementation and define procedures useful for the observance of the principles set forth therein;
  • the Audit Division, which carries out, in observance of the sector standards, independent checks - on an on-going basis or in relation to specific needs - on the efficacy and suitability of the System, by means of an Audit Plant approved by the BoD. The Unit, which reports to the BoD  and does not handle operating activities, is also entrusted with the checks pertaining to the sphere of offences laid down by Italian Legislative Decree No. 231/01. Within the sphere of the checks required by the Supervisory Body, relating to the efficacy of the implementation of the Organisation, management and control model, 3 specific forms of audit activities were carried out during the year which undertook importance for the assessment of the audit system in pursuance of Italian Legislative Decree No. 231/01 in that they are potentially instrumental for committing the crime of corruption: management of seconded staff; management of company credit cards; management of entertaining expenses . In conclusion, the head of the Audit Division supports the Appointed Directors with the activities for identifying the main risks within Acea SpA and the subsidiary companies and with the implementation of the Policies of IARM, also by means of a functional linked to the second level control structures;
  • the Risk Control and internal controls unit, included within the Audit Division, whose tasks include the planning, implementing and handling of the process and instruments for the detection and gauging of the risks, spreading throughout the Group greater awareness of the factors which may compromise the achievement of the corporate objectives and assisting management in the identification of any corrective action;
  • all the Executives and employees are responsible, within their own sphere of competence, for the measures necessary for ensuring an efficient running of the Internal Audit and Risk Management System.

The management of the risks is therefore a transversal process, which envisages widespread responsibilities and involvement of all the corporate levels, so as to assess the exposure and identify the functional responses for avoiding, mitigating, via procedures or management systems - or transferring - for example using insurance coverage - the unacceptable risks.
The control safeguards are developed as from the operating activities and are directed at ensuring the correct performance thereof (first level). Subsequently, additional action intervenes, aimed at checking that the first level controls are adequate and operative (second level), entrusting the performance not only to the heads of the organisational Units in which the risk resides, but also to the corporate structures of the parent company, which report on their activities to the Director in charge of the IARM and to the Audit Division. In conclusion, this Division intervenes with a final control (third level) to check the layout and the overall functioning of the system and the monitoring of the necessary improvement plans.

20 According to the current regulations, the members of the Ethics Committee are 5, of which two appointed externally. In 2011, two external members were appointed, Mr. Cesare San Mauro (lawyer) and Mr. Andrea Mondello.