CORPORATE GOVERNANCE CHARTER OF THE VANDEMOORTELE GROUP 22 May 2015 update 5
Letter from the Chairman of the Board of Directors and from the Chief Executive Officer The Group is a privately owned and family controlled group and a public interest entity since the issuance of its 75 mio retail bond on December 13, 2012. Adequate corporate governance is one of s essential tools to ensure its sustainable growth and profitability in future., where relevant for companies whose shares are not listed on a regulated market, intends to apply the governance best practices of the 2009 Belgian Code on Corporate Governance of March 12,2009. expects its employees to contribute to its endeavours towards sound business management practices by giving the Company s interest priority over personal interest, searching for the best business practices, and acting ethically in all that they undertake. In this way, aims to strike a healthy balance between Company results and risk management and control. Ghent, 3 March 2015 Jean Chairman of the Board Jules Noten for Jules Noten Comm.V, C.E.O
CONTENTS INTRODUCTION p. 1 PART I STRUCTURE AND ORGANISATION 1. Legal structure p. 2 2. Operational structure and organisation p. 2-4 PART II - VANDEMOORTELE SHARES, SHAREHOLDERS AND WARRANTHOLDERS 1. Capital, shares and warrants p. 4 2. General meeting of shareholders and bondholders p. 5-6 3. Dividend policy p. 6 PART III VANDEMOORTELE BOARD OF DIRECTORS 1. Role, responsibilities, powers and decision-making 1.1. Role and responsibilities p. 6 1.2. Powers p. 6-9 2. Composition, training, and evaluation of the board of directors 2.1. Scope p. 9 2.2. Appointments and reappointments p. 9-10 2.3. Term of appointment p. 10 2.4. Age limit p. 10 2.5. Honorary members p. 10-11 2.6. Training of directors p. 11 2.7. Evaluation p. 11-12 3. Chairmanship of the board of directors p. 12-13 i
4. Structure, organisation, and rules of conduct of the board of directors 4.1. Board meetings p. 13 4.2. Specialised committees p. 13 4.3. External advice p. 13 4.4. Secretary of the board p. 14 4.5. Rules of conduct p. 14 PART IV SPECIALISED COMMITTEES OF THE BOARD OF DIRECTORS 1. General provisions applicable to the specialised committees 1.1. Role and responsibilities p. 14-15 1.2. Powers p. 15 1.3. Composition p. 15 1.4. Meetings p. 15 1.5. Evaluation p. 15 2. The compensation & nomination committee 2.1. Role and responsibilities p. 16 2.2. Powers p. 16-17 2.3. Composition p. 17 2.4. Meetings p. 17 3. The audit committee 3.1. Role and responsibilities p. 18 3.2. Powers p. 18-20 3.3. Composition p. 20 3.4. Meetings p. 20-21 ii
PART V THE CEO : role, responsibilities and powers p. 21 PART VI THE EXECUTIVE COMMITTEE 1. Role, responsibilities and powers p. 22 2. Composition and operation p. 22-23 3. Rules of conduct of the executive committee p. 23 PART VII VANDEMOORTELE REMUNERATION POLICY 1. Remuneration policy for the board of directors and the specialised committees p. 23 2. Remuneration policy for the CEO and executive p. 23-24 committee Appendices : - Legal organisation chart - Code of conduct iii
INTRODUCTION The Group shall use its best efforts to apply the following governance best practices: 1. The Company shall adopt a clear governance structure. 2. The Company shall have an effective and efficient board of directors that takes decisions in the corporate interest. 3. All directors shall demonstrate integrity and commitment. 4. The Company shall have a rigorous and transparent procedure for the appointment and evaluation of the board and its members. 5. The Company shall set up specialised committees. 6. The Company shall define a clear executive management structure. 7. The Company shall remunerate the directors and executive managers fairly and responsibly. 8. The Company shall enter into a dialogue with shareholders and potential shareholders based on a mutual understanding of objectives and concerns. 9. The Company shall ensure adequate disclosure of its corporate governance. The board of directors approved the first version of this Corporate Governance Charter on 6 April 2006 and this 4th update version 4 on 3March 2015. It is published on the web site.
PART I - STRUCTURE AND ORGANISATION 1. Legal structure The Group is understood to mean the operational holding company NV, as well as the companies which are consolidated in the IFRS consolidated annual accounts of NV ( hereinafter referred to as the Group ). NV is a public limited liability company under Belgian law whose shares are not listed on the stock exchange. The Company s registered head office is located at Moutstraat 64, 9000 Gent, with KBO (Crossroads Bank for Enterprises) number 0429.977.343 (hereinafter referred to as the Company or ). The Company has various direct and indirect subsidiaries both in Belgium and abroad as is apparent from the organisation chart which is attached to this Charter as Appendix 1. 2. Operational structure and organisation focuses on two business segments : frozen bakery products and margarines and fats. 2
These business segments are managed and developed by two separate business lines, the Lipids business line (margarines and fats) and the Bakery Products business line (frozen bakery products), both business to business oriented. Both business lines are European leaders in their respective markets. With its frozen bakery products, the Bakery Products business line targets professional users who appreciate the quality and convenience of the frozen pastries, bread, patisserie, and American products. The customers here are artisan bakers, in store bakeries, points chauds, and professional customers in the foodservice sector. As far as margarines and fats go, owns famous retail brands in the Benelux and Germany such as, Vitelma, Fama, Belolive, Diamant and Sojola and has a long term license to use the Alpro brand in Belgium. At European level however, targets professional users of margarines and fats and focuses on the sale of private labels to retailers. Each business line has its own supply chain and commercial organisation (the latter is shared in cases where the advantages of synergy outweigh those of focus). Through its 100% subsidiaries Metro and Panalog, is also active in transport and transport management, for the benefit of both the Group and third parties. Finally, also holds a 23,75 % stake in Lipidos Santiga, a market leader in fat refining in Spain. In addition the Group has a number of group services. Group Finance & Administration devises the Group s general policy in terms of finance and administration. It is responsible for the annual accounts and their consolidation, the management reporting and all financial transactions, it conducts the treasury and corporate finance management for the Group, and gives tax advice to the Group; this department also encompasses the Group IT. Group Human Resources designs the Group s general policy with regard to Human Resources and is responsible for the compensation and benefit processes, management and organisation development processes, corporate culture processes and corporate identity and branding processes. 3
The Secretariat General is responsible for compliance (corporate housekeeping, legal & regulatory affairs), risk management & insurance as well as Internal Audit. General Procurement is responsible for buying the key raw materials for the Group and managing their position. The QES service (Quality, Environment, Safety) defines the Group s general policy with regard to quality, health, safety and environmental protection and is responsible for the processes and systems that safeguard these dimensions. R&D and Engineering are also organised as group services, supporting both business lines. The end responsibility for the operational management of the Group lies with the Chief Executive Officer. He leads an executive committee that is composed of the CEO, the managing directors of the two business lines, the Chief Financial Officer, the Group HR Director, and the Secretary General. PART II - VANDEMOORTELE SHARES, SHAREHOLDERS AND WARRANTHOLDERS 1. Capital, shares and warrants NV has a capital of 11,357,100, represented by 418,150 registered shares; the shareholders are entered in a register of shares which is kept at the Company s registered office. The shares of the Company are divided into Class A shares, Class B shares and Class C shares. At the date hereof, (a) (b) (c) there are 417,323 Class A shares numbered 1 to 417,323, all of which are owned by Safinco NV (> 99%), a company controlled by the family shareholders; there are no Class B shares; and there are 827 Class C shares held by the Company itself. NV has issued 129,058 registered warrants, of which 46,468 are subscribed by GIMV NV, 75,951 by GIMV XL Partners Comm VA and 6,639 by Adviesbeheer GIMV-XL NV (collectively GIMV ). The warrants are exercisable at any time until 27 March 2017, such that after the exercise in full of the warrants, GIMV would hold 129,058 registered Class B shares or 23,58% of the share capital of NV.The warrantholders are entered in a register of warrantholders which is kept at the Company s registered office. 4
On 13 December 2012 NV has issued a 75 mio 5 years bond, the prospectus of which is published on the Group website under the item Investors. 2. General meetings of shareholders and bondholders 2.1 Annual meeting of shareholders The annual general meeting of NV is held at the Company s registered head office on the second Tuesday of the month of May of each year; the nominative shareholders and warrantholders as well as the bondholders are invited to attend the annual general meeting in accordance with the applicable rules of the Company Code and of the articles of association of the Company. 2.2 General meetings of shareholders other than the annual meeting Without prejudice to the quorum requirements of the Company Code, any shareholders meeting can only validly convene and resolve if GIMV is present or duly represented. If this condition is not satisfied, a second meeting with the same agenda will be convened, and this specific quorum requirement will then not apply. All resolutions of the shareholders meetings of the Company are subject to the majority thresholds set forth in the Company Code, except that the following decisions will require the affirmative vote of GIMV (for as long as it holds 10% or more of the Company s fully diluted capital) (without prejudice to the majority thresholds set forth in the Company Code): (a) (b) (c) (d) (e) a capital increase of the Company disregarding or restricting the preferential subscription rights (including a capital increase relating to an IPO); the grant of powers to the board of directors of the Company relating to authorized capital; a decision relating to the merger, de-merger, partial de-merger, contribution of all assets and liabilities or of a business line of the Company; a decision relating to the dissolution or liquidation of the Company; or any proposed change to the rights attached to the warrants and/or shares owned by GIMV as set out in the articles of association of the Company or in the Subscription and Shareholders agreement dated 5
March 27, 2009 between the Company, Safinco NV and GIMV as amended on June 30, 2011, October 10, 2012 and March 17, 2014. Warrantholders attend the general meetings with an advisory vote only. 2.3 General meetings of bondholders General meetings of bondholders can be called by the board of directors or at the initiative of bondholders in accordance with the relevant provisions of the Company Code. 3. Dividend policy s dividend policy is based on a well balanced consideration of return for the shareholders and the availability of free cash flow to the Group in order to finance its growth. PART III - VANDEMOORTELE BOARD OF DIRECTORS 1. Role, responsibilities, powers and decision-making 1.1. Role and responsibilities The board of directors is the highest decision making body of, except for matters which are reserved for the shareholders. The primary objective of the board of directors is to sustain and develop further a successful group in the food industry by creating value from a perspective of continuity. The key responsibilities of the board are to set s strategic course, appoint the Group s management, supervise the state of affairs, and monitor the existence and effectiveness of its internal control and risk management systems. 1.2. Powers The board has discretionary and exclusive power to: a) define the Group s values, risk profile and appetite and policies and values, including the ethics and morality of business and the 6
Group s contribution to the community (corporate social responsibility); b) monitor s operational management and the condition of every company within the Group; c) appoint and dismiss the chairman and members of the specialised committees; d) appoint and dismiss the CEO; e) assess its own operation. The board has exclusive power, upon adequate proposals from the CEO, to take the decisions listed hereunder and such decisions shall be adopted by a special majority of two thirds of the votes cast (with any abstentions to be considered as negative votes): a) adopt the strategic business plan and the annual budget; b) approve significant deviations from the business plan (including in respect of the strategy, capital structure and indebtedness set forth in the business plan), and deviations with an impact in excess of 10% of the approved annual budget; c) approve any acquisition or disposal of assets with an aggregate enterprise value in excess of 20 mio; d) approve transactions with directors, shareholders, affiliates of these directors or shareholders, or any other person related (through a family relationship or as a result of marriage) to such directors, shareholders or affiliates (including the supply or receipt of any advance payments to or from such persons or the establishment of current account relationships with such persons), other than transactions representing less than 1% of the net assets of the Group as per the latest audited consolidated annual financial statements and being fully transparent to the board of directors; e) approve amendments to the accounting and valuation rules of the Company; f) approve decisions with respect to a sale or IPO of the Company or of any significant division or subsidiaries of the Company (including decisions with respect to any preparatory steps in this respect and appointments of financial advisers), except for decisions with 7
respect to matters which are by law reserved for the shareholders meeting; g) approve any decision to sell or contribute one or more business activities; h) approve any decision to increase the capital or issue equity securities within the framework of the authorized capital; i) approve any decision to purchase the Company s own shares; j) approve decisions of the Company in its capacity as shareholder of a Group company regarding (i) the decision to merge, de-merge, contribute business divisions or universalities or dissolution and liquidation, (ii) the appointment of a liquidator, (iii) the issuance of debentures, warrants, options or other securities (including securities issued within the framework of a warrant plan), (iv) capital increases with the cancellation or restriction of the preferential subscription right, (v) amendment of the charter, articles of association or other constitutive documents, and (vi) the purchase of the Group company s own shares; k) approve any decisions with respect to the position to be taken regarding any of the matters set forth in the above sub-paragraphs as they relate to any Group company (other than the Company). The board has moreover exclusive power to, upon adequate proposals from the CEO, take decisions with regard to: - commitments relating to investment expenditure exceeding 2.5 mio on a project basis but not in excess of 20 mio; - the financial structure of the balance sheet, as well as the structure and general conditions of the financial debt within the framework of the general guidelines laid down by the board; - the establishment, closure, or relocation of branches, or sales points or important subsidiary units; - any capital increase and the issuance of any type of security for a sum equal to or more than 1.25 million; - the definition of the external communication policy. 8
In addition, the board also has the power to, upon adequate proposals from the CEO, : - appoint and dismiss the executive committee s members; - define the structure, general organisation and powers of the management of and monitor its functioning; - designate people who are authorised to represent as directors in subsidiaries or affiliated enterprises of, as well as people authorised to represent in important external organisations. 2. Composition, training, and evaluation of the board of directors 2.1. Composition The board has fourteen (14) members: five external directors ( which are independent in the sense of article 526ter of the Company Code, not applying article 526ter,2 Company Code), six family directors, two directors representing GIMV (herein, the GIMV directors ) and the CEO. All the current directors are non-executive directors with the exception of Jules Noten Comm.V, C.E.O and Managing Director ( Gedelegeerd bestuurder ) of NV, represented by its permanent representative Mr. Jules Noten. The board ensures that it has a diversified composition since the directors are persons with diverse, yet complementary professional backgrounds, knowledge, and experience. The composition of the board must allow for changes in its composition without disrupting its operation. 2.2. Appointments and reappointments The board submits its proposals relating to appointments and reappointments of external directors to the shareholders on the recommendation of the Compensation & Nomination Committee. A GIMV director, who is entitled to be a member of the Compensation & Nomination Committee, will also have to support the candidate external director for such external director to be recommended. The board will consider candidates for (re-)appointment as independent director who meet the following criteria of independence and competence: 9
- every candidate must have specific skills, knowledge, and/or experience to complement the skills, knowledge, and/or experience already present on the board of directors; in preparation for this, the board of directors draws up a profile of the independent director whom it is looking for; - every candidate must exhibit integrity and be sufficiently available to fulfil his/her obligations as an independent director in an adequate manner; - every candidate must comply with the criteria of independence set out in the Company Code; - every candidate must be sufficiently independent i.e. he or she must be free of any commercial, close family ties, or other ties with the Company, the controlling shareholders, or the management of which might give rise to conflicts of interest which could affect the independent judgement of this director. The shareholders freely determine the criteria which the family directors must meet; it is important for the family shareholders to be well represented on the board of directors. The GIMV directors must, prior to the submission of their candidacy to the Company s shareholders meeting, be approved by the Compensation and Nomination Committee of the Company. 2.3. Term of appointment Directors are appointed for a period of 3 years, renewable once or more. 2.4. Age limit The mandates of the directors expire at the annual general meeting immediately following the date on which they reach the age of seventy. 2.5. Honorary members The board can confer to the retiring chairman of the board of directors or to the retiring directors the title of Honorary Chairman or Honorary Director in recognition of their services to. There is no remuneration associated with these honorary titles and these honorary titles do not confer any voting, attendance or information rights. 10
2.6. Training of directors Newly appointed directors are given a suitable introduction and introductory training, the objectives of which are: - to help new directors gain insight into the fundamental characteristics of, including its strategy, management, main lines of policy, and financial and corporate challenges; - to advise new directors on their rights and obligations as a director. If a newly appointed director is also appointed as a member of a specialised committee, the introductory training will also encompass an introduction to the operation and objectives of that committee, including an outline of the specific role, assignments, and files of that committee. 2.7. Evaluation 2.7.1. The board as a collegial body The board examines and evaluates on a regular basis its own operation and performance as a collegial body, as well as the effectiveness and efficiency of s management structure, including the number of specialised committees and their respective responsibilities, tasks, and operations. To this end, the chairman of the board conducts an evaluation at least every three years which pursues the following four objectives: - to assess the operation of the board; - to ascertain whether or not the key issues are thoroughly prepared and discussed; - to assess the existing composition of the board in the light of the required composition; - to evaluate the interaction between the board and the CEO and his executive committee. On the basis of the results of the evaluation, the chairman, in consultation with external experts if necessary, will submit a report to the board of directors containing, if applicable, proposals aimed at improving the operation of the board and/or the interaction with the CEO and the executive committee. 11
2.7.2. The individual directors The performances of the individual external directors i.e. the actual contribution of each director to the operations of the board, his or her attendance at the meetings of the board and/or the specialised committees, and his or her constructive involvement in the deliberation and decision making of the board are assessed as part of their reappointment process. 3. Chairmanship of the board of directors The board elects a chairman from among its members. In principle, the chairman of the board is elected from among the independent directors. Any decisions to appoint a chairman of the board who is not an independent director requires the affirmative vote of the GIMV directors, if the candidate is a family director, or of a majority of the family directors, if the candidate is a GIMV director. The board also elects a vice-chairman from among the independent directors. If the chairman is not an independent director, the casting vote lies with the vicechairman, in case of tied votes. The chairman takes the necessary measures to create, within the board, an atmosphere of trust conducive to open discussions, constructive criticism, and support for the decisions made by the board. Therefore, he or she will be at the disposal of board members to provide them with any information which they may require as part of the exercise of their duties as director. The chairman takes initiatives to ensure the effective operation of the board in line with the Corporate Governance Charter. In doing so, he or she is assisted by the specialised committees. In particular, the chairman: - ensures the efficient and effective preparation, deliberation, and decision making of the board by: planning the board meetings: the chairman determines the calendar and agenda of board of directors meetings; preparing, presiding over, and conducting board meetings. He or she ensures that the directors receive sufficient accurate, timely, and clear information before the meetings and makes sure that all directors receive the same information; 12
making sure during the meeting that all directors are given time to speak during the deliberations and, if possible, arriving at a consensus with regard to decisions which have to be made; monitoring the quality of the continuous interaction and transparent dialogue, both at board level and between the board and the CEO and executive committee; ensuring that new directors complete a suitable initiation programme which best suits their individual training needs; - presides over the annual general meetings and ensures that these meetings proceed efficiently; in particular, he or she makes sure that shareholders, warrantholders and bondholders in attendance can ask questions to the directors and statutory auditor with regard to their reports and the agenda items and that the directors concerned and/or the statutory auditor give satisfactory answers; - represents and defends, in consultation with the CEO, the interests of by maintaining contacts with external institutions and by participating in external policy forums. 4. Structure, organisation, and rules of conduct of the board of directors 4.1. Board meetings The board meets, in principle, at least six times a year and as much as the needs of the Group would require. Additional meetings to discuss specific topics may be called at any time in a flexible manner. 4.2. Specialised committees In order to carry out its tasks and responsibilities efficiently, the board has set up the compensation & nomination committee and the audit committee. The existence of these specialised committees does not prevent the board from establishing additional ad hoc committees, if necessary. 4.3. External advice The board of directors and specialised committees may seek assistance from external specialists. 4.4. Secretary of the board 13
The Secretary General exercises the position of secretary of the board ; the secretary assist the chairman in the preparation of the meetings of the board of directors and draws up the minutes of the meetings. He or she assists the board, its chairman, and its members and advises them about the execution of their tasks and responsibilities. The secretary will always be at the disposal of the directors to provide them with any information which they require. 4.5. Rules of conduct The members of the board exercise their respective mandates in an honourable and ethically responsible manner. Above all else, they serve the Company s interest and make decisions at all times on the basis of an independent assessment. They ensure that they obtain clear and detailed information which they examine thoroughly in advance so that they are aware of the key aspect of business operations at all times. They agree to treat this information as strictly confidential and not to use it for their own benefit. Each director abides by the law pertaining to conflicts of interest, insider trading, and market manipulation. Upon accepting the mandate of a director, each member shall declare in writing to that he or she accepts the content of the Corporate Governance and will comply with the provisions of this Charter. Each director shall individually and personally refrain from undertaking activities or engaging in actions which compete with s activities. PART IV - SPECIALISED COMMITTEES OF THE BOARD OF DIRECTORS 1. General provisions applicable to the specialised committees 1.1. Role and responsibilities The specialised committees have an advisory function in specific areas and in specific matters. 14
After every meeting of the specialised committees, the chairman of the relevant committee gives an oral report on the committee s activities at the next board of directors meeting. This oral report is included by the secretary in the written report. Once a year, the chairmen of the specialised committees give the board of directors a detailed report. The role, responsibilities, and powers of each specialised committee are determined by the board of directors. Each specialised committee is accountable to the board for the proper execution of its powers and responsibilities. 1.2. Powers Each specialised committee is granted general authorisation by the board to investigate all matters and, to this end, to use all effective, necessary, and proportional means and call upon the help of any internal and external specialists. 1.3. Composition Each specialised committee has a minimum of three and a maximum of five members. The chairman and members of the specialised committees are appointed by the board. The appointment of the members of the specialised committees is based upon their specific knowledge, skills, and experience. The members of the specialised committees are appointed for the term of their mandate as director. They can be reappointed if they are reappointed as director. GIMV has the right to delegate a GIMV director to each specialised committee. 1.4. Meetings The rules which apply to board meetings also apply, mutatis mutandis, to meetings of the specialised committees. The committees always endeavour to reach unanimous decisions. If, in a particular case, it is not possible to reach a consensus, a resolution is formulated by means of a simple majority with a declaration of the alternative point of view. 1.5. Evaluation The board assesses the operation of the specialised committees every 3 years. 15
2. The compensation & nomination committee The board has appointed a compensation & nomination committee. The general provisions applicable to the specialised committees also apply to the compensation & nomination committee, specifically taking into account what follows. 2.1. Role and responsibilities The role of the compensation & nomination committee consists of: - on the one hand, assisting the board in all matters relating to the (re)appointment and performance review of the members of the board, of the CEO and of the executive committee as well as in all matters in which the board is looking for advice; - on the other hand, laying down the general principles of the remuneration arrangements and policy for staff ( kaders ) and fixing the remuneration of the CEO and of the members of the executive committee. 2.2. Powers 2.2.1. With regard to (re)appointments The compensation & nomination committee: - recruits and selects the CEO and submits the appointment to the board; - submits to the board, on the recommendation of the CEO, the appointment of the members of the executive committee; - recruits and selects the independent directors and recommends suitable candidates to the board. 2.2.2. With regard to performance review The compensation & nomination committee: - assesses the performance of the CEO; 16
- discusses, on the basis of the report of the CEO the performance review of the members of the executive committee; - assesses the individual performances of the independent directors in the context of their reappointment. 2.2.3. With regard to remuneration 2.3. Composition The compensation & nomination committee : - lays down the general principles of the remuneration policy for staff on the basis of the proposal of the CEO and approves its global budget every year; - fixes the remuneration of the members of the executive committee on the basis of the proposal of the CEO and fixes the remuneration of the CEO; - transfers proposals to the board about the remuneration of the chairman of the board of directors and the directors; - exceptionally authorises the members of the executive committee to exercise an additional mandate or activity outside the executive committee, with or without the intention of making gain. The board of directors appoints the chairman of the compensation & nomination committee. The chairman of the board of directors is automatically part of this committee. The members of the nomination & compensation committee must be non-executive directors. 2.4. Meetings The compensation & nomination committee holds, in principle, two meetings a year and has the option of calling additional meetings, if the circumstances require so. It is customary for the chairman of the committee to invite the CEO and the Group HR Director to attend the meetings of the committee, except if the compensation & nomination committee decides otherwise. The Group HR Director draws up the minutes of the meetings. 17
3. The audit committee The general provisions which apply to the specialised committees as set forth above also apply fully to the audit committee, taking into account what follows: 3.1. Role and responsibilities The audit committee assists and advises the board, and monitors : - the internal control and risk management systems; - the soundness and reliability of financial reporting; - compliance with statutory provisions and regulations and with s internal policies, procedures and Code of conduct; - the powers, performances, and independence of s external auditors; - the performances of the internal audit operations. 3.2. Powers The audit committee has the following powers which are designed to bring specific problems to the attention of the board: 3.2.1. Risk management and internal control - to oversee the general internal control systems; - to examine the general philosophy regarding identification and analysis of the risks inherent in the activities carried out; - to monitor the processes and procedures for following up risks identified by the management. 3.2.2. Soundness and integrity of financial reporting - regular checking of the internal and external financial reporting and the IT systems; - examining key accounting and reporting items, including significant changes in the valuation rules; - examination of significant extra-business activities, agreements, undertakings, and other relationships with non 18
consolidated legal entities or other persons which might have a significant impact on the Company, its subsidiaries, and affiliated enterprises; - inspection of the annual financial accounts to make sure that they portray an accurate, honest, and comprehensible impression of the financial state of affairs, pursuant to the articles of association as well as from a consolidated point of view. 3.2.3. Compliance with statutory and regulatory provisions, internal policies, procedures and Code of conduct The audit committee assists the board of directors in monitoring the application of s Code of conduct as well as the manner in which the management ensures compliance with the Code of conduct. The Code of conduct is attached to this Charter as Appendix 2. The committee investigates all cases of non compliance with the external regulatory principles and/or the internal policies and procedures which are reported to the committee by the manager of the internal audit department, the auditor(s), the Secretary General, the QES manager, or any other person. 3.2.4. Appointment, evaluation of the performances, powers, and independence of the external auditors The audit committee is the body responsible for managing relationships with the external auditors, specifically including: Proposal to the board regarding nomination and approval of the remuneration and services of the external auditors (without prejudice to the respective powers of the works councils and the general meeting of the shareholders); Inspection of the external auditors report to the board and the management s response to it; investigation of all audit problems or difficulties and the management s reaction to those problems and difficulties; Assessment of the performances, powers, and independence of the external auditors. 19
3.2.5. Performances of the internal audit operation - examination of the status reports of the internal audit department and follow-up of outstanding issues and action points with a view to concluding them; - checking the effectiveness of the internal audit department; - approval of the (re)appointment of s internal audit manager on the recommendation of the CEO. 3.2.6. Annual meeting At least one member of the audit committee attends the annual general meetings and is at the disposal of the chairman to answer any questions from the meeting. 3.2.7. Investigative powers 3.3. Composition In order to perform its task, the audit committee may request information from any director, manager, or employee and from any adviser, agent, or representative of ; the board will urge these people to co-operate with the audit committee. The members of the audit committee are appointed by the board of directors and must be non executive directors. The chairman of the board is part of the audit committee, if required, but does not assume its chairmanship. The chairman of the audit committee is appointed by the board. 3.4. Meetings The audit committee meets at least three times a year and has the option of calling additional meetings if the circumstances warrant it. The CEO, the CFO, the Secretary General and the manager of the internal audit of are permanently invited by the chairman of the audit committee to the audit committee meetings, except where the audit committee decides otherwise. The chairman of the audit committee may invite the external auditors and all other members of s executive staff for specific subjects. 20
The audit committee shall meet the external auditors and the manager of the Group s internal audit for a private meeting at least twice a year. The manager of the internal audit of the Group acts as secretary of the audit committee and draws up the minutes of the meeting. PART V - THE CEO : role, responsibilities and powers The CEO is appointed by the board of directors. He has the final operational authority and responsibility for the whole Group within the framework of the decisions made by the board and within the confines of the delegation of powers defined by the board. He also ensures the daily management of the Company as Managing Director ( Gedelegeerd bestuurder ). His essential tasks include : - leading the executive committee - together with the executive committee, developing the strategy of the Group and its business lines (which will be submitted for discussion and approval to the board of directors) and defining the financial and organisational means to realise it - ensuring the successful implementation of the strategy. He chairs the executive committee, draws up its agenda, is responsible for a good decision making process and makes sure its decisions are executed. He maintains close contact with the chairman of the board of directors; he is responsible for the preparation of the board discussions and the execution of the decisions of the board. He submits to the board the matters which fall within the scope of the powers of the board of directors. He or she proposes to the nomination & compensation committee the appointment and dismissal of the members of the executive committee, as well as their remuneration conditions. The CEO performs his duties in an honorable and ethically justified manner. He serves the Group s interest and adheres to the Code of Conduct. 21
PART VI - THE EXECUTIVE COMMITTEE 1. Role, responsibilities and powers The executive committee ( Exco for short) assists the CEO in leading the Group s operations. In this context, the executive committee s activities consist in: - discussing, evaluating, and deciding on (where provided, with submission for discussion and approval to the board and/or its specialised committees) the topics that have an important strategic and/or operational impact on the Group and/or have implications beyond a business lines or a group service and more specifically on: the strategy of the Group and its business lines as well as the corresponding business plans; the means to implement them : organisation and people, key action plans and investment plans the general policy in the areas of sales, supply chain, finance and HR - appointing and dismissing the members of the management committees of the business lines as well as the executives of the group services; - fixing the adjustments to the remunerations of the executive staff each year; - monitoring the operations and taking corrective action in the event of significant deviations or problems; - ensuring adequate internal control and risk management systems. 2. Composition and operation The executive committee is composed of the CEO, the managing directors of the two business lines, the Chief Financial Officer, the Group HR Director, and the Secretary General. The members of the executive committee are appointed by the board of directors upon proposal of the CEO. Each member of the executive committee other than the CEO is responsible for his or her specific business line or group service and reports to the CEO. 22
The executive committee is an operational management committee and not a directie comité in the sense of the Company Code. The executive committee meets, in principle, every 2 weeks with the option of calling additional meetings if the circumstances require so. Minutes are drawn up of the meeting, a copy of which is given to the chairman of the board. 3. Rules of conduct of the executive committee The members of the executive committee perform their duties in an honourable and ethically justified manner. Above all else, they serve the Group s interest and adhere to the Code of Conduct. PART VII - VANDEMOORTELE REMUNERATION POLICY 1. Remuneration policy for the board of directors and the specialised committees The directors receive a market compliant remuneration for the exercise of their mandate as director in the form of a fixed annual fee. All directors (including the GIMV directors) receive the same remuneration apart from the chairman. The members of the specialised committees receive a fixed fee for each committee meeting which they attend. This fixed fee is the same for all members except for the chairmen of the committees who receive a fee the amount of which is twice the amount of the fee paid to the members. takes out suitable director s and officers liability insurance cover for the benefit of the directors. 2. Remuneration policy for the CEO and the executive committee The level and the structure of the remuneration of the CEO and of members of the executive committee is such that: - qualified and skilled professionals can be attracted, retained, and motivated; - the meeting of ambitious performance targets in the short, medium, and long terms is encouraged; 23
- a strong individual contribution as well as a good team performance are encouraged, acknowledged, and rewarded. The remuneration package comprises 3 components: a fixed remuneration, a variable remuneration in the form of an annual bonus, and share options. The compensation & nomination committee periodically checks the market compliance of this total remuneration package and its components on the basis of studies drawn up by external human resources specialists. The fixed remuneration of each member of the executive committee is tailored to the individual responsibility which he or she bears within the Group and is evaluated each year by the compensation & nomination committee. A suitable portion of the total remuneration is variable and is paid via an annual bonus; this bonus is tied to pre defined individual targets and predetermined parameters which reflect the performance of the Group and its business lines in the short and medium terms. In addition, the board of directors may award share options on the NV shares under the terms of the law of 28 March 1999 (as amended from time to time) and depending on the Company s results and the individual performances of the members of the executive committee. Furthermore, the members of the executive committee are the beneficiaries of a social benefit plan and takes out suitable liability insurance for them. Appendix 1: Legal organisation chart Appendix 2: Code of conduct 24
Appendix 1: Legal organisation chart 25
Group structure chart 01.01.2015 Safinco NV 23,75 % NV 73,35 % Lipidos Santiga SA 37,13% Int. Finance SA 26,65 % Safinco Nederland BV Ruckversicherung AG 17,65 % Coordination Center NV 90 % 45,22 % Vamix NV 10 % Lipids NV Cottes Action SA Metro NV Eeklo NV Iberica SA Lipids Werke GmbH Panavi SASU Reims SASU VDM France SASU Cottes Usines SASU Ghislenghien SA Seneffe SA Dommitzsch GmbH GmbH Hungary Ltd. UK Ltd. Italia SpA VDM Izegem NV Nederland BV 61 % 39 % 99,90 % SNC Auberge du Montigne 30,71 % SCI Val Fleuri 34,12 % Paindor SAS Paindor Toulon SAS 65,88 % Paindor Cote d Azur SAS Panalog SASU Panavi Ohayo SL Vamix Slovenska Sro Brunssum BV Polska Spzoo Cohepa SL Deutschland GmbH 55,56 % 97,56 % 44,44 % Paindor VAR Sarl Paindor Provence Frais SAS Paindor Montpellier SAS 26
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Appendix 2: Code of conduct REPORTING CONFIDENTIALLY INCORRECT BEVAVIOUR The personnel of the Group is to report each action of which they think it is or could be in breach with either the applicable laws and regulations, the internal policies and procedures, or the Code of Conduct of the Group. The normal way in which to report this, is to inform the direct superior about these actions. In circumstances where a person is convinced that the reporting of these actions to the direct superior is not suited or desirable, the Group offers the possibility to contact the Group Secretary General directly, in writing, by e-mail, or by telephone, if necessary even anonymously. The identity of the person will be kept anonymous, except where disclosure is due to possible legal obligations. The personnel will in no way be punished for the bona fide reporting of the presumed incorrect behaviour. As an industrial Group, our aim is to be successful and achieve results. But not in any way. The manner in which we attain these results is also important to us. This Code of Conduct has been written to provide all members of staff with a series of clear and unambiguous guidelines for ethical and moral responsible conduct in business. These guidelines should be obvious to anyone with a proper sense of right and wrong. They are based on respect for society and its rules and the awareness that self-interest cannot prevail over company interest. It is the responsibility of the Group Executive Committee (GEC) and Senior Management to make sure that the Group's staff are duly made aware of this Code of Conduct and duly observe it. 1. ACTING IN COMPLIANCE WITH THE LAW, RULES AND REGULATIONS When associating with colleagues, customers, suppliers, competitors, the authorities and the community at large, staff are expected to act in accordance with all applicable laws, rules, regulations, in-house policies and procedures at all times. 2. CORRECT AND PRUDENT USE OF THE GROUP's ASSETS Each member of staff is accountable for the correct and prudent use of the Group's immaterial and material assets. These include infrastructures (incl. buildings, premises, telephone, Internet), installations, financial information, corporate information and the intellectual properties and rights of the Group. These assets are to be used and wielded exclusively to accomplish the goals and ambitions of the Group, and not for selfinterest purposes. 3. SECURING CONFIDENTIAL INFORMATION Staff must see to it that confidential information does not come into the hands of parties outside of the Group without this being intended or without due safety procedures in place. Confidential information is defined as information which is not public in a general sense outside of the Group and publication of which may harm the Group. The following information in particular is duly considered to be confidential: information with regard to our financial position, production processes, strategies, major agreements, acquisitions and disinvestments of the Group. Confidential information can also be understood to include information about and relating to colleagues, customers, suppliers and/or competitors, etc. which are not in the public domain and publication of which might be detrimental to these persons. 4. INSIDER TRADING AND ACTING WITH FOREKNOWLEDGE Staff are not allowed to conduct share transactions of stock exchange quoted companies on the basis of concrete, non-public information which they have access to as a result of their position as Group members of staff. Concrete information is defined as all and any information which investors may reasonably deem to be relevant to make investment decisions. Just a few examples include : awareness of acquisitions and disinvestments, knowledge of 28
product launches and foreknowledge of financial information. Communicating such information to any third party - other than as a result of an obligation under the articles of association or incumbent on a member of staff in his capacity as a Group worker is prohibited as long as it has not been made public. 5. RELIABLE REPORTING The accounts of the Group constitute the foundation for reliable and accurate reports intended for management, the Group Excecutive Committee, shareholders, creditors, government agencies and other parties. As applies to all forms of reporting on the activities of the Group, the accounts must be accurate, factual, complete and truthful and a faithful account of the facts. The Group will not accept that any which liabilities, commitments, guarantees or similar are not correctly incorporated into the financial records, amongst other things as a result of resorting to the accounts of third parties, such as intermediaries and consultants. 6. BRIBES AND CORRUPTION We wish to compete in a manner that is correct, on the basis of the intrinsic value of our products and services. Accepting or offering bribes or any other form of reward or inducement by or to individual members of staff from customers or suppliers is strictly prohibited. We espouse good governance and a just and impartial due process of law. This is why it is strictly prohibited to provide or furnish government officials with any item or anything of value, either material or immaterial, either directly or indirectly in order to influence, sway or predispose their judgement in their official capacity. 7. GIFTS AND FAVOURS As a general rule, members of staff are not allowed to offer or accept any personal gifts or favours of any material-commercial value. Minor sums for entertainment purposes or gifts which are in compliance with applicable legal provisions and which are part of the traditional and generally accepted business practices of the country where they are being offered or received, fall outside the scope of said general principle. 8. INTERESTS OUTSIDE THE VANDEMOORTELE GROEP Staff are not allowed to work for, favour, or act in the business interest of the Group s competitors, customers, except with the express consent from divisional management and if this concerns a member of divisional management, with the express consent of the Chairman of the GEC. Staff are not allowed to derive any personal or private benefit from business opportunities which are directly related to business activities of the Group, unless the Group should decide not to avail itself of the opportunity concerned and the very fact of taking advantage of the opportunity offered does not contravene the terms and conditions of the service contract of the member of staff concerned. Except with the express consent of divisional management and if this concerns a member of divisional management, with the express consent of the Chairman of the GEC - staff are not allowed to own shares of competitors, customers or suppliers of Group, with the exception of shares in stock exchange quoted companies which are kept for private investment purposes. Staff who feel they face a conflict of interest, are to discuss the matter with their direct line manager. 9. FINANCIAL SUPPORT FOR POLITICAL PARTIES The Group does not endorse any political party nor does it award any financial support to groups which serve any party s political interests. The Group's financial and other resources cannot be used to support politicians or political parties. Staff are not allowed to use or exploit the company's facilities and resources for party political purposes. Staff who decide to invest their own time, money or any other resources of their own into political campaigns or party political activities, do so entirely of their own free choice. Situations may occur in which the Group 29
chooses to offer financial support to local, non-political issues or events. This strictly serves to benefit the local communities where the Group companies are located. 10. CONTACTS WITH GOVERNMENT OFFICIALS With regard to lobbying and other manners of influencing government officials, the Group duly observes all applicable statutory provisions and regulations. The information provided to government officials, must be accurate, and all contacts with government officials are to occur in due observance of the standards of honesty and moral correctness as detailed above. Any activities which remotely suggest lobbying activities or attempts to sway or predispose government officials, are to be presented to divisional management and the Group's legal department. 11. REPORTING INCORRECT, UNETHICAL OR ILLICIT CONDUCT We are pursuing a corporate culture founded on mutual trust and individual responsibility. However, it is of course possible that staff still come across unethical or illicit conduct within the Group. Staff have a duty to report such conduct to their direct line manager or, if required, directly to the Group Secretary General. The Group has procedures in place for reporting incorrect conduct in the strictest confidence. Reports are duly investigated to enable corrective steps to be taken where and when necessary. 30