The Board of Directors 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 operational management. Accordingly, the Board of Directors of VP Bank consists exclusively of non-executive members (i.e. members not actively involved in management).

3.1 Members of the Board of Directors

The Board of Directors of VP Bank consists of seven members. With the exception of the Chairman, no other member has served as a member of Group Executive Management, the Executive Board of VP Bank or the management of any Group company during the past three financial years.

As a bank, 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 Nomination & Compensation Committee
2.  Member of the Nomination & Compensation Committee
3.  Chairman of the Audit & Risk Management Committee
4.  Member of the Audit & Risk Management Committee

The other activities of the Board members and any relevant vested interests can be found in the biographies provided under section 3.1.

There are no interlocking directorships 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 under section 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 working methods of the Board of Directors are set out in the Articles of incorporation (Arts. 17 to 19) and in the Organisation and Business Rules (OBR Sections 2 to 4)3.

In collaboration with the Executive Board, the Board of Directors annually reviews 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 the Executive Board (parent bank and at Group level), on strategically important projects, on individual company and consolidated financial statements as well as on important personnel-related issues.

The Chairman – or, in his absence, the Vice Chairman – directly supervises and controls the Executive Board and Group Executive Management on behalf of the Board of Directors. 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 the Organisation and Business Rules (OBR Section 3). 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 for 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.

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

• Assisting the Chairman of the Board of Directors in the fulfilment of his management and co­ordination duties as well as for assisting the entire Board of Directors on 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 as to the compensation to be paid to the members of the Executive Board
• Dealing with fundamental issues concerning human resources policy (e.g. salary and bonus systems, management development, succession planning and staff welfare benefits) for the attention of the Board of Directors
• 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 Michael Riesen (Chairman), Fredy Vogt and Dr Daniel 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 of the OBR, the Audit & Risk Management Committee is responsible in particular for:

• Critically assessing financial reporting (individual company and consolidated financial statements, cash flow statements, interim financial statements, etc.) as well as discussion thereof with the CFO, the Head of Group Internal Audit and representatives of the Group’s banking-law auditing firm
• 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 the enforcement of legal and internal regulations
• Assessing 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 banking-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
• 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 meeting. Generally, the meetings consist of three parts:

• A Board-internal part
• A consultative part during which members of Group Executive Management and the Executive Board are also in attendance to present their proposals and exchange information
• 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 banking-law auditors, as well as internal or external specialists and advisors). 

During 2014, the Board of Directors held eight ordinary and five extraordinary meetings. In add­ition, the Board of Directors and Executive Board jointly conducted a full-day strategy workshop. All Board meetings were held with a full complement of its members.

The Nomination & Compensation Committee usually meets six to ten times annually. When required, the CEO participates in the Nomination & Compensation Committee meetings in an advisory capacity. 

In 2014, the Nomination & Compensation Committee met on a total of six occasions. All Nomi­nation & Compensation Committee meetings were held with a full complement of its members. 

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 Executive Board 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 seven ordinary meetings and two extraordinary meetings. Except for one meeting, the Audit & Risk Management Committee meetings were held with a full complement of its members. 

1. Retired from the Board of Directors as of 25 April 2014
2. Member of the Board of Directors from 25 April 2014

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 services to VP Bank. From 1961 to 1984, 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 the overall management, supervision and control of the Executive Board. 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 Section 2.2 to 2.4 of the OBR. The tasks and competencies of the two Board committees are described in Section 3 of the OBR.

The Board of Directors has delegated to the Executive Board the responsibility for the operational management of VP Bank Ltd as well as the overall management, supervision and control of the subsidiary companies of VP Bank Group. The tasks and competencies of the Executive Board are laid down in the Articles of incorporation (Art. 21) and in the OBR. Section 5 of the OBR contains more detailed provisions regarding the Executive Board / Group Executive Management.

The segregation of functions between the Board of Directors and the Executive Board / Group Executive Management 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. These instruments include 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). The latter also include quanti­tative and qualitative information as well as budget variances, 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 as a whole. These reports enable the Board of Directors at all times to gain a picture of significant developments and the risk situation. Those reports that lie within the scope of the 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.

On the basis of the reports of the Executive Board, the Board of Directors reviews the implemen­tation of business strategies and strategy controlling twice a year.

A further important instrument in assisting the Board of Directors in fulfilling its supervisory and control function is Internal Audit 4, which conducts its activities in compliance with the internationally recognised standards of the Institute for Internal Auditing Switzerland 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 of Directors receives all minutes of the Executive Board meetings. In addition, he exchanges information with the CEO on a weekly basis as well as with the other Executive Board members.