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 eight members. No Board member has belonged to the 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 is also true for the members of the Board of Directors as well as for 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:

From left to right: Dr Beat Graf, Markus Thomas Hilti, Dr Guido Meier, Fredy Vogt, Prof. Dr Teodoro D. Cocca, Dr Daniel H. Sigg, Michael Riesen, Dr Florian Marxer

Details of other activities of the Board members and any vested interests may be found in their biographies set out in point 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 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 modus operandi 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)4.

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.

4. The Organisation and Business Rules in the Internet:  www.vpbank.com → Investors & Media → Publications → Regulations

The Chairman – or, in his absence, the Vice-Chairman – conducts in the name of the Board of Directors the direct supervision and control of the Executive Board and Group Executive Management. In order to be able to fulfil its duties in an optimal manner, the Board of Directors is supported by three committees: the Nomination & Compensation Committee, the Audit Committee and the Risk Committee. As of 1 November 2015, the tasks of the Audit & Risk Management Committee were divided up into the Audit Committee and the Risk Committee. 

The tasks, competencies, rights and obligations of the Nomination & Compensation Committee, the Audit Committee and the Risk Committee are laid down in the Organisation and Business Rules. In addition, the functions of the Audit and Risk Committees are governed by way of business regulations.

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 the 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 OBR, the 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 on matters of corporate governance, organisation and 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, the Audit & Risk Management Committee and the Audit and Risk Committees;
• preparing and submitting proposals for the post 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 personnel policy (e.g. salary and equity-partici­pation 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 other members of the Board of Directors.

The Audit & Risk Management Committee comprised Michael Riesen (Chairman), Fredy Vogt and Dr Daniel Sigg. The Audit & Risk Management Committee assisted 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. 

The Audit Committee comprises Michael Riesen (Chairman), Fredy Vogt and Dr Daniel H. Sigg. The Audit 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. The Audit Committee is responsible in particular for the following tasks:

• receiving and dealing with the reports of Group Internal Audit and the Banking-Law Auditors as well as assessing the appropriateness of the procedures deployed to remedy the pending matters arising from the audit;   
• critically assessing financial reporting (individual company 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 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;
• evaluating the measures taken to ensure compliance with and the enforcement of legal and internal regulations;
• taking note of significant interactions with the respective supervisory authorities as well as assessing the corrective action taken to implement any conditions imposed;
• assessing the quality of the internal and external auditors, as well as the collaboration between the two sets of auditors;
• defining the audit plan of Group Internal Audit, as well as informing themselves as to and discussing the audit planning of the Group and Banking-Law auditors;
• assessing the performance, fees paid to and independence of the external auditors, especially in terms of the compatibility of their auditing activities with any consulting mandates they may have;
• advising the Board of Directors on the appointment and removal of external auditors;
• submitting proposals to the Board of Directors for the appointment and removal of the Head of Group Internal Audit.

Dr Daniel H. Sigg (Chairman), Fredy Vogt and Michael Riesen belong to the Risk Committee. The Risk 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. The Risk Committee is responsible in particular for the following tasks:

• receiving and dealing with the reports on group risk as well as assessing the procedures deployed to manage and monitor risks;  
• critically assessing financial, business, reputational and operational risks as well as discussing these with the Chief Risk Officer and the Head of Group Risk;
• assessing the functional capability of risk management and monitoring as well as of the internal control system;
• assessing the measures taken designed to ensure compliance with and observance of legal provisions (such as, for example, compliance with capital-adequacy, liquidity and risk-diversifi­cation provisions) and internal prescriptions (compliance);
• informing themselves as to significant interactions with the respective supervisory authorities as well as assessing the measures taken to implement conditions imposed by the latter as well as assessing the appropriateness of the procedures designed to ensure compliance with conditions imposed by supervisory authorities and of measures taken;
• assessing the quality (effectiveness) of risk governance as well as the cooperation between Risk Management, Risk Monitoring, Group Executive Management, Risk Committee and the Board of Directors; 
• assessing whether the incentives offered by the Board of Directors as part of the system of remuneration take into account the risk, equity, liquidity as well as the probability and timing of revenues.

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

• a Board-internal part;
• a consultative part during which members of the Group Executive Management and 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 at first-hand, 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 (executives of VP Bank Group, representatives of the Banking-Law auditors, as well as internal or external specialists and advisors). 

During 2015, the Board of Directors held eight ordinary meetings and one extraordinary meeting. In addition, the Board of Directors and Executive Board jointly conducted a full-day strategy workshop. With one exception, all Board meetings were held with a full complement of 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. During 2015, the Nomination & Compensation Committee met on a total of seven occasions. At three meetings of the Nomination & Compensation Committee, one member did not participate. 

The Audit & Risk Management Committee (as from 1 November 2015 split into Audit Committee and Risk 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 the Head of Group Internal Audit attend the 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. Last year, the Audit & Risk Management Committee met for five ordinary meetings and one extra­ordinary meeting, and the Audit and Risk Committees each met for five ordinary meetings and one joint extraordinary meeting. The meetings of the Audit & Risk Management Committee and of its successor committees were held with a full complement of members.

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 1990, Dr Heinz Batliner was Manager/General Manager and Head of the Management Board, and from 1990 through 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 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 2.2–2.4 OBR. The tasks and competencies of the two Board committees are described in Section 3 OBR.

The Board of Directors has delegated to the Executive Board the responsibility for the operational management of VP Bank 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. The OBR contains more detailed provisions regarding the Executive Board/Group Executive Management in Section 5 thereof.

The segregation of functions between the Board of Directors and the Executive Board / Group Executive Management is also evident 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). The latter also include quanti­tative and qualitative information, as well as budget variances, period-specific and multiyear comparisons, key performance indicators for management purposes, and risk analyses, all of which cover the parent bank, the subsidiaries and the Group in aggregate. 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 tasks of the Audit or Risk Committees are dealt with by the respective body, and corresponding proposals are forwarded to the Board of Directors for approval. The most recent reports undergo a comprehensive review at each Board meeting.

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

A further important instrument to assist the Board of Directors in fulfilling its supervisory and control function is Internal Audit, which conducts its activities in compliance with the inter­nationally recognised standards of the Swiss Association of Internal Auditors 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 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.