Corporate Governance

Corporate structure and shareholders

Corporate structure

Swissgrid’s corporate structure is shown below:

The shareholdings of Swissgrid are listed in paragraph 12 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, 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.

Swissgrid ownership structure

As at 31 December 2023 (all figures rounded). The current shareholder structure can be viewed online at www.swissgrid.ch.

Cross shareholdings

No cross shareholdings currently exist.

Capital structure

Capital and restriction on transferability

The ordinary share capital as at 31 December 2023 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 2023 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.

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.

Board of Directors

Members of the Board of Directors, additional activities and affiliations

Resignations in the reporting period: none

New elections in the reporting period: none

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. They may therefore not belong to the boards of any legal entities which are engaged in activities in the fields of electricity production or sales, or are in a service-provision relationship with any such legal entities.

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). Furthermore, the Articles of Incorporation approved by the Federal Council stipulate that the two members designated by the cantons must also fulfil the independence requirements pursuant to Art. 18 Para. 7 of the Electricity Supply Act. They represent the individual national regions and not any publicly owned power supply companies.

The Articles of Incorporation also state that the Board of Directors should endeavour to ensure a level of diversity of its members that is appropriate for the company. The Board of Directors bases its proposal to the General Assembly on a profile of requirements for the Board of Directors as a whole.

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. The members of the Board of Directors can be re-elected at any time. The Board of Directors is self-constituting. It nominates its Chair, Vice-Chair and Secretary, who does not have to be a member of the Board of Directors. The General Assembly grants discharge to members each year.

The current composition of the Board of Directors meets the applicable independence requirements, both for the Board as a whole and for the individual committees.

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.

As part of their annual self-evaluation, the Board of Directors and the Executive Board review whether the composition of the individual committees, the understanding of their roles, the selection of agenda items, the conduct of meetings, the culture of discussion and cooperation with other bodies meet the expectations placed on them. The role and requirements profile is also regularly reviewed. By doing this, Swissgrid ensures that the Board of Directors has the necessary knowledge and experience. Following the self-evaluation performed in the previous year, changes were made in the reporting year to the processes for holding Board meetings and for preparing risk reports.

Management of conflicts of interest

Appropriate measures are taken to ensure that potential conflicts of interest are recognised, addressed, disclosed and, if necessary, dealt with at an early stage, both in general and in individual cases, so that they cannot have a decisive influence on the passing of resolutions. These measures include active enquiries by the Chair or the Secretary of the Board of Directors and the adoption of resolutions by means of a double resolution as laid down in the organisational regulations. The affiliations of the individual members of the Board of Directors and the shareholdings of the company and its shareholders are disclosed transparently in this report and on the Swissgrid website. Finally, shareholder relations (incl. those with the majority shareholder) and financial counterparty risks are tracked as part of shareholder/stakeholder management and financial planning/accounting.

Board committees

In order to incorporate the specialist knowledge and broad range of experience of the individual members into the decision-making process in a targeted manner, the Board of Directors has formed three committees to assist with 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. The chairs of the committees report on the progress of the preliminary discussions in the committees at each meeting of the Board of Directors.

Strategy Committee

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)
• Claude Nicati (since 2014)
• Roberto Pronini (since 2021)
• Martin Koller (since 2021)

Changes in the reporting period: none

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, and supervises the work of the Internal Audit division. 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 six times in the last financial year.

Mitglieder:

• Regula Wallimann (Chairwoman, since 2017)
• Adrian Bult (since 2021)
• Stefan Witschi (since 2021)

Changes in the reporting period: none

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 three times during the last financial year, in particular to evaluate the new member of the Executive Board.

Mitglieder:

• Markus Kägi (Chairman since 2022, member since 2019)
• Felix Graf (since 2022)
• Benedikt Loepfe (since 2021)
• Regula Wallimann (since 2022)

Changes in the reporting period: none

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 main instruments for monitoring and supervising the Executive Board:

• At Board meetings, the Executive Board submits all important issues for information or resolution.
• A financial report to the Board of Directors is compiled quarterly, and contains key figures on business performance together with comments from the Executive Board.
• At every ordinary Board meeting, the CEO submits a written report on business operations that addresses subjects such as grid operations, ancillary services, grid construction projects, relevant developments in Switzerland and Europe, and key performance indicators (KPI).
• Regular reporting also takes place on recurring issues. This applies in particular to the implementation of the corporate strategy.
• The risk report is discussed with and approved by the Board of Directors every six months.
• Internal Audit issues an annual written report for the Board of Directors containing the conclusions of the main audits and audit results from the reporting year, as well as information on key activities and the utilisation of resources.
• The auditor issues an annual written report for the Board of Directors.

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 is responsible for planning and conducting audits throughout the company in accordance with the guidelines of the profession. It has the highest degree of independence. Internal Audit reports to the Board of Directors, while the Finance and Audit Committee takes on operational management tasks. Internal Audit assists the Board of Directors and its Finance and Audit Committee with the fulfilment of statutory and regulatory supervisory and control duties. It also supports the management by pointing out opportunities to improve business processes and controls. It documents audit findings and monitors the implementation of measures. 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. Internal Audit pursues a risk-based audit approach. The audit results are discussed on an ongoing basis at the meetings of the Finance and Audit Committee. The Finance and Audit Committee is informed of findings as well as any associated recommendations and measures at the meetings. Internal Audit 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 ten audits during the year under review.

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.

Changes in the reporting period: Maurice Dierick, Head of Market, as at 30 June 2023

Appointments in the reporting period: Nell Reimann, Head of Market, as at 1 July 2023

Remuneration

The members of the Board of Directors receive a fixed remuneration (fees and expenses) based on a sliding scale for the Chair, the Vice-Chair, the Chairs of the committees 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 determined by the Staff and Compensation Committee within the framework defined by the Board of Directors. The remuneration paid to the Executive Board and Board of Directors is disclosed in paragraphs 8 and 9 of the notes to the Swiss GAAP FER financial statements and is approved in this form by the General Assembly, as it was in the previous reporting year, without any objections from shareholders.

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, acted as the statutory auditor for the financial report issued by Swissgrid Ltd until the end of 2023. The audit mandate was first awarded to KPMG for the 2005/2006 financial year (long year). The auditor in charge, Silvan Jurt, had performed the role since the 2022 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 214,000 for the last financial year. Total remuneration of CHF 146,200 was paid for other services. PricewaterhouseCoopers AG, Zurich (PwC) will be proposed to the General Assembly as the new auditor for the 2024 financial year.

The non-financial reporting for the 2023 financial year was audited by PwC (limited assurance audit). Stefan Räbsamen took over as lead auditor. PwC performed a business audit on selected environmental and social aspects of the Sustainability Report. The detailed description of the subject matter and scope of the audit performed, including the audit specifications, can be found in the notes on «Limited Assurance». PwC received remuneration of CHF 30,000 for its activities in the past financial year.

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.