ANNUAL REPORT
Original perspective

GOOD GOVERNANCE PRACTICES

General principles of good governance within the Viscofan Group

Viscofan considers that good corporate governance is a key factor in the creation of value, improving the company’s economic efficiency and strengthening its investors’ confidence. This is done through the right distribution of functions, duties and responsibilities among the company’s governing and administrative bodies.

As a result, Viscofan attaches great importance to good corporate governance, understood as the Code of Ethics for its administration and management bodies of listed companies. The main aim is to provide a high level of trust and that the business targets and structure are compatible with protecting shareholders’ rights.

Viscofan’s commitment to corporate governance, has been a constant feature that has led us to incorporate the main recommendations of corporate governance, regardless of their scope of application at any given time. Viscofan has progressively reinforced its structure to guarantee the follow-up of the evolution of the principles of good corporate governance, both in Spain and internationally, as well as a continuous analysis of this evolution, adapting them to the company circumstances, until the highest level of compliance is achieved. 

Given the global nature of performance, Viscofan carries out detailed monitoring and analysis of international recommendations on good governance, incorporating them where they can contribute to the development of the company and its business with greater guarantees for its shareholders. 

Likewise, the Viscofan Board has approved a Corporate Social Responsibility Policy, reflecting its commitment to developing activities responsibly, maximising the creation of sustainable value, sharing it among its interest groups (shareholders, employees, the market and society in general) and identifying, predicting and correcting the possible negative impacts of its activity. The formalisation of this policy will contribute to promoting the development of a culture of best practicesin social responsibility in the Viscofan Group and towards improving the wellbeing of people and driving forward the economic, environmental and social development of the communities in which the Viscofan Group is present through ethical behaviour.

Furthermore, Viscofan has continued in its efforts to promote communication with all its shareholders, whether directly, or via their representatives or advisors, encouraging transparency, providing all the information considered relevant for an enhanced targeted understanding of the company and its commitment to the principles and recommendations of good corporate governance, and establishing additional channels of communication that facilitate the comprehension of their information requirements at all times.

Good governance acts in 2015

In 2015, Act 31/2014 of 3rd December, by which the Limited Companies Act was modified to improve corporate governance, incorporated principles of good governance to the mandatory regulations in Spain.

Viscofan, within the framework of its dynamic policy of adapting best corporate governance practices, pre-empted the evolution of the Spanish regulations, and incorporated improvements to corporate governance into its internal regulations via the drive of the Board of Directors and with the involvement of the shareholders via the General Meeting held on 11th April 2014: a reduction of the Board Member mandate; incorporation into the bylaws of the figure of Lead Independent Director, of the assessment of the Board and its Committees, of the Appointments and Retribution Committee, of the requisites for the Audit Committee structure; increased limit of the number of Board Members that can form part of the Board. 

The approval of Act 31/2014 for improved corporate governance of companies gave a new boost in its incorporation into the internal regulation of some aspects of good governance with which Viscofan already complied and of which it provided regular notification in its Annual Corporate Governance Report, in its Remunerations Report or in this document: separate voting of the agreements proposed to the General Shareholders Meeting, the minimum number of meetings of the Board of Directors, the establishment in bylaws of a remuneration system for Directors, approval by the General Meeting of the maximum amount of annual remuneration of the Board Members collectively, unlimited delegation and fractioned vote of intermediary entities.

Furthermore, during 2015, Viscofan consolidated the operating procedures of its governing bodies to give greater visibility to the incorporation of the principles of good governance, especially those included in the new Good Corporate Governance Code of listed companies published in February 2015..

In this respect, to guarantee the continuous flow of communication and to assure shareholders of the transparency of information and access to it, and to pay particular attention to their points of view regarding the rules and practices of corporate governance, among others, the Board of Directors has approved a communication policy with shareholders, institutional investors and their representatives or advisors based on the principles of equality, transparency and legality, which is available on the Company website and which gives them access to the necessary information to exercise their rights and make informed investment decisions, allowing for the generation of sustainable long-term value.

Furthermore, upholding its transparency policy regarding the General Shareholders Meeting, and specifically, regarding measures to promote the exercising of their attendance and participation rights under equal conditions, in accordance with the principles of Good Corporate Governance, the Board has approved and publicised a policy to encourage participation in the General Shareholders Meeting. This policy formalises the payment of an attendance premium for shareholders that are present or represented in the General Shareholders Meeting, a practice that Viscofan has been implementing since 2004.

Moreover, the Viscofan Board has expanded on the requisites needed to guarantee the diversity of knowledge, experience and gender in its composition from the very initial selection phase of potential candidates, given that this diversity constitutes one of the fundamental aspects to take into account for the good corporate governance of companies, both in how it affects its efficiency and influences quality decision-making, as well as its capacity to effectively promote social interest. As a result, the Board has approved and publicised a Board Member Selection Policy on its website, created by the Appointments and Retribution Committee in accordance with the international principles of Good Corporate Governance, with the aim of providing the Board of Directors with candidates that can offer the competencies, knowledge and experience necessary at all times, taking into consideration the vacancies to be covered, as well as the structure and composition of the Board. 

Along with all the above, the Viscofan Board has adjusted compensation of the Director General Manager for terminating the contract to the best practices of Good Governance, by reducing it to two years; it has improved the Board and its Committees assessment procedure to give greater scope to different aspects of its operation, and it has incorporated actions as a result of the assessments carried out over recent years, mainly relevant to guaranteeing Board Member participation, facilitating their dedication and attendance at meetings and giving them tools to enable them to expand upon specific aspects of the activity and the particular settings of the different productive centres and to enable a better follow-up of the Group strategy and that of each of its companies. 

Finally, Viscofan has upheld its transparency policy regarding the General Shareholders Meeting and has published all the reports and documentation, taking this further than that established in the applicable regulations, which it considered convenient to improve shareholder information with the aim of facilitating their decision-making regarding the proposals put forward by the Board. Thus, Viscofan has published the annual reports about the activities of the Audit Committee and the Appointments and Retribution Committee, so that their shareholders can access them sufficiently in advance regarding their presentation in the General Shareholders Meeting; the Auditor Neutrality report, and the report on Related-Party Operations, both created by the Audit Committee; and the comparative report on the application of the Board remunerations policy with regards to 2014, allowing shareholders to analyse the evolution of the cost of governance with standardised criteria. Likewise, it has published the reports and proposals created by the Appointments and Retribution Committee regarding the naming of Board Members. 

 LINK TO GENERAL SHAREHOLDERS MEETING INFORMATION

Governing and Supervision Bodies

Viscofan has the following internal bodies, considered necessary to ensure that operation is aligned with good governance recommendations:

SHAREHOLDERS ANNUAL GENERAL MEETING

The Annual General Meeting  is the supreme body of the company, the area in which its shareholders take majority decisions on questions within their area of responsibility. The General Shareholders Meeting is one of most important moments of corporate life. Viscofan works on the principle of “one share, one vote”, which favours equal treatment among the company’s different shareholders.

There is only one type of share, granting the same rights and obligations to all the company’s shareholders. There are no voting restrictions, nor on the number of votes that a single shareholder can cast. 

Furthermore, as reported in previous years, Viscofan has allowed split votes to facilitate the participation of shareholders through delegation of votes with instructions through its financial intermediaries, even before Draft Act 31/2014 was published (it includes this obligation). As a result, Viscofan proposes the incorporation of this obligation to its shareholders in the Rules governing the AGM (Bylaws of General Shareholders Meeting).

In recent years Viscofan has launched a series of initiatives designed to facilitate transparency, communication and the participation of its shareholders. Among them, we would highlight the attendance premium for duly accredited shares present or represented in the AGM, which in 2015 were included in the Policy encouraging participation in the General Shareholders Meeting, approved by the Board and as described above.

In the current 2016 financial year we have proposed a premium for attendance to the General Shareholders Meeting of 0.01 euros per share. Viscofan also facilitates remote voting or, as the case may be, delegated votes, including the possibility of this delegation with voting instructions. 

Viscofan has also published on its website an attendance card, delegation and remote voting, to facilitate the exercising of shareholder rights, for those that wish to use them, and a document of questions and answer containing the most common formal and material questions it receives from its shareholders, custodian banks or other intermediaries regarding the evolution of the AGM and the points included on the Agenda and continues to drive forward continuous dialogue with shareholders, their representatives or advisors, via the Investor Relations Department and the Shareholders Attention Service Department to ensure access to the information needed to exercise their rights and to make informed decisions.

As a result of all these measures, 73.06% of the company’s capital (cf. 76.36% the previous year) was represented in the AGM held on 07 May 2015. This maintains the high percentage of participation in the AGMs over the last 5 years (above 73%), higher than the average for listed companies. This is particularly significant if we take into account the company’s high free float.

Viscofan has a website to provide information in an immediate, direct and accessible manner. Viscofan publishes information on its website on financial reports, results and strategic programs and its corporate governance structure, with detailed information on its internal bodies and the people in them. This includes the type of director, shareholder they represent in the event of Dominical Board Members, curriculum vitae, other Boards to which they belong, dates of the first and latest appointment, number of shares and stake in the company, as well as the composition and duties of the Board Committees, the company’s internal rules, information on the AGMs, and any news, modifications or important events that may occur, both on the group’s activities and on its corporate governance and structure.

Viscofan includes a link on its website to all the information related to the AGM, including electronic means for the delegation of votes and distance voting. 


 LINK TO BYLAWS OF BOARD OF DIRECTORS


The same link provides an electronic forum to facilitate communication among shareholders with reference to the AGM, in which they can publish:

  • Proposals of a complementary nature to the Agenda announced in the call for the AGM
  • Request for support these proposals
  • Initiatives to reach a sufficient percentage to exercise a minority right envisaged under the law
  • Voluntary representation offers or requests. 

Finally, the shareholders also have a specific e-mail address (info-inv@viscofan.com) and a specific telephone number (+34 948 198 436). They can contact the company there, or through the shareholder’s office, whose mission is to keep them informed and deal with any needs that may arise as a result of their status as shareholders.

BOARD OF DIRECTORS

The Board of Directors is the body charged with the representation and administration of the company. Its basic role is the general supervision of the operations of Viscofan S.A. and, as required, the companies that make up the Group.

Currently, following the modification of bylaws and the appointments approved by the General Meeting held on 7th May 2015, the Board of Directors now consists of ten members, of which two are executive, one is nominee Director representing Corporación Financiera Alba, S.A. a significant shareholder of Viscofan, two others external and the other five independent thus complying with the most recent recommendations for good corporate governance in that the number of independent and nominee Directors should represent at least half the total. The Secretary to the Board is not a director.

In order to perform its functions rigorously and efficiently, the Board of Directors has created an annual calendar of Board meetings and those held by the different Committees to improve planning processes for Board Members and to facilitate their dedication and attendance at the meetings. The annual calendar includes visits to some of the Group centres and the participation of Managers in the annual planning, allowing a better follow-up to be performed on the Group strategies and on each of their companies’ strategies. 

The Board of Directors holds meetings on a regular basis. The information for these meetings is sent to the directors with sufficient advance notice, including, as the case may be, the Minutes or Reports of the different Board Committees. The Board met on 12 occasions in 2015, with an attendance percentage above 95%. The Chairman attended all the meetings

Thus, as mentioned, the Board and its different Committees have improved their annual assessment procedure, which remains under the coordination of the Secretary and is led by the Coordinating Director as the Top Executive, to whom the Appointments and Retribution Committee presents its report, in which the formal and material aspects of its activity are analysed, as well as the performance of Board Members and Presidents in each of the committees and within the Board itself, incorporating observations that may be used to improve their work. The result of the 2015 assessment established that no significant changes were required, rather, as mentioned, pertinent actions were performed to ensure the participation of Board Members, facilitating their dedication and participation in meetings and providing them with tools to enable them to expand upon specific aspects of activity and in the particular environment of each of the different productive centres, and to allow a greater follow-up to be performed of the strategy of the Group and each of its companies.

Comprehensive information about the Board of Directors is permanently available in the “Corporate Governance” section on the company website, which also includes individualised information about the status of the different Board Members, reviewed each year subject to the verification by the Appointments and Retribution Committee, and their adherence to the different committees, as well as the most relevant information such as that previously cited in this report. Details regarding their individualised remuneration are included in the Remunerations Report presented to the General Meeting for approval through consultative vote, as part of the application of the Remunerations Policy approved by the General Meeting.

BOARD COMMITTEES

With a view to ensuring its efficient operation, the Board has three committees attached to it:

DELEGATED COMMITTEE

This committee is made up by three board members, the Chairman and the two Vice-Presidents. This Committee has all the decision-making powers of the Board delegated to it expect those cannot be delegated. The Delegated Committee has been undertaking an extensive work as the permanent delegation of the Board, due to the increasing complexity of the Viscofan Group and the location of its plants in four continents which require a greater effort and more follow-up by the Board of Directors and, by extension, its Delegated Committee.

The Managing Committee met on 11 times in 2015. While exercising its duties it expanded upon issues to be dealt with by the Board of Directors and supervised the implementation of the strategy in the different branches of the Group, approved by the Board, and under maximum transparency criteria, notified the Board of proposals arising from the strategy, so that the Board can adopt the agreements it considers appropriate. Likewise, it provided all Board Members with the minutes of its sessions.

It carried out strategic analyses for the study of potential organic and inorganic growth, as well as different investment possibilities. 

Not only the Committee members and the Secretary participated in its meetings, but also the Director General Manager, and, upon request, different members of the Senior Management.

AUDIT COMMITTEE

The Audit Committee is made up by three independent directors, appointed by the Board of Directors, based on a report by the Appointments and Remuneration Committee, taking into account knowledge, skills and experience in the fields of accounting, auditing or risk management. The Chairman is the independent director Mr. Alejandro Legarda. 

The functions of the Audit Committee include, among others, supervising the process of preparation and completeness of financial information on the company, including the review of its internal control and risk management systems and the review, analysis and comments on the financial statements and other financial information with Senior Management, internal and external auditors, supervising the adaptation of control policies and procedures, reviewing internal control and risk management systems, supervising the internal audit services and ensuring that Senior Management takes its recommendations into account, proposing an external auditor, ensuring his/her independence, reviewing the audit plan and the results of its execution, supervising compliance with internal behaviour codes and rules of corporate governance, learning about and – as the case may be – responding to initiatives, suggestions or complaints from shareholders regarding the scope of their functions, establishing and supervising a mechanism that allows employees to communicate confidentially and, if considered appropriate, anonymously, their concerns on possible irregular practices within the company that could have major effects, particularly in the areas of accounting, finance or auditing.

The Audit Committee met 8 times in 2015, three of them with external auditors from Ernst&Young. Whenever considered relevant, the presence of members from the Management team, internal audit and external auditors have been requested.

LINK TO REMUNERATIONS REPORT

APPOINTMENTS AND REMUNERATION COMMITTEE

The Appointments and Remuneration Committee  consists of three directors, all non-executive, appointed by the Board of Directors with a majority of independents. Its Chairman is the independent director Mr. Ignacio Marco-Gardoqui.

This committee assesses the competencies, experience and knowledge necessary on the Board to determine the needs that should be covered by candidates for each vacancy, proposes the appointment of independent board members and reports, reports on the appointments and cessations of senior management, establishes a representation objective for the lesser represented gender and develops guidelines on how to achieve this. It also examines and organises the succession of the Board President and the Top Executive, and provides the Board with the Board Member and Senior Position retribution policy, as well as remuneration policies for shares and options wherever applicable, and long-term retribution policies for Board Members and Senior Management.

During 2015, the Appointments and Retribution Committee carried out the duties attributed to it by the Bylaws and by the Board Regulations.

It reviewed the qualification of Board Members, developed reports for the assessment of Executive Board Members and the Committee itself, and led the assessment of the Board and its committees.

It analysed the competencies, knowledge and experience necessary on the Board, it developed a Board Member Selection Policy to be approved by the Board, it requested the presence of the Coordinating Director to determine the concerns of non-executive Board Members, and it raised proposals and reports with the Board of Directors regarding the re-election or appointment of Board Members.

It organised the succession of the President, the Director-General Manager and Senior Management and the talent management policy, with succession and professional development plans for the key positions within the Viscofan Group, having approved a Succession Plan.

It applied the Remunerations Policy approved by the General Meeting held on 7th May 2015 and created the remunerations chart to apply this policy, including variable annual and multiannual retribution. It proposed variable annual and triennial retribution for the coming years, both for Board Members and Senior Management, as well as the salary policy for Senior Management.

It informed the Board of Directors of all its activities, providing all Board Members with the minutes of its sessions.

The Appointments and Remuneration Committee met on 4 occasions in 2015.

The composition, functions, rules for organisation and functioning, as well as the duties that each of the Board Committees is assigned, are described in detail in the internal rules of the company detailed below, and also in the Annual Report on Corporate Governance. In addition, upon calling the General Shareholders Meeting, as indicated, the annual reports were published regarding the activity of the Audit Committee and the Appointments and Retribution Committee, as well as reports on the neutrality of the auditor and related-party operations created by the Audit Committee. All the information related to the Committee its functions, composition and activities as well as their corresponding reports and the above mentioned proposal for the Board remuneration are available for consultation on the company’s website (www.viscofan.com). 

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 LINK TO INTERNAL RULES

 

 LINK TO CNMV WEBSITE

 LINK TO MERCANTILEREGISTER OF NAVARRE

 LINK TO INTERNAL CODEOF CONDUCT

INTERNAL RULES in the field of good governance policy

The internal rules that govern the functioning of the bodies and complement applicable regulations with the aim of guaranteeing a good corporate governance system in the Viscofan Group is available to the shareholders and the general public on the company’s website (www.viscofan.com), as well as required publications and inscription in the website of the Spanish National Securities Market Commission (www.cnmv.es) and in the Mercantile Register of Navarre (www.rmbmnavarra.com).

These internal rules mainly consist of the following:

  • Articles of Association: the basic rules that govern the company and its constituent bodies. These describe the main characteristics and principles of the AGM, the Board of Directors, the Executive Committee and the Audit Committee.
  • Bylaws of AGM: the basis principles that govern the AGM with a view to encouraging transparency, guaranteeing shareholders’ right and their access to company information. It regulates the functioning of the AGM with regard to calls for meetings, attendance, holding, minutes and access to prior information on the AGM by the shareholders.
  • Bylaws of Board of Directors: determines the principles whereby the Board of Directors acts, including an evaluation mechanism, the rules for its organisation and functioning, the code of conduct and duties of its members, and the general principles that should govern its operations. It also regulates the committees of the Board of Directors, together with their rules for organization and functioning and their missions and powers.
  • Code of Conduct : it contains the ethical principles for actions and behaviour guidelines to be followed by the administrators, managers and employees of the Viscofan Group in the course of their professional activity. The general ethical principles contained in the Code can be summarised as: respect for and defence of Human Rights; Sustainability; Integrity, Responsibility and Transparency; Respect and Nondiscrimination; Efficiency and Loyalty.
  • Internal Code of Conduct in Areas Related to the Stock Market: behavioural guidelines to ensure that the institutional and personal actions of the directors and personnel of the company are carried out in strict compliance with current legislation, to encourage transparency in markets and to preserve the interests of its investors at all times.

The Viscofan Group has specific committees to ensure and supervise the correct implementation and monitoring of legislation, and also the management and maintenance of the internal complaints channel: 

  • Corporate Responsibility and Legislative Compliance Committee: among its functions, the Corporate Responsibility and Legislative Compliance Committee supervises the specific risks of the company in relation to criminal liability or any other non-compliance with legislation (both internal or external).
  • Ethics Committee: the Ethics Committee is responsible for initiating, either ex officio or at the request of a third party, the investigation of any situation that could lead to a situation of risk for the Viscofan Group, either through noncompliance with an internal rule of the Viscofan Group or for any other reason. To do this, Viscofan has a whistleblowing channel that is accessible to all employees, in which they can notify any behaviour they consider to have a potential risk. It is available on Vinsite (international communication platform for employees of the Viscofan Group), e-mail or ordinary mail to the Ethics Committee at the central office of Viscofan in Navarra. In 2015 the Ethics Committee met on 6 occasions, during which it updated its information protocols and completed an investigation on 3 reported incidents.

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