Board of Directors

The duties and responsibilities of the Board of Directors of dormakaba Holding AG are defined by the Swiss Code of Obligations, the Articles of Incorporation and the Organizational Regulations.

Members of the Board of Directors

The Board of Directors of dormakaba Holding AG has ten non-executive members. No members of the Board of Directors have sat on the Executive Committee of dormakaba Holding AG, Kaba Group or Dorma Group at any time in the last five financial years.

No members of the Board of Directors have significant business relations with dormakaba Holding AG. The maximum number of mandates that members of the Board of Directors are allowed to take on the governing bodies of legal entities outside the dormakaba Group is regulated in section 27 of the Articles of Incorporation. The following table lists the name, year of birth, and date of joining of the individual members of the Board of Directors.

Members of the Board of Directors as of 30 June 2018

Elections and terms of office

The Board of Directors of dormakaba Holding AG is elected by the Annual General Meeting, with each member standing for election individually. The Articles of Incorporation state that the Board of Directors shall have between five and ten members. Prospective members shall be elected for a one-year term of office up to the conclusion of the next Annual General Meeting. Members of the Board of Directors can be re-elected. When they reach 70 years of age, members of the Board of Directors normally resign at the next General Meeting. The Board of Directors had decided not to apply the age limit it voluntarily included in the Organizational Regulations to the Board of Directors member Ulrich Graf because it wanted to continue to use his experience (especially his significant integration knowledge with regard to the Unican takeover) and support during the implementation and integration work associated with the merger of Kaba Group with Dorma Group.

Following the announcement of Elton SK Chiu not to stand for re-election as member of the Board of Directors and Ulrich Graf not to stand for re-election as Chairman and member of the Board of Directors at the next Annual General Meeting, the Board of Directors is proposing to the Annual General Meeting on 23 October 2018 that all other serving members of the Board of Directors be re-elected, that Riet Cadonau be elected as member and Chairman, and Jens Birgersson be elected as new member of the Board of Directors. Subject to his election, Riet Cadonau will remain CEO for a period of two to maximum three years and will serve as Chairman in a dual role Chairman and CEO. During this period, he will not be a member of any board committees and will not receive additional compensation for his role on the Board of Directors. The Board of Directors intends to nominate Hans Hess as the new Vice-Chairman and Lead Independent Director subject to his re-election as member of the Board of Directors at the upcoming Annual General Meeting. This measure will continue to ensure that the Board of Directors exercises independent control and supervision.

Internal organization

According to the Swiss Code of Obligations and dormakaba Holding AG’s Articles of Incorporation and Organizational Regulations, the main responsibilities of the Board of Directors are:

• The strategic direction and management of dormakaba Group;
• Structuring the accounting system, the financial controls, and the financial planning;
• Appointing and dismissing members of the Executive Committee;
• Overall supervision of business activities;
• Preparation of the Annual Report, preparation of the General Meeting, and implementation of its resolutions;
• Approving the signing authority of dormakaba Holding AG representatives;
• Approving the purchase and sale of companies, business areas or other assets worth more than CHF 10 million;
• Approving investments, purchases, and disposals of real estate worth more than CHF 10 million.

The relevant decisions are taken by the whole Board of Directors. The CEO and CFO regularly participate in meetings of the Board of Directors in an advisory capacity. Other members of the Executive Committee are brought in to advise on individual items of the agenda. The Board of Directors held eight meetings during the 2017/18 financial year; these lasted between ten minutes and one and a half working days. All members of the Board of Directors attended each meeting except two Directors who were each excused for one meeting and one Director who was partly excused for one meeting. In addition, the Board’s committees met 13 times in total. The agendas for Board meetings are defined by the Chairman at the CEO’s request. Each member of the Board of Directors may propose agenda items. Members of the Board of Directors always receive documentation prior to Board meetings so they can prepare for discussion of each item on the agenda. The Board of Directors holds discussions with the company’s managers and visits one or more dormakaba Group locations, usually on an annual basis.

Committees

The Board of Directors has formed an Audit Committee, a Compensation Committee, and a Nomination Committee. Members of the Compensation Committee are elected at each Annual General Meeting. Each committee has written terms of reference that define its tasks and responsibilities. The chairs of these committees are elected by the Board of Directors. The committees meet regularly and are obliged to produce minutes as well as recommendations to the regular Board meetings. Committee meeting agendas are defined by the committee chair. Members of the committees receive documentation prior to the meetings so they can prepare for discussion of agenda items.

Audit Committee

The Audit Committee is composed of three non-executive members of the Board of Directors, who have professional or other experience of financing and accounting:

• Daniel Daeniker (Chair)
• Hans Gummert
• Hans Hess

The Board of Directors has specified that members of the Audit Committee must meet certain requirements with regard to independence and skills and that they must not be members of the Executive Committee. The term of office is one year or until the conclusion of the next Annual General Meeting; members may be re-elected. The Audit Committee meets at least twice a year, but will be convened by the chair as often as business requires. During the 2017/18 financial year the Audit Committee met five times, with each meeting lasting at least one hour. All members of the Audit Committee attended each meeting, except one member who was excused for one meeting. The CFO takes part in the meetings in an advisory capacity, as do, where necessary, the CEO, representatives of the audit firm, representatives of Internal Audit and of the Accounting Department, and the General Counsel. In the 2017/18 financial year, representatives of the audit firm and the General Counsel participated in three meetings, representatives of Internal Audit and external consultants in four, and representatives of the Accounting Department in five. The Audit Committee minutes the deliberations and decisions taken during meetings. The principal responsibilities of the Audit Committee are to evaluate risk management and accounting processes, monitor financial reporting and internal auditing, and assess external audits. With regard to external audits, the Audit Committee has the following responsibilities:

• Approval of the audit priorities;
• Acceptance of the audit report and of any recommendations made by the auditors prior to the submission of the annual accounts (individual and consolidated financial statements) to the whole Board of Directors for approval;
• Proposing to the whole Board of Directors which external auditor should be recommended to the General Meeting;
• Assessing the external auditor’s performance, pay, and independence, and checking that audit activities do not clash with any consultancy mandates.

The Audit Committee’s tasks relating to internal audits include:

• Approving the rules on internal audit’s organization and responsibilities;
• Approving audit plans;
• Checking the results of the audits and implementing the recommendations of the internal or external auditor;
• Transferring (if necessary) internal auditing activities to third parties or to the external auditor in an expansion of its audit activities;
• Monitoring the existing Internal Control System (ICS). Compliance with Management Information System guidelines, compliance with guidelines on limiting legal risk, and optimizing the risk profile through insurance. In individual cases, external specialist auditors may be brought in to help;
• Auditing the compliance report;
• Monitoring outstanding legal proceedings;
• Evaluating and monitoring business and financial risks.

The risk management system periodically records legal, operational, financial and business risks. Legal risks include current or potential legal disputes; operational risks include scenarios such as operational failures and natural disasters; whereas business risks include for instance payment defaults or general negative market developments. Risks are quantified and weighted with regard to their likelihood and their possible financial and/or business impact. Preventative measures that have been planned or already implemented are also subject to review. Risks are recorded if they have a potential financial impact of CHF 2.5 million or more. The Audit Committee regularly reports to the Board of Directors as a whole about its activities, and it notifies the Board of Directors immediately about important matters.

Nomination Committee

The Nomination Committee consists of four members, the majority of which must be non-executive members of the Board of Directors:

• Ulrich Graf (Chair)
• Rolf Dörig
• Hans Gummert
• Hans Hess

The term of office for each member is one year or until the conclusion of the next Annual General Meeting; members may be re-elected. The Nomination Committee meets at least once a year. During the 2017/18 financial year the Nomination Committee met three times, such meetings lasting between fifteen minutes and three hours and 45 minutes. All members of the Nomination Committee attended each meeting. The CEO also usually takes part in the meetings in an advisory capacity, the only member of the Executive Committee to do so. The Nomination Committee sets out the principles for appointing and re-electing members of the Board of Directors and submits proposals to the Board of Directors about its composition. The Nomination Committee also recommends the appointment and de-selection of members of the Executive Committee; the final decisions on appointments and de-selections are taken by the Board of Directors as a whole. The Nomination Committee minutes its deliberations and decisions and regularly reports to the whole Board of Directors.

Compensation Committee

The organization and members of the Compensation Committee as well as the details of dormakaba Group’s compensation policy are set out in the Compensation Report. During the financial year 2017/18, the Compensation Committee held five meetings of approximately half an hour to two hours each. All members of the Compensation Committee attended each meeting.

Powers and responsibilities

Management organization

The Board of Directors has the highest responsibility for business strategy and supervises management of the dormakaba Group. It has the highest decision-making authority and sets the strategic, organizational, financial planning, and accounting rules that dormakaba Group must follow. The Board of Directors has delegated management of ongoing business to the Executive Committee under the leadership of the CEO. Therefore, the CEO is responsible for overall management of the dormakaba Group. The powers and functions of the Executive Committee are set out in the Organizational Regulations of dormakaba Holding AG. The CFO, the CIO (Chief Integration Officer), the COOs, the CTO (Chief Technology Officer), and the CMO (Chief Manufacturing Officer) report to the CEO, who is responsible for overall management and for cooperation across segments and functions. These roles have a seat on the Executive Committee. With the integration process of dormakaba coming to an end at 30 June 2018, the CIO role was abolished at the same time.

Chief Executive Officer (CEO)

The CEO manages dormakaba Group. He is responsible for all the things that are not allocated to other company bodies by law, by the Articles of Incorporation or by the Organizational Regulations. After consulting with the Executive Committee, the CEO submits the strategy, the long- and medium-term objectives and the management guidelines for the dormakaba Group to the Board of Directors for approval. In response to a proposal by the CEO, the whole Board of Directors decides on the annual budget (consolidated) and the medium-term plan, which covers a three-year period, individual projects, the consolidated financial statements, and the financial statements of dormakaba Holding AG. The CEO submits recommendations to the Nomination Committee about personnel issues at the Executive Committee level. The CEO also makes proposals to the Compensation Committee regarding the remuneration of members of the Executive Committee (including allocation of shares from the share allocation plans). The CEO regularly reports to the whole Board of Directors about business performance, anticipated important business issues and risks, as well as about changes in management at the operating segment level. Members of the Board of Directors may request and examine further information. The CEO must inform the Chairman of the Board of Directors immediately about any important unexpected developments.

Information from and control over the Executive Committee

dormakaba Group’s Management Information System works as follows: monthly, quarterly, semi-annual, and annual financial statements (balance sheet, income statement and cash flow statement) are prepared of the Group’s individual reporting units. These figures are consolidated for each segment and for the Group as a whole. The financial figures are compared with the prior year and the budget. The achievability of the budget, which shows the first year of the medium-term plan for each reporting unit, is assessed against the quarterly statements and in the form of a forecast. The CEO and CFO submit monthly written reports to the Board of Directors about progress against the budget and comparisons with the prior year. At monthly meetings (monthly performance reviews) the segment heads (COOs) inform the CEO and the CFO about business performance and notable events based on written reports about e.g. achievement of budget targets. At Board of Directors meetings, a summary of these reports is discussed and assessed with the CEO and the CFO.

Events after balance sheet day

Following the announcement of Elton SK Chiu not to stand for re-election as member of the Board of Directors, the Board of Directors proposed on 10 September 2018 to the Annual General Meeting of 23 October 2018 that Jens Birgersson be elected as new member of the Board of Directors.