Annual Report 2013/14

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 of the Shareholders, with the exception of the Chairman and the members of the Compensation Committee who are elected by the Annual General Meeting pursuant to the “Ordinance against Excessive Compensation at Listed Joint-Stock Companies” (“OaEC”). The Board elects one or more Vice Chairmen. 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. Three meetings lasted for eight hours, one of three hours and two meetings lasted for one hour. The two 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 Brussels and the Group’s operations in Wieze, Belgium.
 
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 deter- mine by majority vote that other third parties, for example external consultants, may attend part or all of the meetings. In the fiscal year under review, 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 short closed discussion by the Board of Directors at the end of each physical 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 and Timothy Minges

The role of the AFRQCC is to assist the Board of Directors in carrying out its responsibilities. The Board of Directors has not delegated any decision power to the AFRQCC. 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 on page 142 and notes 26 and 30 to the Consolidated Financial Statements on pages 115–126 and 132 of the Annual report 2013/14.
 
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 qualification 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 2013/14; further- more, the Chairman of the AFRQCC met the lead external auditor three times 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. The AFRQCC reviews the annual plan of the Internal Audit Department based on a risk  assessment. In  the  last  fiscal  year, the  Internal Audit  Department  was supported on two projects by third-party experts.
 
Pursuant to the Group’s “Fraud Response and Whistleblowing Policy”, the Fraud Committee, chaired by the Group’s General Counsel, evaluates and, as the case may be, investigates alleged violations of the Code of Conduct under the supervision of the Chairman of the AFRQCC. The Fraud Committee reports all pending cases to the AFRQCC on a regular basis.
 
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 two to three hours. One of the meetings took place in the form of a conference call and one in the context of the Board’s three- day visit to Brussels/Wieze, Belgium.

 

Nomination & Compensation Committee

James L. Donald (Chairman), Fernando Aguirre, Nicolas Jacobs and Wai Ling "Winnie" Liu

The role of the Nomination & Compensation Committee (NCC) is to assist the Board of Directors in carrying out its responsibilities. The Board of Directors has not delegated any decision power to the NCC. The responsibilities of the 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 and recommends the remuneration to be paid to members of the Board of Directors and the Execu- tive Committee. It also ensures a transparent Board and Executive Committee nomination process and evaluates 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 on an ongoing basis and develops suggestions for the respective adapta- tions of Barry Callebaut’s compensation system, e.g. the changes necessary for the implementation of the requirements of the Swiss Federal Council’s “Ordinance against Excessive Compensation at Listed Joint-Stock Companies” (“OaEC”). For the implementation of the OaEC, the NCC was assisted by an ad hoc committee consisting of the Chairman and the Vice Chairman of the Board of Directors, Jakob Baer and the Group CFO (“OaEC”-Committee). The OaEC-Committee held three meetings of two hours during the last fiscal year.
 
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 two hours. One of the meetings took place in the context of the Board’s three-day visit to Brussels/Wieze, Belgium.

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