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. 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 was CEO of dormakaba Group from 2015 to the 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.

Based on the principles of the Swiss Code of Best Practice for Corporate Governance established by economiesuisse, all BoD members other than the BoD Chair are independent.

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 at 30 June 2022

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.

As part of a staggered renewal of the Board of Directors, Vice-Chair and Lead Independent Director Hans Hess (67), John Heppner (70), and Christine Mankel (40) will not stand for re-election as member of the BoD at the upcoming AGM on 11 October 2022. The BoD is proposing Kenneth Lochiatto (59), Michael Regelski (57), and Svein Richard Brandtzæg (65) to be elected as new independent members. The BoD plans to propose women for later BoD changes , the first one in 2023, to (re-)increase gender diversity within the BoD. Further, the BoD is proposing to the AGM that all other serving members of the BoD be re-elected.

Riet Cadonau shall continue to serve as Chair of the BoD for one final term subject to his re-election by the upcoming AGM. The BoD intends to nominate Svein Richard Brandtzæg as the Vice-Chair and Lead Independent Director subject to his 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.

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 based on an annual standard agenda defined by the BoD. Main topics of each ordinary BoD meeting are:

• Report by the CEO;
• State of the business, including performance and forecast;
• Projects update, including M&A;
• Reports by the Chairs of the committees.

Further standard agenda topics are:

• February meeting: Report on the EC strategy/medium-term plan workshop; succession planning at BoD and EC level and management development; Financial statements and Interim Report of last half-year;
• June meeting: Strategy update; annual budget and medium-term plan; skills/expertise assessment of BoD members;
• August meeting: Financial statements and Annual Report of last financial year; AGM agenda and motions;
• October meeting: Constitution of the BoD and its committees; Sustainability Report of last financial year;
• December meeting: Annual BoD schedule;
• Regular updates by Global Functions such as HR, IT, and Product Development.

During the year under review, key BoD topics beyond the standard items were the new strategy and operating model Shape4Growth (decision and implementation reviews) as well as personnel matters at BoD and EC level.

The BoD held nine meetings during the financial year 2021/22: two lasted more than ten hours (spread over two days), one lasted more than eight hours (spread over two days), two lasted more than six hours, and four 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 Bod meetings and of the individual committee members at the committee meetings during the financial year 2021/22:

Attendance at BoD and committee meetings during the financial year 2021/22

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 BoD 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)
• Thomas Aebischer
• Jens Birgersson
• Hans Gummert

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 2021/22, the AC held four meetings, each lasting around 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 2021/22, 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 all 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 the 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, supply chain issues, 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.

The agendas for the AC meetings are defined by its Chair based on an annual standard agenda. Main topics of the meetings are:

• Legal report on major litigations and key legal risks;
• External and internal audit plans;
• Internal audit reviews and status of implementation of audit action items;
• Risk management reports;
• Financial statements, audit and ICS reports, Group Management and Corporate Governance Report, Interim Report (full financial year and/or half-year);
• Compliance Report;
• Performance review of external auditor.

During the year under review, a key AC topic beyond the standard items was an update on the capitalization of the R&D projects.

Nomination and Compensation Committee (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. As Hans Hess and John Heppner will not stand for re-election at the AGM 2022, the BoD is proposing to the AGM on 11 October 2022 that Stephanie Brecht-Bergen be re-elected and that Kenneth Lochiatto and Svein Richard Brandtzæg be elected as new members of the NCC.

The NCC meets at least three times a year. During the financial year 2021/22, the NCC held ten meetings: two meetings lasting three to four hours, four meetings lasting one to three hours, and four meetings lasting one hour or less. The BoD Chair, the CEO, and the Chief Human Resources Officer (CHRO) usually take part in the meetings in an advisory capacity. The Deputy Vice President Total Rewards and member(s) of the external executive compensation consultancy attend the compensation topics of the meetings, excluding parts 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 at 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.

The agendas for the NCC meetings are defined by its Chair based on an annual standard agenda. Main topics of the meetings are:

Compensation matters:

• BoD and EC compensation: Philosophy, system, and directives; benchmarks and proposal on aggregates amounts for AGM approval and individual amounts for BoD approval;
• Variable EC and Senior-Management compensation: Target amounts, objectives, and KPIs;
• Compensation Report.

Nomination matters:

• BoD and EC succession, including skills/expertise assessment;
• HR roadmap;
• Employee engagement: Surveys and action items.

During the year under review, key NCC topics beyond the standard items were the review of the compensation program and the implementation of the related changes, as set forth in more detail in the Compensation Report, as well as personnel matters at BoD and EC level.

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 the 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 Presidents, the CMPO (Chief Marketing & Products Officer), the COO (Chief Operations Officer), and the CTO (Chief Technology Officer) report to the CEO, who is responsible for alignment between regions 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) 2018. The BoD decided to continue the role of LID following the end of the BoD Chair/CEO dual role at the 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. 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 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 and 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, and about key changes at the senior management 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 region and function 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 regional and functional heads (Presidents, CMPO, COO, and CTO) 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, and 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:

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

The assessment is done based on the two top skills of each BoD member as well as several personal attributes.

All required competencies are represented in the BoD, with emphasis on executive leadership experience, corporate governance, compliance, strategic industry, and technology skills (each with 45% occurrence), followed by financial skills (35%) and digital business model experience (20%). With the proposal of the BoD that Kenneth Lochiatto and Michael Regelski be elected as new members of the BoD, the BoD intends to further increase the specific industry and technology know- how. With the proposal to elect Svein Richard Brandtzæg as a new member, the BoD also further strengthens its expertise with a very experienced and reputed business leader and former CEO. The BoD plans to propose women for later BoD changes, the first one in 2023, to (re-)increase gender diversity within the BoD.

Details on age, gender, geographic, and tenure diversity can be found in the table "BoD members as of 30 June 2022". 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 1 August 2022, dormakaba signed an agreement to acquire Alldoorco based in Nijkerk (Netherlands). Alldoorco is a well-known company specializing in the maintenance, repair, and new installation of industrial door systems. With its high level of technical expertise in door solution services, the company is an ideal complement to dormakaba’s existing offering in the Dutch market.

As part of a staggered renewal of the Board of Directors, Vice-Chair and Lead Independent Director Hans Hess (67), John Heppner (70), and Christine Mankel (40) will not stand for re-election as members of the BoD at the upcoming AGM on 11 October 2022. The BoD is proposing Kenneth Lochiatto (59), Michael Regelski (57), and Svein Richard Brandtzæg (64) to be elected as new independent members. The Board intends to appoint Svein Richard Brandtzæg as Vice-Chair and Lead Independent Director of the BoD and Chair of the NCC, subject to his election by the Annual General Meeting. As further element of the planned transition, the BoD intends to appoint Thomas Aebischer as chair of the AC. More detailed information on the proposed new BoD member can be found on the dormakaba Group website.