3 Board of Directors
3.1 Members of the Board of Directors
Under the articles of association, the Board of Directors of Allreal Holding AG consists of one or more members. It currently has six members. For the current composition of the Board and information on individual Board members, refer to pages 14 and 15 of the Annual Report. With the exception of Bruno Bettoni, none of the Board members perform executive duties in the company and none have performed operational management functions within Allreal in the past.
Allreal obtains consultancy services in legal matters from several law firms, including Meyerlustenberger Lachenal Attorneys at Law, in which Dr. Thomas Lustenberger, Chairman of the Board of Directors of Allreal Holding AG, is one of 32 partners. In the 2014 financial year, Meyerlustenberger Lachenal charged Allreal fees amounting to CHF 0.057 million.
The Helvetia Group, which holds 10.0% of Allreal Holding AG’s share capital, is represented on the Board of Directors of Allreal Holding AG by Dr. Ralph-Thomas Honegger. Allreal works for the Helvetia Group as a general contractor for project development and the realisation of construction projects. These services are provided at arm’s length. During the period under review, the volume of project work completed for the Helvetia Group amounted to CHF 6.7 million.
In addition, insurance contracts are in place between the Helvetia Group and individual Allreal companies which have an annual premium volume of CHF 1.1 million (policies covering buildings, construction and management).
Olivier Steimer is Chairman of the Board of Directors of Banque Cantonale Vaudoise, which has had a business relationship with Allreal going back several years. As at the balance sheet cut-off date, there are mortgage-backed loans of CHF 50 million and derivative financial instruments (payer swaps) with a nominal value of CHF 150 million in place.
There are no other material business relationships between Allreal and members of the Board of Directors.
3.2 Other activities and vested interests
For details of other work and functions performed by individual members of the Board of Directors outside Allreal see pages 14 and 15 of the Annual Report.
3.3 Articles of association provisions relating to the number of permissible activities
Each member of the Board of Directors may hold a maximum of 15 remunerated mandates outside Allreal, not more than 5 of which may be mandates with publicly owned companies.
3.4 Elections and terms of office
The members of the Board of Directors, the Chairman of the Board of Directors and the members of the Nomination and Compensation Committee, who must be members of the Board of Directors, are elected individually on an annual basis by the general meeting. Re-election is permitted. The age limit is 70.
Dr. Thomas Lustenberger was first elected to the Board of Directors in 1999, Albert Leiser in 2005, Dr. Ralph-Thomas Honegger in 2012, Olivier Steimer and Peter Spuhler in 2013 and Bruno Bettoni in 2014.
3.5 Internal organisational structure
The general meeting elected Dr. Thomas Lustenberger Chairman of the Board of Directors. The Board of Directors constitutes itself and has appointed Dr. Ralph-Thomas Honegger to serve as its Vice Chairman and Bruno Bettoni as Board Delegate.
The Board of Directors has a quorum if at least half of its members are present. It passes its resolutions with the majority of the votes cast; the Chairman has a casting vote.
The Board of Directors holds four ordinary meetings annually, each normally lasting half a day. Additional meetings may be convened to discuss topics of current concern. A total of four ordinary meetings were held in 2014. Two meetings were attended by all Board members for the full duration of the meetings, while two meetings were attended by five members. A one-day closed meeting was also held with all members of the Allreal Board of Directors to discuss strategic direction. Meetings of the Board of Directors are also attended by members of Group Management for specific agenda items. The Board of Directors also dealt with a number of business matters by circular letter and telephone conferences.
The following key points were addressed at the Board meetings held in 2014:
- Review, isolated adjustment and approval of corporate strategy, medium-term planning for the period from 2015 to 2017 and the annual budget for 2015
- Discussion and examination of the implementation of the two-pillar strategy with backtracing of the specified quantitative targets on the basis of individual growth initiatives
- Discussion and approval of the financial statements for each quarter (including liquidity status, debt financing and pending legal disputes), of the variance analysis versus the 2014 budget and of the forecast calculation for 2014 as a whole
- Examination and approval of applications relating to sales of investment properties as well as major investment projects
- Assessment of opportunities and risks of major own projects (development real estate, and investment real estate under construction)
- Discussion of the transaction and rental market and the vacancy situation at individual investment properties within the Real Estate division’s remit
- Discussion of the direction of the Projects & Development division as well as its short and medium-term capacity utilisation on the basis of major offers for third-party construction projects
- Discussion and assessment of financing management (interest lock-in periods, credit facilities and hedging)
- Monitoring of and compliance with the investment and financing guidelines
- Deliberations and resolutions in connection with the issue of a bond
- Approval of the half-yearly external financial reporting including media releases
- Approval of the proposals of the Risk and Audit Committee and the Nomination and Compensation Committee
- Deliberations on risk management (risk matrix and catalogue) and the internal control system (ICS)
- Discussion of various accounting standards and confirmation of IFRS as the accounting standards in force for Allreal
- Development of the share price and the shareholder structure in relation to compliance with “Lex Koller” requirements
- Discussion and approval of the agenda items to be proposed to the annual general meeting on 28 March 2014.
The Chairman of the Board of Directors assumes special tasks in his capacity as the liaison to the Chief Executive Officer. Performing these tasks involves several meetings per year and frequent telephone contact.
3.6 Board committees
With a view to integrating the specialist expertise and experience of individual Board members into the decision-making process and enabling the Board to produce reports as part of its supervisory duties, the Board of Directors formed two committees as provided for in the organisational regulations. The duties and powers assigned to the Board of Directors in accordance with the organisational regulations and the law remain vested in the full Board of Directors, i.e., the two Committees have no decision-making powers. The Chairmen of the Committees inform the full Board of Directors of the key findings of the Committee meetings and/or present the resulting proposals.
Risk and Audit Committee
The Risk and Audit Committee supports the Board in supervising accounting and financial reporting, the auditors and the external real estate valuer and in monitoring compliance with legal requirements.
The tasks include reviewing the structuring of the accounting system in terms of appropriateness, reliability and effectiveness, reviewing the annual financial statements and the other financial information to be published, monitoring corporate risk assessment and reviewing risk management practices and/or the effectiveness of the internal control system (ICS) and periodic reviewing of the insurance cover available to Allreal. The Risk and Audit Committee is also responsible for monitoring business activity for compliance with decisions of the Board of Directors, with internal regulations and guidelines, with corporate policy principles and with relevant legal requirements, in particular those arising from the Stock Exchange Act.
In addition, the Risk and Audit Committee reviews the performance, independence and compensation of the auditors and the external real estate valuer. This includes in particular examining the compatibility of the auditing activities with any consultancy mandates and reviewing overall remuneration. The review reports and the resulting findings and recommendations are discussed in detail with Group Management and the external auditors and consequent measures are formulated. Implementation of these measures is overseen by the Risk and Audit Committee.
The tasks, duties, and powers of the Risk and Audit Committee are defined in the organisational regulations of 2 December 2014. The full Board of Directors is informed of the activities of the Audit and Risk Committee by the latter’s Chairman at the next Board meeting and decides on any resulting proposals.
The Risk and Audit Committee is made up of Albert Leiser (Chairman) and Olivier Steimer (member). Meetings are normally attended by the Chief Financial Officer.
In 2014, the Risk and Audit Committee held two meetings in order to review the 2013 annual financial statement and the 2014 half-yearly financial statement in relation to the above-mentioned tasks. In addition, cooperation with the external auditors and the operational management was assessed in detail. The two-hour meetings were attended by all members of the Risk and Audit Committee and in some cases by the Chief Financial Officer. Representatives of the external auditors and the external real estate valuer were present for individual items on the agenda.
Nomination and Compensation Committee
The Nomination and Compensation Committee supports the Board of Directors with regard to the selection, compensation and training of the members of the Board, Group Management and the management of the Projects & Development division.
Its tasks include managing the selection process for members of the Board of Directors and Group Management and the resulting submission of proposals to the full Board of Directors; in respect of Group Management, this also extends to the submission of proposals relating to the key terms and conditions of their contracts of employment. The Committee is also mandated by the full Board of Directors to prepare a compensation report for submission to the annual general meeting.
Its other tasks include succession planning at the most senior level of management, monitoring management training and reviewing and proposing the salary policy suggested by the Chief Executive Officer for the attention of the full Board of Directors.
The tasks, duties and powers of the Nomination and Compensation Committee are defined in the organisational regulations of 2 December 2014. The Chairman of the Nomination and Compensation Committee briefs the full Board of Directors on the Committee’s activities. The Board decides on the resulting proposals. The Committee does not have any decision-making powers.
The annual general meeting appointed Dr. Thomas Lustenberger (Chairman) and Dr. Ralph-Thomas Honegger (member) to the Nomination and Compensation Committee. The meetings are normally attended by the Chief Executive Officer.
In 2014, the Nomination and Compensation Committee held two approximately two-hour meetings and five telephone conferences, in which both members of the Committee and the Chief Executive Officer participated. These meetings were concerned with issues of succession planning, the organisation of the company and issues relating to the compensation paid to the members of the Board, Group Management and the Management of the Projects & Development division. In connection with the recruitment of a new Chief Executive Officer, the Nomination and Compensation Committee called on the services of external consultants and participated in ten candidate interviews and presentations. The Committee submitted its proposals regarding these issues to the Board of Directors.
3.7 Definition of areas of responsibility
The principles governing the most senior level of management and the delineation of powers and responsibilities are defined in the organisational regulations of 2 December 2014. While the Board of Directors performs the tasks of supervisory and steering body, Group Management is in charge of the operational business.
At the same time, under the articles of association and the organisational regulations, in particular the following powers and responsibilities are vested in the Board of Directors:
- Ultimate direction of the Allreal Group and ultimate supervision of the persons entrusted with management (compliance)
- Defining the organisation and appointment of management and persons authorised to act as proxies
- Determining the organisation of and procedures for accounting, financial controlling and financial planning
- Producing the annual report and annual financial statements, preparing for the general meeting and implementing its resolutions
- Defining business policy, including in particular investment and financial policy
- Decisions on major transactions, including in particular investments and divestments.
All other tasks are delegated to Group Management. In particular, the latter also prepares the following for approval by the Board of Directors: medium-term planning over a period of three years, the annual budget and financial statements and proposals for investments or divestments. It conducts operational business.
Allreal has had internal auditors since 1 August 2014. Allreal staff conduct regular reviews in order to verify property accounts prepared by external property management companies.
3.8 Information and control instruments vis-à-vis Group Management
In particular, the Board of Directors has the following supervisory and control instruments at its disposal:
- Comparative calculation of the annual budget for medium-term planning and corresponding variance analysis (annually)
- Reporting on the functioning and effectiveness of the internal control system (ICS) for financial reporting (annually)
- Reports on compliance with the investment and financing guidelines based on instruments of simplified liability management (quarterly)
- Quarterly statements with presentation of the financial situation (incl. budget comparison, end-of-year forecast and corresponding variance analysis) and management reports (quarterly)
- Balanced score card relating to the Allreal Group and its divisions (quarterly)
- Risk matrix and assessments of specific major projects (quarterly)
- Detailed reports from Group Management on the trend of business in the individual business areas, with lists of the investments and divestments made (management information system/quarterly)