Board of Directors

As of 31 December 2018

Responsibilities

The Board of Directors has ultimate responsibility for supervising and monitoring the management of Georg Fischer Ltd. The Board of Directors is responsible for all matters vested to it by the law or the Articles of Association of Georg Fischer Ltd, provided it has not delegated these to other bodies. These are in particular:

  • decisions on corporate strategy and the organizational structure

  • appointing and dismissing members of the Executive Committee
  • organizing finance and accounting
  • determining the annual and investment budgets 

Unless otherwise provided for by law or the Articles of Association of Georg Fischer Ltd, the Board of Directors delegates operational management to the Chief Executive Officer, who is assisted in this task by the Executive Committee. The extent to which competencies are delegated by the Board of Directors to the Executive Committee and the nature of the cooperation between the Board and the Executive Committee are defined by the Organization and Business Rules. 
www.georgfischer.com/content/gf/com/en/investoren/annual-report.html

Elections and term of office

As per § 16.2 of the Articles of Association of Georg Fischer Ltd, the members of the Board of Directors have to be elected individually, and their term of office ends at the next Annual Shareholders’ Meeting. Re-election is possible.

The average term of office of members of the Board of Directors is ten years. Two-thirds of members of the Board of Directors have a term of office of less than ten years. Members of the Board must resign their mandate at the Annual Shareholders’ Meeting following their 70th birthday.

2018

At the 122nd Annual Shareholders’ Meeting on 18 April 2018, all nine members of the Board of Directors were re-elected.

Internal organizational structure

Pursuant to § 16.3 of the Articles of Association of Georg Fischer Ltd, the Annual Shareholders’ Meeting elects a member of the Board of Directors as its Chairman for the period of one year until the next ordinary Annual Shareholders’ Meeting. Re-election is possible.

With the exception of the election of a Chairman of the Board of Directors, who is elected by the Annual Shareholders’ Meeting, the Board of Directors constitutes itself by electing a Vice Chairman from within its ranks once a year. Alongside the election of Andreas Koopmann as Chairman of the Board of Directors, Gerold Bührer was elected by the Board of Directors as its Vice Chairman on the day of the Annual Shareholders’ Meeting on 18 April 2018.

In addition, pursuant to § 20.1 of the Articles of Association of Georg Fischer Ltd, the Annual Shareholders’ Meeting elects the members of the Compensation Committee.

Diversity and independence

The Board of Directors comprises nine members. Each member normally belongs to one of the three standing committees. When members are elected, the focus is not only on experience in executive and management functions, industry and technology markets, innovation, finance and accounting, risk management and law, but also on specific international relationships and regional market knowledge. The Board of Directors also aims to achieve a proper balance of competence and knowledge, taking into account the main operational focus of the Corporation, its international orientation, and the accounting requirements of listed companies. The Board of Directors broadly covers the required competence and knowledge. Expert knowledge in innovation and digitalization is being gradually expanded. After the retirement of Gerold Bührer from the Board of Directors, the expertise in finance and accounting will also be built up again.

Expertise/Experience
  
Nationality
  
Tenure
   

Based on the Swiss Code of Best Practice for Corporate Governance from economiesuisse all members of the Board of Directors are independent and non-executive. There are no significant business relationships between members of the Board or the companies or organizations they represent and Georg Fischer Ltd or a Corporate Company.

Mandate

Pursuant to § 21 of the Articles of Association of Georg Fischer Ltd, a member of the Board of Directors may at one and the same time hold no more than four additional mandates as a member of the supreme managerial or governing body of listed legal entities and no more than ten additional mandates as a member of the supreme managerial or governing body of unlisted legal entities.

In addition, a member of the Board of Directors may not hold more than ten mandates that he or she exercises by order of the company, in legal entities belonging to the member’s own family, in a professional or industry association or in a charitable institution.

Mandates of associated companies or institutions, which are exercised in the function as a member of the supreme managerial or governing body of a legal entity, together count as one mandate.

Succession planning

For new nominations, a requirement profile is drawn up based on a competence matrix, and suitable candidates are sought and contacted with the help of an external executive recruiter. The Nomination Committee is responsible for preparing and drawing up the requirement profile as well as for pre-selection. Candidates also meet the Chairman and other members of the Board of Directors personally before any nominations are proposed.

All members of the Board of Directors are independent and non-executive. However, three members have been on the Board of Directors for more than twelve years. Gerold Bührer (member of the Board of Directors since 2001) will step down from the Board at the Annual Shareholders’ Meeting 2019. Meanwhile, Roman Boutellier and Zhiqiang Zhang (members since 1999 and 2005 respectively) will be proposed for re-election at the Annual Shareholders’ Meeting 2019. As the former long-term Vice Chairman of the ETH Zurich, former Professor of Innovation and Technology Management at the ETH Zurich and former CEO of listed companies, Roman Boutellier has an excellent combination of technology and innovation expertise and operating management experience. Zhiqiang Zhang is a Chinese citizen and has held key positions in leading European corporations in China for many years. As GF generates around 20% of the Corporation’s revenue in China, his expertise in China and in-depth knowledge of European culture and its economy are extremely valuable. Therefore, the Board of Directors is proposing their re-election.

Areas of responsibility

The members of the three standing Board Committees are listed at the beginning of this chapter and in the separate section Members of the Board of Directors. The Board Committees provide preliminary advice to the Board of Directors and do not make any definitive decisions. They discuss the issues assigned to them and make proposals to the Board of Directors as a whole. The CEO attends the meetings of the Board Committees, but is not entitled to vote. Minutes of the committee meetings are sent to all members of the Board of Directors. The Chairmen of the individual committees also make a verbal report at the next meeting of the Board of Directors and submit any proposals.

Working methods of the Board of Directors

Decisions are made by the Board of Directors as a body. Members of the Executive Committee also participate in Board meetings for agenda items relating to the company’s business, but are not entitled to vote. Only the Chief Executive Officer is present when personnel topics are dealt with. Personnel topics affecting him directly are treated in his absence. Invitations to Board meetings list all the items that the Board of Directors, a Board Committee, or the CEO wish to discuss. All participants in a Board meeting receive detailed written material on the proposals in advance.

The Board of Directors meets at least four times a year under the leadership of its Chairman. During the year under review, it met six times: five meetings lasted less than a day. One meeting, including the annual strategy meeting in 2018 that was dedicated to reviewing Strategy 2020, lasted two days. The dates of the regular meetings are generally set two years in advance to enable all members to attend personally. In the year under review, the attendance rate was 100%. The three standing Board Committees met a total of 20 times.

External consultants are called on for their services when specific topics are involved. Further information is provided in the section on the Board Committees.

Evaluation

The Board of Directors carried out a self-assessment in 2018, the results of which were circulated and noted. The Board of Directors will discuss these in 2019 and agree measures to further optimize the Board of Directors’ work.

Audit Committee

The Audit Committee consists of three Board members (see separate section Members of the Board of Directors). It supports the Board of Directors in monitoring accounting and financial reporting, supervises the internal and external audit function, assesses the efficiency of the internal control system including risk management and compliance with legal and statutory provisions, acknowledges the sensitivity analysis of the pension funds of Georg Fischer Ltd, and issues its opinions on transactions concerning equity and liabilities at Georg Fischer Ltd. The Audit Committee also decides whether or not the consolidated financial statements and those of Georg Fischer Ltd can be recommended to the Board of Directors for presentation to the Annual Shareholders’ Meeting.

As a rule, the Chairman of the Board, the CEO, the CFO, the Head of Corporate Controlling and Investor Relations, the Head of Internal Audit, and a representative of the external auditor also take part in the meetings. At the request of the Audit Committee the external auditor also provides information on current questions related to the financial reporting requirements and financial issues.

In the year under review, the Audit Committee held five ordinary and two extraordinary meetings, four of which lasted half a day, and the other three lasted between one and two hours. All members of the Audit Committee attended all seven meetings.

Compensation Committee

The Compensation Committee consists of three Board members (see separate section Members of the Board of Directors), who are elected on a yearly basis by the Annual Shareholders’ Meeting. It supports the Board of Directors in setting compensation policy at the highest corporate level. It uses knowledge of internal and external compensation specialists about market data from comparable companies in Switzerland, in addition to publicly available data obtained on the basis of compensation disclosures. Furthermore, based on internal and external sources, common market practices and expectations of stakeholders are continuously evaluated by the Compensation Committee. Adaptations to the long-term incentive plan (LTI) decided and implemented in the reporting year, based on requirements expressed by the shareholders of GF, will be implemented in 2019. These adaptations are disclosed in the Compensation Report. The Compensation Committee proposes to the Board of Directors the total amount of compensation to be paid to the entire Executive Committee and the Chief Executive Officer.

The Compensation Committee held three ordinary and three extraordinary meetings during the past fiscal year, each of which lasted one to two hours. All six Compensation Committee meetings were consistently attended by all of the Compensation Committee members, with the exception of one person at an extraordinary meeting.

Nomination Committee

The Nomination Committee consists of three Board members (see separate section Members of the Board of Directors). It supports the Board of Directors in succession planning and assists in the selection of suitable candidates for the Board of Directors and the Executive Committee. The Nomination Committee is kept informed annually about succession planning for the Senior Management levels, about the talent pipeline within Senior Management, and the diversity situation. For specific high-level recruitments, services of headhunters were hired.

In the year under review, the Nomination Committee held three ordinary and four extraordinary meetings, which lasted one to two hours on average. All members of the Nomination Committee attended all seven meetings.

Information and control instruments

The Board of Directors is informed in depth about business performance every month. The members of the Board receive the monthly report. In addition to an introductory commentary on the current course of business, it contains the most important key figures for the course of business and the monthly closing as well as a preview of the next three months and the year-end. These key figures are broken down by Corporation, divisions and Corporate Companies. The Executive Committee presents and comments on business performance and presents its assessment of business performance for the coming months at Board meetings. It also presents all important topics to the Board of Directors.

In addition, the Board of Directors receives regularly the forecast containing the expected figures at year-end. Once a year, the Board of Directors receives and approves the budget of the Corporation and the divisions for the following year. The Board of Directors holds as a general rule a two-day meeting once a year to discuss the strategies of the divisions and the Corporation as a whole. Once a year, it discusses the Corporate Risk Officer’s report, the Corporation’s risk profile and is updated about the measures taken to minimize and control risk.

The Chairman of the Board of Directors attends the Corporate Convention of the Senior Management and the Executive Committee’s strategy meeting and is a regular attendee at other corporate management meetings. The Chairman of the Board of Directors and the CEO inform and consult each other regularly on all business matters that are of fundamental importance or have far-reaching ramifications. The Chairman of the Board receives the invitations and minutes of the Executive Committee and Corporate Staff Meetings. He visits Corporate Companies on a regular basis to see their operations in person and how they are implementing the Corporation’s strategy. In 2018, he visited Corporate Companies in Europe, in the USA and in Asia.

Internal Audit

Internal Audit reports to the Chairman of the Audit Committee operationally and to the CFO administratively. Based on the audit plan approved by the Audit Committee, Corporate Companies are audited either annually or every two to three years, depending on the risk assessment and based on a comprehensive audit program. In the year under review, 41 internal audits were conducted. The audit reports are reconciled with the management of the audited Corporate Companies and distributed to the line managers, the external auditor, the Executive Committee, the Chairman of the Board of Directors as well as the Chairman of the Audit Committee. Audit reports with significant findings are presented to and discussed in the Audit Committee.

Internal Audit ensures that all discrepancies arising in internal and external audits are addressed and submits a report to the Executive Committee and the Audit Committee. The Head of Internal Audit prepares an annual report, which is discussed by the Executive Committee and the Audit Committee. He also serves as the secretary of the Audit Committee.

Corporate Compliance

The Service Center Law & Compliance informs the Board of Directors and the Executive Committee about legal issues and significant changes to the law. The Corporate Compliance Officer (CCO) is appointed by the Chief Executive Officer and in this function reports to the General Counsel; he informs the CEO directly, if necessary. The CCO helps Corporate Companies comply with the law, internal directives, and the Corporation’s principles of business ethics in their business activities, in particular through preventive measures and training in the divisions along with information and advice to the Corporate Companies. The Executive Committee, in consultation with the CCO, defines priority issues.

A number of compliance measures were implemented in 2018:

  • further implementation of the “Compliance Agreement for Intermediaries” as a guideline for GF business partners who act in the name or interest of Corporate Companies within the GF Corporation
  • roughly 2’900 internal e-learnings were conducted on anticorruption, competition, and cartel law as well as for export controls and economic sanctions 
  • training courses on antitrust law, anticorruption, export controls, and/or other compliance topics at various Corporate Companies
  • ongoing advice and support for internal revisions
  • continuation of specific compliance measures for intermediaries in China (e.g. ongoing checks regarding the appropriateness of compensation paid to intermediaries as well as examination of their ownership structure so as to avoid conflicts of interests)
  • further implementation of a web-based system for the prevention of business with sanctioned persons and organizations
  • advice on issues relating to export controls, cartel law, and labor law
  • further implementation of the function “Compliance Agents” (carried out by the Business Unit Controllers) for risk assessment and internal control
  • updating the data protection measures in view of the changed legislation in the EU and preparatory activities with respect to the forthcoming revised Swiss data protection law

Code of Conduct of GF: 
www.georgfischer.com/content/gf/com/en/UeberGeorgFischer/nachhaltigkeit/code-of-conduct.html

Risk management

The Board of Directors and the Executive Committee attach great importance to the thorough handling of risks in the areas of strategy, finance, markets, management and resources, operations, and sustainability. The Head of the Service Center Risk Management & Tax acts as the Chief Risk Officer (CRO) and, in this function, directly reports to the CEO. The CRO is supported by a non-executive risk officer from each division. Supplemented by internal experts of the corporate risk management, the risk officers under the leadership of the CRO constitute the Corporate Risk Council which met twice during the year under review. In addition, the CRO conducted workshops with the management of the three divisions as well as with the Executive Committee to analyze the risk situation, discuss measures to mitigate the risks, and define the actual top risks of each unit. Based on the results of the workshops, a risk report was prepared which was reviewed and approved by the Board of Directors in September.

The handling of financial and operational risks is explained in the notes to the consolidated financial statements in note 3.6 Risk management.

Assessment

The Board of Directors evaluates and assesses the performance of the Executive Committee and its members at least once a year in the absence of the Executive Committee members. The Chairman of the Board of Directors must approve any appointments of Executive Committee members to external Boards of Directors or to high-level political or other public functions.