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Hamilton Utilities
Corporation (HUC) is wholly-owned by the City of Hamilton. Its
mandate is to deliver multi-utilitiy services to the citizens of
Hamilton, and to leverage the City's utility assets by pursuing
business opportunities related to its core competencies as permitted
by the Electricity Competition Act.
It was determined from
inception that the Company would adopt the same high standards of
corporate governance required by the Toronto Stock Exchange (TSX)
for publicly traded corporations, modified as appropriate
recognizing that HUC is not a public issuer, and would keep abreast
of changes as they occur. HUC will ensure that these standards of
corporate governance also extend to its subsidiaries.
In doing so, HUC
recognizes that its business model is somewhat unique in that HUC is
in "The Business of Public Service™" with all that
entails. It means that HUC is accountable to its sole shareholder,
the City of Hamilton, for the provision of essential public services
and HUC must set and be accountable for its economic objectives
together with objectives for customer service, safety, health and
environment, and responsibility to the community at large.
Within this context
HUC has adopted the following corporate governance guidelines.
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| 1.
Sustainable Development |
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First and foremost, the Board is committed to
the basic principles of sustainable development and to the City of
Hamilton's Vision 2020 - the Sustainable City.
The Company is committed within its influence
to:
- the social well-being of the
community including public health and safety,
- the protection of and
improvements to the natural environment,
- the financial and economic
viability of the community.
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| 2.
Code of Conduct |
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The Board is committed to
ensuring that the Company, its directors, officers, and employees
conduct themselves to the highest standards of business ethics,
honesty and integrity.
The Board has adopted a written Code of Conduct that is
applicable to all directors, officers and employees of the Company.
Annually, each director will review and sign the Code of Conduct and
Conflict of Interest questionnaire.
Any waivers from the Code that are granted for the benefit of the
Company's directors or senior officers shall only be granted by the
Board or Board committees.
The Board will ensure that comparable processes are adhered to by
its subsidiaries.
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| 3.
Shareholders Communications |
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| The Board recognizes the importance of open and transparent communications and decision making processes. The Board will keep its shareholder well informed on significant operating and development activities on a timely basis.
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| 4.
Board Size and Composition |
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| The Shareholder Declaration authorizes a Board that will consist of a minimum of 7 and a maximum of 11 directors. The directors are appointed with staggered three year terms, shall include the Mayor or the Mayor's designate and may include the CEO of the Company. The majority of the Board will consist of independent, non-employee directors, who are nominated by the Board for consideration by Council.
For the purpose of Board and Committee membership, a member is independent if he or she has no direct or indirect material relationship with the Company, or its subsidiaries or its Shareholder. A material relationship is defined as a relationship which could, in the view of the Company's Board of Directors, reasonably interfere with the exercise of a member's independent judgment.
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| 5.
Board Chair |
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| While there is a preference for an independent, non-executive Chair, the Board may determine in appropriate circumstances to combine the roles of the Chair and CEO. In the absence of the Chair at any meeting, an independent director will be appointed by the Board.
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| 6.
Board Committees |
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| Committees are formed, filled, modified and terminated as part of the organizational and governance work of the full Board in order to assist the Board in carrying out its mandate. Currently there are two standing committees, namely the Human Resources and Governance Committee and the Audit and Risk Management Committee.
A Nominating Committee shall be constituted annually or as required, for consideration of director nominations for the following year.
From time to time, the Board may form committees for special purposes. All committees will operate to a board-approved, written mandate, outlining duties and responsibilities.
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| 7.
Assignment and Rotation of Committee Members |
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| Board committee assignments and committee chairs are reviewed annually and rotated periodically consistent with the directors' interests, areas of expertise and regulatory requirements.
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| 8.
Regular Board and Committee Meetings |
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| The schedule of meetings of the Board and each committee will be determined by the Chair in consultation with the Committee Chairs and members based upon an annual work plan designed to discharge the responsibilities of the Board or committee as set out in its mandate. The Chair of the Board or committee will develop the agenda for each Board or committee meeting through consultation, as appropriate, with members of management, staff and the directors or committee members. Each committee will report to the Board on results of each committee meeting.
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| 9.
Information for Board and Committee Meetings |
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| Information and reports pertaining to the Board and committee meeting agenda items will be circulated to the directors in advance of the meeting whenever practical. Such materials should be concise, yet complete - and be prepared in a way to focus attention on critical issues to be considered by the Board. Directors are expected to review materials prior to meetings. Board presentations by management should assume that this material has been read by directors. It is understood that, in the case of highly confidential matters, it may not be appropriate to distribute written materials in advance.
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| 10.
Notice of Meetings and Attendance by Directors |
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| Other than in exceptional circumstances, meetings will be held in accordance with annual work plans, and subject to individual notice in accordance with the bylaws.
The Chair of the Board, or the Committee Chair, may schedule, at any time, a special meeting outside of the regularly scheduled Board and committee meetings.
Meetings may be held at short notice subject to waiver of notice requirements by all Board members as appropriate. Directors are to make all reasonable efforts to attend all meetings.
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| 11.
Regular Attendance of Non-Directors at Meetings |
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| The Board appreciates the value of having certain members of senior management attend each Board meeting to provide information and opinion, and to assist the directors in their deliberations. The CEO will seek concurrence of the Chair of the Board or respective Committee Chair in the event of any proposed change to the management attendees at Board or committee meetings. Management attendees will not attend the "Closed Board Session" portion of each meeting which is reserved for discussion among directors only.
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| 12:
Closed Sessions |
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| The Board and Committees will schedule a closed Board session without management present at each Board or Committee meeting as appropriate.
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Board Contacts with Senior Management |
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| All of the directors have open access to the Company's senior management. It is expected that directors will exercise judgment to ensure that their contacts will not distract from the Company's business operations. The Board encourages having members of management participate appropriately in Board meetings in order to better inform directors about the business of the Company and the calibre of the management team. The Board also encourages individual directors to make themselves available for consultations with management outside Board meetings in order to provide specific advice and counsel on subjects where such directors have special knowledge and experience.
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Board Compensation |
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| The Human Resources and Governance Committee will regularly review the compensation of the Chair and Directors. The Committee will make recommendations to the Board for consideration when it believes changes in compensation are warranted.
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Board Review of "Independence" of Directors |
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| The Chair of the HR/Governance Committee will review on an annual basis, and where appropriate, bring forward to the committee, any relationships between an independent director and the Company which might be construed in anyway to compromise the designation of such director as being an independent director. The objective of such review will be to determine the existence of any relationships, to ensure that the composition of the Board remains such that the majority of the directors are independent, and that where any relationships exist, the director is acting appropriately.
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Criteria for Board Membership |
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Prior to nominating or appointing individuals as directors, the Board of HUC or of its subsidiaries will:
- consider the competencies and skills the relevant Board, as a whole, should possess; and,
- assess the competencies and skills each existing director possesses. The relevant Board should be considered as a group, with each individual making his or her own contribution. Attention should be paid to the personality and other qualities of each director.
The objective of this review will be to maintain the composition of the relevant Board in a way which provides the best mix of skills and experience to guide the long term strategy and ongoing business operations of the Company and its subsidiaries. This review will take into account such characteristics as personal integrity, outstanding ability in their individual fields of expertise and a willingness to devote the necessary time to Board matters.
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| 17.
Selection of Independent Directors |
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| The Board is responsible for proposing a slate of directors to the City Council of Hamilton for appointment to the Board effective June 30th of each year. The Nominating Committee has been given the responsibility of reviewing the availability and interest of current directors to fulfill their term or the desirability from a director's and Board's perspective of their seeking a further three (3) year term. In order to fill any vacancies, the Nominating Committee has been given responsibility for gathering the names of potential nominees, screening their qualifications against current skill and experience needs of the Board, and making recommendations in this regard to the full Board. An invitation to stand as nominee for election to the Board will normally be made by the Chair of the Board or the Chair's delegate.
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| 18.
Term Limits |
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| The Board has staggered terms of three (3) years. No director would normally serve more than three (3) successive terms.
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| 19.
New Director Orientation |
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| New directors will be provided with an orientation and education program which will include written information about duties and obligations of directors, the business of the Company, opportunities for meetings and discussions with management and other directors, tours of operations, etc. The Board will ensure that all new directors understand the role of the Board and its committees, as well as the contribution individual directors are expected to make, including the commitment of time and resources. The details of the orientation of each new director will be tailored to that director's individual needs and areas of interest. Orientation will also be provided to new Board committee members to prepare them to participate effectively.
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| 20.
Director Education |
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| Each director has the obligation to inform themselves sufficiently to perform their duties. The Company recognizes that benefits may accrue from formal director education programs and qualifications. The Company encourages director participation in industry and Company events. If a director will incur expenses requiring reimbursement, prior approval by the Board Chair should be obtained.
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Assessing the Board's Performance |
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| The Human Resources and Governance Committee is responsible for organizing and implementing an annual assessment of the overall performance of the Board and each of its members and committees. The objective of these reviews is to contribute to a process of continuous improvement on the Board's and committees' execution of their responsibilities, to improve individual director participation, and to provide feedback and a report to the Board and individual directors.
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Directors Who Change Their Present Job Responsibility |
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| Any director who makes a major change in principal occupation is expected to advise the Board Chair and Corporate Secretary and to offer his or her resignation to the Board. It is not intended that directors who retire or whose professional positions change should necessarily leave the Board. However, there should be an opportunity for the Board to review, through the Human Resource and Governance Committee, the continuing appropriateness of Board membership under such circumstances.
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Retirement Age |
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| There is no mandatory retirement age for the Board.
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| 24.
Evaluation of the CEO |
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| The Chair of the Board working through the Human Resource and Governance Committee will, in consultation with the CEO, prepare a written leadership performance review of the CEO annually, which will include the CEO's specific achievements compared to his or her one year written objectives. This will be discussed and agreed upon by the Human Resource and Governance Committee and the Board, before being presented to the CEO by the Board Chair. This review will be used in determining compensation and personal development plans for the CEO.
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Management Development and Succession Planning |
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| The Board expects senior management development and succession planning at HUC and each of its subsidiaries to be an ongoing activity with an annual report to be considered by the Human Resource and Governance Committee. A summary of this report, plus a focused discussion on succession planning for the CEO of HUC and each of its operating subsidiaries will take place annually with the full Board.
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| 26.
CEO and Outside Boards |
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The primary obligation of the CEO is to the Company, but it is recognized that service by the CEO on selected outside boards can be beneficial to the Company and its subsidiaries, and to the individual's development. All such requests must be approved by the Board based on time allocation, benefit to the individual and benefit to the Company or its subsidiaries. The number of outside boards will be limited and determined on a situational basis.
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| 27.
Corporate Strategy |
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| Participating in the development of corporate strategy is a key role for the Board to play. Management has the responsibility for the development of the Company's long-term strategy, and recommending the preferred corporate strategy to the Board. The Board in turn must develop a clear understanding of the recommended strategy, its potential risks and rewards.
Following a process of review, questions and comments, the Board must ultimately approve the corporate strategy for the Company. From time to time, special meetings of the Board will be held to facilitate this process.
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| 28.
Board Interactions with Stakeholders |
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| The Board believes that it is the function of management to speak for the Company in its communications with the shareholder, the investment community, the media, customers, suppliers, employees, government, and the general public. It is understood that the Chair of the Board or other individual directors may from time to time be requested by management to assist with such communications, and it is expected that such communication will only occur with the prior knowledge of management. Enquiries from stakeholders directly to the Chair or other directors should be communicated through management to determine an appropriate response. The Board will approve the content of major communications to the shareholder and the investment community including the Annual Report, the MD&A, etc.
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| 29.
Individual Directors Engaging Outside Advisors |
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| The Board has determined that any director who wishes to engage outside advisors should review the request with the Chair of the Board.
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Revised: April 26, 2010 |
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