Board of Directors (BoD)

The duties and responsibilities of the BoD of dormakaba Holding AG are defined by the Swiss Code of Obligations, the Articles of Incorporation and the company’s Organizational Regulations.

BoD members

The BoD of dormakaba Holding AG has ten members. As at 30 June 2021, all members are non-executive. Other than BoD Chair Riet Cadonau, none of the BoD members have sat on the Executive Committee (EC) of dormakaba Holding AG at any time in the last five financial years. Riet Cadonau has been CEO of dormakaba Group from 2015 to end of March 2021 (and CEO of Kaba Group from 2011 to 2015) and was elected as BoD Chair the first time in 2018.

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

BoD members as of 30 June 2021

Elections and terms of office

The BoD of dormakaba Holding AG is elected by the AGM, with each member standing for election individually. The Articles of Incorporation state that the BoD 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 AGM. BoD members can be re-elected. The Organizational Regulations provide that when they reach 70 years of age, BoD members shall resign at the next AGM.

Riet Cadonau shall continue to serve as Chair of the BoD subject to his re-election by the upcoming AGM on 12 October 2021. The BoD intends to re-nominate Hans Hess as the Vice-Chair and Lead Independent Director subject to his re-election as BoD member at the upcoming AGM. This measure will continue to ensure that the BoD exercises independent control and supervision for as long as the Chair is not considered independent according to the definition of the Swiss Code of Best Practices for Corporate Governance established by economiesuisse.

As Karina Dubs-Kuenzle will not stand for re-election as member of the BoD at the AGM 2021, the BoD is proposing to the AGM on 12 October 2021 that all other serving members of the BoD be re-elected, and that Thomas Aebischer be elected as new independent member of the BoD.

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 BoD 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 EC;
• Overall supervision of business activities;
• Approving the Group-wide codes of conduct or ethics (incl. supplier codes), the sustainability framework (ESG) and the Group-wide strategic risk management framework;
• 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 BoD. The CEO and CFO regularly participate in meetings of the BoD in an advisory capacity. Other EC members are brought in to advise on individual items of the agenda. The agendas for Board meetings are defined by the Chair. Each BoD member may propose agenda items. BoD members always receive documentation prior to Board meetings so they can prepare for discussion of each item on the agenda. The BoD holds discussions with the company’s managers and visits one or more dormakaba locations, usually on an annual basis. During the year under review, such visits were suspended due to the Covid-19 pandemic.

The BoD held eight meetings during the financial year 2020/21: one lasted around twelve hours (spread over three days), one lasted around six hours, four lasted four to five hours and two lasted two hours or less. None of the BoD members or committee members missed a meeting held during their term. The following table shows the attendance of the individual BoD members at the Board meetings and of the individual committee members at the committee meetings during the financial year 2020/21:

Attendance at Board and Committee meetings during the financial year 2020/21

Committees

The BoD has formed an Audit Committee (AC) and a Nomination and Compensation Committee (NCC). Members of the NCC are elected at each AGM. Each committee has written terms of reference that define its tasks and responsibilities. The chairs of these committees are elected by the BoD. 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 (AC)

The AC is composed of four non-executive BoD members, who have professional or other experience of finance and accounting:

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

The BoD has specified that members of the AC must meet certain requirements with regard to independence and skills and that they must not be EC members. The term of office is until the conclusion of the next AGM; members may be re-elected. The AC meets at least twice a year but will be convened by the chair as often as business requires. During the financial year 2020/21, the AC held four meetings, each lasting between two and three hours. The CFO takes part in the meetings in an advisory capacity, as do, where necessary, the CEO, representatives of the audit firm, representatives of Group Internal Audit and of the Group Accounting Department, and the Group General Counsel. In the financial year 2020/21, representatives of the audit firm participated in two meetings and representatives of Group Internal Audit, the Group General Counsel, and representatives of the Group Accounting Department in four meetings. The AC minutes the deliberations and decisions taken during meetings. The principal responsibilities of the AC are to evaluate risk management and accounting processes, monitor financial reporting and internal auditing, and assess external audits. With regard to external audits, the AC 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 (statutory and consolidated financial statements, Group Management Report, Corporate Governance Report) to the whole BoD for approval;
• Proposing to the whole BoD which external auditor should be recommended to the AGM;
• Assessing the external auditor’s performance, pay, and independence, and checking that audit activities do not clash with any consultancy mandates.

The AC’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 AC regularly reports to the BoD as a whole about its activities, and it notifies the BoD immediately about important matters.

Nomination and Compensation Committee (NCC)

At the AGM 2020, the shareholders approved the BoD’s proposal to merge the Nomination Committee and the Compensation Committee to establish a NCC. The NCC consists of three non-executive BoD members:

• Hans Hess (Chair)
• Stephanie Brecht-Bergen
• John Heppner
  

The term of office for each member is until the conclusion of the next AGM; members may be re-elected. The NCC meets at least three times a year. During the financial year 2020/21, the NCC held six meetings, three meetings lasting two to three hours and three meetings lasting around one hour. The BoD Chair, the CEO and the Senior Vice President Group Human Resources usually take part in the meetings in an advisory capacity, as are the Deputy Vice President Global Compensation & Benefits and member(s) of the external executive compensation consultancy, however, limited to compensation topics. They do not attend the parts of the meetings where their own compensation and/or performance are being discussed.

The NCC’s main compensation tasks are:

• Propose and periodically review the compensation policy and regulations for the attention of the BoD (the details of the compensation policy of dormakaba are set out in the Compensation Report);
• Propose to the BoD the specific design of the fundamental compensation elements and the determination of the compensation-related performance objectives;
• Propose to the BoD the maximum aggregate compensation amount of the BoD and of the EC to be submitted to the shareholders’ vote at the AGM;
• Propose to the BoD the compensation to be paid to its members within the limits approved by the AGM;
• Decide on the terms of appointment, significant changes in existing employment contracts, and compensation for the EC members within the limits approved by the AGM;
• Decide on the share-based compensation to be awarded to the members of the EC and the Senior Management;
• Propose the Compensation Report to the BoD for approval.

The NCC’s main nomination tasks are:

• Set out the principles for appointing and re-electing BoD members;
• Conduct and regularly review succession planning for the BoD and the EC; 
• Submit proposals to the BoD about its composition and the composition of its committees;
• Review management development on EC-level;
• Recommend the appointment and de-selection of EC members (the final decisions on appointments and de-selections are taken by the BoD as a whole);
• Approve mandates of BoD members outside dormakaba, including political mandates;
• Review of the Group-wide employee engagement program.

The NCC minutes its deliberations and decisions and regularly reports to the whole BoD.

Powers and responsibilities

Management organization

The BoD has the highest responsibility for business strategy and supervises management of dormakaba. It has the highest decision-making authority and sets the strategic, organizational, financial planning, and accounting rules that dormakaba must follow. The BoD has delegated management of ongoing business to the CEO, supported by the EC. Therefore, the CEO is responsible for overall management of dormakaba. The powers and functions of the EC are set out in the Organizational Regulations of dormakaba Holding AG. The CFO, the COOs and the CTO (Chief Technology Officer) report to the CEO, who is responsible for overall management and for alignment between segments and functions. These roles have a seat on the EC.

Environmental, Social and Governance (ESG)

The BoD guides the Group’s sustainability strategy and is responsible for its overall governance by reviewing and approving it. The BoD Chair monitors its implementation progress against set targets, and monitors and evaluates the related risks and opportunities on behalf of the BoD. The BoD receives a status update on the ESG strategy implementation from its BoD Chair at least once a year; the BoD Chair is regularly updated by the delegate of the Group Sustainability Council.

Lead Independent Director

Together with the dual role of BoD Chair and CEO, the BoD established the role of Lead Independent Director (LID) in the year 2018. The BoD decided to continue the role of LID following the end of the BoD Chair/CEO dual role end of March 2021. The LID role is specifically designed to ensure the independent decision-making of the BoD based on sound separation of duties between the BoD (including its Chair) and the EC (including the CEO). It is equipped with competencies that are defined in the Organizational Regulations. The LID:

• Focuses on best corporate governance practices by the BoD, be it within the BoD or in its interaction with the CEO;
• Stays in regular contact with the BoD Chair between BoD meetings in case of important business developments;
• Chairs in matters related to the BoD Chair and in case of potential conflicts of interest of the BoD Chair, and leads communication content and measures related thereto, following alignment with the BoD;
• Calls for information from the CEO if the flow of information from the EC to the BoD does not meet the expectation for forming an independent opinion, or if the flow of information is not transparent;
• Is available to respond to stakeholder engagement requests.

Chief Executive Officer (CEO)

The CEO manages dormakaba. She 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 EC, the CEO submits the strategy, the long- and medium-term objectives, and the management guidelines for dormakaba to the BoD for approval. In response to a proposal by the CEO, the BoD decides on the annual budget and the medium-term plan, which covers a three-year period, individual projects, and the statutory as well as consolidated financial statements of dormakaba. The CEO submits recommendations to the NCC about personnel issues at the EC level. The CEO also makes proposals to the NCC regarding the remuneration of EC members (including allocation of shares from the share allocation plans). The CEO regularly reports to the BoD about business performance, anticipated important business issues and risks, as well as about changes in management at the segment level. BoD members may request and examine further information. The CEO must inform the BoD Chair immediately about any extraordinary developments.

Information from and control over the EC

The Management Information System of dormakaba works as follows: monthly, quarterly, semi-annual, and annual financial statements (balance sheet, income statement, and cash flow statement) are prepared based on 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 previous 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 monthly financial statements and in the form of monthly rolling forecasts. The CEO and CFO submit monthly written financial reports to the BoD about progress against the budget and comparisons with the previous 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 BoD meetings, a summary of these reports is discussed and assessed with the CEO and the CFO.

The financial part of the Management Information System is supplemented by semi-annual risk reports and annual compliance and sustainability reports.

Skills and expertise of the BoD

In line with the guideline of the Swiss Code of Best Practice for Corporate Governance for a well-balanced representation, the BoD members have a broad spectrum of educational background, professional skills and expertise as well as personal qualities from a range of industries.
In addition to age, gender, geographic and tenure diversity, the BoD assesses its level of diversity based on a skills matrix established by its NCC.

The skills matrix includes the following professional skills/expertise, and the assessment is done based on the two top skills of each BoD member:

• Executive leadership experience,
• Corporate governance/compliance skills,
• Strategic industry and technology skills,
• Financial skills,
• Digital business model experience,

as well as several personal attributes.

All required competencies are represented in the BoD with emphasis on executive leadership experience, corporate governance and compliance as well as strategic industry and technology skills (each with 50% occurrence), followed by financial skills (30%) and digital business model experience (20%). With the proposal of the BoD to the AGM on 12 October 2021 that Thomas Aebischer be elected as new, independent member of the BoD, the BoD intends to further strengthen its competence in Finance as Thomas Aebischer brings broad financial know-how in a global, industrial and publicly listed environment.

Details on age, gender, geographic and tenure diversity can be found in the table BoD members as of 30 June 2021. Details on the range of business sectors represented by the Board members can be found in their biographies.

The NCC annually reviews the composition of the BoD and its committees based on the abovementioned characteristics of its members as well as on dormakaba’s strategy, business profile, risks, and opportunities to determine the need to propose changes to the AGM.

Events after balance sheet date

On 2 July 2021, dormakaba signed an agreement to acquire Solus Security Systems Pvt Ltd, a market leader for integrated Electronic Access & Data solutions in India. Based in Bangalore (India) with multiple further locations, Solus provides integrated solutions for Access Control, Time and Attendance, Visitor Management, Vehicle Access and Security, as well as the services required for managing these solutions. The transaction was closed on 15 July 2021.

On 23 August 2021, dormakaba signed an agreement to acquire the Australian Reliance Doors and Best Doors Australia Groups (RELBDA), thus strengthening its position in door automation. The group of companies is a well-established provider in the Australian market with reputable brands for residential garage doors, automatic openers, industrial overhead doors as well as related services. RELBDA has manufacturing sites located in Brisbane, Sydney, Melbourne, and Adelaide. This transaction will allow dormakaba to further diversify and expand its footprint into the residential sector of the Australian market by combining the products to integrated solutions for a seamless home access.

As Karina Dubs-Kuenzle will not stand for re-election as member of the BoD at the AGM 2021, the BoD is proposing to the AGM on 12 October 2021 that all other serving members of the BoD be re-elected, and that Thomas Aebischer be elected as new independent member of the BoD.