This section provides an overview of the procedural remit, diverse nature and governance of the Supervisory Board of AkzoNobel. For an understanding of the activities of the Supervisory Board over the past year, please refer to the Chairman’s Statement and the Supervisory Board Report. The responsibility of the Supervisory Board is to supervise the policies adopted by the Board of Management and the Executive Committee and to oversee the general conduct of the business of the company. In practice, this means supervising the achievement of the company’s operational and financial objectives, the corporate strategy, the design and effectiveness of the internal risk management and control systems, the main financial parameters, compliance with applicable laws and regulations and risk factors. The Supervisory Board advises the Board of Management and Executive Committee, while taking into account the interests of the AkzoNobel group and the company’s stakeholders. Major investments, acquisitions and functional initiatives are subject to Supervisory Board approval.
A list of current Supervisory Board members, including their biographies, can be found in the Leadership section. The Supervisory Board is constituted in a balanced manner to reflect the nature and variety of the company’s businesses, their international spread and expertise in fields such as finance, economic, societal, environmental and legal aspects of business, government and public administration. Consequently, the current members have a diverse and appropriate mix of knowledge and experience of the markets in which AkzoNobel operates, as well as insights from different markets and non-operational areas.
According to the Act on Management and Supervision, a supervisory board of a large Dutch public company has a balanced composition if it consists of at least 30 percent female and at least 30 percent male members. The current gender balance of the Supervisory Board does not meet this depiction of a balanced composition, because two of its seven members are female. The Supervisory Board has a preference for a better gender balance. However, in compliance with provision III.3.1 of the Code, the Supervisory Board composition reflects both society at large and the markets in which the company operates – by ensuring that at least one-third of the members meet the diversity criteria of gender (female) and/or nationality (outside of the European Union). AkzoNobel acknowledges that gender is only one part of diversity and Supervisory Board members will continue to be selected on the basis of their wide-ranging experience, backgrounds, skills, knowledge and insight. Our current Supervisory Board represents six nationalities, all of whom bring with them experience from a diverse range of international business, professional and non-profit organization backgrounds. When nominating and selecting new candidates for the Supervisory Board in the future, the requirements of the Act on Management and Supervision as well as provision III 3.1 of the Code will continue to be taken into account.
Rules of Procedure of the Supervisory Board
The Supervisory Board is governed by its Rules of Procedure, which are available on the company’s corporate website. The Rules of Procedure include the profile and the Charters of the Committees and sets out the tasks and responsibilities of the Supervisory Board.
The Chairman of the Supervisory Board determines the agenda, chairs meetings and the AGM, monitors the proper functioning of the Supervisory Board and its committees, arranges for the adequate provision of information to its members and acts on behalf of the Supervisory Board as the main contact for the Board of Management and Executive Committee. He also initiates the evaluation of the functioning of the Supervisory Board, its committees, its individual members and the functioning of the Board of Management.
Meetings of the Supervisory Board require a quorum of at least half of its members to be present in order to pass resolutions. Resolutions can also be passed in writing if the written resolution is submitted to all Supervisory Board members in advance, with sufficient time for them to review and assess the implications, nature and content. Resolutions of the Supervisory Board must be adopted by absolute majority of the votes cast. The Chairman, or in his absence the Deputy Chairman, shall cast the deciding vote in the event of a tie.
Members of the Supervisory Board are nominated, appointed and dismissed in accordance with procedures identical to those outlined for the members of the Board of Management. As a general rule, based on a rotation schedule (available on our corporate website), a Supervisory Board member’s tenure is four years. Since September 2014 and in accordance with the Code, all members are eligible for re-election only twice, each time for a period not exceeding four years, leading to a maximum possible term of 12 years for any Supervisory Board member. In 2014, one appointment and two re-appointments to the Supervisory Board were proposed to the AGM. For 2015, one re-appointment is currently scheduled to be proposed to the AGM.
Induction and training
Following appointment to the Supervisory Board, members receive a comprehensive induction tailored to their individual needs. This includes extensive briefings about all major business and functional aspects of the company, and its corporate governance and compliance statements as well as meetings with the CEO, the CFO and all other Executive Committee members. This enables them to build up an understanding of AkzoNobel’s businesses and strategy, and the key risks and issues the company faces. Throughout the year, the Chairman of the Supervisory Board ensures that regular updates on AkzoNobel’s businesses, legal matters, social and corporate governance, environmental, accounting, investor relations, compliance, risk management and internal control matters are provided to the Supervisory Board.
Independence of the Supervisory Board
Supervisory Board members are required to act critically and independently of one another, the Board of Management and the Executive Committee. Each member of the Supervisory Board meets the independence requirements as stated in the Code provisions III.2.1 and III.2.2 and has completed an annual independence questionnaire addressing the relevant requirements for independence. To this end, the company takes steps to verify that:
- There are no cross ties between Supervisory Board members and members of the Board of Management
- There have been no employment relationships between Supervisory Board members and AkzoNobel during the five years preceding their last appointment
- No personal financial compensation has been paid, other than in relation to work as a Supervisory Board member
- No Supervisory Board member has had important business relationships with the company in the year prior to their last appointment
- There are no significant shareholding ties (amounting to more than 10 percent of the share capital of the company) between Supervisory Board members and the company
Conflict of interest
The Articles of Association and the Rules of Procedure include detailed provisions on how to deal with potential conflicts of interest between members of the Supervisory Board and the company. A member of the Supervisory Board shall not participate in the discussions and decision-making on a subject or transaction in relation to which he/she has a conflict of interest with the company. Decisions to enter into transactions under which Supervisory Board members have conflicts of interest that are of material significance to the company, and to the relevant Supervisory Board member, require the approval of the Supervisory Board. Any such decisions will be recorded in the annual report for the relevant year, with reference to the conflict of interests and a declaration that the relevant best practice provisions of the Code have been complied with. In 2014, no transactions were reported under which a member had a conflict of interest which was of material significance to the company.
Supervisory Board members receive a fixed annual remuneration and attendance fee, which is determined by the AGM. More information on the remuneration of the members of the Supervisory Board can be found in Note 22 of the Consolidated financial statements.