Board composition evaluation and director
selection protocol / process
Board composition
Western Power’s directors are appointed by the Governor of Western Australia on the nomination of the Minister for Energy1. Accordingly, the composition of the Board, and the independence of its
non-executive directors, is not something over which the Board has ultimate control.
However, the Minister is required to consult with the Board before making any nomination for appointment and the Board may recommend suitable candidates to the Minister. In making recommendations to the Minister regarding nominations for non-executive directors, the Board will have regard to the following criteria:
1. The Chair and the Deputy Chair must be independent, non-executive directors
2. The role of the Chair and the Chief Executive Officer cannot be filled by the same person 3. The Chief Executive Officer is to be resident in, or near, the town in which Western Power’s head
office is located
4. A majority of the Board will be independent directors as detailed in the Board charter (see below) 5. The Board should have the required mix of skills, experience and expertise in the following
disciplines:
5.1. accounting and/or finance 5.2. business
5.3. human resources / change management
5.4. electricity transmission and/or distribution (including the regulatory environment) 5.5. legal skills (especially when not present in the company secretary role)
5.6. CEO-level responsibility and decision making
6. The need for diversity, including but not limited to gender diversity, should also be considered. The Board, through the People & Performance Committee will also:
Regularly evaluate the mix of skills, experience, expertise and diversity that will best complement Board effectiveness, with a view to ensuring that it has a proper understanding of, and the competence to deal with, the current and emerging issues of Western Power’s business (see appendix one for a composition matrix that the People & Performance Committee will use when conducting this evaluation)
Develop and implement a plan for identifying, assessing and enhancing director competencies. In evaluating the skills and experience that each director contributes to the overall Board composition, the People & Performance Committee will recognise both professional expertise and also substantial experience in a particular skill-set.
Director independence
The following extract from the Board charter outlines the criteria against which the independence of directors will be assessed.
In these standards, a reference to "Western Power", includes any subsidiary of Western Power, as well as the former Western Power Corporation.
In judging whether a director is an "independent director”, the Board will have regard to whether or not:
1. The director is not, and has not within the past three years been: 1.1. employed by Western Power in an executive capacity
1.2. a principal, director or senior employee of a material professional adviser, or a material consultant, to Western Power, or been an employee materially associated with services provided by such adviser or consultant
2. The director is a material supplier, or customer, of Western Power, or is an officer, or employee, of, or otherwise associated with, a material supplier, or customer.
3. The director has received any remuneration from Western Power, other than directors' fees.
4. The director has a material contractual, or other material relationship, with any Western Power subsidiary, other than as a director.
5. The director has close family ties with any person who falls within any of the categories described above.
6. The director has been a director of Western Power for such a period that his or her independence may have been compromised.
7. The director is free from any other interests and any business, or other relationships, that could, or could be perceived to, interfere with the director's unfettered and independent judgment and ability to act in the best interests of Western Power.
These criteria are based on the premise that a director must be independent of management and free of any business or other relationship that could materially interfere with (or be seen to interfere with) the exercise of his or her unfettered and independent judgment.
The People & Performance Committee (as delegate of the Board) has determined2 that $1.5 million in
any 12 month period is the threshold for a customer or supplier to be regarded as material. However, this threshold is not conclusive and the Board will examine both the qualitative and quantitative nature of a director’s relationship with any particular customer or supplier when assessing director
independence.
Process step Responsibility
1. Determine skills and experience required to support Western Power’s
strategic direction P&PC / CEO / General Counsel
2. Assess / confirm skills and experience of existing directors P&PC / CEO/ General Counsel 3. Use gap analysis to determine selection criteria for new director(s) General Counsel
4. Update “role description” as required General Counsel 5. Briefing by Board chair and consider sourcing strategy: e.g. executive
search firm, AICD directors register and/or Board member recommendations
Board Chair / P&PC / CEO / General Counsel
6. Commence search activities General Counsel
7. Collate potential candidates and prepare individual profiles for
consideration General Counsel
8. Identify selection team Chair / P&PC / CEO / General
Counsel 9. Selection team shortlists candidates Selection team
10. Conduct preliminary discussions with short listed candidates Selection team member/search firm
11. Selection team identifies preferred candidate(s) Selection team
12. Conduct selection interviews Board chair / CEO
13. Identify preferred candidate & make recommendation to Board P&PC / CEO / General Counsel
14. Endorse recommendation to Minister Board
15. Obtain consent(s) from the proposed new director General Counsel
16. Undertake appropriate checks in relation to the proposed new director, including checks as to the person’s character, experience, education, criminal record and bankruptcy history
General Counsel
17. Prepare relevant Ministerial and Cabinet submissions General Counsel 18. On confirmation of appointment by Governor, prepare formal letter of
appointment for signature by Minister General Counsel 19. Make media announcements as required Board chair / CEO
20. Draft and send engagement documents General Counsel
Approval history
Version Approved by Date Resolution no. Notes
1. P&PC 17/04/2007 PPC/03/2007
3. P&PC 07/08/2007 PPC/17/2007
5. P&PC 21/10/2008 70/2008/PPC
9. Board 17/12/2010 115/2010/BD
11. P&PC 21/02/2011
13A. P&PC 14/08/2012 011/2012/PPC
14B. Board 05/08/2014 018/2015/BD
16.3 Board 02/09/2014 031/2015/BD
EXECUTED under seal by ELECTRICITY
NETWORKS CORPORATION
ABN 18 540 492 861 in accordance with
paragraph 135(2)(a) of the Electricity
Corporations Act and Board resolution
BD/09/2006:
Alan Mulgrew
(Chairman and non-executive director)
John Pease
Appendix 1
Board composition analysis – preferred skills / experience matrix
The following matrix outlines the skills and experience considered by the Board .
The accounting/finance area of expertise relates to the suggestion in the commentary to the ASX corporate governance principles that the members of the audit committee should, between them, have accounting and financial expertise, namely a person who is a qualified accountant or other financial professional with experience of financial and accounting matters, including an understanding of financial statements, Australian equivalents to International Financial Reporting Standards (AIFRS) and experience in preparing or auditing financial statements, in internal accounting controls and in the functioning of audit committees.
Inde pe nde nt CE O level co rpor ate man ag emen t HR / ER & cha ng e man ag emen t Elec tr ic al eng in eer in g Acco unt in g / fina nce Str ateg ic l ead ersh ip Ris k ma na ge ment Leg al / co rporate gove rnan ce Gove rnm ent & stakehol der relati ons Acce
ss / re
gula to ry re gim e Sa fe ty f ocu sse d i ndu st ry As se t/in fr as tr uc tu re (i nc l. pr oject man ag emen t
Board Chair
Non-executivedirector
