Corporate governance
General
The Supervisory Board and the Management Board of Roto Smeets Group respect the principles and best practice provisions of the Corporate Governance Code, and have been observing these for some time, where these apply to Roto Smeets Group.
The amended Corporate Governance Code of December 10, 2008 also requires that attention is given to the social aspects of entrepreneurship relevant to the company in the communication with stakeholders of the company. As Roto Smeets Group publishes a separate Social Annual Report, we will not go into too much detail with regard to the subject in order to keep the financial accounts readable.
I. Observance and enforcement of the Code
In this chapter the company specifically states to what extent the best practice provisions included in this code are observed, and if not, why and to what extent it deviates from these best practice provisions.
Each substantial change in the Corporate Governance structure of the company and in the observance of this code shall be submitted to the General Meeting of Shareholders in a separate item of the agenda.
The group’s views and the relevant documents can be found on the group website: www.rsdb.com/financial/corporate governance.
II. The Executive Board
II.1. RESPONSIBILITIES AND PROCEDURES
The Management Board of Roto Smeets Group fully endorses the principle of the responsibilities and procedures of the Management Board as stated in the Code and implemented the majority of the described best practice provisions within the company some time ago. With regard to the policy concerning the proposed period of appointment of members of the Management Board it is Roto Smeets Group’s view that the employment contract of the current CEO, entered into in 2001 for an undetermined period of time and with a notice period of six months, will be respected. On appointment of new board members best practice II.1.1. of the Code will be applied, and board members will be appointed in principle for a maximum period of four years, also with a notice peridod of six months. Reappointment can take place, each time for a maximum period of four years.
The Management Board will submit for approval to the Supervisory Board:
a) the operational and financial objectives of the company;
b) the strategy which must lead to the realisation of these objectives;
c) the preconditions with regard to this strategy, for instance with regard to the financial ratios.
d) The social aspects of entrepreneurship relevant to the company.
The main subjects will be outlined in the annual report.
The company has a specific internal risk management and control system. The system is described in the annual report.
Roto Smeets Group also observes the other principles and best practices mentioned in this chapter.
II.2. REMUNERATION
Amount and composition of the remuneration
The Supervisory Board analyses the possible outcome of the variable remuneration components and their consequences for the remuneration of the members of the Management Board. A review is also carried out with regard to market conformity (median level). This review will use the survey carried out each year by Hay Consultants. In general, the foundations of the present remuneration system will remain unchanged. The members of the Management Board of Roto Smeets Group receive a market median level remuneration which consists of a fi xed and a variable part. The variable part is linked to the development of EBITDA in relation to the average invested capital. With regard to the long-term incentive, Roto Smeets Group has opted for a loyalty arrangement in the form of Phantom Shares, which can be sold at the end of a predetermined period against the share price of that particular moment.
Roto Smeets Group has no option or share schemes for its Executive Board.
With regard to the exit arrangements, the best practice provisions of the Code (11.2.7) will be observed.
With regard to the change of control provisions, the employment agreements of the members of the Management Board include a maximum payment of 24 months in case of termination of their employment in connection with a public offer for the company.
Determination and disclosure of the remuneration
The principal points of the remuneration report regarding the remuneration policy of the company have been posted on the website. The notes to the annual accounts include the statutory information regarding the amount and structure of the remuneration of the individual members of the Management Board. Amendments to remuneration policy adopted by the General Meeting of Shareholders will be submitted for adoption to the General Meeting of Shareholders.
II.3. CONFLICTS OF INTEREST
Within Roto Smeets Group there are no conflicts of interest between the company and members of the Management Board. Should these occur in the future, than the best practice provisions with regard to this principle will be observed.
III. Supervisory Board
III.1. RESPONSIBILITIES AND PROCEDURES
The Supervisory Board of Roto Smeets Group fully endorses the principle of the responsibilities and procedures of the Supervisory Board as stated in the Corporate Governance Code and implemented the best practice provisions within the company some time ago. The regulations containing principles and best practices for the Supervisory Board can be found on the company website.
III.2. INDEPENDENCE
The composition of the Supervisory Board is such that the members are able to act critically and independently of one another and of the Management Board and any particular interest.
III.3. EXPERTISE AND COMPOSITION
Based on a profile, the members of the Supervisory Board have been selected for their specifi c expertise required for the fulfilment of their duties within the Board. Each member of the Supervisory Board is capable to assess the broad outline of the overall policy. The profile can be found on the website of the company.
III.4. ROLE OF THE CHAIRMAN OF THE SUPERVISORY BOARD AND THE COMPANY SECRETARY
The Chairman of the Supervisory Board shall ensure the proper functioning of the Supervisory Board and its committees, and shall act on behalf of the Supervisory Board as the main contact for the Management Board and for shareholders regarding the functioning of members of the Executive and Supervisory Board members. The best practices described are observed.
In view of the size of the management structure of Roto Smeets Group it was decided to transfer support tasks for the Supervisory Board to the Secretary of the Management Board.
The supervision on the correct following of procedures and the acting in accordance with the statutory obligations and obligations under the Articles of Association will be carried out by the company’s Head of Legal Affairs.
III.5. COMPOSITION AND ROLE OF THREE KEY COMMITTEES OF THE SUPERVISORY BOARD
As long as the Supervisory Board of Roto Smeets Group consists of four members, the Code does not require the company to appoint separate committees within its Board. All members therefore have seats on the three key committees, as a result of which the applicable best practice provisions therefore relate to the whole Supervisory Board. The regulations of the key committees form an integrated part of the regulations regarding principles and best practices of the Supervisory Board. These regulations can be found on the website of the company.
In view of the amount of work and the retirement schedule, the Supervisory Board believes it to be desirable to return to the original number of five members. A profile is placed on the website of the company. As soon as the Board consists of five members, three separate committees will be appointed.
III.6. CONFLICTS OF INTEREST
Within Roto Smeets Group there are no conflicts of interest between the company and members of the Supervisory Board. Should these occur in the future, than the best practice provisions with regard to this principle will be observed.
In 2008, ING Corporate Finance acted as adviser in the negotiations with HHBV.
ING Corporate Finance through its subsidiary Parcom Ventures holds 12.1 % of the share capital of Roto Smeets Group NV. In entering into this agreement with ING Corporate Finance, best practice provision III.6.4 of the code was observed.
III.7. REMUNERATION
The remuneration of the members of the Supervisory Board of Roto Smeets Group is not dependent on the results of the company. The remuneration policy of the members of the Supervisory Board was submitted to and adopted by the General Meeting of Shareholders.
Amendments to this remuneration policy will be submitted for adoption to the General Meeting of Shareholders.
III.8. ONE-TIER MANAGEMENT STRUCTURE
The principle with regard to the One-tier management structure does not apply to Roto Smeets Group.
IV. (General Meeting of) Shareholders
IV.1. POWERS
The powers of the shareholders, as stated in the Corporate Governance Code will be observed and the decisions of the management board on a major change in the identity or character of the company or the enterprise shall, in accordance with the Articles of Association of the Company, be submitted to the General Meeting of Shareholders for approval. The agenda items mentioned as best practice are discussed at the General Meeting of Shareholders. The company has also set a registration date for the exercision of voting and meeting rights.
IV.2. DEPOSITARY RECEIPTS FOR SHARES
The principle with regard to depositary receipts for shares and the thereby described best practice provisions do not apply to Roto Smeets Group.
IV.3. PROVISION OF INFORMATION TO AND LOGISTICS OF THE GENERAL MEETING OF SHAREHOLDERS
The Management Board and the Supervisory Board of Roto Smeets Group endorse the principle of the provision of information to and logistics of the General Meeting of Shareholders as stated in the Corporate Governance Code and observe all described best practice provisions.
The complete presentations, possible webcasts, etc. will be available directly after themeetings via the website www.rsdb.com / financial / investor relations / presentations.
IV.4. RESPONSIBILITY OF SHAREHOLDERS AND INSTITUTIONAL INVESTORS
The principle with regard to the responsibility of shareholders and institutional investors and the thereby described best practice provisions do not apply to Roto Smeets Group.
IV.5. ANTI-TAKEOVER MEASURES
In the Roto Smeets Group General Meeting of Shareholders of April 20, 2000, the proposal was adopted to grant the Foundation ‘Stichting Preferente Aandelen’ an option to take up Roto Smeets Group preference shares to the maximum number of ordinary shares issued at that moment.
The objective of the Foundation ‘Stichting Preferente Aandelen’ is to protect the interests of the company in such a way that the interests of the company and of all stakeholders are protected in the best possible way, and that all infl uences which could infringe upon the independence and/or the continuity and/or the identity of the company against these interests are resisted to the best of the foundation’s abilities, as well as performing all actions which relate to or promote the above.
The Foundation aims to achieve its objective by acquiring and holding preference shares in the capital of the company and by exercising the rights connected with these shares, including in particular the voting rights on these shares. At year-end 2008, the Foundation held option rights on 3,290,274 preference shares. The Board of the Foundation ‘Stichting Preferente Aandelen’ consists of three independent members.
V. The audit of the financial reporting and the position of the internal auditor function and of the external auditor
V.1. FINANCIAL REPORTING
The Management Board of Roto Smeets Group recognises its responsibility for the accuracy and completeness of the external financial reporting. The Management Board and the Supervisory Board also recognise the role of the Supervisory Board in supervising the fulfilment of this responsibility by the Management Board.
V.2. ROLE, APPOINTMENT, REMUNERATION AND ASSESSMENT OF THE FUNCTIONING OF THE EXTERNAL AUDITOR
The external auditor will be present at the General Meeting of Shareholders.
The Supervisory Board, with due observance of the advice of the Management Board, shall if necessary submit the appointment of the external auditor to the General Meeting of Shareholders.
V.3. INTERNAL AUDIT FUNCTION
The principle with regard to the internal auditor function does not apply to Roto Smeets Group.
V.4. RELATIONSHIP AND COMMUNICATION OF THE EXTERNAL AUDITOR WITH THE BODIES OF THE COMPANY
The principle with regard to the relationship and communication of the external auditor with the bodies of the company and the described best practice provisions are observed by Roto Smeets Group.
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