Nalcor Energy Board of Directors

Department

Authority

Remuneration

Purpose:

Nalcor is a provincial Crown corporation established in 2007 under a special act of the Legislature of the Province of Newfoundland and Labrador. The company’s business includes the development, generation, transmission and sale of electricity; the exploration, development, production and sale of oil and gas; industrial fabrication site management; and energy marketing. 

The mandate of Nalcor, established in legislation under the Energy Corporation Act, is to invest in, engage in and carry out activities in all areas of the energy sector in the province and elsewhere, including:

• Developing, generating, producing, transmitting, distributing, delivering, supplying,selling, exporting, purchasing and using power from wind, water, steam, gas, coal, oil,hydrogen or other products used or useful in the production of power.
• Exploring for, developing, producing, refining, marketing and transporting hydrocarbons and products from hydrocarbons.
• Manufacturing, producing, distributing and selling energy related products and services.
• Research and development.

The principal functions of the Board include:

• developing Nalcor’s approach to corporate governance;
• reviewing and approving the business, financial, strategic and other plans to enable Nalcor to execute its strategy;
• adopting processes for monitoring the company’s progress toward its strategic and operational goals;
• approving the audited financial statements and Management’s Discussion and Analysis;
• ensuring that Management has a process for identifying the principal business risks;
• overseeing the integrity of the internal control systems;
• ensuring that Nalcor has processes for operating within applicable laws and regulations;
• ensuring the company has a compensation philosophy and framework;
• ensuring a process is in place to measure the performance of senior executives of Nalcor;
• ensuring Management creates a culture of integrity throughout the organization; and
• ensuring that succession plans are in place for senior Management, including the President and CEO.

 Nalcor’s legal structure at December 31, 2015 included the entities listed below. 

The Nalcor Energy Board appoints individuals to the boards of these entities with the exception of the boards of Hydro, Churchill Falls, Twin Falls and LCDC, which are appointed by the shareholders of those companies. 

Headquartered in St. John’s, Nalcor’s energy portfolio is located throughout the province.

For additional on the role of Nalcor Energy, please visit www.nalcorenergy.com.

Structure:

The structure for the Board of Directors for Nalcor Energy is prescribed in Section 6 of the Energy Corporation Act. There is additional information on the appointment of the Chairperson in sections 7 & 9. These sections are provided below.

Board of directors

6. (1) For the exercise and discharge of the powers and duties of the corporation, there shall be a board of directors comprised of not less than 5 and not more than 14 persons.

(2)  The directors shall be appointed by the Lieutenant-Governor in Council, shall hold office during pleasure only and are eligible for reappointment.

(3)  Except where otherwise prescribed under this Act, the corporation may exercise its powers by a resolution of the board.

(4)  The directors shall be paid the salary or other remuneration that the Lieutenant-Governor in Council may determine, and the salary or remuneration together with all reimbursable expenses shall be paid by the corporation out of its funds.

(5)  Where a vacancy occurs on the board because of the death, illness, resignation, removal of a member, or for another reason, the Lieutenant-Governor in Council may appoint a person to fill the vacancy.

(6)  Exercise of the powers of the corporation is not impaired because of a vacancy on the board.

(7)  Until the board makes other provision under section 10, a majority of the directors who then hold office constitutes a quorum of the board.

(8)  Notwithstanding that it is afterward discovered that there was some defect in the appointment or qualification of a person purporting to be a director, all acts done by the corporation and the board shall be as valid as if that defect had not existed.

Chairperson and CEO

7. (1) There shall be a chairperson of the board to be appointed by the Lieutenant-Governor in Council from among the directors.

(2)  The chairperson holds office for the period and under the terms and conditions that may be prescribed by the Lieutenant-Governor in Council or in an agreement made under section 9, and shall vacate office in accordance with those terms and conditions.

Service Contract

9. (1) With the approval of the Lieutenant-Governor in Council the corporation may enter into an agreement with a person that provides for his or her appointment to the office of chairperson or chief executive officer of the corporation.

(2)  An agreement under this section may prescribe the terms and conditions of appointment to the office and the term, tenure and remuneration, including the salary, pension and other rights and benefits that the appointee is to receive and the terms and conditions under which the appointment may be terminated and by whom before the expiration of the term of the appointment.

(3)  A person with whom an agreement is made under this section in relation to an office

             (a)  holds that office in accordance with the agreement and shall vacate it or them accordingly; and

             (b)  does not, by reason only of the appointment to that office, become an employee of the province.

The board has 4 active committees: Audit, Corporate Governance, Compensation and Safety, Health, Environment and Community.

The Audit Committee’s primary duties and responsibilities are to:

• serve as an independent and objective party to monitor the integrity of Nalcor’s financial statements, financial reporting process and systems of internal controls regarding finance, accounting, and legal compliance;
• identify and monitor the management of the principal risks that could impact the financial reporting of the Company;
• appoint, approve compensation, and monitor the independence and performance of Nalcor’s external auditors;
• monitor the compliance by Nalcor with legal and regulatory requirements;
• provide an avenue of communication among the external auditors, management, and the Board; and
• encourage continuous improvement of, and foster adherence to, Nalcor’s policies, procedures and practices at all levels.

  The Corporate Governance Committee is responsible for:

• developing governance principles for the Corporation and its subsidiaries that are consistent with high standards of corporate governance and reviewing and assessing on an ongoing basis the Corporation’s system of corporate governance;
• identifying and recommending candidates for appointment to the Board to be put before the Shareholder in the event of a vacancy on the Board;
• reviewing and recommending a process for Director orientation, assessment, and compensation; and
• Enterprise Risk Management with respect to the Corporation and its subsidiaries. 

The primary responsibilities of the Compensation Committee are to:

• consider and recommend for approval by the Board of Directors the appointment of the President and CEO and all other Officers of Nalcor and its subsidiaries;
• with the chair of the Board of Directors, undertake an annual performance review of the President and CEO of Nalcor and report and/or make recommendations to the Board of Directors;
• review and assess annually Nalcor’s succession planning policies and practices, and report and/or make recommendations to the Board of Directors;
• establish and maintain a compensation philosophy and framework for Nalcor and its subsidiaries;
• review and assess annually compensation and benefit policies and programs and pension plans of Nalcor for Executive, Management and all employees and recommend any changes or new policies or programs, where appropriate, to the Board of Directors;
• review compensation and benefits mandates for collective bargaining mandates and any proposed tentative settlement and recommend to the Board of Directors;
• review annually the Corporation’s performance management practices and procedures, and report and recommend any changes, as appropriate, to the Board of Directors; and
• as necessary, provide guidance and direction to the Boards of subsidiary companies with respect to compensation and human resource policies and issues as outlined in this mandate.

  The Safety, Health, Environment and Community Committee’s primary responsibilities include:

• reviewing and reporting to the Board of Directors on Nalcor’s maintenance of safety, environment and health policies, procedures and practices and in the conduct of its operation, directed to prevent injury to its employees, the public and the environment;
• reviewing with Management whether Nalcor’s safety, environment and health policies are effectively implemented and in compliance with statutory and regulatory requirements and report to the Board of Directors, at least annually, on Nalcor’s compliance with current industry, legislative, regulatory and corporate standards for safety, environmental and health;
• reviewing the findings of reports arising from internal and external audits and assessments of safety, environment and health issues, together with Management’s response thereto and oversee to ensure that there is an agreed course of action leading to the resolution of any concerns, deficiencies or outstanding issues and timely follow-up on any unresolved matters;
• reviewing with Management the impact of proposed legislation in matters of safety, environment and health on the operations of Nalcor and make recommendations to the Board of Directors on the appropriate responses and action for Nalcor;
• reviewing and reporting to the Board of Directors Nalcor’s safety and environmental emergency response planning policies and procedures.
• reviewing and approving annually the safety and environmental audit plans by Nalcor and external auditors and review of an annual Corporate report on safety and environmental issues identified by Management;
• reviewing with Management and make recommendations to the Board of Directors as appropriate on the Corporation’s safety, environment, health and community programs, policies and procedures and any other matters relating to safety, environment, health and community that it considers relevant;
• reviewing and approving the appointment, compensation and retention of external safety and environment auditors;
• meeting with the Vice-President responsible at least annually to review safety, environmental, health or community matters that could have a material impact on Nalcor’s reputation, business or financial position and report to the Board of Directors thereon in a timely manner; and
• reviewing and understanding the safety, health and environment policies and practices of Nalcor’s oil & gas partners.

It should also be noted that individuals appointed to the Nalcor Energy governing board are often also appointed to one or more subsidiary boards.

Competency Profile:

Those who make up the Nalcor Energy Board should collectively possess the following core competencies.

Judgment and Risk Assessment Savvy

•  Ability to effectively oversee Nalcor’s overall investment strategy;
• Up-to-date knowledge of the Canadian and international business;
• Experience with multiple perspectives on risk and risk management;
• International capital markets exposure; and
• Ability to understand the unique investment characteristics of long term assets, infrastructure, and real estate.

International Orientation

•  Knowledge of international markets and business operations, especially where Nalcor will be active in securing investment capital and partnerships.

Senior Leadership Business Acumen 

• Experience in a growing and increasingly complex organization, including success in building, consolidating and overseeing at a board/senior leadership level an organization’s infrastructure (i.e., IT, HR, Finance, Enterprise Risk Management, etc.).

Diversity 

• Direct experience in working with indigenous individuals, governments and organizations;
• Exposure/experience in working with visible minorities;
• Demonstrated knowledge of gender equity and the strategies that support gender balance;
• Able to bring a diverse perspective to the board;
• Demonstrated cultural competence; and
• Understanding of the role of the board in supporting gender equity and diversity.

General Educational Requirements 

• Corporate Governance
• Electrical Engineering Expertise
• Energy Marketing Expertise
• Petroleum Engineering/Geoscientist Expertise
• Large Scale Industrial Development Expertise
• Regulatory and Energy Economics Expertise
• Project Management Certification
• Financial Expertise
• Legal Expertise
• Business Development/International Business
• Public Policy
• Human Resources
• Safety/Emergency Management

Qualifications:

All individuals appointed to the board are expected to hold the following requisite competencies and experiences:

 Strong Conceptual Skill and Intellectual Insight

• Ability to assimilate, understand and effectively monitor Nalcor’s approach to business and the drivers of its success;
• Evident intellectual interest in, and commitment to, understanding Nalcor’s business;
• High level of analytical capability; and
• Willingness and capability to delve into and understand complex business dealings and long term investments.

 Nalcor Values Orientation 

• Demonstrated ability to successfully balance fiduciary responsibility to the public shareholder with the commercial interests of the corporation;
• Ability to communicate openly and foster an environment where information moves freely in a timely manner;
• Demonstrates a high level of accountability through holding oneself responsible for actions and performance;
• Evident commitment to safety by protecting oneself, colleagues and the community;
• Committed to being sincere and demonstrates honesty and trust;
• Evident teamwork capabilities;
• Shows respect and dignity by appreciating the individuality of others;
• Ability to provide leadership and empower individuals; and
• High ethical standards and integrity in professional dealings.

Board-Level Contributor

•  Accomplished senior business or professional leadership experience;
• Experience in contributing effectively to strategy discussions and their implementation;
• Tolerance for ambiguity (i.e., comfort in making decisions with imperfect information in highly changeable external circumstances; taking calculated risk);
• Experience in making decisions that are long term in nature;
• Experience in the leadership, oversight, attraction and retention of talent;
• Expertise and familiarity with financial information, public accountability, performance metrics, and reporting; and
• Able to bring a diverse perspective to the board. 

Sophistication and Sensitivity in Dealing with Multi-Stakeholder Environments

•  Experience and reputation for success in operating at the interface of the private sector and public policy/public stewards; and
• Ability to contribute to the strategic thinking and proactive influence required to ensure Nalcor’s independence and founding legislative mandate.

Time Commitments:

The Nalcor Board met 11 times in 2015. Committee meetings were as follows:

• Audit Committee met 6 times,
• Corporate Governance Committee met 2 times,
• Compensation Committee met 2 times, and
• Safety Health, Environment, and Community Committee met 3 times.

The number of meetings may fluctuate slightly from year to year. Board members are expected to spend additional time to review materials and prepare for Board and Committee meetings.

Term:

The directors are appointed by the Lieutenant-Governor in Council. They hold office during pleasure only and are eligible for reappointment.