3. Board of Directors

The Board of Directors bears responsibility for 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 legislation 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).

The Board of Directors of VP Bank consists of nine 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:

Details of other activities of the Board members and any vested interests may be found in their biographies in section 3.1.

VP Bank is not subject to the Swiss Ordinance against Excessive Compensation in Public Corporations (OAEC). From that point of view, it has not issued any statutory rules concerning the number of authorised activities. 

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 shall comprise 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).

The Board of Directors elects the Chairman and Vice-Chairman from amongst its members 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 proposed by the Executive Board for the parent bank and Group, on strate­gically important projects, on consolidated and individual-company financial statements, as well as on important personnel-related issues.

4. The Organisation and Business Rules in the Internet: www.vpbank.com/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. To be able to fulfil its duties in an optimal manner, the Board of Directors is supported by four committees: the Nomination & Compensation Committee, the Audit Committee, the Risk Committee and the Strategy & Digitalisation Committee. 

The tasks, powers of authority, rights and obligations of the various Committees are laid down in the Organisation and Business Regulations. In addition, the functions of the Audit Committee, the Strategy & Digitalisation Committee and the Risk Committee are governed by way of separate business regulations. 

Minutes are kept on the meetings and the matters dealt with by the committees at their respective meetings and submitted to the Board of Directors. In addition, the committee chairmen 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), Markus Thomas Hilti and Dr Gabriela Maria Payer. Pursuant to chapter 3.2 OBR, the Committee is primarily responsible for the following tasks: 

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 motions to the Board of Directors;

submitting motions to the Board of Directors on the composition of the Committees of the Board of Directors;

preparing and submitting motions to the Board of Directors concerning the appointment of the 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) for the attention of the Board of Directors;

submitting motions to the Board with regard to the compensation paid to the Chairman and other members of the Board of Directors. 

The Audit Committee comprises Michael Riesen (Chairman), Dr Beat Graf and Ursula Lang. The Audit Committee assists the Board of Directors in fulfilling the duties 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 (pursuant to OBR Section 3.3): 

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 as well as discussion thereof with the CFO, the Head of Group Internal Audit and representatives of the 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;

assessing the measures taken designed to ensure compliance with and observance of legal (e.g. compliance with capital-adequacy, liquidity and risk-diversification provisions) and internal provisions (compliance);

taking note significant interactions with the respective supervisory authorities and assessing the measures taken to implement the conditions imposed as well as assessing the appropriateness of the procedures implemented to ensure compliance with regulatory conditions imposed and of remedial action taken;

assessing the quality of the internal and external auditors, as well as the collaboration between the two sets of auditors;

defining the multi-year 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 advisory mandates they may have;

advising the Board of Directors on the appointment and removal of external auditors;

submitting motions to the Board of Directors for the appointment and removal of the Head of Group ­Internal Audit;

advising the Board of Directors on the appointment and removal of the Chief Financial Officer.

Ursula Lang (Chairwoman), Dr Beat Graf 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 (pursuant to OBR Section 3.4):

receiving and dealing with the reports of Group Risk as well as assessing the appropriateness of 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 (e.g. compliance with capital-adequacy, liquidity and risk-diversification provisions) and internal provisions (compliance);

taking note of significant interactions with the respective supervisory authorities and assessing the measures taken to implement the conditions imposed as well as assessing the appropriateness of the procedures implemented to ensure compliance with regulatory conditions imposed and of remedial action 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;
evaluating whether the incentives offered as part of the system of remuneration take into account the risk, equity, liquidity as well as the probability and timing of revenues.

advising the Board of Directors on the appointment or removal of the Chief Risk Officer.

Prof. Dr Teodoro D. Cocca (Chairman), Dr Christian Camenzind, Dr Florian Marxer und Dr Gabriela Maria Payer belong to the Strategy & Digitalisation Committee. The Strategy & Digitalisation Committee assists and advises the Board on strategic issues and projects. The following tasks, in particular, are incumbent on it (in accordance with OBR Section 3.5):

preparation of strategic issues for the attention of the Board of Directors;

in-depth handling of strategic issues (e.g. digitalisation in banking);

ensuring on-going steering and management processes in the area of strategy;

review (periodically and on an ad-hoc basis) of strategy (strategy review);

review of implementation of strategic measures (strategy controlling);

ensuring strategy is well embedded within the bank;

examining the strategic fit of mergers, acquisitions, cooperation partnerships, business cases etc.;

raising the outward and market orientation as well as the innovative capacity of the bank. 

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. In principle, the meetings consist of three parts: 

a Board-internal part;

a consultative part during which members of the Executive Board and Group Executive Management are also in attendance to present their proposals and exchange information;

a decision-taking part during which the Board of Directors arrives at its decisions. In order to be informed at first-hand, the CEO is also present during the decision-taking part of Board of Directors’ meetings. 

Specific topics addressed by the Board of Directors and its committees can require, when needed, 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 2017, the Board of Directors held nine ordinary meetings. In addition, the Board of Directors and Executive Board jointly conducted a full-day strategy workshop. 

The Nomination & Compensation Committee usually meets six to ten times per annum. When required, the CEO participates in the Nomination & Compensation Committee meetings in an advisory capacity. During 2017, the Nomination & Compensation Committee met on a total of fourteen occasions. 

The Audit Committee usually meets on five to eight occasions per annum, 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. For the purpose of addressing audit-specific topics, representatives of the external auditing firm (as a general rule, the Auditor-in-Charge) attend the meetings. Last year, the Audit Committee convened for seven ordinary meetings. At one joint meeting with the Risk Committee, an exchange of information took place with the Executive Board regarding the quality of internal control systems and other matters.

The Risk Committee usually meets on five to eight occasions per annum. The CRO, the Head of Group Internal Audit as well as the Head of Group Risk attend the meetings. Last year, the Risk Committee met for seven ordinary meetings. At one joint meeting with the Audit Committee, an exchange of information took place with the Executive Board regarding the quality of internal control systems and other matters.

The Strategy & Digitalisation Committee usually meets on six to eight occasions per annum. The CEO and representatives of the Group Executive Board attend the meetings. In 2017, the Strategy & Digitalisation Committee met for a total of seven meetings. 

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 four 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 (“The organisational structure of VP Bank Group” on page 17).

The Board of Directors and its committees have at their disposal various informational 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 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 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 committee and corresponding motions are forwarded to the Board of Directors for approval. The most recent reports undergo a comprehensive review at each Board meeting. 

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

 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.