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2014 Sustainability-based Annual Report

35 Horizon Holdings Inc. is incorporated under the Ontario Business Corporations Act and, throughout 2014, was subject to a Shareholders Agreement with Hamilton Utilities Corporation and St. Catharines Hydro Inc., its two shareholders. The Shareholders Agreement requires that the Board of Directors observe the standards of corporate governance which apply to publicly traded corporations to the extent practical. Although it is not a public corporation, Horizon Holdings Inc. recognizes the role of good governance in a successful business enterprise and provides voluntary disclosure of its corporate governance practices. Horizon Holdings Inc. owns all the shares in each of the two subsidiaries through which it operates, namely Horizon Utilities Corporation and Horizon Energy Solutions Inc. At present, accountability and responsibility for Committee oversight in Horizon Holdings Inc. and Horizon Energy Solutions Inc. is the responsibility of the full Board of Directors of the respective companies. Horizon Utilities, for its part, has three Board Committees in addition to its Board of Directors. Responsibilities of the Board of Directors The Canadian Securities Administrators (CSA) has published comprehensive guidelines for effective corporate governance. The guidelines cover a broad spectrum of good governance practices and elaborate specifically on a number of major areas where Boards should explicitly assume stewardship: • Development of corporate governance principles and guidelines • The integrity of senior management and staff throughout the organization • Strategic planning process and approval of a strategic plan • Risk assessment • Integrity of internal controls and management information systems • Succession planning and management performance • Employee and public safety The Boards of Directors of Horizon Holdings Inc. and of Horizon Energy Solutions Inc. have assumed stewardship with respect to the areas identified by the CSA and fulfill such stewardship responsibilities directly. These two Boards have established written mandates for themselves and each has adopted a comprehensive statement of Governance Guidelines. The Board of Directors of Horizon Utilities Corporation has also assumed stewardship with respect to the areas identified by the CSA and fulfills such stewardship responsibilities directly and with supporting oversight by its Committees. The CSA also provides guidelines with respect to the composition of the Board of Directors, including that the majority of Directors should be independent. The Boards of Directors of Horizon Holdings Inc. and Horizon Energy Solutions each consist of five directors, all of whom are presently independent as defined by the CSA. The Board of Directors of Horizon Utilities Corporation consists of 10 directors, all of whom are also presently independent. The Chair of the Board is an independent Director, as are the Chairs of all Horizon Utilities’ Board Committees. The independent members of each Board meet without management in attendance for part of each Board meeting. Board composition also meets the requirements of the Ontario Energy Board’s Affiliate Relationships Code (ARC). This code regulates the contractual arrangements between related parties and requires that at least one-third of a regulated distribution company’s Directors are independent from its non-regulated affiliates. All new Directors of Horizon Holdings Inc. and its two subsidiaries receive a comprehensive orientation with respect to the role of the Board, the business of the Corporation and the legislative and regulatory environment affecting the electricity sector. All three Boards have adopted a Code of Business Conduct, including a Conflict of Interest Policy. The Boards undertake an annual assessment of the Board and, in the case of Horizon Utilities Corporation, each Committee. Annually, each of the companies’ Boards request and receive an independence letter from its Auditors. By letters dated February 4, 2015, KPMG LLP has confirmed that it is independent with respect to Horizon Holdings Inc. (and its related entities) within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulation from January 1, 2014 up to the date of its letters. The Strategic and Financial Plans for the Corporations are approved and monitored directly by their respective Board of Directors. Horizon Utilities Corporation Board Committees There are three Committees of the Board with respective oversight mandates as follows: • Audit and Risk Management Committee: risk management, internal control, financial information, and annual audit; as well as the information systems activities of Horizon Utilities Corporation. • Human Resources and Corporate Governance Committee: succession planning, management objective setting and performance, compensation and safety activities of the Corporation. This Committee also covers all governance issues. • Nominating Committee: constituted as required for the evaluation of Board composition and nomination of prospective Directors of the Board as may be required. Mandate of Management The Board approves the mandate of the Chief Executive Officer and annual corporate objectives consistent with the recommendations of the CSA. The permitted business activities of the Corporation are outlined in its Shareholder Agreement. The mandate of the Chief Executive Officer and annual corporate objectives are consistent with the Shareholder Agreement. The authority limits of the Chief Executive Officer, as delegated by the Board, have been formally documented and executed by the Board. In addition, the Board of Directors annually reviews the Chief Executive Officer’s objectives, evaluates the Chief Executive Officer’s performance and monitors the succession planning process. Corporate Governance


2014 Sustainability-based Annual Report
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