The Executive Board and the Supervisory Board (the ‘Board’) are responsible for the company’s corporate governance structure. The corporate governance of ForFarmers N.V. (the ‘Company’) is determined by the law, the Articles of Association and the pertinent regulations. The regulations are established based on the Dutch Corporate Governance Code (the ‘Code’)1. The Executive Board and the Board are of the opinion that, partly for historical reasons, deviations or qualifications of some individual provisions of the Code by ForFarmers are justified. These deviations or qualifications are explained below.
ForFarmers has published its Corporate Governance Declaration2 as part of the board report and as a separate document on its website. The Corporate Governance Declaration explains how the Code is applied by
Deviations from the Code
Deviations from the Code and the main points of the corporate governance of ForFarmers N.V. are explained below.
Change layout to 1 column
|2.1.7 and 2.1.8||Independence of members of the Supervisory Board|
|The Supervisory Board does not consider members of the Supervisory Board who are also directors of Coöperatie FromFarmers U.A., i.e. Mr Eggink and Mr Hulshof, independent. In this respect, Article 4.4 f of the Supervisory Board Regulation states that a maximum of two Board members per shareholder or group of related shareholders who, directly or indirectly, hold more than 10% of the shares in the capital of the company, may be regarded as related or representing it as referred to in Article 4.5 sections f. and g. of the Regulation. This is further explained in the Report of the Supervisory Board.|
|2.1.9||Statement by the Chairman of the Supervisory Board|
|The current Chairman of the Board is also a member of Coöperatie FromFarmers U.A.’s Executive Board and will step down as of the date of the General Meeting of Shareholders in 2018 latest. The Chairman of the Board is nominated by the priority shareholder after consultation with the Board, or by the Board after consultation with the priority shareholder, as determined in Article 22.2 of the Company’s Articles of Association. Coöperatie FromFarmers U.A. holds the priority share.|
|2.2.2||Appointments and re-appointments of Supervisory Board members|
|As discussed during the General Meeting of Shareholders of 26 April 2017, the Company deviates from this provision as regards people who on 1 January 2017 formed part of the Board; these people can again be re-appointed once for a period of four years after a period of twice four years. Other than that, the provision on this subject in the Supervisory Board Regulation also applies here. For people re-appointed after that date, this provision of the Code will be applied.|
|2.3.4||Composition of committees|
|ForFarmers reserves the right to deviate from this provision for practical purposes. The regulation on committees states that at least half of the members of committees should be independent within the meaning of best practice provision 2.1.8. In the period under review, this provision was deviated from as regards the Selection and Appointment committee. Half of this committee is composed of members who are independent as specified above.|
|4.4.5||Exercise of voting rights|
|Insofar as no voting rights have been requested for the shares held by the Trust Office Foundation and no voting instructions have been given by Coöperatie FromFarmers U.A. in accordance with the provisions of Article 8 of the Trust terms & conditions, the Trust Office Foundation shall determine the manner of exercising the voting rights associated with these shares as it sees fit, with the proviso that the Foundation shall primarily bear in mind the interests of the holders of depositary receipts and the interests of the Company and its affiliated enterprise.|
|Only holders of depositary receipts who are also employees of ForFarmers or members of Coöperatie FromFarmers U.A. may apply for voting rights as referred to in the Trust Terms & Conditions of the Trust Office Foundation. Other holders of depositary receipts may not apply for voting rights. Only Coöperatie FromFarmers U.A. may issue binding voting instructions for the shares held by the Foundation (and for which voting rights have not been requested). Holders of depositary receipts may not issue binding voting instructions. Furthermore, restrictions apply as provided for in the aforementioned Trust Terms & Conditions.|
Change layout to 2 columns
Main points of Corporate Governance
Executive Board and Committee
Externally, the Executive Board, together with the other Directors, acts under the name of the ‘Executive Committee of ForFarmers’. The Executive Board is responsible for the continuity of the Company and its affiliated enterprise. In accordance with its Regulation, the Executive Board has developed a long-term vision on value creation for the Company and its affiliated enterprise and has - in consultation with the Board - formulated a strategy in line with this. When formulating the strategy, a lot of attention was devoted to aspects included in best practice provision 1.1.1. i to vi of the Code. Given the size of the organisation and the importance of efficient reporting lines, the operational management is steered by the Executive Committee.
The number of members of the Executive Board is determined by the Board. In the period under review, the Executive Board consisted of three members and the Executive Committee (including the Executive Board) of seven members. The following retirement schedule applies for the members of the Executive Board since the General Meeting of Shareholders of 15 April 2016.
|Name||Year of latest appointment||Eligible for re-election in|
|Knoop, Y.M. (CEO)||2014||2018|
|Traas, A.E. (CFO)||2016*||2020|
|Potijk, J.N. (COO)||2016*||2019|
|* change of term of office|
Appointments of members of the Executive Board can be renewed for an unlimited amount of times, each time for a maximum of four years.
In the period under review, the Executive Board has assessed the design and operation of the internal risk management and control systems. The effectiveness of the design and operation of these systems is discussed with the Audit committee, the Executive Board and the external auditor. ForFarmers has appointed an internal auditor from 1 January 2017. In the period under review, the Executive Board evaluated its own performance as a group as well as that of the individual Directors.
The Supervisory Board supervises the policy of the Executive Board as well as the general affairs of the Company. The Board furthermore advises the Executive Board. The Board is composed of six natural persons and has three key committees, i.e. an Audit Committee, a Remuneration Committee, and a Selection and Appointment Committee. The Supervisory Board Regulations and those of its committees as well as the Profile of the Supervisory Board are published on the Company’s website.
General Meeting of Shareholders
The Executive Board and Board ensure that the General Meeting of Shareholders is properly informed and advised. The Company has, in accordance with best practice provision 4.2.2 of the Code, drawn up a Policy on bilateral contacts with Company shareholders. As stated in the aforementioned policy, the relationship between the Company and Coöperatie FromFarmers U.A., is such that, partly for historical reasons, additional agreements are authorised in this relationship. These agreements are laid down in the Relationship Agreement.
The Company’s share capital is composed of ordinary shares, preference shares and a priority share. The ordinary shares of ForFarmers N.V. are listed on Euronext Amsterdam since 24 May 2016. Furthermore, depositary receipts of ordinary shares are issued with the cooperation of the Company. No preference shares are issued. Coöperatie FromFarmers U.A. is the holder of the priority share as further explained in the paragraph Priority shareholder.
Trust Office Foundation
The management of the ForFarmers Trust Office Foundation (‘Trust Office Foundation’) operates independently of the company. The Trust Office Foundation holds ordinary capital shares in the Company and is intended, among other things, for (i) the acquisition of ordinary shares for management purposes, (ii) the issue of depositary receipts, (iii) where applicable, the acquisition, disposal and encumbrance of shares for its own account, (iv) the exercise of rights associated with the ordinary shares it holds and (v) the granting of proxies for the exercise of voting rights as well as the acceptance of voting instructions as regards the exercise of the voting right, all in accordance with the Trust terms & conditions. The Articles of Association, Trust terms & conditions and the Report of the ForFarmers Trust Office Foundation (in Dutch: “Stichting Beheer- en Administratiekantoor ForFarmers”) are on the Company’s website. As aforementioned, only Coöperatie FromFarmers U.A. may issue binding voting instructions for the shares held by the Trust Office Foundation (and for which voting rights have not been requested).
The Trust Office Foundation shall only accept ordinary shares for management purposes against issue of depositary receipts to (i) a holder of depositary receipts within the context of exercising a share claim, (ii) someone entitled to the balance of a participation account held with Coöperatie FromFarmers U.A. within the context of a conversion, (iii) an employee as part of an employee participation plan, (iv) Coöperatie FromFarmers U.A. or (v) a party designated by the aforementioned Cooperative.
The priority share is held by Coöperatie FromFarmers U.A. Given that Coöperatie FromFarmers U.A., on the latest reference date of 1 January 2018, could exercise the voting right for more than fifty per cent (50%) of votes to be cast on the total of ordinary shares, on the shares it holds and/or could give voting instructions with regard to the shares held by the Trust Office Foundation, the situation is that Coöperatie FromFarmers U.A. as priority shareholder:
(i) has a recommendation right for four of the six members of the Supervisory Board;
(ii) may appoint a Board member as Chairman after consultation with the Supervisory Board;
(iii) has an approval right as regards the decisions of the Executive Board regarding:
1. moving the Company’s head office outside the east of the Netherlands (Gelderland and Overijssel);
2. an important change in the identity or nature of the Company or its enterprise as a result of (1) transfer of the enterprise or practically all of the enterprise to a third party or (2) entering into or breaking off a long-term partnership of the Company or a subsidiary thereof with another legal entity or company, or as fully liable partner in a limited partnership or general partnership, if such partnership or its termination represents a fundamental change to the Company;
3. taking, or disposing of, a participating interest in the capital of a company to a value of at least a third of the amount of the Company’s equity according to the balance sheet with explanatory notes or, in the event the Company draws up consolidated balance sheets, according to the consolidated balance sheet with explanatory notes, according to the most recently adopted annual accounts of the Company, or any of its subsidiaries;
4. changes to the Company’s articles of association;
5. a merger or split.
Please see the Corporate Governance Statement for the conditions for holding the priority share and the special control rights associated thereto if that voting right and/or voting instruction can be exercised or given for 50% or less.
The Company has entered into a call-option agreement with regard to preference shares with Stichting Continuïteit ForFarmers (ForFarmers Continuity Foundation). This Continuity Foundation was established to safeguard the identity, strategy, independence and continuity of the enterprise affiliated with the Company. Stichting Continuïteit ForFarmers is fully independent and has independent management. Furthermore, Coöperatie FromFarmers U.A. holds a priority share to which rights are associated as provided for in the Company’s Articles of Association.
The appointment of Executive Board members furthermore only occurs by binding recommendation from the Board, and material decisions of the General Meeting of Shareholders (such as issues of shares, dividends, amendment to the articles of association, mergers, divisions and demergers) may only be made on the proposal of the Executive Board with the approval of the Board.
Culture, Code of Conduct and Whistle-blower Policy
ForFarmers expects its employees to act ethically and follow the local rules and procedures in place. Sustainability, and its associated corporate social responsibility, forms one of the three core values of ForFarmers, along with ambition and partnership. The core values are based on long-term value creation and are ratified by the Board. ForFarmers has a Code of Conduct and a Whistle-blower Policy. ForFarmers’ core values and the Code of Conduct are proactively communicated within the organisation. This occurs, amongst others, through regular employee engagement surveys. New members of staff follow an e-learning course in which all the aspects of the Code of Conduct are explained.
This includes, inter alia, aspects such as anti-bribery and anti-corruption, preventing conflicts of interest, how to handle gifts and hospitality, fair competition and how to handle confidential information. In the period under review, ten incidents or suspected incidents have been reported. In these cases, a high level of confidentiality was in all cases observed and the procedure described in the whistle-blower policy was followed. Given the nature and/or impact of the notifications, it was not necessary to disclose these publicly. The overview of alerts to incidents and the follow-up thereof is periodically discussed with the Audit Committee and the Board.
1 This Code can be consulted (in English) through the following link http://www.mccg.nl/?page=4738. An overview of ForFarmers N.V. as regards the implementation of the Code can be found on the website www.forfarmersgroup.eu.
2 Pursuant to the provisions of the Decree of 29 August 2017 to revision of the Decree of 23 December 2004 adopting further rules on the contents of the annual report, this Corporate Governance Declaration is deemed to form part of the management report.