Annual Report 2012/13

Functioning of the Board

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Internal Regulations of Barry Callebaut AG

Based on Article 26 of Barry Callebaut AG's Articles of Incorporation, the Board of Directors promulgates the following Regulations.
Internal Regulations [90 KB] Internal Regulations Annex [89 KB]

The Board of Directors constitutes itself at its first meeting subsequent to the Annual General Meeting. The Board elects its Chairman and its Vice Chairman. It meets as often as business requires, but at least four times per fiscal year. The meetings usually take place in Zurich. If possible, the Board meets once per year at one of the Barry Callebaut production sites and combines this meeting with a visit of the local operation. During this fiscal year, the Board of Directors met six times for regular and twice for extraordinary Board meetings. Four meetings lasted around six hours, one three hours and three meetings lasted one and a half hour. The three latter meetings took place in the form of conference calls. In the year under review, the Board held one of the regular meetings in the context of a three-day visit to the Group’s sites in Mexico (Monterrey, Mexico City, Toluca).

The Chairman invites the members to the meetings in writing, indicating the agenda and the motion for resolution thereto. The invitations are sent out at least ten business days prior to the meeting. Each member of the Board can request the Chairman to call a meeting without undue delay. In addition to the materials for meetings, the Board members receive monthly financial reports.

At the request of one member of the Board, members of the Executive Committee shall be invited to attend meetings. The Board of Directors can determine by majority vote that other third parties, for example external consultants, may attend part or all of the meetings. Last year, the CEO, the CFO and, depending on the agenda items, other members of the Executive Committee or management were present at all Board and Committee meetings, with the exception of a closed discussion on the Board of Director’s self-assessment in the context of a regular Board meeting.

Resolutions are adopted by a simple majority of the Board members present or represented. Members may only be represented by a fellow Board member. In the event of a tie vote, the proposal is deemed to be not resolved. Resolutions made at the Board meetings are documented through written minutes of the meeting.

Directors may request any information necessary to fulfill their duties. Outside of meetings, any Director may request information from members of the Executive Committee concerning the Group’s business development. Requests for information must be addressed to the Chairman of the Board.

The Board of Directors has formed the following committees:

Audit, Finance, Risk, Quality & Compliance Committee

Jakob Baer (Chairman), Andreas Schmid, Markus Fiechter and Timothy Minges

The primary task of the Audit, Finance, Risk, Quality & Compliance Committee (AFRQCC) is to assist the Board in carrying out its responsibilities and make recommendations regarding the company’s accounting policies, financial reporting, internal control system, legal and regulatory compliance and quality management. In addition, the AFRQCC reviews the basic risk management principles and guidelines, the hedging and financing strategies as well as the bases upon which the Board of Directors determines risk tolerance levels and limits for exposures of raw material positions. For details of the risk management system, see note 7 to the Financial Statements of Barry Callebaut AG and notes 26 and 30 to the Consolidated Financial Statements.

The AFRQCC further assists the Board of Directors in fulfilling its oversight responsibility of the external auditors. The AFRQCC recommends the external auditors, reviews their qualifications and independence, the audit fees, the external audit coverage, the reporting to the Board and/or the Audit Committee, and assesses the additional non-audit services as well as the annual financial statements and the notes thereto. The external auditors attended one meeting of the Audit, Finance, Risk, Quality & Compliance Committee in fiscal year 2012/13; furthermore, the Chairman of the AFRQCC periodically meets the external auditors outside AFRQCC meetings.

Barry Callebaut has its own Internal Audit Department. The internal audit function reports to the Chairman of the AFRQCC. The scope of internal auditing encompasses the examination and evaluation of the adequacy and effectiveness of the organization’s system of internal control and the quality of performance in carrying out assigned responsibilities. Significant findings of the Internal Audit Department as well as the respective measures of the Management are presented and reviewed in the meetings of the AFRQCC and of the Board of Directors. In the last fiscal year, the internal audit team was supported on two projects by third-party experts.

In the year under review, the Board of Directors issued the new “Fraud Response and Whistleblowing Policy” and installed a Fraud Committee. The Fraud Committee is responsible for the evaluation and investigation of alleged violations of the Code of Conduct. Standing members are the General Counsel (Chairman), Head Internal Audit and Head Global HR. The Chairman of the AFRQCC supervises the proceedings of the Fraud Committee, which regularly reports on all pending cases to the AFRQCC.

The AFRQCC meets as often as business requires, but at least three times per fiscal year. The meetings usually take place in Zurich. In the last fiscal year, the committee met six times. The meetings lasted for two to three hours. One of the meetings took place in the context of the Board’s three-day visit to Mexico.

In the year under review Barry Callebaut AG increased its share capital by way of an Accelerated Book-building, thereby excluding the existing shareholders of their subscription rights. In this process, the AFRQCC was mandated by the Board of Directors to serve as a pricing committee and ensured compliance with the requirements of the law and the Articles of Association of Barry Callebaut. For this purpose, the AFRQCC convened several times via conference call during the execution of the Accelerated Book-building process.

 

Nomination & Compensation Committee

James Donald (Chairman), Fernando Aguirre, Nicolas Jacobs and Ajai Puri

The responsibilities of the Nomination & Compensation Committee (NCC) are to make recommendations to the Board with respect to the selection, nomination, compensation, evaluation, and, when necessary, the replacement of key executives. The NCC establishes jointly with the CEO a general succession planning and development policy. The committee also reviews remuneration paid to members of the Board of Directors, ensures a transparent Board and Executive Committee nomination process, and is responsible for monitoring and managing potential conflicts of interest involving executive management and Board members. The NCC monitors the developments of the regulatory framework for compensation of the top management and the Board of Directors (e.g. the “Minder-Initiative”) on an ongoing basis and develops suggestions for the respective adaptations of Barry Callebaut’s compensation system.

The NCC meets as often as business requires, but at least three times per fiscal year. The meetings usually take place in Zurich. Last year, the committee met five times, one of which was in the form of a conference call. The meetings lasted for approximately two hours. One of the meetings took place in the context of the Board’s three-day visit to Mexico.


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