6. Governance

The Board of Directors determines the strategic objectives and the general resources for achieving these, and decides on major business transactions. For details about the internal organisation of the Board of Directors and its committees, see Business Report > Corporate Governance > Board of Directors > Internal organisational structure.

As of 31 December 2017, the operating management structure of Geberit is broken down into seven Group divisions:

• CEO division
• Sales Europe
• Sales International
• Marketing & Brands
• Operations
• Product Management & Innovation
• Finance

The assignment of clearly distinguished responsibilities minimises the number of interfaces. For more details about the organisational structure, see Business Report > Management structure.

The Board of Directors determines the strategy. This includes the corporate strategy, see Business Report > Business and financial review > Strategy and goals > Strategy and the Sustainability strategy. To the extent legally permissible and in accordance with the Organisational Regulations, the Board of Directors has assigned the operational management and the implementation of the strategy to the Chief Executive Officer. Within the operational management structure, responsibility for specific economic, environmental and social issues is delegated further, see Business Report > Management structure.

At every meeting, members of the Group Executive Board inform the Board of Directors of current business developments and major business transactions of the Group or Group companies. Between meetings, the Board of Directors is comprehensively informed in writing about current business developments and the company’s financial situation on a monthly basis.

The Board of Directors determines the strategic objectives and the general resources for achieving these, and decides on major business transactions. Within the operational management structure, responsibility is determined for specific economic, environmental and social issues, see Business Report > Management structure. The responsible individuals report either directly to the CEO (including Corporate Human Resources, Corporate Communications and Investor Relations, Strategic Planning), or to other members of the Group Executive Board.

The way in which the topic of sustainability is approached has been further developed regularly within the company. For over 20 years, Geberit has had an Environment and Sustainability department, which has been reporting directly to the CEO for more than a decade. In recent years, this department has coordinated the further development of the sustainability strategy and related activities, although the responsibility for planning and implementation lies within the individual areas themselves.

For the participatory rights of the shareholders, see Business Report > Corporate Governance > Participatory rights of the shareholders.

There is no employee representative on the Board of Directors. The employee representatives of the European sites meet regularly with a member of the Group Executive Board and the Head Corporate Human Resources. Selected concerns can be addressed to the Board of Directors through this channel.

At the end of 2017, the Board of Directors comprised six non-executive members – one woman and five men. Albert M. Baehny is Chairman of the Board of Directors. All of the committees formed by the Board of Directors are comprised exclusively of independent members. For further details, see Business Report > Corporate Governance > Board of Directors.

Christian Buhl is Chief Executive Officer (CEO) and Chairman of the Board of Directors is Albert M. Baehny. For further details, see Business Report > Corporate Governance > Board of Directors.

With regard to the election and terms of office of members of the Board of Directors, see Business Report > Corporate Governance > Board of Directors > Elections and terms of office.

Detailed information on all members of the Board of Directors, including their memberships in other organisations, can be found in Business Report > Corporate Governance > Board of Directors.

In den Statuten und im Organisational Regulations of the Board of Directors stipulate how conflicts of interest of members of the Board of Directors are avoided. The members of the Board of Directors are obliged to refrain from involvement in the handling of matters affecting either their personal interests or those of a company with which they have an affiliation. This obligation to refrain from involvement has no influence on the requirements for a quorum when passing resolutions. Business dealings between the company and governing bodies or related parties are subject to the principle of conclusion at conditions as with independent third parties.

Geberit’s long-standing success is based on the fact that, together with the Board of Directors, the Group Executive Board pursues a long-term perspective. The Board of Directors and Group Executive Board have defined and adopted key mission statements and principles such as the Geberit Compass and the Geberit Code of Conduct, see G4-56. The Sustainability strategy is examined and approved by the Group Executive Board and the Board of Directors, see G4-45.

Internal business processes are designed to ensure continuous improvement and innovation. These values are closely associated with the Geberit brand. At the same time, stakeholder concerns are taken seriously, and the Group Executive Board and Board of Directors receive feedback and input for the continued development of the sustainability strategy as part of the stakeholder panel, for example.

Every year, the Board of Directors undertakes at least one assessment of the way in which it works together. This includes an assessment of how well-informed the members of the Board of Directors are about the Group and its business performance, see organisational regulations of the Board of Directors .

Geberit’s long-standing success is based on the fact that, together with the Board of Directors, the Group Executive Board pursues a long-term perspective, thus enabling the company to demonstrate its performance clearly in areas including sustainability. There is no formal procedure for assessing the performance of the Board of Directors from an integrated sustainability perspective. As part of the annual review of the sustainability strategy, findings are discussed and areas where action is needed are determined, see G4-45.

Geberit’s remuneration policy states that remuneration programmes must be balanced between the reward of short-term success and long-term value creation. For information about the remuneration of the management bodies, see Business Report > Remuneration report.

The Sustainability strategy is examined and approved by the Group Executive Board and the Board of Directors. Results and the achievement of objectives are submitted to the Group Executive Board for verification at least once annually. This also comprises the Communication on Progress UN Global Compact and the Geberit Compliance Report, including the audit results with respect to the Code of Conduct. Key figures on occupational safety are presented quarterly to the Group Executive Board and on a regular basis to the Board of Directors.

In 2016, Geberit consulted an external Stakeholder Panel for the third time. Its mandate consisted of providing feedback on the sustainability strategy and sustainability communication, as well as the associated risks and opportunities. This input is used for the strategic review and continued development of the company. The next stakeholder panel is planned for 2018.

Based on the Organisational Regulations of the Board of Directors, the Audit Committee has implemented a comprehensive system for monitoring and controlling the risks linked to the business activities. This process includes risk identification, analysis, control and reporting.

Operationally, the Group Executive Board is responsible for controlling risk management. In addition, responsible persons are designated in the company for significant individual risks. These responsible parties decide on specific actions for risk mitigation and monitor their implementation. Every other year, the Internal Audit Department issues a risk report for the attention of the Board of Directors. Significant risks are also constantly discussed in the meetings of the Group Executive Board and Board of Directors, which take place on a regular basis.

For an overview of the Geberit compliance topics, see Business Report > Business and financial review > Financial Year 2017 > Compliance.

The impacts, risks and opportunities are discussed and reviewed by the Group Executive Board and Board of Directors annually in connection with the sustainability reporting and the Sustainability strategy.

Sustainability reporting is examined and approved by the Board of Directors and Group Executive Board as part of the integrated annual report.

The Board of Directors is available at any time to address the concerns of stakeholders and shareholders.

Matters brought forward by shareholders within the context of the General Meeting are dealt with in accordance with the Articles of Incorporation. Only a very small number of matters were submitted directly to the Board of Directors outside the General Meeting in 2017. It proved possible to discuss and to settle these matters directly with the individuals concerned. There are no significant matters outstanding at the present time.

Geberit publishes a detailed annual remuneration report, which discloses the precise points of its remuneration policy, see Business Report > Remuneration report.

Geberit publishes a detailed annual remuneration report, which discloses the precise points of remuneration paid to the Board of Directors and Group Executive Board, see Business Report > Remuneration report.

The remuneration to the Board of Directors and Group Executive Board disclosed in the detailed remuneration report addresses the concerns of stakeholders and shareholders, see Business Report > Remuneration report.

The ratio of the annual remuneration paid to the highest-paid employee to the average annual remuneration of all employees (excluding the highest-paid employee) was 21.4 in Switzerland, 6.2 in Germany, 4.9 in Austria and 4.8 in Italy.

The ratio of the percentage increase in annual remuneration paid to the highest-paid employee to the level of the percentage increase in annual remuneration for all employees (excluding the highest-paid employee) for 2017 cannot be reproduced as a figure. This is because the salaries of the highest-paid employees partly decreased whereas the annual remuneration paid to the rest of the workforce slightly increased.