Corporate Governance

Corporate structure and shareholders

Corporate structure

Swissgrid’s corporate structure is shown below:

The shareholdings of Swissgrid are listed in paragraph 13 of the notes on the statutory financial statements. Swissgrid holds 100% of the shares in the non-consolidated subsidiary Pronovo AG. In accordance with Art. 64 of the Energy Act, Pronovo AG is the responsible enforcement agency for guarantees of origin, the feed-in tariff system (FTS and CRF), one-off remuneration activities and additional cost financing. It is also responsible for the collection of grid premiums in this respect. Pronovo AG prepares separate annual reports, which can be accessed at www.pronovo.ch.

Shareholders

The following companies are Swissgrid shareholders as at 31 December 2021: Aare Versorgungs AG (AVAG), AEK Energie AG, Alpiq Suisse SA, Axpo Power AG, Axpo Solutions AG, Azienda elettrica ticinese, Aziende Industriali di Lugano (AIL) SA, BKW Energie AG, BKW Netzbeteiligung AG, Centralschweizerische Kraftwerke AG, Electra-Massa AG, Elektrizitätswerk der Stadt Zürich, Elektrizitätswerk Obwalden, EnAlpin AG, Engadiner Kraftwerke AG, FMV SA, Forces Motrices de Mauvoisin SA, Forces Motrices Hongrin-Léman S.A. (FMHL), General Electric Technology GmbH, Grande Dixence SA, IWB Industrielle Werke Basel, Kraftwerke Hinterrhein AG, Kraftwerke Linth-Limmern AG (KLL), Kraftwerke Mattmark AG, Kraftwerke Oberhasli AG, Kraftwerke Sarganserland AG (KSL), Kraftwerke Vorderrhein AG (KVR), Nant de Drance SA, Officine Idroelettriche della Maggia SA, Officine idroelettriche di Blenio SA, Repower AG, SIRESO Société d’Investissement de Suisse occidentale SA and SN Energie AG. Together, they hold 100% of Swissgrid’s share capital as at 31 December 2021. Swissgrid is directly or indirectly majority-owned by the cantons and the municipalities. The current shareholder structure can be viewed online at www.swissgrid.ch.

Cross shareholdings

No cross shareholdings currently exist.

Swissgrid ownership structure

As at 31 December 2021 (all figures rounded)

Capital structure

Capital and restriction on transferability

The ordinary share capital as at 31 December 2021 consists of 334,495,151 registered shares with a nominal value of CHF 1 per share (divided into 167,247,576 A registered shares and 167,247,575 B registered shares). The conditional share capital as at 31 December 2021 consists of a maximum of 112,939,487 fully paid-up registered shares (half A registered shares and half B registered shares), each with a nominal value of CHF 1. The conditional share capital relates to received convertible bonds that Swissgrid used to finance the transfer of the transmission grid. Creditors can exercise conversion rights over a maximum of 20 years. Shareholders have no pre-emptive rights. Shareholder advance subscription rights are also excluded, as the convertible bonds are financing the takeover of grid companies transferred as contributions in kind or individual system elements, or the simple and rapid improvement of Swissgrid’s capital resources.

Following issuance of the corresponding rulings by EICom, the definitive valuation adjustment of the transmission grid systems handed over to Swissgrid led to an overall positive change in value, for which the previous owners were compensated for the investment in their transmission grid systems with 30% of the value in Swissgrid shares and 70% of the value in a loan claim against Swissgrid. In exchange, in connection with the existing conditional capital, new Swissgrid shares with a par value of CHF 14,097,002 were issued (half A registered shares and half B registered shares) and recorded in the commercial register on 26 November 2021.

No authorised capital exists. According to Art. 18 Para. 5 of the Electricity Supply Act, the company’s shares may not be listed on a stock exchange. The Board of Directors maintains a share register listing the names and addresses of the owners and beneficiaries. Only shareholders or beneficiaries listed in the share register are recognised by the company and are authorised to exercise their shareholder rights. The status of the entries in the share register on the 20th day prior to the General Assembly is decisive for determining entitlement to participation and representation at the General Assembly. According to Art. 18 Para. 3 of the Electricity Supply Act, the majority of the share capital and the associated voting rights must be directly or indirectly held by the cantons and municipalities. In the event of share transfers (sale, gift, exercise of pre-emptive rights and purchase rights, etc.), these majorities must be retained. If an intended transaction breaches one of these majority ownership requirements, the Board of Directors must not grant its approval.

There are no participation or profit-sharing certificates and no options were issued.

Capital changes

Further information on the share capital and capital changes in the last two years is shown in the statement of changes in equity in the Swiss GAAP FER financial statements.

Resignations in the reporting period
Marcel Frei, as at 18 May 2021
Ronald Trächsel, as at 18 May 2021

New elections in the reporting period
Benedikt Loepfe, as at 18 May 2021
Roberto Pronini, as at 18 May 2021
Stefan Witschi, as at 18 May 2021

Election and term of office

The Board of Directors is comprised of at least three elected members. The majority of members and the Chairman must meet independence requirements in accordance with Art. 18 Para. 7 of the Electricity Supply Act. As a rule, the Board of Directors is elected at the Annual General Assembly for one year at a time. The term of office for the members of the Board of Directors ends on the day of the next Annual General Assembly. All cantons together have the right to delegate and recall two members to/from the company’s Board of Directors (Art. 18 Para. 8 of the Electricity Supply Act). The members of the Board of Directors can be re-elected at any time. The Board of Directors is self-constituting. It nominates its Chairman, Vice Chairwoman and the Secretary, who does not have to be a member of the Board of Directors.

Internal organisation

The Board of Directors is responsible for the overall management of the company and for supervising the management of the company. It represents the company externally and takes care of all matters that are not assigned to another corporate body according to law, regulations or the Articles of Incorporation. The Board of Directors can, subject to the legal guidelines on independence (Art. 18 Para. 7 of the Electricity Supply Act), transfer the management of the company or individual parts thereof as well as the representation of the company to one or more persons, members of the Board of Directors or third parties, who do not have to be shareholders. It issues the organisational regulations and arranges the corresponding contractual relationships. The powers of the Board of Directors and the Executive Board are defined in the organisational regulations. The members of the Board of Directors do not exercise any executive roles within Swissgrid. The Board of Directors met ten times during the last financial year.

Board committees

In order to incorporate the specialist knowledge and broad range of experience of the individual members in the decision-making process, or to report as part of its supervisory duty, the Board of Directors formed three committees to assist in management and control activities in close collaboration with the Executive Board: the Strategy Committee, the Finance and Audit Committee, and the Staff and Compensation Committee. The tasks and powers of the Board committees are set out in detail in the organisational regulations.

Strategy Commitee

The Strategy Committee supports the Board of Directors in the strategy process. It advises on the strategic principles on behalf of the Board of Directors and reviews the strategy for the Board of Directors on a regular basis. The committee presents its view on proposals that relate to strategic issues. The Strategy Committee met four times during the last financial year.

Members:
– Adrian Bult (Chairman, since 2012)
– Kerem Kern (since 2017)
– Claude Nicati (since 2014)
– Roberto Pronini (since 18 May 2021)

Changes in the reporting period:
– Marcel Frei (resignation as at 18 May 2021)
– Roberto Pronini (new election as at 18 May 2021)

Finance and Audit Committee

The Finance and Audit Committee supports the Board of Directors in its supervisory role, i.e. with regard to the integrity of the accounts, the fulfilment of legal provisions, and the competence and services of the external auditors. The Finance and Audit Committee assesses the suitability of financial reporting, the internal control system and the general monitoring of business risks. It ensures that there is ongoing communication with the external auditors concerning the financial position and the course of business. It supervises the Internal Audit division’s work. It makes the necessary preparations relating to the appointment or discharge of external auditors and the organisation and management of the Internal Audit division. The Finance and Audit Committee met five times during the last financial year.

Members:
– Regula Wallimann (Chairwoman, since 2017)
– Adrian Bult (since 18 May 2021)
– Stefan Witschi (since 18 May 2021)

Changes in the reporting period:
– Adrian Bult (transfer from the Staff and Compensation Committee as at 18 May 2021)
– Ronald Trächsel (resignation as at 18 May 2021)
– Stefan Witschi (new election as at 18 May 2021)

Staff and Compensation Committee

The Staff and Compensation Committee draws up principles for all compensation components of the members of the Board of Directors, the CEO and the members of the Executive Board, and submits a proposal to the Board of Directors accordingly. The committee defines the compensation of the CEO and the members of the Executive Board. The basis for this decision is the compensation concept approved by the Board of Directors. The committee presents its view on the changes to the Executive Board that are proposed by the CEO. It also ensures that succession planning is in place for the Board of Directors and the Executive Board. The Staff and Compensation Committee met four times during the last financial year.

Members:
– Isabelle Moret (Chairwoman, since 2014)
– Markus Kägi (since 2019)
– Kerem Kern (since 2018)
– Benedikt Loepfe (since 18 May 2021)

Changes in the reporting period:
– Adrian Bult (transfer to the Finance and Audit Committee as at 18 May 2021)
– Benedikt Loepfe (new election as at 18 May 2021)

Ad hoc committees

The Board of Directors may appoint ad hoc committees for specific tasks. It did not set up any such committee in the last financial year.

Information and control instruments with regard to the Executive Board

Information and control instruments

The Board of Directors has the following instruments for monitoring and supervising the Executive Board:
– At Board meetings, the Executive Board presents and comments on business performance and submits all important issues for discussion or resolution.
– A report to the Board of Directors is compiled quarterly, and contains key figures on business performance together with comments from the Executive Board.
– The written CEO report is submitted at every ordinary Board meeting and also deals with recurring issues, such as the ancillary services reports, grid construction projects, developments in the energy sector in Switzerland and Europe and key performance indicators (KPI).
– The risk report is discussed with and approved by the Board of Directors every six months.
– The auditor issues an annual written report for the Board of Directors (see also the comments in the external audit section).

Internal control system

The internal control system has an important role as part of corporate management and monitoring, and covers all procedures, methods and measures mandated by the Board of Directors and the Executive Board that serve to ensure the correct execution of the business processes with regard to financial management and accounting at Swissgrid. The internal operational controls are integrated into the operating procedures. They are implemented while work is being carried out or take place immediately before or after a procedure. Internal checks do not come under a separate function, but are integrated into the processes. The internal control system at Swissgrid is implemented at all levels of the organisation and demands a high level of personal responsibility from employees.

Internal Audit

The Internal Audit division reports to the Board of Directors, while its activities are monitored by the Finance and Audit Committee. The Internal Audit division supports the Board of Directors and, in particular, the Finance and Audit Committee with independent audits and advice. It gives the Board of Directors and the Finance and Audit Committee assurance that corporate governance is undertaken, that processes are complied with and that weaknesses are identified. The duties, powers and responsibilities of the Internal Audit division are regulated in separate regulations. The Board of Directors approves the Internal Audit division’s audit planning annually upon request by the Finance and Audit Committee. The Internal Audit division pursues a risk-based audit approach. The Internal Audit division’s audit results are dealt with at the Finance and Audit Committee meetings on an ongoing basis. The Finance and Audit Committee is informed of findings as well as any associated recommendations and measures at the meetings. The Internal Audit division also maintains a follow-up process to monitor and ensure that the agreed actions are implemented in a timely and effective manner. The Internal Audit division performed nine audits during the year under review. In addition, the Internal Audit division submits an annual Activity report to the Board of Directors.

Risk management

Risk management is an integral part of effective and prudent corporate management for Swissgrid. Swissgrid’s risk management covers the entire organisation, not including its subsidiaries and shareholdings, takes account of established standards (ISO 31000, COSO Enterprise Risk Management Framework) and satisfies the internal requirements of corporate governance as well as the requirements under Swiss law. Additional information on the implementation of the risk assessment can be found in the Management Report.

Resignation in the reporting period
Rainer Mühlberger, Head of Technology, as at 31 July 2021

Appointment in the reporting period
Konrad Zöschg, Head of Technology, as at 1 August 2021

Remuneration

The members of the Board of Directors receive a fixed remuneration (fees and expenses) based on a sliding scale for the Chairman and the other Board members. Remuneration for the members of the Executive Board consists of a basic salary (including lump-sum expenses) and a variable salary component that is dependent on achieving company and personal targets. The amount of remuneration for members of the Executive Board is defined by the Staff and Compensation Committee within the framework defined by the Board of Directors. Payments to the Executive Board and the Board of Directors are disclosed in paragraphs 8 and 9 of the notes to the Swiss GAAP FER financial statements.

Rights of participation

Shareholders’ rights to assets and rights of participation are governed by law and the Articles of Incorporation. The Articles of Incorporation can be viewed online at www.swissgrid.ch. There are no statutory regulations that differ from the legal provisions.

External audit

Mandate and fees

KPMG AG, Basel, acts as the statutory auditor for Swissgrid Ltd. The audit mandate was first awarded to KPMG for the 2005/2006 financial year (long year). The auditor in charge, Rolf Hauenstein, has been in the role since the 2015 financial year. The auditor is appointed at the General Assembly for a one-year term. For its function as auditor, KPMG received remuneration of CHF 215,000 for the last financial year. The total remuneration for additional services amounted to CHF 10,000.

Information instruments

Every year, the Finance and Audit Committee evaluates the effectiveness of the auditor. The members of the committee use their knowledge and experience garnered from holding similar positions in other companies to evaluate the audit. They also base their evaluation on the documents provided by the auditor, such as the comprehensive report and the verbal and written statements on individual aspects in connection with accounting, the internal control system and the audit.