3.Board of Directors

All nine members of the Emmi Board of Directors (see table in section 3.1 Members of the Board of Directors) are non-executive members, who were not previously members of Emmi Group Management or the management team of one of its subsidiaries. The basis for nomination as a member of the Board of Directors is the fulfilment of a specific requirement profile of requirements, which reflects the relevant expertise for Emmi’s strategic long-term development and seeks to achieve balance across the Board. Mandate agreements are in place with each member, governing all the necessary details.

Thomas Grüter, Hubert Muff and Werner Weiss are members of the Board of the Central Switzerland Milk Producers Cooperative (ZMP), which supplies a large proportion of its milk to Emmi. ZMP, via its subsidiary ZMP Invest AG, Lucerne, holds a majority stake in Emmi.

Fritz Wyss (born 1944) has been Honorary Chairman of the Emmi Board of Directors since 2010. He was a Delegate of the Board of Directors from 1993 to 2003 and its Chairman from 2003 to 2009.

3.1Members of the Board of Directors

3.2Professional background and other activities and interests

Konrad Graber

Member of the Board of Directors since 2006, Chairman since 2009

Thomas Grüter

Member of the Board of Directors since 2021, Vice-Chairman since April 2022

Monique Bourquin

Member of the Board of Directors since 2013

Dominik Bürgy

Member of the Board of Directors since 2021

Christina Johansson

Member of the Board of Directors since 2018

Hubert Muff

Member of the Board of Directors since April 2022

Alexandra Post Quillet

Member of the Board of Directors since 2018

Diana Strebel

Member of the Board of Directors since 2012

Werner Weiss

Member of the Board of Directors since April 2022

3.3Permitted number of activities

The members of the Board of Directors may hold a maximum of five mandates in listed legal entities and 15 mandates in non-listed legal entities. In practice, the limits permitted by the Articles of Association are far from fully exhausted.

3.4Election and term of office

The first election of members can be seen in the table in section 3.1 Members of the Board of Directors. The term of office of members of the Emmi Board of Directors is one year and accordingly lasts until the General Meeting 2023. Re-election is permitted, subject to an internal regulation passed by the Board of Directors on age limits and terms of office. The members of the Board of Directors and the Personnel and Compensation Committee are elected by the General Meeting, with the period between one Ordinary General Meeting and the end of the next deemed to be one year. The Chairman is elected by the General Meeting from among the members of the Board of Directors. Elections to the Board of Directors are generally carried out as individual elections. All votes and elections are carried out by open ballot unless a majority requests a secret ballot.

3.5Internal organisation

Allocation of duties within the Board of Directors

The table below illustrates the areas of responsibility within the Board of Directors.

The Board of Directors subjects its work and the work of the committees to a self-evaluation once a year. This involves assessing the company’s own performance, organisation, work processes, competencies and responsibilities in accordance with the organisational regulations, the composition and diversity of the Board of Directors, the renewal process and cooperation with Group Management. Based on this, the Board of Directors determines any measures that are needed. In 2020, an external assessment of the Board of Directors and its activities was carried out. The resulting inputs and recommendations were implemented.

Composition, duties and delimitation of responsibilities of the committees

The composition of the committees and the Agricultural Council (hereinafter the “committees”) is shown in the previous table.

The Audit Committee supports the Board of Directors in monitoring the management of the company, in particular from a financial perspective. As a body, it is entitled at any time to inspect all documents necessary for the performance of its duties and to request comprehensive information from all offices in the Group and the external auditors. It comprises at least three members of the Board of Directors, one of whom is the Chairman of the Board of Directors. Its meetings are attended by the CEO, CFO, Head of Group Controlling, Head of Internal Audit and, on invitation, the external auditor in charge.

The Audit Committee deliberates on and approves:

• the auditing plan and the personnel budget of Internal Audit
• the appointment and dismissal of the Head of Internal Audit
• the audit plan and the remuneration budget for the external auditors
• the auditors for consolidated subsidiaries where these differ from the Group auditors
• the list of counterparties and their credit limits for financial transactions

The Audit Committee assesses the following, in particular, for the Board of Directors in an advisory or preparatory capacity:

• the organisation of accounting, and the organisation and content of financial control including internal auditing
• the effectiveness and independence of the internal auditors
• the selection of the Group auditors
• the effectiveness and independence of the external auditors
• the results of internal and external audits and the monitoring of action plans by management based on these results
• the Group and holding company accounts and the results of the subsidiaries
• the financial ambitions of the Group companies and the Group during the strategy period
• the target-setting system that serves as a basis for setting annual financial targets
• the annual financial targets of the Group companies and the Group
• the total investments for the subsequent year
• the evaluation of risks and of the measures based on this
• financial and liquidity planning as well as business relations with financial institutions
• the rolling forecast
• financial reporting to shareholders and the public
• legal proceedings and out-of-court settlement of disputes whose outcome may have implications for the financial situation of the Group
• the treasury guidelines

The Market Committee supports the Board of Directors in monitoring the management of the company, in particular from a medium and long-term perspective. It offers recommendations on the basic organisation of the brand, product and market strategy as preparation for the corporate strategy. It comprises at least three members of the Board of Directors, one of whom is the Chairman of the Board of Directors. Its meetings are attended by the CEO, Chief Marketing Officer and, on invitation, other members of Group Management and management. The Market Committee has no approval power.

The Market Committee assesses or processes the following for the Board of Directors in an advisory or preparatory/follow-up capacity:

• the organisation based on the strategy
• merger and acquisition projects, brand projects, and product and marketing investments based on the strategy
• the strengthening of the Emmi brand portfolio and innovations based on the strategy
• the preparation of changes in strategy
• the development of key customers and markets as well as critical business units
• the controlling of major projects and major acquisitions

The Personnel and Compensation Committee supports the Board of Directors in monitoring the management of the company, in particular from a personnel perspective and regarding compensation topics. It comprises at least three members of the Board of Directors, one of whom is the Chairman of the Board of Directors. Its meetings are attended by the CEO and the Chief Human Resources Officer on invitation.

The Personnel and Compensation Committee deliberates on and approves:

• the remuneration system for management and employees
• the remuneration for the Chairman of the Board of Directors, the members of the Agricultural Council, the CEO and the other members of Group Management (taking into account the ceiling amounts approved by the General Meeting)
• nomination of the employer representation in the Emmi Pension Foundation and the Emmi Welfare Foundation
• other mandates of the members of the Board of Directors and Group Management

The Personnel and Compensation Committee elects and removes the members of Group Management and the members of the extended Group Management, with the exception of the CEO.

The Personnel and Compensation Committee assesses or processes the following, in particular, for the Board of Directors in an advisory or preparatory capacity:

• the remuneration system for the compensation of the Board of Directors as well as the remuneration of the members of the Board of Directors
• the remuneration system for the compensation of Group Management
• the ceiling amounts for the remuneration of the Board of Directors, the Agricultural Council and Group Management for approval by the General Meeting (see section 3.1 Approval model of the General Meeting in the Compensation report)
• the total amount of salary adjustments and bonuses for employees
• the composition of Group Management
• succession planning and the evaluation of candidates for the Board of Directors according to election regulations
• succession planning for the Chairman of Group Management and, at the request of the CEO, for the members of Group Management
• the regular review of the organisational regulations

The Agricultural Council, which consists of members of the Board of Directors and specialists, supports the Board of Directors in monitoring the management of the company, in particular with regard to milk procurement and agricultural issues. As such, it is not a committee of the Board of Directors, but rather acts as an advisory body. The Agricultural Council comprises at least four individuals, of whom at least three are members of the Board of Directors (the Chairman of the Board of Directors plus two further members). Internal and external experts inform the Agricultural Council about the latest developments and provide its members with advice where necessary. On Emmi’s side, the meetings are attended by the CEO, the Executive Vice President Switzerland and the Head of Industrial Business Switzerland as internal experts. The external experts are the Managing Directors of the regional milk producer organisation ZMP, which has a stake in Emmi, and the national milk producer organisation SMP. Other members are the presidents of the national milk sector organisation BOM, the milk producer organisation Mittelland Milch and the Managing Director of the milk producer organisation mooh. The Agricultural Council has no approval power.

The Agricultural Council assesses or processes the following, in particular, for the Board of Directors in an advisory or preparatory capacity:

• general political issues
• the development of the milk and cheese industry and its organisations
• the volume and price management of milk as a raw material
• milk and cheese procurement

Working methods of the Board of Directors, its committees and the Advisory Board

As a rule, the Emmi Board of Directors, its committees and the Advisory Board meet as often as business requirements dictate, but at least quarterly. The Personnel and Compensation Committee and the Agricultural Council generally meet twice a year. In the year under review, the Board of Directors held ten half-day meetings and one all-day meeting. The Audit Committee met five times for three hours each, and the Market Committee four times for three hours each. The Personnel and Compensation Committee met seven times for two hours each. The meeting durations are averages. Attendance at all meetings of the Board of Directors and its three committees averaged 99%. The Agricultural Council met twice for two hours each.

Meetings held by the Board of Directors are also attended by the CEO, the CFO and, depending on the topic, other members of Group Management and management. Certain individual items on the agenda are handled exclusively by the members of the Board of Directors. The entire Group Management participates in the strategy meeting held by the Board of Directors. The inclusion of members of Group Management in meetings held by the committees is shown for the individual committees. With the exception of the Agricultural Council and Audit Committee, the Emmi Board of Directors holds its meetings without any external experts. The Chairman of the Board of Directors is a member of all committees for the purposes of coordinating the various committees of the Board of Directors and integrating the Board of Directors as a whole.

The chairpersons of the committees report to the Board of Directors at every Board meeting regarding their activities and results, and record details of their consultations and decisions in minutes that are distributed to all members of the Board of Directors. If any important issues arise, the Board of Directors is informed immediately following the meeting.

Overall responsibility for the duties assigned to the committees remains with the Emmi Board of Directors. The decisions of the Board of Directors are made with an absolute majority of the votes cast. In the event of a tied vote, the Chairman has the casting vote.

3.6Definition of responsibilities between the Board of Directors and Group Management

The Board of Directors is responsible for the overall management of the company and the Group, as well as for monitoring the management of the company in accordance with Art. 716a of the Swiss Code of Obligations. On this basis, it deliberates on and determines issues including:

• the financial ambitions of the Group companies and the Group during the strategy period
• the target-setting system that serves as a basis for setting annual financial targets
• the annual financial targets of the Group companies and the Group
• the total investments for the subsequent year
• the annual and half-year results
• the Group structure up to and including Group Management
• the salary policy, in particular the remuneration system for the compensation of the members of the Board of Directors, the remuneration system for the compensation of Group Management, the total amount of salary adjustments and bonuses for employees
• ceiling amounts for remuneration of the Board of Directors, the Agricultural Council and Group Management for approval by the General Meeting (for approval model, see section 3.1 Approval model of the General Meeting in the Compensation report 2022)
• the evaluation of the main risks
• multi-year financial and liquidity planning
• strategy-relevant cooperations and agreements, in particular the purchase and sale of participations, companies, etc.
• Group regulations
• the founding, merger and closure of companies
• the approval of members of the Board of Directors of consolidated subsidiaries
• the nomination of candidates for the Board of Directors for the attention of the General Meeting

All other areas of management are delegated in full by the Board of Directors to the Chairman, the CEO and Group Management. The Board of Directors can, at any time, on a case-by-case basis or on the basis of general powers reserved, intervene in the duties and areas of competence of the corporate bodies that report to it and take over business carried out by these bodies.

The CEO is the Chairman of Group Management. He leads, supervises and coordinates the members of Group Management and – for Group tasks – of the extended Group Management, and grants them the necessary authority to perform their functions. In particular, he is responsible for implementing strategic objectives, defining operational thrusts and priorities, and providing the necessary material and personnel resources for this purpose. He communicates regularly with the Chairman of the Board of Directors and the Board of Directors as a whole regarding business developments.

The members of Group Management consistently ensure the implementation of strategic Group management. They manage the subsidiaries from a financial point of view and influence their strategic orientation. Their areas of competence and responsibility are determined, in particular, by instructions from the CEO and the budget approved by the Board of Directors, as well as by the business strategy defined by the Board of Directors.

The members of the extended Group Management selectively fulfil strategic projects assigned to them by the CEO as part of their activities as members of the Executive Board Switzerland or as long-standing former members of the Executive Board.

3.7Information and control instruments vis-a-vis Group Management

The Emmi Board of Directors is informed at every meeting by the Chairman, the chairpersons of the committees, the CEO, the CFO and depending on the agenda item by other members of Group Management about current business developments, the financial situation and key business events. Additional information is provided during committee meetings. In the case of significant acquisitions, the Market Committee or delegations from the Board of Directors visit the companies concerned to assess the situation first-hand. The Chairman of the Board of Directors meets with a local Executive Board twice a year on average.

In addition to the meetings, every member of the Board of Directors can, having first informed the Chairman of the Board of Directors accordingly, request information from the members of Group Management about business developments and, with the authorisation of the Chairman, about individual transactions. The Chairman is kept up to date by the CEO on a regular basis, at least once every two weeks, and receives the minutes of all Group Management meetings. He and the CEO ensure an appropriate flow of information between Group Management and the Board of Directors. Members of the Board of Directors are informed immediately of exceptional incidents by means of circular letter.

Additional information and control systems are:

• Management Information System (MIS): Members of the Board of Directors receive a detailed Group Management Report, containing in-depth information on the company’s financial position, on a monthly basis. The members of the Audit Committee receive a quarterly Group Treasury Report. A rolling prognosis for the following 18 months is additionally created at least three times a year. The Board of Directors is sent these documents and informed in detail about their contents.
• Risk management process: At least once a year, the Board of Directors is informed by the CEO regarding the main risks and their assessment on the basis of relevance and likelihood of occurrence. The Board of Directors approves the risk management measures defined by Group Management for implementation and monitors their progress (see also Notes to the consolidated financial statements of the Emmi Group in the Annual Report 2022).
• External and Internal Audit: Details of the external auditor are provided in section 8 Auditors. Internal Audit is a management tool used by the Board of Directors and Group Management, and as such forms a fundamental part of the internal control system. It is directly associated with the Chairwoman of the Audit Committee, as well as the Audit Committee as a whole, through participation in its meetings, which are held at least quarterly (five meetings in the year under review). The Audit Committee approves the audit programme and the annual planning; it also receives all auditors’ reports and is kept informed at its meetings of all findings and the resulting measures. In addition, the Head of Internal Audit regularly meets with the Chairwoman of the Audit Committee.

Internal Audit works in accordance with standards defined in the Audit Manual and carries out audits in the entire Emmi Group. These audits involve assessing the risk potential in corporate governance, business processes and information systems of the company in terms of the reliability and integrity of accounting data and other fundamental information, the efficacy and efficiency of business processes, the securing of tangible and non-tangible business assets, and compliance with laws, ordinances and agreements. Internal Audit also works closely together with the external auditors and carries out special audits at the request of the Audit Committee. It evaluates the effectiveness of the internal and external control systems, as well as the risk management of the Emmi Group. Compliance is also supported and jointly monitored by the Legal department.