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.
To ensure that the company’s as well as the shareholders’ interests are adequately represented on the BoD, the BoD will propose the election of Isabelle Romy, a proven expert in governance, legal and compliance, as well as Adam Warby, former CEO of Avanade, with a strong background in the technology services industry, as new independent members of the Board at the shareholders’ meeting.
The members of the BoD and the Chairperson of the BoD are elected individually and annually by the shareholders’ meeting. The term of office ends at the closing of the next ordinary shareholders’ meeting. Re-election is possible and there are no limitations on the number of terms a member can serve on the BoD or the age a director may have upon (re-)election.
During the reporting period, the following members formed part of the BoD. As at 31 December 2020, the BoD consisted of seven members:
|
Name |
Nationality |
Born |
First elected |
Significant shareholder |
Education |
Background |
|
|
|
|
|
|
|
|
|
Beat Curti 1) Vice-Chairman |
Swiss |
1937 |
2013 |
Yes |
Business and economics |
Entrepreneur, Founder SoftwareONE |
|
Andreas Fleischmann 2) |
Austrian |
1967 |
2018 5) |
Yes 8) |
Social sciences, economics, finance |
Chairman, Raiffeisen Informatik |
|
Johannes Huth 3) |
German |
1960 |
2015 |
Yes 7) |
Economics |
Head EMEA, KKR |
|
Marina Nielsen 4) |
Swiss |
1976 |
2018 5) |
Yes |
Business |
Real estate management |
|
Daniel von Stockar Chairman |
Swiss |
1961 |
2013 |
Yes |
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 |
|
Jean-Pierre Saad |
Belgian |
1980 |
2015 |
Yes 7) |
Engineering, computer and communications |
Technology and telecom investments, KKR |
|
Marie-Pierre Rogers |
Spanish |
1960 |
2019 6) |
No |
Business |
Leader Board Practice, Spencer Stuart Switzerland |
|
Timo Ihamuotila |
Finnish |
1966 |
2019 6) |
No |
Economics and finance |
CFO, ABB Ltd |
|
José Alberto Duarte |
Portuguese |
1968 |
2019 6) |
No |
Accounting, management, marketing |
CEO, Infovista |
1) Resigned from the BoD on 7 October 2020.
2) Resigned from the BoD on 30 June 2020.
3) Resigned from the BoD on 19 June 2020.
4) Did not stand for re-election at the AGM on 14 May 2020.
5) These BoD members were elected by the EGM held on 20 November 2018.
6) These BoD members were elected by the EGM held on 10 October 2019.
7) Representing KKR (see section Group structure and shareholders for detailed information).
8) Representing Raiffeisen-Holding Niederösterreich-Wien (see section Group structure and shareholders for detailed information).
Individual Board members
The following members did not stand for re-election or stepped down in 2020:
Compensation of the Board of Directors
The shareholders’ meeting shall approve annually and separately the proposals of the BoD in relation to the maximum aggregate compensation of the BoD for the period until the next ordinary shareholders’ meeting and the EB for the next business year.
Art. 18 of the AoI establishes that compensation of the BoD shall consist of fixed compensation paid in cash and/or shares, short-term variable compensation elements defined by performance metrics and long-term variable compensation elements determined pursuant to the strategic goals as defined by the BoD. Unless determined by the BoD or, in delegation by the NCC, the short-term variable compensation elements shall be paid in cash. Unless otherwise determined by the BoD or, to the extent delegated to it, the NCC, long-term variable compensation elements consist of shares, options or similar instruments. More details on compensation and post-employment benefits of the BoD and the EB can be found in the Compensation Report.
The members of the BoD and the EB may only be granted loans and credits up to a maximum amount of CHF 1,000,000, at market-based conditions and in compliance with the applicable rules of abstention.
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 must 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 provides 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 concise, clear and reasoned decision-making in a professional manner.
The overall guiding principle for the BoD is full accountability to all shareholders and stakeholders of SoftwareONE and a style marked by a culture of openness and mutual respect.
The BoD meets at least six times per year (four quarterly report meetings, a strategy off-site, and a medium-term planning and budgeting meeting) and meetings are held in person but can also be held via telephone or video conference or by means of other electronic media. Owing to the COVID-19 situation, of the eight BoD meetings that were held in 2020, all but the first were held by video conference. The strategy meeting includes cultural aspects, including how to drive cultural change to foster overall good corporate governance. Further focus is placed on company performance and integrity as well as on how to accelerate integration in relation to external growth such as mergers and acquisitions. 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 continues to be committed to the values set out in the company’s CoCs, including responsible corporate citizenship and fostering long-term, sustainable, inclusive value generation, and in doing so, reflecting SoftwareONE’s seven core values. Despite the pandemic and to some extent because of this crisis, SoftwareONE continues to run a range of society initiatives to make a positive impact in the communities where we work. These initiatives, both local and global, range from raising funds for medical research, increasing awareness for mental health issues, joining donor registers, donating food, items and funds to organizations supporting people and animals in need, investing in education initiatives to develop children’s IT skills, funding green energy installations for NGOs, providing transformation advice and solutions to not-for-profit organizations and joining the fight against the pandemic. SoftwareONE is proud to support these worthy causes and gratified by the enthusiasm and dedication shown by the members of its workforce backing the initiatives.
The BoD with the support of the Audit and the Nomination and Compensation Committee regularly reviews the company’s initiatives, including their progress in its meeting agenda. To facilitate the reporting of possible infringements against the CoCs, including health and safety violations, the SoftwareONE Integrity Line was introduced as an accessible and safe reporting tool enabling anonymous exchanges (softwareone.integrityline.org).
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 of building 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 are steered by the Chairperson of the BoD, supported by the Lead Independent Director and the Chairperson of the Nomination and Compensation Committee. Dialogs conducted in 2020 with proxy advisors addressed the structure, overview and strategy of SoftwareONE, insights into our shareholder and leadership structure as well as explanations regarding our compensation policy and principles.
Specific Board activities during the reporting period
During the 2020 financial year, eight ordinary meetings of the BoD with an average length of five hours were held. The average attendance at BoD meetings in 2020 was 97% (for individual attendances, see section Availability and External mandates below).
In addition to the regular meeting agenda items, in 2020, the BoD specifically focused on topics such as:
- The company’s development in terms of corporate governance and organizational structures since the IPO
- Strategy review and implementation, in particular concerning specific growth initiatives
- The COMPAREX integration
- Understanding and aligning with the Microsoft roadmap
- Driving the services portfolio and focusing on areas of future development
- Customer trends, structural industry changes and new technologies
-
Global talent management and succession planning
- Navigating the challenges of the global pandemic
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 BoD has established the following two standing committees:
In 2019, the BoD had established an ad-hoc committee to oversee the integration of COMPAREX after its acquisition. This ad-hoc committee continued its work throughout 2020, holding its last meeting on 8 December 2020. Having accomplished its assignment, it was subsequently dissolved.
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).
The BoD had established the additional key positions of Vice-Chairperson and Lead Independent Director, whose duties and competencies are described in the sections Vice-Chairperson of the Board of Directors and Lead Independent Director. With the decision of Beat Curti to step down as Vice-Chairperson, communicated on 16 September 2020, the BoD determined that going forward, the Independent Lead Director would chair the Board and any general meeting in the absence of the Chairperson.
The composition of the two committees is detailed below and the tasks of each committee are described in the 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.
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, and since 16 September 2020, the Lead Independent Director, 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
With the decision of Beat Curti to step down as Vice-Chairperson on 16 September 2020, the BoD determined that going forward, the Lead Independent Director (LID) will chair the Board, and any general meeting, in the absence of the Chairperson.
The LID either assumes the Chairperson’s duties themself or delegates 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 Section 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 10 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 |
8/8 |
|
6 / 6 |
0 |
2 |
|
Beat Curti 2) |
5/7 |
2/3 2) |
|
0 |
6 |
|
Peter Kurer |
8/8 |
|
6 / 6 |
1 6) |
3 |
|
René Gilli |
8/8 |
|
|
0 |
1 |
|
Johannes Huth 3) |
4/5 |
|
2 / 3 |
0 |
2 |
|
Jean-Pierre Saad |
8/8 |
3/4 |
|
0 |
3 |
|
Andreas Fleischmann 4) |
5/5 |
|
|
0 |
2 |
|
Marina Nielsen 5) |
3/5 |
|
|
0 |
0 |
|
Marie-Pierre Rogers |
8/8 |
|
6 / 6 |
0 |
0 |
|
Timo Ihamuotila |
8/8 |
4/4 |
|
1 |
0 |
|
José Alberto Duarte |
7/8 |
4/4 |
|
1 |
2 |
|
Average meeting length |
5:00h |
2:30h |
2:30h |
|
|
1) Maximum number allowed in listed companies is four, and is six for non-listed companies.
2) Resigned from the BoD on 7 October 2020.
3) Resigned from the BoD and the AC on 19 June 2020.
4) Resigned from the BoD on 30 June 2020.
5) Did not stand for re-election on 14 May 2020.
6) Did not stand for re-election in 2020.
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 2020, the CEO participated in seven, the CFO in seven and other EB members in six of the eight 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 admitted to BoD meetings on an exceptional basis if proposed by a Board member or by the CEO and approved by the Chairperson. In 2020, the BoD invited external experts to one of its meetings, the AC to three of its meetings and the NCC to three of its meetings.
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. Until the resignation of Beat Curti on 7 October 2020, the AC consisted of four members. As at 31 December 2020, the AC was composed of three members but will again be expanded to four members if Isabelle Romy is elected to the BoD at the shareholders’ meeting. 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, which was revised by the BoD on 12 February 2020.
Audit Committee activities in the reporting period
In 2020, the AC held four meetings by video conference, taking place in March, June, August and September, with an average duration of 2:30h. With the listing on 25 October 2019, the remit of the AC was expanded in line with the 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.
- Discussed the impact of COVID-19 on liquidity and the business portfolio.
-
Reviewed the synergies resulting from the COMPAREX acquisition.
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 as well as accounting policies. The AC challenges the appropriateness of risk-based estimates and judgements as well as the methods used to account for unusual transactions. 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 2020, 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 the 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 2020, SoftwareONE’s CFO participated in all four 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 monitors the strategic risk management processes and reviews the risk management framework against the company’s risk management strategy, providing recommendations regarding risk management and appropriate mitigations. It further assesses the robustness of the company’s risk management policies and processes related to the risk management strategy. These systems provide appropriate security against significant inaccuracies and material losses.
Based on its risk management oversight activities, the AC makes proposals to the BoD regarding the company’s corporate governance, compliance and corporate responsibility framework and assesses the effectiveness of the internal control system related to key financial processes, forms a view on the situation concerning compliance with applicable standards and guidelines, and develops these further.
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
-
Post-merger integration
Operational risks, eg:
- Competition
- Loss of key people
- IT infrastructure
- IT security
- Operational excellence issues (scalable and efficient business model)
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
The risk management map was expanded further to include COVID-19 related concerns, namely regional and global economic downturns and the onus placed on SoftwareONE to reduce risks in business cases, focus on liquidity, accounts receivables and to ensure a swift adaptation of the portfolio, including cost rightsizing. In the same context, business has seized measures to counter any ‘fatigue’ among employees due to COVID-19 restrictions.
Risk management is carried out by line management, 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. SoftwareONE is refining its reporting activities to improve its evaluation not only of potential environmental but also of social, employee and human rights risks in order to measure alignment with Swiss, European and international standards. The company will focus on ensuring that sustainability-driven opportunities are seized to create value.
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 |
CHF 1,838,000 |
81 % |
|
Additional fees (total) |
CHF 443,000 |
19 % |
|
– Tax |
CHF 204,000 |
|
|
– Transaction services |
CHF 239,000 |
|
|
Total fees |
CHF 2,281,000 |
100 % |
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 2020, the external auditors participated in three of four meetings of the AC (all three via video conferencing owing to the COVID-19 situation). 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. At least once a year, the AC meets the external auditors without management being present.
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 change 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 annually evaluates 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. Until the resignation of Johannes Huth on 19 June 2020, the NCC consisted of four members. As at 31 December 2020, the NCC was composed of three members but will again be expanded to four members if Adam Warby is elected to the BoD at the shareholders’ meeting. 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. Details to the compensation policies and principles can be found in the Compensation Report 2020.
Nomination and Compensation Committee activities in the reporting period
The NCC held six meetings in 2020, one in person and five by video conference. The average duration of these calls was 2:30h. 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.
- Completed 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.
- Provided guidance for the annual performance assessments of the Chairperson 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 2021 regarding compensation amounts based on the 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 2020, the CEO participated in three meetings 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 2021 financial year, 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 analyzes the BoD’s composition to confirm that its members’ qualifications, skills and experience 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 the section Board of Directors’ independence assessment. Directors also need to show significant commitment, integrity and competence in intercultural communication. 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.
The NCC has developed a strategy to gradually, and in line with the required skills and experience as detailed in the 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 rapidly growing business
- Governance, legal and compliance
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Risk management
The NCC reviews these competencies to confirm that the BoD continues to possess the most relevant experience and expertise to perform its duties, ensuring that the leadership of SoftwareONE has the relevant proficiency required for active involvement and supervision of an international listed company.
As part of its review, the NCC established a strategic skills matrix gathering data to focus on aspects such as Board size, diversity, independence, nationality, committee representation and future skills needed, also to better understand the priorities for future Board recruitments. In terms of nationality, the Board agreed to preserve a good balance of ‘Swissness’, all the while seeking to move away from being chiefly Western European.
The strategic skills matrix reflecting the BoD composition as of December 2020:
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 the section Board of Directors’ skill and experience assessment.
Under the lead of the LID, a self-assessment of the BoD was performed towards the end of the reporting period. The LID’s report was circulated in the BoD and a review is scheduled for 2021.
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.