Board of Directors
Composition of the Board of Directors
Based on the BoD’s own criteria and in accordance with the Swiss Code, the Nomination and Compensation Committee (NCC) seeks appropriate professional backgrounds and experience as well as diversity among the members of the BoD, including gender diversity. The BoD does not consider age or tenure limits as being appropriate measures to drive the Board's development process.
As at 31 December 2019 the BoD consisted of the following eleven members
|
Name |
Nationality |
Born |
First elected |
Significant shareholder |
Education |
Background |
|
|
|
|
|
|
|
|
|
Daniel von Stockar Chairman |
Swiss |
1961 |
2013 |
Yes |
Economics |
Entrepreneur, Founder SoftwareONE |
|
Beat Curti Vice-Chairman |
Swiss |
1937 |
2013 |
Yes |
Business and economics |
Entrepreneur, Founder SoftwareONE |
|
Peter Kurer Lead Independent Director |
Swiss |
1949 |
2013 |
No |
Law |
Former Chairman of Sunrise and UBS |
|
René Gilli |
Swiss |
1958 |
2013 |
Yes |
Economics and information technology |
Founder SoftwareONE |
|
Johannes Huth |
German |
1960 |
2015 |
Yes 3) |
Economics |
Head EMEA, KKR |
|
Jean-Pierre Saad |
Belgian |
1980 |
2015 |
Yes 3) |
Engineering, computer and communications |
Technology and telecom investments, KKR |
|
Andreas Fleischmann |
Austrian |
1967 |
2018 1) |
Yes 4) |
Social sciences, economics, finance |
Chairman, Raiffeisen Informatik |
|
Marina Nielsen |
Swiss |
1976 |
2018 1) |
Yes |
Business |
Real estate management |
|
Marie-Pierre Rogers |
Spanish |
1960 |
2019 2) |
No |
Business |
Leader Board Practice, Spencer Stuart Switzerland |
|
Timo Ihamuotila |
Finnish |
1966 |
2019 2) |
No |
Economics and finance |
CFO, ABB Ltd |
|
José Alberto Duarte |
Portuguese |
1968 |
2019 2) |
No |
Accounting, management, marketing |
CEO, Infovista |
1) These BoD members were elected by the EGM held on 20 November 2018.
2) These BoD members were elected by the EGM held on 10 October 2019.
3) Representing KKR (see section Group structure and shareholders for detailed information)
4) Representing Raiffeisen-Holding Niederösterreich-Wien (see section Group structure and shareholders for detailed information)
Individual Board members
Duties and responsibilities of the Board of Directors
The legal foundation of the BoD’s responsibilities is provided by Art. 716a of the Swiss Code of Obligations.
The BoD has a strong supervisory role and has to make a number of key decisions in the areas of strategy, finance and personnel in accordance with the law, the AoI and the OrgR. In addition, it needs to provide support, advice and encouragement to management. Striking the right balance between supervision, decision-making and support is a challenge for the BoD and requires tailored company processes outlined herein.
The BoD as a whole, its committees and each Board member aim to contribute to the achievement of these objectives, with BoD members acting as an example for the entire company in driving crisp, clear and reasoned decision-making in a professional manner.
The overall guiding principle for the BoD is full accountability to all of shareholders and stakeholders of SoftwareONE and a style marked by a culture of openness and mutual respect.
The BoD meets in person six times per year (four quarterly report meetings, a strategy off-site, and a medium term planning and budgeting meeting). The strategy meeting includes cultural aspects such as the SoftwareONE Family, the SoftwareONE Foundation or corporate social responsibility such as how to drive cultural change to foster good corporate governance in general. Further focus is on company performance and integrity as well as, in relation to external growth such as mergers and acquisitions, on how to accelerate integration. In addition, a call with the BoD members is held to approve the motions of the Audit Committee (AC) for the year-end reporting. Extraordinary meetings are held if and when urgent decisions are required.
Corporate social responsibility
The BoD of SoftwareONE is committed to the values set out in the company’s CoC. First and foremost, this includes responsible corporate citizenship and a broad discussion with its key stakeholders to foster long-term, sustainable and inclusive value generation. The foundations of these commitments lie in SoftwareONE’s seven core values, which define its corporate culture and the way the company intends to conduct its business. Together with the EB, the BoD works towards identifying and regularly assessing targets in terms of culture, processes and policies not only for financial, but also for material non-financial issues. These may include topics such as business ethics and conduct, environmental awareness, data security, employee engagement, diversity and inclusion as well as general reputational risk management. SoftwareONE has summarized the approach to and integration of these values in a CoC for employees and Board members and a CoC for business partners. These are guiding principles that shape SoftwareONE's people's conduct as loyal, flexible, motivated, open individuals who accept responsibility for their own actions and always behave ethically, with integrity and as good citizens. The BoD with the support of the Audit and the Nomination and Compensation Committee regularly reviews the company’s initiatives, addressing these material issues and includes these topics regularly in its meeting agenda.
Interaction with shareholders and stakeholders
In working towards a sustainable business and addressing the material non-financial issues raised above, a key mandate of the BoD is to build and maintain an ongoing dialog with its shareholders and other stakeholders. The processes to build these various relationships started with the company’s IPO in October 2019 and will be further developed and institutionalized going forward.
The engagement discussions with investors and proxy advisors outside financial and strategy matters such as governance, compensation and corporate social responsibility will generally be conducted by the Chairperson of the BoD who may be supported by the Lead Independent Director and the Chairperson of the Nomination and Compensation Committee whenever appropriate.
Specific Board activities during the reporting period
During the 2019 financial year, nine ordinary meetings of the BoD with an average length of seven hours were held. The average attendance at BoD meetings in 2019 was 95% (for individual attendances, see section Availability and External Mandates below).
In addition to the regular meeting agenda items, in 2019, the BoD specifically focused on topics such as:
- The company’s IPO and the transition from a private to a public company including the development of corporate governance and organizational structures
- Strategy review and implementation, in particular concerning specific growth initiatives
- The Comparex acquisition and integration
- Understanding and aligning with the Microsoft roadmap
- Driving the services portfolio and focusing on areas of future developments
- Customer trends, structural industry changes and new technologies
-
Global talent management
Board of Directors’ internal organization
To efficiently and competently fulfill its inalienable and non-transferable responsibilities, the BoD has established and delegated certain responsibilities, including the preparation and execution of resolutions, to two committees. The overall responsibility for the duties and powers assigned to these committees remains with the BoD.
The following two standing committees were established:
In 2019, the BoD further established an ad-hoc committee to oversee the integration of the acquired company Comparex. Each standing committee consists of an independent Chairperson and at least two other members of the BoD. The members of the NCC are elected annually by the General Meeting of shareholders. The duties and authorities of the committees are set forth in the Audit Committee Charter and the Nomination and Compensation Committee Charter, respectively, as well as in SoftwareONE’s OrgR. The committees’ operating principles are aligned with and complementary to those applicable for the overall BoD.
BoD committees are structured non-redundantly and working topics are clearly assigned and handled by only one committee. The BoD Chairperson coordinates committee work in case of potential overlaps. All materials used in BoD committee meetings are made available to all BoD members, who are invited to contact the committee Chairperson, the BoD Chairperson or the CEO with any clarifying questions (exceptions may apply to materials of the NCC).
Further, the BoD has established the additional key positions of Vice-Chairperson and Lead Independent Director, whose duties and competencies are described in section Vice-Chairperson of the Board of Directors and Lead Independent Director.
The composition of the two committees is detailed below and the tasks of each committee are described in section Audit Committee and section Nomination and Compensation Committee.
There are no overlaps of directors between the two committees and both committees are chaired by an independent member of the BoD.
|
Name |
Function |
Audit Committee |
Nomination and Compensation Committee |
|
|
|
|
|
|
Daniel von Stockar |
Chairman |
(X) 2) |
X |
|
Beat Curti |
Vice-Chairman |
X 3) |
(X) 2) |
|
Peter Kurer |
Lead Independent Director |
(X) 2) |
X |
|
René Gilli |
Member |
|
|
|
Johannes Huth |
Member |
|
X |
|
Jean-Pierre Saad |
Member |
X |
|
|
Andreas Fleischmann |
Member |
|
|
|
Marina Nielsen |
Member |
|
|
|
Marie-Pierre Rogers 1) |
Member |
|
X (Chairwoman) |
|
Timo Ihamuotila 1) |
Member |
X (Chairman) |
|
|
José Alberto Duarte 1) |
Member |
X |
|
1) Elected at the EGM held on 10 October 2019 and member of the committee since the IPO on 25 October 2019.
2) Member of the Committee until the IPO on 25 October 2019.
3) Member of the Committee since the IPO on 25 October 2019.
Chairperson of the Board of Directors
The Chairperson is entrusted with leading and managing the BoD and is responsible for establishing an appropriate structure and governance system that enables the BoD to render its duties efficiently and in the best interest of the company. The Chairperson encourages alternative views and constructive dissent, leveraging individual insights of BoD members while keeping the focus on the agenda topics and driving aligned decision-making.
The Chairperson further represents the opinions and views of the BoD towards SoftwareONE’s internal and external stakeholders. In exercising these duties, the Chairperson is guided by SoftwareONE’s conflict of interest policies and if needed, will be supported by the Lead Independent Director.
The Chairperson ensures, in cooperation with the CEO, that the information flows on all aspects of the company relevant for the meeting preparation, deliberations, decision-making and supervision are made available to all members of the BoD in a proper and timely manner. In case of an emergency, when immediate action is required to safeguard the interests of the company, and where a regular BoD resolution cannot be reasonably passed in due time, the Chairperson, or in their absence, the Vice-Chairperson has the power to make, together with the CEO or any other appropriate member of the BoD or the EB, all decisions and actions which otherwise would be reserved to the BoD. The Chairperson shall promptly inform all members of the BoD of such decisions and actions and they shall be confirmed and properly recorded in the minutes at the next meeting of the BoD.
The power and duties of the BoD Chairperson are set out in section 3.8 of the OrgR.
Vice-Chairperson of the Board of Directors
If the Chairperson is temporarily unable or unavailable to exercise their functions, the Vice-Chairperson assumes their functions (Item 3.9 of the OrgR).
The Vice-Chairperson’s role is to ensure a functioning BoD in case the Chairperson is not available. The Vice-Chairperson may either assume the Chairperson’s duties themself or delegate them within the BoD or to suitable company representatives.
Lead Independent Director
The BoD assigns such powers and duties to the Lead Independent Director (LID) as it deems necessary (see Item 3.10 of the OrgR).
The LID has the right and duty to call meetings of the independent BoD members if they deem it necessary, but in particular, when the independent decision making process seems to be compromised. The LID further acts as the point of contact for BoD members if they have concerns with respect to the independent decision-making process.
The BoD further provides the independent BoD members under the lead of the LID with financial resources to mandate external advice if this is deemed necessary by the LID to foster independent decision-making of the BoD.
Moreover, the LID generally accompanies the Chairperson in governance and strategy-related investor engagements and will conduct these engagements without the Chairperson if engaging shareholders consider this necessary.
Availability and statutory provisions regarding external mandates
SoftwareONE’s AoI provide that the company’s BoD is composed of at least three and not more than 12 members, including the Chairperson of the BoD.
No member of the BoD may hold more than four additional mandates in listed companies and more than six mandates in non-listed companies.
Mandates within the meaning of this provision shall mean mandates in the supreme managing or administrative body of a legal entity, which is required to be entered in the commercial register or a corresponding register abroad. Mandates in different legal entities under common control or owned by the same beneficial owner shall be deemed to constitute a single mandate.
The following mandates are not subject to these limitations:
- Mandates in companies which are controlled by the company or which control the company
- Mandates held at the request of the company or companies controlled by it. No member of the BoD or of the EB may hold more than ten such mandates
-
Mandates in associations, charitable organizations, foundations, trusts and employee welfare foundations. No member of the BoD or of the EB may hold more than six such mandates
All members of the BoD remained within the statutory maximum numbers of outside mandates in listed and non-listed companies and organizations. The following table shows the availability and outside mandates of the members of the BoD:
|
Name |
Board meetings |
Audit Committee meetings |
Nomination and Compensation Committee meetings |
External mandates (listed|non-listed) 1) |
|
|
|
|
|
|
|
|
|
Daniel von Stockar |
9/9 |
2/3 |
6 / 6 |
0 |
2 |
|
Beat Curti 2) |
9/9 |
– 4) |
6 / 6 |
0 |
6 |
|
Peter Kurer |
9/9 |
3/3 |
6 / 6 |
1 |
3 |
|
René Gilli |
7/9 |
|
|
0 |
1 |
|
Johannes Huth |
6/9 |
|
6 / 6 |
0 |
2 |
|
Jean-Pierre Saad |
9/9 |
2/3 |
|
0 |
3 |
|
Andreas Fleischmann |
9/9 |
|
|
0 |
2 |
|
Marina Nielsen |
8/9 |
|
|
0 |
0 |
|
Marie-Pierre Rogers 3) |
1/1 |
|
– 4) |
0 |
0 |
|
Timo Ihamuotila 3) |
1/1 |
– 4) |
|
1 |
0 |
|
José Alberto Duarte 3) |
1/1 |
– 4) |
|
1 |
2 |
|
Average meeting length |
7:00h |
2:40h |
1:30h |
|
|
1) Maximum number allowed in listed companies is four, and is six for non-listed companies.
2) Member of the NCC until the EGM on 10 October 2019.
3) Elected at the EGM on 10 October 2019. Between the election and the end of the financial year 2019, the BoD held one meeting.
4) No meetings have taken place between the appointment/election and the end of the financial year 2019.
Board of Directors’ independence assessment
The BoD generally defines the independence of its members within the meaning of the provisions of the Swiss Code. Accordingly, all non-executive members of the BoD who have never been a member of the EB, or who were members thereof more than three years ago, and who have no or comparatively minor business relations with the company, are considered independent. Consequently, all members of the BoD are non-executive and considered independent according to the Swiss Code.
The BoD is committed to ensuring an independent decision-making process and is aware that Board members representing large shareholders, even if they are the company’s founders who continue to contribute to its prosperous development, may be considered non-independent. Consequently, the BoD appointed a Lead Independent Director with far reaching competencies as well as independent Chairpersons to the Nomination and Compensation Committee and the Audit Committee. Through their casting votes, these two Chairpersons ensure the independent decision-making of both committees.
Independent decision-making/conflict management
The CEO, CFO and, as directed by the CEO, other EB members are required to attend meetings of the BoD to provide detailed information on the current state of the business and offer their views on strategic questions. EB members have no voting rights and will leave the room in case discussions and/or decisions concern the EB or their own position. A private meeting with BoD members will only be held before or at the end of each Board meeting. In 2019, the CEO participated in eight, the CFO in eight and other EB members in six of the nine meetings of the BoD.
The CEO informs the members of the BoD in a monthly letter about SoftwareONE’s business performance and about material events affecting the company. During BoD meetings, each director may request and receive information from other directors, the CEO, the EB and other persons present on all affairs relating to SoftwareONE or its subsidiaries.
In each regular BoD meeting, the Chairpersons of the AC and the NCC provide the BoD with an update of the committees’ work.
In case information or, to the extent necessary to perform their duties, examination of the business records is requested by a member of the BoD outside of a meeting, such request must be addressed to the Secretary of the BoD and be approved by the Chairperson of the BoD. If the request concerns a potential conflict of interest for the Chairperson, it shall be addressed to the BoD for decision.
The BoD has the power to mandate external advisors if an outside view is deemed necessary for an independent decision-making of the BoD. Third parties (for example legal counsels, auditors or financial and other advisors) are exceptionally admitted to BoD meetings if proposed by a Board member or by the CEO and approved by the Chairperson.
The agenda setting for the BoD annual cycle and for individual meetings is the remit of the Chairperson. In case the Chairperson is considered non-independent, the agenda setting will be conducted together with the Lead Independent Director, who must approve the set agenda. Meeting minutes reflect the deliberations and decisions taken by the BoD, including, if requested, dissenting opinions of and votes cast by members of the BoD. The Board secretary will make available to the members of the BoD a copy of the minutes once they have been signed. Members of the BoD may examine the minutes of any meeting at any time.
Audit Committee
Key responsibilities and duties
The AC is composed of at least three members of the BoD. As at 31 December 2019, the AC consisted of four members. The members of the AC and the Chairperson are appointed annually by the BoD, which aims to appoint non-executive and independent (within the meaning of the Swiss Code) members of the BoD. Additionally, the Chairperson of the AC must be an independent Board member other than the Chairperson of the BoD. Furthermore, the majority of the members, including the Chairperson of the AC, should be experienced in financial and accounting matters. The term of office of the AC members ends at the closing of the next Annual General Meeting. Re-appointments are possible. The AC meets whenever required by business, but at least four times per year.
The AC supports the BoD in the fulfilment of its duties as per Art. 716a CO in the areas of financial controls (supervision of internal and external auditing, monitoring of financial reporting), supervision of persons entrusted with the management of the group (assessing the effectiveness of internal and external control systems), risk management processes and oversight of key non-financial processes (corporate social responsibility and compliance). Its duties and responsibilities are set out in the AC charter.
Audit Committee activities in the reporting period
In 2019, the AC held three meetings, taking place in April, August and September with an average duration of 2:40h. In view of the fact that SoftwareONE has been a listed company since 25 October 2019, the remit of the AC will expand in line with the applicable committee charter. The committee focused on a number of key areas, including but not limited to the activities described below. Specifically, the AC:
- Discussed the coverage of the group audit
- Evaluated the liquidity reserves
- Reviewed the valuation of the Comparex acquisition
-
Considered how to enable investors to see a hypothetical consolidated Comparex/SoftwareONE past in the IPO-prospectus
The AC sets the audit plan for a period of several years as well as the scope of the internal and external audits and approves the guidelines for the work of the Internal Audit department as well as for the company’s compliance and supply chain organization. It reviews and approves the internal and external audit plans, changes to the plans, activities, scope and budget. Further, the AC defines the organizational structures of the Internal Audit function and sets and reviews the qualifications of the Internal Audit organization as deemed necessary or appropriate. The AC may hold meetings with representatives of the internal and external auditors without management present. Such meetings must take place at least once per year with the external auditor. In 2019, the AC held one meeting with the Internal Auditors and three meetings with the external auditors.
It is furthermore the AC’s responsibility to assess the performance of the internal and external auditors as well as their cooperation with one another.
In consultation with management and the external and Internal Auditors, the AC discusses the integrity of SoftwareONE’s financial reporting processes, management controls, compliance management and the functionality of internal controls, reviews significant financial risk exposures and the steps management has taken to monitor, control and report such exposures.
The Head of Internal Audit and the Group General Counsel have a direct reporting line to the AC in cases of significant compliance issues with the potential of major financial or reputational damages, including issues concerning management. The AC shall have direct access to the Internal Audit department and may obtain all information required by it within the group as well as question the responsible employees. The AC will ensure that it receives regular information from both the internal and the external auditors. The AC has the overriding supervision of internal and external auditing.
Interactions with Executive Board
The AC will also regularly invite the CEO, the CFO and other members of the EB or, subject to prior notification of the responsible member of the EB, members of the company's management or other key employees to its meetings, as it may deem desirable or appropriate. Further, upon invitation by the AC Chairperson or, in their absence, the member of the AC calling a meeting, other executive officers/employees of the company or its subsidiaries shall also participate in meetings of the AC on a consultative basis. Third-parties may be invited to participate in meetings of the AC on a consultative basis. In 2019, SoftwareONE’s CFO participated in all three AC meetings.
Risk management
The BoD is responsible for overseeing SoftwareONE’s risk management and internal control systems for which the BoD has mandated the AC. The AC reviews and addresses strategic risks to which the group is exposed. These systems provide appropriate security against significant inaccuracies and material losses.
Embedded throughout the business, the group risk management function ensures an integrated approach to managing current and emerging threats. Risk Management plays a key role in business strategy and planning discussions. At SoftwareONE, the group risk management function falls within the responsibility of the CFO.
Strategic Risk Management has identified key areas of strategic risks that are constantly monitored by Group Risk Management and the AC. The following key strategic risk categories have been identified:
Strategic business risks, eg:
- Competition at end customer (manufacturers and distributors)
- Customer needs
- Technological innovation
- Economic situation
- Innovation
Operational risks, eg:
- Competition
- Loss of key people
- IT infrastructure
- IT security
- Operational excellence issues
Financial risks, eg:
- Accounts receivable risk
- Currency fluctuation risk
- Transfer pricing
- Taxes on assets that are not materialized
- Performance measurement and controlling
Legal and compliance risks, eg:
- Organizational culture
- Reputational risk
- Professional liabilities with service business
- Non-conformity, illegal acts, internal or external fraud
- Non-compliance with laws and regulations
Risk management is carried out by the line management and controlled by the CFO under policies approved by the BoD and is reviewed and supervised by the AC. Strategic risks are identified, evaluated and managed in close co-operation with the group’s operating units. The BoD provides written principles for overall strategic risk management, as well as written policies covering specific areas within the risk categories.
IT security including cyber and data security is a key risk factor for SoftwareONE and taken very seriously by the BoD. The company’s risk management system covers the processes of the entire application management of all local and global IT systems, and ensures a regular monitoring as well as update of its IT systems and processes to ensure reliability, business continuity and performance.
SoftwareONE is further certified to international standards on systems management, including ISO 9001:2008 on quality management systems, ISO 14001:2015 on environmental management systems and ISO 27001:2005 on information security management (in respect of the entities acquired as part of the Comparex acquisition, with rollout to the entire IT organization in progress).
Quality audits are an integral part of SoftwareONE’s quality management system and cover the control of the established processes to fulfill all required regulatory industry standards.
The AC periodically monitors the risk assessment of SoftwareONE and assesses the proposed risk mitigating measures proposed by the EB on a semi-annual basis.
Audit of non-financial topics and corporate social responsibility
A key non-financial risk for SoftwareONE concerns reputation with respect to its IT-security. The assessment of the processes and reviews in this regard are, therefore, an important ongoing task for Internal Audit. To ensure that the responsible specialists in Internal Audit are able to conduct their assessments according to the highest and latest industry standards, SoftwareONE is dedicated to providing relevant trainings to and resources needed by Internal Audit.
SoftwareONE’s BoD is committed to a high level of corporate social responsibility (CSR). A material component of CSR that the BoD is following closely, is the company’s energy management. Internal Audit is, therefore, mandated to regularly assess the development of the company’s energy consumption and to ensure a consistent measurement of this indicator over time.
External audit
a. Mandate external audit
The AC supports the BoD in the nomination of the external auditors to be proposed to the Annual General Meeting for election or re-election. It assesses annually the external auditor’s qualifications, effectiveness, past performance and independence, in particular related to any further consulting mandates. In connection with the appointment of the external auditor, the AC further approves the audit program, the annual fees and annually reviews the fee budget and actual audit fees incurred.
b. External auditor
Since its incorporation in 2013, SoftwareONE’s statutory external auditors have been Ernst & Young AG (CHE- 491.907.686) (“EY”), Maagplatz 1, 8005 Zurich, Switzerland. The current auditor in charge is Mr Kaspar Streiff, who has been the lead auditor since 2016. In line with the Swiss Code of Obligations and to foster external auditor independence, the lead auditor is replaced every seven years.
The external auditor is elected (or re-elected, as the case may be) at each Annual General Meeting of shareholders for a term of office until the completion of the following Annual General Meeting.
c. Auditing fees and additional fees
|
Auditing fees 1) |
CHF 2,611,000 |
85 % |
|
Additional fees (total) |
CHF 461,000 |
15 % |
|
– Tax |
CHF 248,000 |
|
|
– Transaction services |
CHF 213,000 |
|
|
Total fees |
CHF 3,072,000 |
100 % |
1) Total fees in the amount of CHF 707,000 are related to SoftwareONE’s IPO in 2019.
d. Information instruments pertaining to the external audit
Responsibilities of the external auditor
The external auditor is independent and accountable to the AC, the BoD and ultimately to the shareholders.
Cooperation and flow of information between the auditor and the Audit Committee
The AC liaises closely with the external auditor. In general, the lead auditor participates as an advisor at the AC meetings. In 2019, the external auditors participated in all of the three meetings of the AC (two in person, one by telephone). The external auditor provides the AC with regular updates on the audit work, open audit issues and the processing thereof, all audit-related issues as well as with reports on topics requested by the AC. The external auditor has a direct reporting line to the AC and may escalate potential audit issues directly to the Chairperson of the AC.
The AC together with the BoD reviews and approves in advance the planned audit services as well as a cap on additional non-audit services provided by the external auditor. It discusses the results of annual audits with the external auditor, including reports on the financial statements, necessary changes to the audit plans and critical accounting issues. It also establishes guidelines for the internal and external audit with the goal of an optimal complementarity of all audit work as important pillars of the various lines of defense.
The external auditor shares with the AC its findings on the adequacy of the financial reporting process and the efficacy of the internal controls.
It informs the AC about any differences of opinion between the external auditor and management encountered during the audits, or in connection with the preparation of the financial statements, findings regarding a potential malfunctioning of internal controls or differing views between the external and the Internal Auditor.
Evaluation of the external auditor
The AC is responsible for recommending an audit firm to the BoD for election at the Annual General Meeting of shareholders. In Switzerland, there is no general legal requirement providing for a periodic mandatory rotation of the external auditor company, but the lead audit person must be exchanged every seven years.
The AC closely monitors the regulatory developments on the topic. In order to be able to recommend an audit firm for election by the shareholders and in line with good corporate governance, the AC annually and thoroughly evaluates the credentials of the current external auditor and presents its findings to the BoD. EY has a proven record of professionalism and efficiency and fully meets the high standards of SoftwareONE.
The AC’s assessment of the external auditor is based on the external auditor’s qualifications, independence and performance. The AC furthermore evaluates annually the performance of the lead auditor.
Qualifications
At least once a year, the AC discusses with the external auditor any material issues, inquiries or investigations raised by governmental or professional authorities and steps taken to deal with any such issues.
Independence
At least once per year, the external auditor provides a formal written statement delineating all relationships with the company that might affect its independence. Any disclosed relationships or services that might interfere with the external auditor’s objectivity and independence are reviewed by the AC, which then recommends appropriate action to be taken by the BoD.
Performance
This assessment measures the external auditor’s performance against a number of criteria, including understanding of SoftwareONE’s business; technical knowledge and expertise; comprehensiveness of the audit plans; quality of the working relationship with management and clarity of communication. It is compiled based on the input of key people involved in the financial reporting process and the observations of the AC members.
Nomination and Compensation Committee
Key responsibilities and duties
The NCC is composed of at least three members of the BoD. As at 31 December 2019, the NCC consisted of four members. The members of the NCC are each elected annually and individually by the shareholders' meeting. Their term of office ends at the closing of the next ordinary shareholders' meeting. Re-election is possible. The Chairperson of the NCC is appointed by the BoD. Against the backdrop of the particular shareholder structure and in deviation from the Swiss Code, the proposed Chairperson of the NCC shall in any case be an independent member of the BoD. At least one other member shall be an independent director ensuring (with the casting vote of the Chairperson) an independent majority.
If there are vacancies in the NCC, the BoD may appoint substitute members from among its members for a term of office extending until the closing of the next ordinary shareholders' meeting.
The NCC meets whenever required by business, but at least three times per year.
The NCC has the powers and duties of the compensation committee as provided by Swiss law and in particular, the Ordinance against Excessive Compensation in Public Companies, as well as the powers and duties as provided in Art. 15 para. 5 of the AoI and the NCC Charter. The overall responsibility for the duties and powers assigned to the NCC shall remain with the BoD. The NCC shall regularly report to the BoD on its activities and submit the necessary proposals.
Nomination and Compensation Committee activities in the reporting period
The NCC was formally established in the course of the IPO in 2019 and since then did not hold a physical meeting in 2019. Prior to the IPO, the NCC held six phone calls in 2019. The average duration of these calls was 1:30h. The committee focused on a number of key areas, including but not limited to the activities described below. Specifically, the NCC:
- Established a strategic skill map and assessed the current BoD’s skills against it.
- Initiated a review of potential new BoD candidates to complement the existing slate.
- Evaluated and proposed new compensation principles and compensation plans for the EB and the BoD to the BoD.
- Reviewed and endorsed Board succession plans for subsidiary boards, including the appointments of new non-executive Chairpersons of major subsidiaries.
- Conducted search processes for new group functions such as Communications/Investor Relations and General Counsel/Secretary of the BoD.
- Provided guidance for the annual performance assessments of the Chairman and the CEO.
- Developed a compensation framework to strengthen future long-term value creation, align interests with SoftwareONE’s shareholders and recognize and retain talent.
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Derived the proposals to the Annual General Meeting 2020 regarding compensation amounts based on the new compensation scheme.
The NCC’s work on compensation-related matters is described in detail in the SoftwareONE Compensation Report.
Interactions of the committee
The NCC shall regularly invite the CEO and may invite other members of the EB or, subject to prior notification of the responsible member of the EB, members of the company’s management to its meetings, as it deems desirable and appropriate to fulfill its tasks responsibly.
The CEO or other members of the EB may not be present when the NCC reviews the compensation or other aspects of the employment of the respective person. The Chairperson of the BoD or the NCC Chairperson are not present when the NCC reviews their compensation. In 2019, no EB member participated in the meetings or calls of the NCC.
In the process of evaluating SoftwareONE’s performance against the pre-determined compensation-relevant performance metrics, the NCC generally interacts annually with the Chairperson of the AC to obtain the information on the relevant metrics.
To determine the overall employee development within the company and in particular on the EB and highest management levels, the NCC regularly interacts with the Head of Human Resources to develop and recommend appropriate actions to the BoD.
In developing the compensation system for the financial year 2020, the NCC worked together with external service providers HCM Hostettler & Company (HCM), for the compensation system, and Willis Towers Watson (WTW), for a benchmarking review. HCM had no other business relationship with SoftwareONE other than this mandate. WTW is a trading customer in the ordinary course of business of SoftwareONE in NORAM.
Board of Directors’ renewal and succession
The BoD has to deliver its duties as a mutual decision-making body. Accordingly, the BoD must work as an efficient, effective and aligned team. Succession planning and an active renewal process for the BoD is of high relevance to the company. The requirements prospective BoD candidates must meet in terms of knowledge and experience in various key areas and the industry are constantly changing and subject to increasingly higher demands.
The NCC regularly analyses the BoD’s composition to confirm that its members’ qualifications, skills and experiences correspond to the BoD’s needs, subject to an adequate Board size and well-balanced composition. A majority of the Board members should be independent according to the criteria laid out in section Board of Directors’ independence assessment. Directors also need to show significant commitment, integrity and intercultural communication competence. With regard to its succession planning, the BoD aims to safeguard the stability of its composition while also renewing the BoD in a sensible way.
Following the IPO in 2019, the NCC has developed a strategy to gradually, and in line with the required skills and experience as detailed in section Board of Directors’ skill and experience assessment, develop the BoD composition to become more independent and reflect shareholdings proportionately.
Board of Directors’ skill and experience assessment
To inform the Board’s renewal and succession activities, the NCC is establishing a skills and experience assessment that it will conduct annually going forward. The following competencies are considered the most relevant for SoftwareONE’s BoD members:
- Finance, audit, accounting
- Capital markets transactions
- CEO and other executive leadership (CFO, CRO or COO) experience in a publicly listed or non-public company
- Human resources management, including compensation
- Information technology, software and cloud solutions
- Leadership experience as Chairperson of a Board of Directors or Board of Directors’ committee in a publicly listed or non-public company
- Leading business operations in a global and fast-growing business
- Legal and compliance
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Risk management
The NCC reviews these competencies regularly to confirm that the BoD continues to possess the most relevant experience and competencies to perform its duties and initiates the evaluation of potential new BoD members if required. The prevalence of these qualifications and skills ensures that the leadership of SoftwareONE has the relevant expertise required for active involvement and supervision of an international listed company.
Board of Directors’ performance assessment
According to SoftwareONE’s OrgR, the BoD with the assistance of the NCC will carry out a regular evaluation of the BoD’s and the BoD committees’ performance as well as the Chairpersons’ work. To this extent, the BoD is committed to an open, transparent and critical boardroom culture, which forms the basis for this annual review of its own performance and effectiveness.
The assessment is intended to review the BoD’s as well as the committees’ composition, organization and processes, the BoD’s responsibilities governed by the OrgR and the committee charters. The committees shall further assess their accomplishments and evaluate their achievements subject to predetermined goals.
The outcome of these assessments will generally feed into the BoD’s succession planning as described in section Board of Directors’ skill and experience assessment.
Board of Directors’ training and education
Education is an important priority for SoftwareONE’s BoD. Newly elected BoD members attend an on-boarding program tailored to their functions to gain a sound understanding of SoftwareONE’s organization, business, culture and its environment. In addition to this induction program for new members, continuous training with respect to their responsibilities as BoD and committee members is primarily the individual Board members’ responsibility.
SoftwareONE’s Board program shall update and enhance the Board members knowledge of emerging business trends and risks and is further intended to contribute to building a strong and effective culture in the BoD, an important pillar of BoD effectiveness.
Interaction of the Board of Directors with the Executive Board
In accordance with Art. 16 of the AoI and Art. 11.2 of the OrgR, the BoD has delegated the operational management of SoftwareONE and the group based on the OrgR entirely to the EB within the limits permitted by and subject to the powers and duties remaining with the BoD pursuant to the OrgR.
The EB supports the BoD in fulfilling its duties and prepares proposals for consideration and decision-making by the BoD. These proposals are related to the following key group responsibilities: long-term strategy, business plan resilience, organizational structure, accounting principles, finance, capital markets, risk management including insurance, HR matters, corporate social responsibility, share capital and financing in general as well as for important strategic transactions. BoD resolutions shall result in appropriate feedback and unambiguous instructions to the CEO and other members of management.
The BoD supervises and monitors the performance of the EB through reporting and controlling processes. The CEO and other EB members regularly provide reports and updates to the BoD. These include information on key performance indicators and other relevant financial data, current and forward-looking risks, and on developments in important markets, the industry and material events. The Chairperson of the BoD regularly meets with the CEO and other EB members also outside of regular Board meetings. SoftwareONE has an information and financial reporting system. The annual targets are reviewed by the EB in detail and are approved by the BoD. SoftwareONE has adopted and implemented a formal approach to risk management and control, described in more detail in the section Audit Committee.
The BoD remains entitled to resolve any matters, which are not delegated to or reserved for the Annual General Meeting of shareholders or another executive body of the company by law, the AoI or the OrgR. Further, the BoD may, at any time on a case-by-case basis or according to a general reservation of powers provided in the OrgR, intervene in the tasks and powers of an EB subordinated to it and resolve on the relevant matter itself.