The Board of Directors is a collective decision-making body consisting of at least seven (7) and not more than nine (9) members, elected by the Annual Shareholders Meeting held by the end of April each year.
Six (6) out of the seven (7) directors are indicated by the controlling shareholders and one (1) is an Independent Director, pursuant to the Listing Rules of the Novo Mercado segment of BM&FBOVESPA.
Directors can be elected through two (2) voting systems:
a) Slate-based voting system, in which shareholders register the names of candidates with the presiding board of the Shareholders Meeting, or
b) Multiple vote, through a request made by shareholders representing at least five percent (5%) of the capital stock, in which candidates are nominated and elected individually. Voting is done by attributing to each share the votes equivalent to the number of members of the Board of Directors.
To ensure compliance with Novo Mercado rules, if the noncontrolling shareholders do not elect as Director, the controlling shareholders must indicate a director who fits the definition of Independent Director in the BM&FBOVESPA Novo Mercado Listing Rules and the Company’s Bylaws.
The nomination of Directors will first be deliberated upon by the controlling shareholders in a prior meeting.
Chairman and Vice Chairman of the Board
The Chairman and Vice Chairman of the Board of Directors will be nominated at the first meeting that will be held after the election of its members.
The Chairman will be one of the directors indicated by the shareholder belonging to the Control Block who individually holds the highest number of shares bound to the Agreement and the Vice Chairman will be one of the directors indicated by the shareholder belonging to the Control Block who individually holds the second highest number of shares.
Shareholders must submit to the Shareholders Meeting, the updated resume of the candidates for a seat on the Board of Directors.
The elected directors are selected from among senior professionals, with a wide range of qualifications, who are aligned with ethical principles and values of the Company and who collectively have proven experience in the electricity sector or in their respective fields.
Duties and responsibilities of the Board of Directors are established by the Bylaws and by the Brazilian Corporation Law (Federal Law 6,404/76), while the rules for the Board functioning are defined in its Internal Charter.
Meetings and Interlocutors
The Board of Directors ordinarily meets at least twelve (12) times a year, as per the calendar of meetings approved beforehand and extraordinarily whenever called in accordance with the Bylaws of the Company.
The Internal Audit and Corporate Governance Advisors are primarily acconuntable to the Board of Directors.
The compensation of the Board of Directors is a fixed amount and annually by the Annual Shareholders Meeting.
Directors do not receive additional compensation for participating in Advisory Committees and/or Commissions of the Board of Directors.
Alternate directors are entitled to fees only when they are exercising their functions in place of the respective directors.
Committees and Commissions
The Board of Directors has three (3) Advisory Committees to advise it on issues of importance to the Company, direct and indirect subsidiaries, companies under shared control and affiliated companies that require constant monitoring and in-depth analysis. These are: (i) Human Resources Management Committee; (ii) Related Parties Committee; and (iii) Management Processes, Risks and Sustainability Committee.
Duties and responsibilities and rules of functioning of each Committee are regulated by their Internal Charter, duly approved by the Board of Directors.
The Committees are permanent and meet upon request from the Board of Directors to analyze issues under their authority.
The Human Resources Management Committee supports the Board of Directors in monitoring the following matters:
a) Selection of Chief Executive Officer, indication of Executive Officers of the Company and key executives indicated by him;
b) Criteria for compensation of Management and Fiscal Council;
c) Definition and validation of results of the plans for the short- and long-term targets for the Executive Officers; and
d) Organizational structure, succession plan and assessment.
The Related Parties Committee supports the Board of Directors in monitoring compliance with the usual market practices in transactions involving controlling shareholders or their related parties, whose amount is higher than or equal to the minimum amount under the authority of the Board of Directors as per the Bylaws of the Company, with regard to:
i. Selection of suppliers and service providers for construction works, as well as purchase of raw materials and services;
ii. Signing of energy purchase and/sale agreements; and
iii. Any other transactions that may, in any manner, bring benefits or advantages of any kind to controlling shareholders or their related parties.
The Management Processes, Risks and Sustainability Committee supports the Board of Directors in examining and monitoring the following processes:
i. Supervising the work of Internal Audit
ii. Supervising risk management and compliance activities;
iii. Supervising the Sustainability Platform and the Ethics System, including the channels for reporting complaints; and
iv. Improvements in business management processes.
Apart from the activities performed by the Advisory Committees, the Board of Directors can, whenever necessary, create ad hoc working commissions to monitor the study and conduct of issues of high importance for the Company, its direct and indirect subsidiaries, companies under shared control and affiliated companies, such as budget, strategic projects and corporate finance.
The rules of functioning of Advisory Committees also apply to the Advisory Commissions to the Board of Directors.
Members of Advisory Committees and Commissions are nominated by the Board of Directors for a term of one year and their scope of work is defined through Worksheets that are revised annually.
The provisions of the Code of Ethics Conduct, the Policy on Disclosure of Material Event and Policy on Trading of Securities of CPFL Energia apply to members of the Advisory Committees and Commissions to the Board of Directors.
Board of Directors of Subsidiaries, Companies under Shared Control and Affiliated Companies
The Board of Directors of direct or indirect subsidiaries, companies under shared control and affiliated companies is composed of the Executive Officers of the Company, executives selected from the succession process in the Company and/or professionals selected from the market, in accordance with the respective Bylaws and Articles of Incorporation.
In the subsidiaries CPFL Paulista, CPFL Piratininga, RGE and CPFL Geração, one of the directors is a representative of their employees, who is elected in a voting process held by the Council of Representatives of Employees (CRE).
To ensure alignment of interests and compliance with the corporate governance rules defined by the Company, the Board of Directors of CPFL Energia will, whenever applicable, issue a voting recommendation to the executives indicated by the Company to the management bodies of direct or indirect subsidiaries, companies under shared control and affiliated companies regarding the following:
a. All matters subject to the authority of the Shareholders Meetings and Partners Meetings and
b. Matters subject to the authority of the Board of Directors and/or Executive Officers that administers the privately-held subsidiary, which are:
(i) Management election and compensation,
(ii) Strategic plan, expansion projects, investment programs, business policies, annual budgets, five-year business plans and their annual reviews,
(iii) Annual financial statements and dividend policy,
(iv) Capital increase and reduction,
(v) Issue of commercial paper and debentures,
(vi) Selection and removal of independent auditors,
(vii) Contracting of loans or assumption of debt in an amount greater than or equal to the amount authorized for the Board of Directors by the Bylaws of CPFL Energia,
(viii) Definition of triple nomination list of institutions or companies specializing in preparing share valuation reports,
(ix) Public offering for registration or cancellation of status as publicly-held company,
(x) Contracting of loans or assumption of debt in an amount greater than or equal to the amount authorized for the Board of Directors by the Bylaws of CPFL Energia,
(xi) Acquisition of shares for cancellation or for holding in treasury,
(xii) Signing of agreements for the acquisition of goods and services, sale of assets or of any nature, with their shareholders or persons controlled by them or affiliated or related to them, directly or indirectly, in an amount higher than the limit authorized for the Board of Directors by the Bylaws of CPFL Energia,
(xiii) Signing of agreements for the purchase of goods and services, sale of assets or of any kind, whose total amount is higher than the limit authorized for the Board of Directors by the Bylaws of CPFL Energia, even if these refer to expenses included in the annual budget or in the five-year business plan,
(xiv) Constitution and dissolution of subsidiaries, direct or indirect interest in consortia and acquisition or divestment of interest in other companies,
(xv) Constitution of any type of guarantee that involves or does not involve fixed assets of an amount equal to or greater than the limit authorized for the Board of Directors by the Bylaws of CPFL Energia, in transactions involving the interests and activities of the Company and/or direct or indirect subsidiaries,
(xvi) Change in the human resources policy that could substantially impact the cost strategy,
(xvii) Provision of guarantee or assumption of debt for the benefit or in favor of third parties,
(xviii) Declaration of dividends or interest on equity, charged to net income ascertained in the half-yearly balance sheets or those of shorter periods, or charged to retained earnings or profit reserves,
(xix) Creation of, and nomination of members to, Advisory Committees to the Board of Directors,
(xx) Stock option plan for management and employees,
(xxi) Signing of or amendment to Partners Agreement or Shareholders Agreement and Concession Agreement,
(xxii) Liquidation and appointment of liquidator, in cases of dissolution and
(xxiii) Any matter proposed by the Executive Officers of CPFL Energia.