Governance
The MGE Energy Board of Directors provides oversight of the Company's long-term strategic planning, business initiatives, major capital projects, risks and budget matters. Board members are kept informed of our business by various reports and documents, including operating and financial reports, made available at board and committee meetings by our CEO and other officers. We are dedicated to conducting all aspects of our business in an honest and fair manner.
Our board is very active and engaged with 10 regularly scheduled meetings of the full board each year, in addition to committee meetings. These meetings help directors stay well-informed of industry and company developments.
Board meetings are structured to provide for active dialogue with MGE management. Internal and external subject matter experts present to the board on issues of strategic importance to inform board members’ decision-making and oversight.
Board Oversight Manages and Mitigates Risk
Through strategic planning and a consistent, careful approach, MGE Energy is well positioned to manage risk. The board is involved in the process of overseeing the primary operational, financial and regulatory risks facing MGE Energy and its regulated utility, MGE. Trends in economic, business and commodity market conditions; legislative and regulatory initiatives and their potential or actual effects upon operations and capital expenditures; information technology systems and cyber security; and operational issues are recurring matters considered by the board in the course of its regular meetings.
The company's comprehensive approach to risk management encourages directors to initiate discussion at any time, either directly or through the Lead Independent Director, on any areas of concern, including risk identification and assessment, controls, management and oversight. The board and MGE management have created a culture of sustainability, responsibility and risk management. MGE management regularly presents to the board on issues of strategic importance and conducts periodic revisions of risks enterprise-wide under board oversight.
As a public utility, MGE operates under state and federal regulations. These regulations serve to protect the interests of customers, employees, investors and the environment. MGE is subject to regulation by the Public Service Commission of Wisconsin (PSCW), which has authority to regulate most aspects of MGE’s business, including rates, terms and conditions of service, accounts, issuance of securities and construction of infrastructure, such as generation siting. The PSCW also has authority over certain aspects of MGE Energy as a holding company of a public utility.
The Federal Energy Regulatory Commission (FERC) has jurisdiction, under the Federal Power Act, over certain accounting practices and certain other aspects of MGE’s business. MGE Energy’s subsidiaries also are subject to regulation under local, state and federal laws regarding air and water quality and solid waste disposal.
Executive Compensation
MGE Energy’s Board of Directors’ Human Resources and Compensation Committee, composed of independent directors, takes into consideration performance on both short- and long-term corporate strategy, among other factors, when evaluating executive compensation. Directors consider environmental performance, among other factors, such as cost containment and management of day-to-day operations. The committee also considers other performance goals that are critical to company performance, such as earnings, system reliability and customer satisfaction, as well as long-term strategic goals, including those related to sustainability and ESG-related matters.
The board regularly reviews how well the company is advancing its goals for carbon emissions reductions and its strategies for deep decarbonization. Our compensation program is designed to link a significant portion of the compensation of our named executive officers to defined performance standards that promote a balance of the drive for near-term earnings and returns with growth in long-term shareholder value. (For more compensation information, see governance links below.)
Director Independence
The board makes an annual assessment of the independence of directors under the independence guidelines adopted by Nasdaq Stock Market, Inc. Those guidelines are generally aimed at determining whether a director has a relationship which, in the opinion of the MGE Energy board, would interfere with the exercise of independent judgment in carrying out director responsibilities.
The board has four standing committees. All members of the Corporate Governance Committee, Audit Committee and Human Resources and Compensation Committee are considered independent.
The Executive Committee acts in lieu of the full board and between meetings of the board. The Executive Committee has the powers of the board in the management of the business and affairs, except action with respect to dividends to shareholders, election of principal officers or the filling of vacancies on the board or committees created by the board. Since our board meets 10 times a year, there has not been a need for the Executive Committee to meet or take action.
The resources below provide the guidelines and framework under which we do business.