3. Board of Directors

The Board of Directors (BoD) bears responsibility for determining the medium- to long-term strategic orientation of VP Bank Group. Moreover, 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 operational management. Accordingly, the Board of Directors of VP Bank Group consists exclusively of non-executive members (i.e. members not actively involved in management).

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 directorships between the Board members of VP Bank Group 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 amongst 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 Group Executive Management, the Board of Directors annually verifies the Group’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. The Board of Directors decides on the annual budget as proposed by Group Executive Management (parent bank and at Group level), on strategically important projects, stand-alone 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 Group Executive Management and the 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 Nomination & Compensation Committee and the Audit & Risk Management Committee.

The tasks, competencies, rights and obligations of the 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 dealt with by both committees at their respective meetings and are forwarded to the attention of the Board of Directors. In addition, the chairmen of both committees inform the Board of Directors at the following Board meeting about all important matters as part of a standard agenda item.

Nomination & Compensation Committee (formerly Committee of the Board of Directors)

The Nomination & Compensation Committee currently comprises the following members: Fredy Vogt (Chairman), Dr Guido Meier, Markus Thomas Hilti and Prof. Dr Teodoro D. Cocca. Pursuant to Section 3.2 OBR, the Nomination & Compensation Committee is primarily responsible for the following:

• assisting the Chairman of the Board of Directors in the fulfilment of his management and coord­ination duties as well as the entire Board of Directors in matters of corporate governance, organisation and the monitoring of business developments;
• 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 Nomination & Compensation Committee and Audit & Risk Management Committee;
• preparing and submitting proposals for the posts of Chief Executive Officer and – in collaboration with the Chief Executive Officer – of the remaining members of the Executive Board;
• submitting proposals to the Board regarding the compensation to be paid to the members of the Executive Board;
• dealing with fundamental issues concerning the 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; and
• submitting proposals to the Board with regard to the compensation paid to the Chairman and other members of the Board of Directors.

The Audit & Risk Management Committee currently comprises Walo Frischknecht (Chairman), Fredy Vogt and Dr Daniel H. Sigg. 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 parent bank 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 (stand-alone and consolidated financial statements, statement of cash flows, interim financial statements, etc.) as well as discussion thereof with the CFO, the Head of Group Internal Audit and representatives of the Group’s bank law auditors;
• deciding whether the stand-alone and the consolidated financial statements can be recommended to the Board of Directors for submission to the annual general meeting of shareholders;
• assessing the functional effectiveness 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 bank law 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; and
• 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 convenes eight to ten times per year for ordinary meetings as well as for one strategy meeting in camera. Generally, Board meetings consist of three parts: 

• a Board-internal part;
• a consultative part during which members of Group Executive Management and of the 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 to attend (managers of VP Bank Group, representatives of the bank law auditors, as well as internal or external specialists and advisors). 

During 2013, the Board of Directors held eight ordinary and five extraordinary meetings. In add­ition, the Board and Group Executive Management 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 its members.

As a general rule, the Nomination & Compensation Committee convenes six to seven times a year. When the need arises, the CEO takes part in an advisory capacity in the meetings of the Nomin­ation & Compensation Committee. In 2013, the Nomination & Compensation Committee held a total of nine 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 Group Executive Management 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) participate in the meeting. 

Last year, the Audit & Risk Management Committee met for eight ordinary meetings and two extraordinary meetings.

Fürstlicher Kommerzienrat Dr Heinz Batliner, Vaduz, has been Chairman Emeritus of VP Bank Group since 1996. The Board of Directors bestowed this honorary title upon him for his services to VP Bank Group. From 1961 to 1990, Dr Heinz Batliner was Manager/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 Group Executive Management. 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 to 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 VP Bank Group Vaduz is responsible for the operative management of the parent bank. The tasks and competencies of the Executive Board are laid down in the Articles of Incorporation (Art. 21) and in the OBR. The OBR contains more detailed provisions regarding the Executive Board in Section 5 and regarding Group Executive Management in Section 6. 

The segregation of functions between the Board of Directors and Group Executive Management / 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 stand-alone 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 parent bank, the subsidiaries and the Group in aggregate. These reports enable the Board of Directors to gain a picture of significant developments and the risk situation at VP Bank Group at any point in time. The reports lying 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.

The Board of Directors reviews the implementation of business strategies and strategy controlling twice a year on the basis of Group Executive Management’s reporting.

A further important instrument to assist the Board of Directors in fulfilling its supervisory and control function is Internal Audit3, 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. 

The Chairman of the Board receives all minutes of Group Executive Management and Executive Board meetings. In addition, he exchanges information with the CEO as well as with the other Group Executive Management and Executive Board members on a weekly basis.