3. Board of Directors

The Board of Directors (BoD) bears responsibility for determining the medium- to long-term strategic orientation of VP Bank Group. It is responsible for the overall management, supervision and control of the company. Liechtenstein law provides for a clear separation of the overall management, supervision and control duties performed by the Board of Directors, and the duties performed by operative management. Accordingly, the Board of Directors of VP Bank consists exclusively of non-executive members (i.e. members not actively involved in management).

The Board of Directors of VP Bank consists of eight members. With the exception of the Chairman, no other member has belonged to the GEM, the Executive Board of VP Bank or Executive Board of any Group company during the past three financial years.

As a financial institution, VP Bank maintains business relationships with numerous domestic and foreign companies. This also applies to the members of the Board of Directors as well as to individuals or legal entities that are closely related to the Board members. 

The following table provides information on the names, ages, functions, joining dates and remaining terms of office of the Board members:

1. Chairman of the Committee of the Board of Directors
2. Member of the Committee of the Board of Directors
3. Chairman of the Audit & Risk Management Committee
4. Member of the Audit & Risk Management Committee

Fredy Vogt (born 11 September 1958; citizen of Liechtenstein) has been the Chairman of the Board since April 2012. He is also Chairman of the Committee of the Board of Directors and a member of the Audit & Risk Management Committee of VP Bank. 

• Educational background: Swiss Certified Expert in Accounting and Controlling (1984); Swiss Certified Public Accountant (1988); since 1989, individual continuing education studies focused on controlling, international accounting, taxes, operational bookkeeping and management accounting, risk management, employee/corporate leadership and coaching.
• Professional background: Liechtensteinische Landesbank, Vaduz; 1983–1987 lead auditor at AREVA AG, Vaduz; 1987 joined VP Bank as Deputy Head of Internal Audit; 1990 as Head of Controlling; 1996 as GEM member (responsible for finance, corporate clients and intermediaries, trading, real estate and security); from 2003 to 2012 CFO. In addition, he also acted as CEO ad interim from 25 August 2009 to 31 March 2010.
• Other (board of directors) mandates: none.
• Other activities and vested interests: member of the board of trustees of Privatbank- Personalstiftung as well as the board of trustees of the VP Bank Foundation.

Dr iur. Guido Meier (born 8 January 1948; citizen of Liechtenstein) is Vice Chairman of the Board of Directors and a member of the Committee of the Board of Directors of VP Bank.

• Educational background: studied law at the University of Basel; graduated with a doctorate degree in 1977; admission to the bar in 1979.
• Professional background: chairman of the council of trustees of Allgemeines Treuunternehmen (ATU), Vaduz; partner at Meier & Kieber Attorneys-at-Law, Vaduz.
• Other (board of directors) mandates: none.
• Other activities and vested interests: 1985 to 1993, part-time judge at the Liechtenstein Constitutional Court; 1993 to 1997, member of Parliament; since 1986, chairman of the Liechtenstein Institute; since 2008, chairman of the council of trustees of Stiftung Fürstlicher Kommerzienrat Guido Feger, Vaduz (see Point 1.2.).

Lic. oec. Markus Thomas Hilti (born 3 January 1951; citizen of Liechtenstein) is a member of the Committee of the Board of Directors of VP Bank.

• Educational background: 1973 to 1976, studies in business administration, majoring in finance and accounting, at the University of St. Gallen; graduated as lic. oec. HSG.
• Professional background: 1977 to 1980, auditor with Coopers & Lybrand, White Plains NY; 1981 to 1990, various posts in the fields of finance, product management and sales, as well as member of senior management (responsible for product management, purchasing, development, quality assurance as well as head of the Tulsa factory) of Hilti Western Hemisphere, Tulsa/USA.
• Other (board of directors) mandates: none.
• Other activities and vested interests: 1990 to 2010, Administrative Fiduciary of the Martin Hilti-Familientreuhänderschaft, Schaan; since 2010, protector of the Martin Hilti Familientreuhänderschaft, Schaan, as well as a trustee of U.M.M. Hilti-Stiftung, Schaan (see Point 1.2.).

Roland Feger (born 26 December 1956; citizen of Liechtenstein) is a member of the Audit & Risk Management Committee of VP Bank.

• Educational background: Swiss Federal Examination in Accounting; diploma as Swiss Certified Fiduciary Expert.
• Professional background: activities in the field of finance and accounting at various companies in Switzerland and Liechtenstein; since 1983, various management functions within Allgemeines Treuunternehmen (ATU), Vaduz, and since 2000, chairman of the directorate of Allgemeines Treuunternehmen (ATU), Vaduz.
• Other (board of directors) mandates: none.
• Other activities and vested interests: member of the council of trustees of Stiftung Fürstlicher Kommerzienrat Guido Feger (see Point 1.2.), as well as chairman of the council of trustees of Privatbank-Personalstiftung.

Walo Frischknecht (born 7 October 1946; Swiss citizen) is Chairman of the Audit & Risk Management Committee of VP Bank.

• Educational background: diploma in business administration KSZ (1976) ; Swiss Certified Public Accountant (1982); Swiss Certified Expert in Accounting and Controlling (1988); Controller’s Diploma of the Controller-Akademie, Gauting, Germany (1991).
• Professional background: 1976 to 1983, PriceWaterhouse, Zurich; 1983 to 1986, Revision AG, Zurich; 1986 to 1991, auditor and head of accounting and controlling at Bank Leu AG, Zurich; 1991 to 1995, group controller at Leu Holding, Zug; 1996 to 2000, group controller at BZ Trust AG, Wilen SZ; 2001 to 2003, chairman of general management at BZ Bank AG, Wilen SZ; since 2003, independent management consultant (Walo Frischknecht & Partner GmbH, Lachen).
• Other (board of directors) mandates: vice chairman and head of the Audit Committee of Clientis AG, Bern; chairman of the board of directors of Carpen AG, Zurich; chairman of the board of directors of Fundus Treuhand AG, Zurich; member of the board of directors of Allhost Holding, Lachen SZ. 
• Other activities and vested interests: member of the council of trustees of Treuhand-Personalstiftung, Vaduz.

Dr iur. Daniel H. Sigg (born 22 September 1956; Swiss citizen, resident of New York).

• Educational background: studied law at the University of Zurich; Dr iur. degree in 1984.
• Professional background: 1984 to 1985, financial analyst at Credit Suisse Zurich and New York; 1985 to 1987, activities in the fixed-income area at Credit Suisse First Boston Inc.; 1987 to 1990, vice president and head of international securities trading and sales at Swiss American Securities Inc.; 1990 to 1997, member of senior management and CFO of BEA Associates; 1997 to 1999, global head of institutional asset management at UBS; 2000 to 2005, chairman of Times Square Capital Management Inc.; since 2006, consultant in the field of financial services at DHS International Advisors LLC.
• Other (board of directors) mandates: Bellevue Group AG, Zurich; Auerbach Grayson & Co., New York; various investment funds.
• Other activities and vested interests: board member and treasurer of the Swiss Institute, New York; board member of the Resurrection Episcopal Day School, New York.

Prof. Dr Teodoro D. Cocca (born 25 July 1972; Swiss citizen).

• Educational background: undergraduate and graduate studies in economics at the University of Zurich; Dr oec. degree (2001). 
• Professional background: 2001 to 2006, senior assistant and senior researcher at the Swiss Banking Institute of the University of Zurich; 2003 to 2004, research activities with Prof. Ingo Walter at the Stern School of Business, New York/USA; 2005, appointment to professorship in business administration, with focus on asset management, at Johannes Kepler University in Linz; since 2006, professor for Asset Management at Johannes Kepler University in Linz; since 2010, Adjunct Professor at the Swiss Finance Institute in Zurich; since 2011, dean of the Social and Economic Sciences Faculty of Johannes Kepler University in Linz.
• Other (board of directors) mandates: vice chairman of the board of Geneva Group International, Zurich.
• Other activities and vested interests: member of the Research Institute for Banking and Finance, Johannes Kepler University Linz; member of the investment committees of various Austria investment funds; chairman of the annual European Private Banking Summit, Zurich; proprietor of Cocca Asset Management KG, Weißkirchen an der Traun.

Max E. Katz (born 24 April 1955; Swiss citizen) is a member of the Audit & Risk Management Committee of VP Bank.

• Educational background: Höhere Wirtschafts- und Verwaltungsschule (HWV), Zurich, with a degree in business administration (1978).
• Professional background: 1978 to 1981, product manager at Unilever (Elida Cosmetics AG), Zurich; 1981 to 1987, regional controller at Jacobs Suchard AG, Zurich; 1987 to 1991, director of finance & informatics and member of senior management at Effems AG (Mars Incorporated), Zug; 1991 to 1995, director of finance & informatics and member of senior management at Hürlimann Holding AG, Zurich; 1995 to 2010, CFO and member of group management at Kuoni Reisen Holding AG, Zurich. In 2008, he also headed Kuoni Group as it CEO on an ad interim basis.
• Other (board of directors) mandates: vice chairman of the board and head of the audit committee of Charles Vögele Holding AG, Pfäffikon SZ; chairman of the board of Best of Switzerland Tours AG, Zurich; member of the board of directors of PDM Tourismus Holding AG, Zug; chairman of the board of directors of Seventheaven Schweiz AG, Zurich.
• Other activities and vested interests: chairman of the Association of Swiss Travel Agents, Zurich.

The other activities of the Board members and any relevant vested interests can be found in the biographies (shown in Point 3.1).

There are no interlocking directorates between the Board members of VP Bank and any other listed companies.

Details concerning the election and terms of office of the current members of the Board of Directors can be found in the analysis (shown in Point 3.1) Pursuant to Art. 16 of the Articles of Incorporation, the Board of Directors comprises at least five members who are elected for a term of three years. The members of the Board of Directors are elected individually (re-election is permitted).

From among its members, the Board of Directors elects the Chairman and Vice Chairman for a term of three years (re-election is permitted).

The internal organisation and work methods of the Board of Directors are set out in the Articles of Incorporation (Art. 17 to 19) and in the Organisation and Business Rules (OBR Sections 2 to 4) 2.

In collaboration with the GEM, the Board of Directors annually verifies the company’s strategy in keeping with the provisions of the Articles of Incorporation and OBR, and establishes the medium- and long-term objectives as well as the management guidelines of VP Bank Group. At the proposal of the GEM, the Board of Directors decides on the annual budget (Head Office and at Group level), on strategically important projects, individual company and consolidated financial statements, as well as on important personnel-related issues.

The Chairman – or in his absence the Vice Chairman – conducts on behalf of the Board of Directors the direct supervision and control of the GEM and Executive Board. In order to be able to fulfil its duties in an optimal manner, the Board of Directors is supported by two committees: the Committee of the Board of Directors (Nomination & Compensation Committee) and the Audit & Risk Management Committee.

The tasks, competencies, rights and obligations of the Committee of the Board of Directors (Nomination & Compensation Committee) and the Audit & Risk Management Committee are laid down in Section 3 of the Organisation and Business Rules (OBR). In addition, the function of the Audit & Risk Management Committee is regulated in detail in a specific set of rules. 

Minutes are kept on the matters addressed by both committees at their respective meetings and are forwarded to the attention of the Board of Directors. Within the framework of a standard agenda item addressed at the following Board meeting, the chairmen of both committees inform the Board of Directors and GEM about all important matters.

The Committee of the Board of Directors currently comprises three members: Fredy Vogt (Chairman), Dr Guido Meier and Markus Thomas Hilti. The Committee of the Board of Directors also functions as the Nomination & Compensation Committee. Pursuant to Section 3.2 OBR, the Committee of the Board of Directors is primarily responsible for the following:

• assisting the Chairman in the fulfilment of his management and coordination tasks as well as the entire Board of Directors in issues concerning corporate governance, organisation and the monitoring of business developments;
• preparing key strategic matters for the attention of the Board of Directors (new business fields, acquisitions, cooperative ventures, etc.);
• reviewing the strategy implementation (strategy controlling) for the attention of the Board of Directors. 

In its capacity as Nomination & Compensation Committee, the Committee of the Board of Directors also attends to the following tasks:

• defining the criteria for the election of Board members; performing the evaluation and submitting the related proposals to the Board of Directors;
• submitting proposals to the Board of Directors concerning the composition of the Committee of the Board of Directors and Audit & Risk Management Committee;
• preparing and submitting proposals for the post of CEO and – in collaboration with the CEO – the members of the GEM and Executive Board, including their conditions of employment and compensation;
• dealing with fundamental issues concerning human resources policy (e.g. salary and bonus systems, management development, succession planning, staff welfare benefits, etc.) for the attention of the Board of Directors;
• submitting proposals to the Board with regard to the compensation paid to the Chairman and the other Board members.

The Audit & Risk Management Committee currently comprises Walo Frischknecht (Chairman), Fredy Vogt, Roland Feger and Max E. Katz. The Audit & Risk Management Committee assists the Board of Directors in fulfilling the tasks assigned to it under the Banking Act with regard to the overall management, supervision and control of the Head Office and of VP Bank Group. Pursuant to Section 3.3 OBR, the Audit & Risk Management Committee is responsible in particular for the following tasks:

• critically assessing financial reporting (individual company and consolidated financial statements, statement of cash flow, interim financial statements, etc.) as well as discussing the related matters with the CFO, the Head of Group Internal Audit and representatives of the company’s statutory auditors;
• deciding whether the individual-company and consolidated financial statements can be recommended to the Board of Directors for submission to the annual general meeting of shareholders;
• assessing the functional capability of the internal control system, including risk and cash management;
• evaluating the measures taken to ensure compliance with and enforcement of legal and internal regulations;
• judging the quality of the internal and external auditors, as well as the collaboration between the two;
• defining the audit plan of Group Internal Audit, as well as taking note of and discussing the audit planning of the Group and statutory auditors;
• assessing the performance, compensation and independence of the external auditors, especially in terms of the compatibility of their auditing activities with any consulting mandates they may have;
• submitting proposals to the Board of Directors for the appointment of the Head of Group Internal Audit.

At the invitation of the Chairman, the Board of Directors normally meets eight to ten times per year for meetings as well as for one strategy conclave. Generally, the meetings consist of three parts: 

• a Board-internal part;
• a consultative part during which members of the GEM and Executive Board are also in attendance to present their proposals and exchange information; and
• a decision-making part during which the Board of Directors arrives at its resolutions; in order to be informed on a first-hand basis, the CEO is also present during this part.

Specific topics addressed by the Board of Directors and its committees can require that further individuals are called upon (managers of VP Bank Group, representatives of the statutory auditors, as well as internal or external specialists and consultants). 

During the 2012 financial year, the Board of Directors held ten ordinary and three extraordinary meetings. In addition, the Board and GEM jointly conducted a full-day strategy workshop. With the exception of two meetings, each with one absence, and one meeting with two absences, the Board meetings were held with a full complement of members.

As a general rule, the Committee of the Board of Directors (Nomination & Compensation Comittee) holds six to ten meetings per year. The CEO normally takes part in these NCC meetings in an advisory capacity. 

In 2012, the Nomination & Compensation Committee held a total of ten meetings.

The Audit & Risk Management Committee usually holds five to eight meetings per year, with the meeting dates being set to accommodate the needs arising from specific tasks (closing of accounts, financial reporting, auditors’ reports, etc.). The CFO and Head of Group Internal Audit each take part in these meetings. At one meeting, there is an exchange of information with the GEM regarding the quality of internal control systems and other matters. For the purpose of addressing audit-specific topics, representatives of the external auditing firm (as a general rule, the Auditor in Charge) are invited to attend. 

In 2012, the Audit & Risk Management Committee met for six ordinary meetings and one extraordinary meeting.

Fürstlicher Kommerzienrat Dr Heinz Batliner, Vaduz, has been Chairman Emeritus of VP Bank since 1996. The Board of Directors bestowed this honorary title upon him for his outstanding services on behalf of VP Bank. From 1961 to 1990, Dr Heinz Batliner was General Manager and Head of the Management Board, and from 1990 to 1996 Chairman of the Board of Directors.

The Board of Directors is the corporate body in charge of overall management, supervision and control of the GEM. It bears ultimate responsibility for the strategic direction of VP Bank Group. 

The powers and duties of the Board of Directors are laid down in detail in Art. 17 of the Articles of Incorporation as well as in Sections 2.2–2.4 OBR. The tasks and competencies of the two Board committees are described in Section 3 OBR.

The Board of Directors has delegated responsibility for the overall management, supervision and control of the subsidiary companies of VP Bank Group to Group Executive Management. The Executive Board of the Head Office is responsible for the operative management of VP Bank Vaduz. The tasks and competencies of the Executive Board are laid down in Articles of Incorporation (Art. 21) and in OGR. The OGR contains more detailed provisions for the Executive Board in Section 5 and for the GEM in Section 6. 

The separation of functions between the Board of Directors and the GEM / Executive Board can also be seen in the organisational chart  (“Structure of VP Bank Group”).

The Board of Directors and its committees have at their disposal various information and control instruments for managing and supervising the activities of the Executive Board. Among those instruments are the strategy process, medium-term planning, the budgeting process and internal reporting. 

The members of the Board of Directors regularly receive various reports: monthly financial reports, risk-controlling reports, as well as periodic reports on the quarterly, semi-annual and annual financial statements (consolidated and individual company accounts). They also include quantitative and qualitative information, as well as budget variances, benchmark comparisons, period-specific and multi-year comparisons, key performance indicators for management and risk analyses, all of which cover the Head Office, the subsidiaries and the Group in general. These reports enable the Board of Directors at all times to gain a picture of significant developments and the risk situation at VP Bank. The reports that lie within the scope of tasks of the Audit & Risk Management Committee are addressed by that body, and corresponding proposals are forwarded to the Board of Directors for approval. The latest reports undergo a comprehensive review at each Board meeting.

Verifying and controlling the implementation of the company’s strategy is a task of the Committee of the Board of Directors, but the matter is also addressed by the Board itself.

A further key instrument to assist the Board of Directors in fulfilling its supervisory and control function is the Internal Audit 3 unit, which conducts its activities in compliance with the internationally recognised standards of the Institute for Internal Auditing Switzerland (IIAS) and the Institute of Internal Auditors (IIA). The duties and powers of Internal Audit are laid down in a specific set of rules. As an independent body, it examines in particular the internal control systems, management processes and risk management. 

In addition, the Chairman of the Board receives all minutes of the GEM and Executive Board meetings. He also exchanges information with the CEO on a weekly basis as well as with the other GEM and Executive Board members.