As Supervisory Board, we act as supervisor, advisor, and employer of the Executive Board. How did we fulfil these roles in 2023? We describe this in this paragraph.
Safety
Safety has the highest priority at Enexis and therefore it is also at the top of our agenda. Via quarterly reports, we discuss, for example, accidents resulting in absenteeism. We examine concrete incidents and the effectiveness of follow-up measures.
In the safety message for 2023, the EB stated that working gas-free and voltage-free is now the norm. We are enthusiastic about this new way of working and the corresponding policy. This applies not only to Enexis employees but also to the employees of contractors. Enexis is taking an important step forward with this new norm.
Furthermore, Enexis has realised the national target of carrying out an inventory of all accessible stations and making these stations asbestos safe. A huge task has been completed. As SB, we are proud of the colleagues that have worked hard on this.
Strategy
The central theme of Enexis's strategy is focus on facilitating the energy transition. As the energy transition accelerated in 2023, we monitored the execution of the strategy more critically. We are convinced that the strategy contributes to building the energy system of the future in a good and sustainable manner. However, we also see that the demand for energy - and thus for capacity on our grid - is growing faster than Enexis can keep pace. The goal to offer everyone access to energy at all times is therefore under pressure. To limit the consequences of not being able to meet this goal, we gave the EB advice on measures, for instance, clear and transparent communication with stakeholders, and carrying out research into the use of hydrogen and green gas to free-up grid capacity. In addition, we also advised setting priorities for grid expansion and allocation of capacity.
This demands a lot from the organisation. Consequently, we regularly have spirited discussions with the EB about the choices and progress. We discussed dilemmas such as how the nitrogen regulations are having the effect of slowing down Enexis's work. We also discussed the effectiveness of investments frequently. Enexis is doubling its investments in the coming years. Based on our role as supervisor, we asked the EB to explain their investment choices in detail. For example, what does the EB want to invest in first? And why?
Grid congestion
The electrification of society is accelerating. For example, there are more electric cars on the road and factories are switching from gas to electricity. Consequently, businesses and households require more and more electricity from our grids. And we are reaching the limits of our grid capacity in a growing number of areas. The transmission shortage for electricity consumption will probably continue in the coming five to ten years with waiting lists for large-volume business customers.
The consequences of a shortage of transmission capacity are far-reaching for our customers and other stakeholders. As SB, we also received signals of these negative consequences in 2023, which we discussed with the EB. In this case, our approach was primarily focused on ensuring that Enexis reaches society and stakeholders effectively, leading to greater awareness of the impact and challenges of the energy transition.
We talked about expanding the electricity grid by 'building, building, building'. Innovative measures were also discussed that can help reduce the shortage of transmission capacity like new types of contracts for large-volume business customers. We also discussed new ways of working together with the EB, for example, new forms of collaboration with municipalities and contractors. In the Nationale Uitvoeringsagenda [National Execution Agenda], the Dutch grid operators set out how they plan to invest proactively to resolve the grid congestion. The SB endorses this agenda.
Heat
Heat was one of the most discussed topics in our meetings in 2023. In the beginning of the year the Extraordinary General Meeting of Shareholders (EGM) gave the green light for an investment of nearly € 80 million in phase 1 of Mijnwater. This a district heating system that will be supply heating and cooling to business customers and households in the Parkstad region in Limburg. Old mine shafts are being given a new role as a renewable source of heating and cooling. In projects like Mijnwater, we are gaining valuable experience with heat.
In nearly every meeting, we discussed the developments around heat and the fine-tuning of our heat strategy with the EB. This strategy not only describes goals and results, but also guidelines and the conditions under which Enexis participates in heat projects. We advised the EB extensively on the criteria, risks, governance, and financing.
The heat strategy was also discussed in our meetings with shareholders, for example during the meetings of the Shareholders’ Committee. The AGM will be asked in April 2024 to approve the heat strategy.
More engaged and involved employees
As is the case for other companies, the tight labour market also has a negative effect on Enexis. The challenge Enexis faces in finding, retaining, and training skilled and competent employees demands a lot from the board, management, and HR/recruitment. Therefore, this topic has been a regular subject of discussion with the supervisory board. Enexis has tried to attract new colleagues in various ways, for example, with a new labour market campaign. And successfully: many new technical and other colleagues joined the company. This success demands sufficient training and coaching capacity of experienced colleagues. We are also monitoring this closely.
The recruitment of new colleagues was not the only attention point. The necessary production growth demands standardisation of processes. With the Central Works Council (COR) and the EB, we discussed how job satisfaction, entrepreneurship, and creativity can be maintained when the work is standardised. Together, we emphasised that it is crucial for Enexis to create a safe and learning organisation culture, offer good training possibilities, and continue to pay attention to the vitality of colleagues. After all, our employees make the energy transition possible. We are therefore pleased with the agreement on a new Collective Labour Agreement.
The supervisory board wholeheartedly supports the management in building an Enexis for everyone. With a focus on diversity and inclusion, we set new targets for the gender balance within the board of directors, the supervisory board, and the management layer directly below the board of directors. We also refined the profile of the supervisory board with regards to diversity. The Supervisory Board intends to explicitly focus on how Enexis ensures inclusivity in 2024.
Other topics
Furthermore, we undertook the following activities:
In 2023, we discussed the method based on which the remuneration of the EB and SB is charged to the various Enexis Groep entities. The EB and SB decided to evaluate the remuneration allocation method in order to determine whether the method is still appropriate. This, in view of the developments in the energy transition, including the challenges with regard to financing the grid operations and the strategic developments in connection with heat and hydrogen.
During a thematic session, the procurement process and policy of Enexis were explained. The shortages on the raw materials market require the whole energy chain to look ahead.
We approved the issue of a green bond and a new loan facility at the European Investment Bank (EIB). This issue and loan facility are in line with Enexis's strategy to make optimal choices for society for the energy system of the future.
We discussed the annual report, the financial statements, the interim report, the year plan, and the risk inventories and granted our approval based on the advice provided by the Audit Committee. EY, our external auditor, was present at these sessions.
During a two-day SB session, we visited the high-voltage station Eindhoven-Oost, work being carried out on a section of the grid, and a transmission distribution station. With the contractor in question, we discussed the impact that grid expansions and adaptations are having in practice.
During the two-day session, we discussed the theme of integrity in detail with the EB, the integrity manager and internal audit and risk manager, including critical points of concern. This year there were no critical points of concern and the theme was discussed on the basis of cases.
Another topic that was discussed during the two-day session was the feasibility of our strategy. With the EB and a number of directors, we engaged in in-depth discussions about production growth and the National Execution strategy as well as other topics.
In another session, we focused on grid losses and, in particular, the strategy for purchasing grid losses.
We also examined the tariff structure and the regulation method of the Netherlands Authority for Consumers and Markets (ACM) together with the EB. In view of the large investment and financing challenges and related issues, we think it is important that the ACM revises the current method.
We approved an amendment to the articles of association of Enexis Holding N.V. and submitted the amendment proposal to the shareholders during the Extraordinary AGM of 23 November 2023. The Extraordinary AGM approved the amendment proposal. The amendment makes it possible to reappoint, subject to conditions, supervisory board members after a period of eight years for a period of two years.
We discuss the daily course of affairs based on ongoing and detailed management reports about the performance of Enexis. This concerns the reliability of the energy supply.
We discussed the audit plan of our external auditor EY and the internal audit and risk plan.
Finally, the EB reported both quarterly and cumulative on important projects, customer and other processes, customer satisfaction, and financial figures. They also provided forecasts of the financial results and cash flow.
Governance
Changes in the Supervisory Board
At the beginning of 2023, we received the sad news that supervisory board member Paul Rüpp had passed away. Paul was a very dedicated supervisory board member, nominated by the shareholders, who enriched our team with his extensive political experience, warmth and ability to put things into perspective. He had to lay down his work due to health reasons at the end of February. We are deeply affected by Paul's death and thankful for his dedication and commitment all these years.
Until November 2023, the SB had four members and the duties were redivided. After a careful selection process, Wilma Mansveld was appointed as an SB member on 23 November 2022 after being nominated by the shareholders. Besides a member of the SB, Wilma also became a member of the Audit Committee. Anita Arts was reappointed at the AGM of 13 April 2023 as an SB member nominated by the Works Council, with a positive recommendation from the SB colleagues and the COR.
Changes in the Executive Board
After CEO Evert den Boer was unable to fulfil his duties at the beginning of 2023 due to health reasons, we focused all our attention on the continuity of the EB. Mariëlle Vogt temporarily assumed Evert's position - a situation that also had influence on the workload of the other EB members, Rutger van der Leeuw and Jeroen Sanders. We are grateful to Mariëlle, Rutger and Jeroen for the extra effort that they made in this period. When it became clear that Evert would not be able to return, we started looking for a suitable successor. After a selection procedure and positive advice from the Central Works Council and the Shareholders’ Committee, we appointed Rutger as CEO. The knowledge and experience that he has gained outside and within the organisation are suited to the challenges that Enexis is facing.
After his appointment, Rutger temporarily filled the role of both CEO and Chief Operating Officer (COO). In order to limit this period, we appointed Liesbeth Kaashoek as COO ad interim. A procedure is running to fulfil this position definitely; however, this is a challenge due to the tight labour market in combination with the Dutch Standards for Remuneration of Senior Officials in the Public and Semi-Public Sector Act (WNT). The law contains rules for the remuneration of senior management in the semi-public sector. We hope to introduce the new COO during the next AGM.
Performance SB
We carried out a self-assessment in 2023 under the supervision of an external party. The EB provided information in advance about the collaboration with us as SB. The assessment focused on the functioning of the SB as a whole, the two committees and the individual SB members. The process in connection with the succession of the CEO was also discussed, during which recommendations were put forward. We immediately applied these recommendations concerning the process in the appointment procedure of the new COO. The self-assessment confirmed that the way the SB members function is generally good. The SB does demand a substantial investment of time from the SB members due to the frequent meetings and the size of the task. The relationship between the SB and the EB is described as professional and there is mutual trust. We discussed the conclusions from the self-assessment with the EB. All SB members comply with the independence norms laid down in the Dutch Corporate Governance Code 2022.
The members of the SB continuously improve their performance by actively participating in relevant meetings and knowledge sessions, for example at Netbeheer Nederland and the major accounting and consultancy organizations.
Functioning of EB and collaboration with SB
We assessed the functioning of the EB again this year. Despite the limited staffing, the EB functioned well and demonstrated leadership. The collaboration among the board members and with us is good, which strengthens our confidence in the EB. We are involved timely and effectively in strategic and important decisions.
Supervisory board member attendance
We met with the EB a total of eight times. These meetings are always preceded by a closed meeting of the SB. The table below shows the attendance percentages per supervisory board member from the moment of appointment to the supervisory board and the relevant committee.
|
Jos Nijhuis |
Joost van Dijk |
Carmen Velthuis |
Anita Arts |
Wilma Mansveld (since November 2023) |
Paul Rüpp (up until March 2023) |
|
|
Supervisory Board |
100% |
100% |
100% |
87.50% |
100% |
100% |
|
Audit committee |
n/a |
100% |
100% |
100% |
100% |
n/a |
|
Remuneration and Selection committee |
100% |
n/a |
n/a |
100% |
n/a |
n/a |
The SB has two permanent committees: the Audit Committee and the Remuneration and Selection Committee.
Audit Committee
The composition of the Audit Committee changed in 2023. Wilma Mansveld became a member of the Audit Committee in November 2023. She succeeded Anita Arts, who became the Chair of the Remuneration and Selection Committee in October. The AC is chaired by Carmen Velthuis with Wilma Mansveld and Joost van Dijk as members. The committee convened seven times in 2023. In accordance with the governance agreements, the external auditor EY, the internal audit & risk manager, and the Chief Financial Officer (CFO) participated in all meetings.
The committee discussed the longer-term financial outlook, the structurally increasing investments, and the financing of these investments in connection with the energy transition extensively. Regarding data and digitalisation, the Audit Committee was informed about the design, objectives, and results of portfolio management and the next steps in this area, as well as about the control of Identity & Access Management. The Audit Committee also discussed cybersecurity in the presence of the Chief Information Security Officer (CISO). The Audit Committee assesses the functioning of the external auditor EY each year and reports to the SB on the outcome of this assessment.
Remuneration and Selection Committee
The Remuneration and Selection Committee has been chaired by Anita Arts since October 2023 with Jos Nijhuis as a member. After Paul Rüpp's death, the composition of the committee was not changed formally and Jos acted temporarily as chair of the committee. Other SB colleagues provided additional support.
The committee convened three times in 2023. They carried out the preparations for the succession of the CEO, the selection of the COO ad interim and started the procedure for the recruitment of the new COO. In addition, the committee discussed and supervised the reappointment of Anita Arts and the appointment of Wilma Mansveld. Other topics on the agenda were the remuneration of the EB and senior management, succession management, diversity, and inclusiveness. The committee also discussed changes in the SC profile to ensure that diversity, inclusiveness, and the independence of the SC members are well-embedded in the profile. In the last meeting of the year, the committee decided to broaden its scope and to transform the committee into a Human Resources Committee (HR Committee). In this manner, important HR topics, that the committee needs to provide advice on, can be discussed properly.
Finally, the RSC prepared the annual evaluation procedure of the EB. The RSC provided advice to the supervisory board on the evaluation process. A member of the committee was present at each individual performance review.
Shareholders
As SB, we regularly consult with the Shareholders’ Committee who represents the shareholders. The SB met five times with this committee in 2023. The composition of the Shareholders’ Committee changed following the Dutch Provincial elections in 2023. We conducted a strategic dialogue with the shareholders on the topic heat in November.
Employee Participation
We decided to strengthen the collaboration in the 'golden triangle’ of EB, SB, and the Central Works Council in 2023. With that objective, the chairs of the EB and the Central Works Committee, and the RSC participated in several meeting of the Employee Participation and Governance Alliance. In two formal ‘article 24’ meetings, the triangle discussed the labour market shortage, the progress with regard to the strategy, and organisational developments. The opportunities and threats of artificial intelligence (AI) were also a topic of discussion.
Throughout the year, there was also constructive contact about appointments in the EB and SB. Due to all the formal and informal contacts, the collaboration in the golden triangle proceeded smoothly. This also applies to the various works councils. At the beginning of the year on the employee participation day, the EB gave a presentation about the role of the supervisory board and answered questions about it. This was experienced as useful by both parties. We are pleased with the collaboration with the Central Works Council and we hope to strengthen this further in 2024.
About this report
We discussed the 2023 financial statements with the auditors’ report and assurance report, as prepared by the EB, extensively. The external auditor EY was present at this meeting. The auditor audited the 2023 financial statements and issued an unqualified audit opinion. The Audit Committee discussed the financial statements and the annual report extensively with the CFO, her team, and the auditor, and issued a positive advice for both documents. We conclude that the report satisfies the requirements of good governance, transparent reporting, and accountability, and we propose that the AGM adopt the 2023 financial statements and the profit appropriation proposal for 2023. We also propose that the AGM grant the EB discharge for the management of the company and grant us as SC discharge for our supervision of the EB in the reporting year 2023.
Word of appreciation
In the year 2023, the employees, management, Central Works Council and EB have again made a huge effort to realise Enexis's societal objectives. They did this under challenging circumstances. We would like to voice our appreciation and gratitude for their dedication and the results that they achieved in 2023. We would also like to thank the shareholders and other stakeholders for their valuable contributions and involvement, and for the trust they have placed in Enexis.
‘s-Hertogenbosch, 4 March 2024
Supervisory Board
Jos Nijhuis (Chairman)
Joost van Dijk (Vice-Chairman)
Carmen Velthuis
Anita Arts
Wilma Mansveld