Annual General Meeting 2023 -
Event invitation

Annual General Meeting 2023 -
Event invitation

Statement in response to shareholder questions

November 24, 2023

Following the publication of the Notice of Meeting for the 2023 AGM of Barry Callebaut AG, to be held on Wednesday, December 6, 2023, the Company has received questions from certain shareholders requesting clarifications regarding some of the resolutions proposed at the AGM. In response to these queries, we are providing to all shareholders additional information so that this can be taken into account before most investors cast their votes.

Election of directors (resolutions 4.1-4.2)

Independence of Mauricio Graber

We have stated explicitly on our website that Mauricio Graber, who is put forward for election at the 2023 AGM, is being proposed as an independent non-executive director. His independence is implied in his CV, which was already available, but this fact has now been made explicit. 

Board overall independence

The above confirms that the proposed overall board composition following the 2023 AGM will be comprised of a majority of independent non-executive directors. 

Board gender diversity 

The Board takes gender diversity very seriously and is actively working on Board refreshment and we expect at least one female new member in 2024. Furthermore, we are committed to meet the gender diversity regulation by the 2025 AGM.  

Audit committee independence

The Board is aware that many investors want to ensure that the Audit Committee chair is an independent non-executive. The Company is actively working on Board refreshment and the evolution of the Audit Committee composition is a top priority. The Nomination Committee is aiming to address this situation by the 2024 AGM. 

Aggregate Executive Committee compensation amounts (resolutions 5.2-5.3)

Executive Committee fixed compensation aggregate maximum 

As noted in the fixed compensation vote, we have reduced the size of the Executive Committee and are requesting less in fixed compensation than in previous years. 

Executive Committee short-term and long-term variable compensation aggregate maximum 

Over the past several years, Barry Callebaut has been on a journey to bring its pay practices in line with industry norms. We instituted minimum shareholdings for all directors and executive members. In 2022, we changed the Executive Committee LTI from its historic 50/50 RSU/PSU to 100% PSUs (linked to share price and ROIC performance, both quantified elements that align executives closely to shareholder interests). These changes should provide comfort to our shareholders that management is strongly incentivized to grow equity value per share (otherwise, they cannot achieve awards – indeed, the currently running 2021 and 2022 LTI plans are accruing at 0% for the share price-related portion of the pay-out). 

The Board conducted a strategic review earlier this year. This review determined that our company required a change in leadership, and furthermore, it would be best to identify an outsider, preferably with deep experience in taking businesses to the next level of growth, profitability, and cash generation. Shareholders will have seen the announcement of the BC Next Level program on 6 September 2023 (with more details shared on 1 November 2023).  

Executing a strategic investment program of the scale of BC Next Level requires specific expertise, and the Board identified in Peter Feld someone who has delivered significant value for Private Equity shareholders by executing similar programs.  As you know, Private Equity firms deploy very different compensation models in their portfolio companies than in listed FMCGs, so to get the right talent to unlock our full growth potential, we had to match at least the existing packages within the compensation model of Barry Callebaut. We recognize that the new CEO compensation plan is much higher than our previous CEO but the Board of Directors was not comfortable with the trajectory of the business under the former CEO, and we needed to act to correct the business momentum. We are very confident that the new CEO’s investment program, BC Next Level is the right path forward to unlock the next decade of growth and will deliver an increase in shareholder value that will benefit all shareholders. 

It is important to note that while the variable compensation request appears much higher than the previous year’s this is due primarily to the one-time costs of sign-on awards to establish a new team as mentioned above. Variable compensation net of sign-on awards was 5% below the previous year, which was already 4m CHF below 2021. For the period 2018-2021 shareholders had approved variable compensation in the average amount of 18.0 mCHF, so 2022 at 13.5 mCHF as a baseline was an anomaly.

Contact details

Should any investors have further queries regarding the resolutions being presented at the upcoming AGM please do not hesitate to contact the IR team.