TrustPower is committed to sound corporate governance that will ensure the company operates as effectively as possible whilst providing for the appropriate level of accountability and transparency. 
 

Corporate Governance Statement

Role of the Board of Directors

The Directors are elected by the shareholders and are responsible to the shareholders for the performance of the Group.  Their focus is to enhance the interests of shareholders and other key stakeholders and to ensure the Group is properly managed.  The Board draws on relevant corporate governance best practice principles to assist and contribute to the performance of the Group.

The Board had developed a charter that outlines responsibilities that encompass the following:

• Set the strategic direction of TrustPower and monitor management's implementation of that strategy.
• Select and appoint (and, if appropriate, remove from office) the Chief Executive, determine his/her conditions of service and monitor his/her performance against established objectives.
• Ratify the appointment (and, if appropriate, remove from office) the Chief Financial Officer and Company Secretary.
• Ratify the remuneration of senior management consistent with their employment agreements.
• Monitor financial outcomes and the integrity of reporting; in particular approve annual budgets and longer-term strategic and business plans.
• Set specific limits of authority for management to commit to new expenditure, enter contracts or acquire businesses without prior Board approval.
• Ensure that effective audit, risk management and compliance systems are in place to protect the Company's assets and to minimise the possibility of the Group operating beyond legal requirements or beyond acceptable risk parameters.
• Monitor compliance with regulatory requirements (including continuous disclosure) and set ethical standards and then monitor compliance with those standards.
• Review, on a regular basis, senior management succession planning and development.
• Ensure effective and timely reporting to shareholders.

The Board has eight scheduled one day meetings, an extended strategic planning meeting at least once a year, at least four audit Committee meetings and several unscheduled meetings to consider and/or review substantial projects and any other special circumstances that may arise from time to time.

The full Board determines the Board size and composition, subject to limits imposed by the Company's Constitution which is required to comply with the NZX Listing Rules. The Constitution provides for a minimum of three Directors and a maximum of seven. For the time being, the Board has determined there shall be six Directors, all of whom are non-executive Directors.

The Constitution and NZX Listing Rules also require that while there are a total of six Directors, two must be independent Directors.  The Board has resolved that TrustPower’s independent Directors for the time being are Sir Ron Carter, Mr GJC Swier and Mr IS Knowles.

The Board has established two Subcommittees being; the Audit Committee and the Remuneration Committee

Audit Committee
The Board has constituted a standing Audit Committee consisting of three Board members.  The Committee meets at least five times a year.  Members of the Committee are:  GJC Swier (Chairman), BJ Harker, and Sir Ron Carter.

The role of the Audit Committee is formally recorded in a charter document approved by the Board of Directors.  The primary objective of the Committee, as set out in the charter, is to assist the Board in fulfilling its responsibilities relating to accounting and reporting practices of the Group.  In particular, the Committee’s main responsibilities are to:

• Review and report to the Board on the annual report, the quarterly financial reports and all other financial information published by the Group or released to the market. 
• Assist the Board in reviewing the effectiveness of the organisation’s internal control environment.
• Determining the scope of the internal audit function and ensure that its resources are adequate and used effectively, including co-ordination with external auditors.
• Oversee the effective operation of the risk management framework.
• Recommend to the Board the appointment, removal and remuneration of the external auditors, and review the terms of their engagement, and the scope and quality of the audit.
• To review and approve, within established procedures, and before commencement, the nature and scope of non-audit services being provided by the external auditors.  These procedures include quantitative and qualitative thresholds for the review, and includes all relatively significant projects.

In fulfilling its responsibilities, the Audit Committee receives regular reports from management and the internal and external auditors.  It also meets with the internal and external auditors at least three times a year – more frequently if necessary.  The internal and external auditors have a clear line of direct communication at any time to either the Chairperson of the Audit Committee or the Chairperson of the Board.

Remuneration Committee

The Board has established a Remuneration Committee which has two Directors as members, Mr BJ Harker and Mr GJC Swier .  The role of the Remuneration Committee is formally recorded in a charter document approved by the Board of Directors.  The primary objectives of the Remuneration Committee are to:

• Help enable the Company to attract, retain and motivate executives and Directors who will create value for shareholders.
• Fairly and reasonably reward executives having regard to the performance of the Company, the performance of the executives and the general pay environment.
  Help the Company comply with the provisions of the, Employment Relations Act, the Companies Act 1993, the NZX Listing Rules and any other relevant legal requirements.

The responsibilities of the Committee include:

• Review and recommend to the Board for approval the remuneration policy for Directors and senior executives and ensure that the structure of the policy allows the Company to attract and retain Directors and senior executives of sufficient calibre to facilitate the efficient and effective management of the Company's operations
• Annually review and recommend to the Board for approval the remuneration packages of all Directors and senior executives of the Company
• With reference to the Board, manage the employment or deployment of the Chief Executive and negotiate employment terms.
• Participate in the process of employment of the Chief Financial Officer and recommend to the Board their confidence in any appointment.
• Establish appropriate performance criteria, from time to time, for the employee share option plan and make recommendations to the Board.

Other Committees

The Board has established a sub committee including BJ Harker, MJ Cooney and RP Carter to oversee any transaction to be undertaken by the Company in relation to on-market share buybacks.

Review of Board Performance

An annual review of the performance of the Board and individual Directors is undertaken  by the Chairman.  This review is facilitated by an independent consultant and incorporates the feedback of all Directors.

Compliance with NZX Best Practice Code and Other Guidelines

As a listed issuer TrustPower is required to disclose in its Annual Report whether, and to what extent, its corporate governance principles materially differ from the NZX Corporate Governance Best Practice Code.

TrustPower believes that it complies in all material respects with the Code.  However, it should be noted that the TrustPower Board has chosen not to constitute a Nominations Committee as recommended by the Code.  The Board has decided that Director nominations are able to be handled more effectively by the full Board.

Code of Ethics

A Code of Ethics has been developed and approved by the Board.  TrustPower is committed to maintaining the highest standards of honesty, integrity and ethical conduct and has adopted a Code of Ethics to deter wrongdoing and to:

• Promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.
• Promote full, fair, accurate, timely and understandable disclosure in reports and documents filed by the Company and in other public communications made by the Company.
• Promote compliance with applicable laws, rules and regulations.
• Prompt internal reporting to the Board of Directors of violations of this Code of Ethics. 
• Promote accountability for adherence to the Code of Ethics.

The Code of Ethics is not an exhaustive list of acceptable or non-acceptable behaviour, rather it is intended to guide decisions so they are consistent with TrustPower's values, business goals and legal and policy obligations.

Failure to follow the Code of Ethics may lead to disciplinary action being taken, which may include dismissal.

The Code of Ethics applies to the Board of Directors and the Company’s employees.  To down load a pdf copy of the Code Of Ethics click on this link, 

Internal Control

The Group has adopted a system of internal control.  The system is based upon written procedures, policies and guidelines, organisational structures that provide an appropriate division of responsibility, sound risk management, a programme of internal audit, and the careful selection and training of qualified personnel.

While the Board acknowledges that it is responsible for the overall control framework of the Group, it recognises that no cost effective internal control system will preclude all errors and irregularities.

Risk Management

The Group has developed a comprehensive, enterprise-wide risk management framework.  Management actively participate in the identification, assessment, and monitoring of new and existing risks.  Particular attention is given to the market risks that could impact on the Group.  Management undertake regular reporting to appraise the Audit Committee and the Board of the company’s risks and the treatment of those risks.

Wholesale Electricity Trading Policy

The Group has adopted a Wholesale Electricity Trading Policy to manage the risk from the purchasing of electricity from the wholesale electricity market.  Derivative instruments can be used to set the price of electricity at a future nominated time.

The Wholesale Electricity Trading Policy allows wholesale electricity trading to occur within risk limits set by the Board.

Treasury Policy

The Group has a Treasury Policy to manage interest rate, foreign exchange and foreign investment risks.  The Policy approves the use of certain instruments for risk management purposes, and it prohibits any activity that is purely speculative in nature.

It also sets out exposure limits, delegated authorities and internal controls.

Delegated Authorities Policy

The Group has a Delegated Authorities Policy in place that has been approved by the Board.  The Policy provides limited authority to certain Group executives to purchase goods and services, enter into sales contracts and approve credit, sign deeds, indemnities and guarantees, and sign other contracts and documents.  The Policy is reviewed annually.

Environmental Policy

The Group recognises the importance of environmental issues and is committed to the highest levels of performance.  To help meet this objective the Group has developed and is proactively implementing both environmental policies and a comprehensive environmental management system. 

These have been established to facilitate the systematic identification of environmental issues and to ensure that they are managed in a structured manner.  These measures allow the Group to:

• Monitor its compliance with all relevant legislation.
• Continually assess and improve the impact of its operations on the environment. 
• Encourage employees to actively participate in the management of environmental issues.
• Use energy and other resources efficiently.
• Encourage the adoption of similar standards by the Group’s principal suppliers, contractors and distributors.
• Ensure procedures are in place to deal appropriately should an adverse environmental event take place.

Group Information Policy

The following is the Group’s policy regarding the disclosure of Group information:

No Director of the Group may disclose information which that Director has received in his or her capacity as a Director or employee of the Group, being information that would not otherwise be available to the Director, to

• a person whose interests that Director represents; or
• a person in accordance with whose directions or instructions the Director may be required, or is accustomed to act in relation to the Director’s powers and duties, 

without the prior consent of a Subcommittee of the Board established to authorise the disclosure.  The Committee referred to above has not received any requests to use information.

Conflicts of Interest

Where any TrustPower Director has a conflict of interest or is otherwise interested in any transaction, that Director is required to disclose his or her conflict of interest, and thereafter neither participate in the discussion nor vote in relation to the relevant matter.  The Company maintains a register of disclosed interests.

Insider Trading

In order to protect TrustPower’s reputation and safeguard employees who may want to buy or sell TrustPower securities, the Insider Trading Policy requires an approved procedure to be followed by all staff and Directors.

Certain employees of the Company are required to make additional disclosures under the Securities Markets Act.

Whistleblowing Policy

TrustPower has recently adopted a Whistleblowing Policy in order to facilitate the disclosure and impartial investigation of any serious wrongdoing.  This policy advises employees of their right to disclose serious wrongdoing, and sets out TrustPower’s internal procedures for receiving and dealing with such disclosures.  The policy is consistent with, and facilitates, the Protected Disclosures Act 2000.

Other Corporate Policies

The Group has a number of other policies covering but not limited to human resource activities, health and safety, buildings and security, and disaster recovery planning.  These policies are regularly reviewed and approved by senior management and where appropriate the Board.

Internal Audit

The Group has established an outsourced internal audit function that is responsible for monitoring the Group’s system of internal financial control and the integrity of the financial information reported to the Board.  Internal audit operates independently from the Board and reports its findings directly to the Audit Committee.  Internal audit liaises closely with the external auditors, who review the internal audit work undertaken to the extent necessary to support their audit opinion.

The Role of Shareholders

The Board aims to ensure that shareholders are informed of all major developments affecting the Group’s state of affairs.  Information is communicated to shareholders in the annual, half yearly and quarterly reports, and various announcements to the NZX.  The Board encourages full participation of shareholders at the annual meeting to ensure a high level of accountability and identification with the Group’s strategies and goals.

Constitution

To view the most recent copy of the TrustPower Constitution click here.