Corporate Governance

Introduction by the Chairman of the Board of Directors

Dear Shareholders,

On behalf of the Board of Directors of GF, I am pleased to present the 2020 Corporate Governance Chapter.

A proactive dialogue with our stakeholders

In 2020, the governance dialogue with our shareholders and proxy advisors was intensified. More than 25 virtual and in-person meetings with a focus on environmental, social and governance (ESG) matters were held. These were led by our Chairman and attended by our Independent Lead Director, the Chairwoman of our Compensation Committee, and the Head of Investor Relations/Sustainability.

We will continue to proactively engage in and pursue this dialogue with our shareholders. It gives us the opportunity to explain our ESG priorities and programs, as well as providing us with an invaluable outside-in perspective and welcome input so that we can continue to improve.

A year marked by the COVID-19 pandemic

The consequences of the ongoing COVID-19 pandemic were far-reaching in 2020, starting in China and then unfolding worldwide. Quick decisions had to be taken by our Executive Management in order to address employee safety and customer concerns, as well as secure supply chains and manage costs and liquidity. To assess the rapidly evolving situation and better support the Executive Committee with regard to the measures to be taken, extraordinary Board meetings were held in March and May 2020.

The 2020 individual (non-financial) objectives of the Executive Committee were adapted at mid-year with a view to aligning all efforts to successfully navigate the pandemic.

For safety reasons, our Annual Shareholders’ Meeting in April had to be held without in-person attendance of our shareholders.

The COVID-19 pandemic has clearly resulted in added urgency with regard to social issues in the population at large but also within our investor community. In fact, during our meetings, most institutional investors showed a great interest in our response to the COVID-19 pandemic, and on a more general level, in all aspects of sustainability in addition to matters relating to Board refreshment, diversity, and compensation.

Sustainability Committee established at Board level

In order to support our Board of Directors on ESG topics, the Nomination Committee purview has been enlarged to encompass sustainability, and in July 2020, it became the Nomination and Sustainability Committee. The Committee’s responsibilities as they relate to sustainability involve discussing all ESG-related matters, including climate change, integrating sustainability into the strategy, monitoring progress on sustainability goals, adherence to standards, and setting sustainability objectives for the Executive Committee. Two quarterly meetings have been held to date: one in September and one in December 2020.

2025 strategy and risk management

The Strategy 2025 was prepared by the Executive Committee during 2020 and discussed with the Board in November. It places a clear emphasis on profitable growth as well as integrating sustainability into the strategy, including the introduction of science-based targets. This five-year strategy will be communicated by our CEO in early March 2021.

As risk management is also within the Board’s remit, an extensive risk workshop was organized in September. All members of the Board of Directors and the Executive Management participated. This workshop will be repeated on a yearly basis.

Board refreshment and diversity

At the Annual Shareholders’ Meeting in April 2020, Yves Serra, CEO until April 2019 and therefore classified as non-independent, was elected Chairman of the Board, succeeding Andreas Koopmann. On the same occasion, the Board nominated Hubert Achermann as Independent Lead Director, in accordance with corporate governance best practice. In his new role, Hubert Achermann held separate meetings with the CEO and CFO, and with all Board members without the presence of the Chairman.

In addition, the Audit Committee was strengthened with the election of a financial expert, Peter Hackel, CFO of the Straumann Group.

At the end of the year, the Board of Directors conducted its self-assessment, which confirmed that the Board committees fulfill their advisory role in a very satisfactory manner. The collaboration between the Board of Directors and the Executive Committee is characterized by mutual respect, trust, and transparency. In the years to come, diversity in terms of nationality, gender and experience/skills shall be pursued in line with investor and proxy guidelines. Starting in 2021, the Board of Directors will conduct its self-assessment annually.

We trust that you will find this report interesting and informative. We are looking forward to continuing the dialogue with you as our shareholders and stakeholders.

Sincerely,

Yves Serra

Chairman of the Board of Directors

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