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Corporate Governance Report 2011
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1. Groupstructureandshareholders
1.1 Group structure
1.2 Signifcant shareholders
1.3 Cross-shareholdings
2. Capitalstructure
2.1 Capital
2.2 Conditional capital
2.3 Changes in capital
2.4 Shares and participation certifcates2.5 Proft sharing certifcates
2.6 Limitations on transerability and nominee registrations
2.7 Convertible bonds and options
3. BoardofDirectors(1)
3.1 Members o the Board o Directors
3.2 Proessional background and other activities and unctions
3.3 Elections and terms o ofce
3.4 Internal organisational structure
3.5 Defnition o areas o responsibility
3.6 Inormation and control instruments vis--vis the Executive Board (2)
4. ExecutiveBoard
4.1 Members o the Executive Board
4.2 Proessional background and other activities and unctions
4.3 Management contracts
5. Compensations,shareholdingsandloans
6. Shareholdersparticipation
6.1 Voting rights and representation restrictions
6.2 Statutory quorums
6.3 Convocation o the General Meeting o shareholders
6.4 Inclusion o item on the agenda
6.5 Inscriptions into the share register
7. Changeofcontrolanddefencemeasures
7.1 Duty to make an oer
7.2 Clauses on change o control
8. Auditors
8.1 Duration o the mandate and term o ofce o the lead auditor
8.2 Auditing ees
8.3 Additional ees
8.4 Supervisory and control instruments pertaining to the audit
9. Informationpolicy
GeneralOrganisationofNestlS.A.
Appendix1:CompensationReport2011
Appendix2:ArticlesofAssociationofNestlS.A.
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(1) The ull Board o Directors Regulations and Committee Charters are published on www.nestle.com.
(2) The term Executive Committee, as used in the SIX Directive, is replaced by Executive Board throughout this document.
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Corporate Governance Repor t 2011
Preliminary remarks
The Nestl Corporate Governance Report 2011 ollows the
SIX Swiss Exchange Directive on Inormation relating to
Corporate Governance and takes into account the Swiss
Code o Best Practice or Corporate Governance. Additional
inormation can be ound in the Compensation Report
(Appendix 1).To avoid duplication o inormation, cross-reerencing to
other reports is made in some sections, namely the Annual
Report 2011, the 2011 Financial Statements that comprise
the Consolidated Financial Statements o the Nestl Group
and the Financial Statements o Nestl S.A., as well as the
Articles o Association o Nestl S.A., whose ull text can be
consulted in Appendix 2 or on www.nestle.com.
The 2011 Consolidated Financial Statements o the Nestl
Group comply with International Financial Reporting
Standards (IFRS) issued by the International Accounting
Standards Board (IASB) and with the Interpretations issued
by the International Financial Reporting Interpretations
Committee (IFRIC). Where necessary, these disclosures
have been extended to comply with the requirements o
the SIX Swiss Exchange Directive.
1. Groupstructureandshareholders
1.1 Groupstructure
Please reer to the Annual Report 2011 or the overview
o Directors and Ofcers.
1.1.1 Description o the issuers operational group structure
For the general organisation chart o Nestl S.A.,
reer to page 23 o this document. The Groups
Management structure is represented in the analysisby operating segments (reer to Note 3 o the 2011
Consolidated Financial Statements o the Nestl Group).
1.1.2 All listed companies belonging to the issuers group
Please reer to page 48 o the Annual Report 2011 or
Nestl S.A.s registered ofces, its stock exchange
listing and quotation codes and inormation on market
capitalisation.
Please reer to the 2011 Consolidated Financial
Statements o the Nestl Group, page 120 or a list o
the principal afliated and associated companies,
with an indication o their company names, registeredofce, share capital, place o listing, securities ISIN
numbers, their market capitalisation and the
Companys participation.
1.1.3 The non-listed companies belonging
to the issuers consolidated entities
Please reer to the 2011 Consolidated Financial
Statements o the Nestl Group, page 120 or th
enumeration o the principal afliated and asso
companies, with an indication o their companyregistered ofce, share capital and the Compan
participation.
1.2 Signicantshareholders
On 31 December 2011, Nestl S.A. held, togeth
a Nestl subsidiary, 128 020 079 treasury share
representing 3.9% o the share capital, includin
75 200 000 shares repurchased under Nestl S
Share Buy-Back Programme o CHF 10 billion
completed on 6 September 2011 (reer to Note
the 2011 Consolidated Financial Statements o
Nestl Group). During 2011, the Company publi
on the electronic publication platorm o the SIX
Exchange one disclosure notifcation pertaining
holding o its own shares. This holding ell belo
threshold o 5% on 22 June 2011 as a conseque
the capital reduction eected by the Company.
With respect to nominees, Chase Nominees
London, was a registered Nominee N (reer to p
2.6.3. below) o 346 904 083 shares, i.e. 10.5%
shares o the Company as at 31 December 2011
same date, Citibank N.A., London, as a deposita
the shares represented by American Depositary
Receipts, was the registered holder o 243 575
shares, i.e. 7.4% o the shares o the Company. on 31 December 2011, Nortrust Nominees Ltd,
London, was a registered Nominee N o 112 86
shares o the Company, representing 3.5% o th
shares.
Further, Mellon Bank N.A., Everett, was a reg
Nominee N o 109 326 112 shares, i.e. 3.3% o t
shares o the Company as at 31 December 2011
1.3 Cross-shareholdings
The Company is not aware o cross-shareholdin
exceeding 5% o the capital or voting rights on
sides.
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4 Corporate Governance Repor t 2
2. Capitalstructure
2.1 Capital
The ordinary share capital o Nestl S.A. is
CHF 330 000 000. The conditional share capital is
CHF 10 000 000. Nestl S.A. does not have any
authorised share capital.
2.2 Conditionalcapital
The share capital may be increased in an amount
not to exceed CHF 10 000 000 by issuing up to
100 000 000 registered shares with a nominal value o
CHF 0.10 each through the exercise o conversion
rights and/or option rights granted in connection with
the issuance by Nestl or one o its subsidiaries o
newly or already issued convertible debentures,
debentures with option rights or other fnancial market
instruments. Thus the Board o Directors has at its
disposal a exible instrument enabling it, i necessary,
to fnance the activities o the Company through
convertible debentures.
For a description o the group o benefciaries and
o the terms and conditions o the issue o conditional
capital, reer to art. 3bis o the Articles o Association
o Nestl S.A.
2.3 Changesincapital
The share capital was reduced three times in the last
three fnancial years as a consequence o several Share
Buy-Back Programmes launched by the Company; the
resulting cancellations o shares were approved at the
Annual General Meetings o 23 April 2009, 15 April 2010and 14 April 2011.
In 2009, the Annual General Meeting resolved to
reduce the share capital by 180 000 000 shares to
CHF 365 000 000.
In 2010, the share capital was urther reduced
by 185 000 000 shares to CHF 346 500 000. In 2011,
the Annual General Meeting approved a reduction
o the share capital by 165 000 000 shares to
CHF 330 000 000.
For the breakdown o capital (equity) or 2011,
2010 and 2009 see the changes in equity in the 2011
and 2010 Consolidated Financial Statements o theNestl Group.
2.4 Sharesandparticipationcerticates
Nestl S.A.s capital is composed o registered
shares only. The number o registered shares with
a nominal value o CHF 0.10 each, ully paid up,
was 3 300 000 000 at 31 December 2011.
According to art. 11 par. 1 o the Articles oAssociation, each share recorded in the share registe
as a share with voting rights coners the right to
one vote to its holder. See also point 2.6.1 below.
Shareholders have the right to receive dividends.
There are no participation certifcates.
2.5 Protsharingcerticates
There are no proft sharing certifcates.
2.6 Limitationsontransferability
andnomineeregistrations
2.6.1 Limitations on transerability or each share category
along with an indication o statutory group clauses, i
any, and rules or granting exceptions
According to art. 5 par. 5 o the Articles o Associatio
no person or entity shall be registered with voting
rights or more than 5% o the share capital as
recorded in the commercial register. The limitation o
registration also applies to persons who hold some
or all their shares through nominees pursuant to that
article. Legal entities that are linked to one another,
through capital, voting rights, management or in any
other manner, as well as all natural persons or legal
entities achieving an understanding or orming a
syndicate or otherwise acting in concert to circumvethe regulations concerning the limitation on registrati
or the nominees, shall be counted as one person or
nominee (art. 5 par. 7 o the Articles o Association).
The limitation on registration also applies to shares
acquired or subscribed by the exercise o subscriptio
option or conversion rights (art. 5 par. 10 o the
Articles o Association). See also art. 5 par. 6 and 9
o the Articles o Association and point 2.6.3 below.
2.6.2 Reasons or granting exceptions
in the year under review
Please reer to points 2.6.3 and 6.1.2 below.
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2.6.3 Admissibility o nominee registrations, along with an
indication o percent clauses, i any, and registration
conditions
Pursuant to art. 5 par. 6 and 9 o the Articles o
Association, the Board o Directors has issued
regulations concerning nominees, setting orth rulesor their entry as shareholders in the share register.
These regulations allow the registration o:
Nominees N (N as Name o benefcial owner
disclosed): where trading and saekeeping practices
make individual registration o benefcial owners
difcult or impractical, shareholders may register
their holdings through a Nominee N with voting
rights, subject to the specifc understanding that
the identity and holdings o benefcial owners are to
be disclosed to the Company, periodically or upon
request. Voting rights o Nominees are to be
exercised on the basis o voting instructions received
rom the benefcial owners. Holdings o a Nominee N,
or Nominees N acting as an organised group or
pursuant to a common agreement, may not exceed
5% o the share capital o the Company. Holdings
exceeding the 5% limit (respectively the limit fxed
by the Board o Directors, see point 6.1.2 below) are
registered without voting rights. The responsibility
or disclosure o benefcial owners and their
holdings resides with the nominees registered in
the share register.
Nominees A (A as Anonymous benefcial owner):
registration without voting rights.
2.6.4 Procedure and conditions or cancelling
statutory privileges and limitations on transerability
Please reer to point 6.1.3 below.
2.7 Convertiblebondsandoptions
As at 31 December 2011, there were 8 500 000
outstanding put options, sold, in the context o global
liquidity management, by a Nestl subsidiary on
Nestl S.A. shares, which i exercised would represent
0.26% o the share capital o the Company.(a)
(a) Ratio (or all options) 1:1; 1 000 000 options: maturity 21 December 2012 / strike price CHF 47.00; 300 000 options: maturity 20 July 2012 / strike p
CHF 51.00; 900 000 options, maturity 17 August 2012 / strike price CHF 51.00; 600 000 options: maturity 24 August 2012 / strike price CHF 51.00;
options: maturity 21 September 2012 / strike price CHF 51.00; 250 000 options: maturity 16 November 2012 / strike price CHF 51.00; 300 000 optio
maturity 17 August 2012 / strike price CHF 52.00; 300 000 options: maturity 24 August 2012 / strike price CHF 52.00; 300 000 options: maturity 21
ber 2012 / strike price CHF 52.00; 900 000 options: maturity 19 October 2012 / strike price CHF 52.00; 800 000 options: maturity 16 November 201
price CHF 52.00; 1 150 000 options maturity 23 November 2012 / strike price CHF 52.00; 800 000 options: maturity 21 December 2012 / strike pric
CHF 52.00.
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6 Corporate Governance Repor t 2
3. BoardofDirectors
3.1 MembersoftheBoardofDirectors
First Term
Name Year o birth Nationality Education/Qualifcations (a) election expires
Peter Brabeck-Letmathe 1944 Austrian Economics 1997 2013
ChairmanPaul Bulcke 1954 Belgian Economics and Business 2008 2014
CEO Administration
Andreas Koopmann 1951 Swiss Mechanical Engineering 2003 2014
1st Vice Chairman and Business Administration
Rol Hnggi 1943 Swiss Law and Finance 2004 2014
2nd Vice Chairman
Jean-Ren Fourtou 1939 French Ecole Polytechnique 2006 2012
Daniel Borel 1950 Swiss Physics and Computer Science 2004 2012
Jean-Pierre Meyers 1948 French Economics 1991 2014
Andr Kudelski 1960 Swiss Physics 2001 2013
Carolina Mller-Mhl 1968 Swiss Political Science 2004 2012
Steven G. Hoch 1954 American/Swiss International Relations 2006 2013
and Economics
Nana Lal Kidwai 1957 Indian Economics and Business 2006 2014
Administration
Beat Hess 1949 Swiss Law 2008 2014
Titia de Lange 1955 Dutch Biochemistry 2010 2013
Jean-Pierre Roth 1946 Swiss Economics and Finance 2010 2013
Ann M. Veneman 1949 American Law and Political Science 2011 2014
(a) For more complete inormation on qualifcations: please reer to individual CVs on www.nestle.com.
a) Management tasks o the members
o the Board o Directors
With the exception o Paul Bulcke, all members othe Board o Directors are non-executive members.
Peter Brabeck-Letmathe is active Chairman and has
certain responsibilities or the direction and control
o the Group including the Nestl Health Science
Company and Nestls engagements with LOral,
Galderma and Laboratoires innov.
b) Inormation on non-executive members
o the Board o Directors
With the exception o Peter Brabeck-Letmathe, all
non-executive members o the Board o Directors
are independent, were not previously members
o the Nestl management and have no importantbusiness connections with Nestl.
c) Cross-involvement
Peter Brabeck-Letmathe and Jean-Pierre Meyers
are on the Board o Directors o both Nestl and
LOral.
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3.2 Professionalbackgroundandotheractivities
andfunctions
PeterBrabeck-Letmathe,Chairman
Peter Brabeck-Letmathe joined the Nestl
Groups operating company as a salesman
in Austria in 1968. Between 1970 and 1987,he held a series o responsibilities in Latin
America. In 1987, he was transerred to
Nestls International Headquarters in Vevey,
Switzerland, as Vice President and was named
Executive Vice President in 1992. At the Annual
General Meeting o Shareholders in June 1997, Peter
Brabeck-Letmathe was elected member o the Board
o Nestl S.A. In 1997, the Board o Directors o
Nestl S.A. appointed him Chie Executive Ofcer
(CEO). In 2001, he was elected Vice Chairman and in
2005 Chairman o the Board o Directors. As o
10 April 2008, Peter Brabeck-Letmathe relinquished
his unction as CEO remaining Chairman o the Board
o Directors.
As a Nestl S.A. representative, he serves as Vice
Chairman o LOral S.A., France.
Peter Brabeck-Letmathe is also Vice Chairman
o the Board o Directors o Credit Suisse Group,
Switzerland, and member o the Boards o the Exxon
Mobil Corporation, Texas, USA and o Delta Topco
Limited, Jersey.
In addition, he is a member o the European Round
Table o Industrialists, Belgium, a member o the
Foundation Board o the World Economic Forum,
Switzerland, as well as a member o the FoundationBoard o the Verbier Festival, Switzerland.
PaulBulcke,CEO
Paul Bulcke began his career in 1977
as a fnancial analyst or Scott Graphics
International in Belgium beore moving
to the Nestl Group in 1979 as a marketing
trainee. From 1980 to 1996, he held various
responsibilities in Nestl Peru, Nestl Ecuador and
Nestl Chile beore moving back to Europe as
Managing Director o Nestl Portugal, Nestl Czech
and Slovak Republic, and Nestl Germany. In 2004,he was appointed as Executive Vice President,
responsible or Zone Americas. As o April 2008, Paul
Bulcke was elected member o the Board o Directors
o Nestl S.A. and the Board appointed him Chie
Executive Ofcer (CEO).
As a representative o Nestl, Paul Bulcke se
as Co-Chairman o the Supervisory Board o Ce
Partners Worldwide, Switzerland.
Furthermore, Paul Bulcke is a Board membe
Roche Holding Ltd., Switzerland as well as o th
Consumer Goods Forum and co-chairs its GoveCommittee.
AndreasKoopmann,1stViceChairman
Andreas Koopmann began his caree
1979 as Assistant to the Chairman a
CEO o Bruno Piatti AG, Switzerland
rom 1980 to 1982 was Assistant to
Group Executive at Motor Columbu
Holding, Switzerland. From 1982, he was at Bo
Group, starting as Vice President o Engineering
Manuacturing in Roseland, New Jersey, USA.
1989, he returned to Switzerland, holding a num
senior positions in the company, including mem
o the Group Executive Committee in charge o
Manuacturing. He was a member o the Board
Directors or Bobst Group rom 1998 to 2002 an
was appointed as CEO in 1995, a position he he
May 2009. As o 2010, Andreas Koopmann was
appointed Chairman o Alstom (Suisse) S.A. and
Country President.
Presently, he serves as Vice Chairman o Sw
in Switzerland and as Board member o Credit S
Group, Switzerland, CSD Group, Switzerland an
Georg Fischer AG, Switzerland.
RolfHnggi,2ndViceChairman
In 1970 Rol Hnggi started his care
as a fnancial and investment analys
Swiss Bank Corporation, Switzerlan
beore moving on to the Union Bank
Switzerland and then to the Basella
Cantonal Bank, Switzerland. In 1976 he joined Z
Insurance Company and in 1986 became a mem
o the Corporate Executive Board and Head o f
and investments in securities, worldwide. He w
appointed Deputy CEO o Zurich Insurance Com
in 1988, serving as a Board member rom 1993 1997, beore becoming a private consultant.
From 1994 to April 2009, Rol Hnggi also se
Chairman o Rd, Blass & Cie AG, Bankers, Swit
Presently, he is a member o the Board o Tru
o the Foundation Lutbild Schweiz, Switzerland
a member o the Foundation Board, Werner Ab
Fonds, Switzerland until the end o the year 201
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8 Corporate Governance Repor t 2
also sits on the Advisory Board or the Mastercourse
o Advanced Studies in Applied History at the
University o Zurich, Switzerland.
Jean-RenFourtou
Jean-Ren Fourtou began his career atBossard & Michel in 1963. He became CEO
o Bossard Consultants in 1972 and later
Chairman and CEO o the Bossard Group
rom 1977 to 1986.
From 1986 to 1999, he served as Chairman and
CEO o Rhne-Poulenc Group, and when Hoechst and
Rhne-Poulenc merged to create Aventis in 1999, he
became Vice Chairman o the Management Board and
Managing Director o the company until 2002. Since
2005, he has been Chairman o the Supervisory Board
o Vivendi, where he was Chairman and CEO rom
2002 to 2005.
Jean-Ren Fourtou is Chairman o the Bordeaux
University Foundation, France. He also serves as a
Board member o Sanof-Aventis, France and o Maroc
Tlcom, Morocco.
DanielBorel
Daniel Borel is the co-ounder o Logitech.
He served as Chairman and CEO o
Logitech S.A. rom 1982 to 1988 and o
Logitech International S.A. rom 1992
to 1998. Since 1998, he has served as
Chairman o Logitech International S.A. As o January
2008, Daniel Borel handed over the ofce o Chairmanremaining a member o the Board o Directors o
Logitech International S.A.
In addition, he is President o the EPFL Plus
Foundation and serves as Chairman o swissUp, a
Foundation or Excellence in Education in Switzerland,
and is a member o the Board o Deftech Foundation,
Switzerland.
Jean-PierreMeyers
From 1972 to 1980, Jean-Pierre Meyers
was attached to the directorate o fnancial
aairs at Socit Gnrale. During thesame time he was Assistant Proessor at
the Ecole Suprieure de Commerce in
Rouen, France. From 1980 to 1984, he was a Director
o the bank Odier Bungener Courvoisier. Jean-Pierre
Meyers has been a Board member o LOral S.A.,
France, since 1987 and Vice Chairman since 1994. He
has also served as Vice Chairman o the Bettencourt
Schueller Foundation since 1988.
In addition, Jean-Pierre Meyers is CEO and a
member o the Supervisory Board o Tthys S.A.S.
in France.
AndrKudelski
Andr Kudelski started his career in 1984
at Kudelski SA, Switzerland, as a research
and development engineer. Ater working
in Silicon Valley, he returned to Kudelski S
in 1986 and was appointed product
manager or Pay-TV solutions. From 1989 to 1990, he
was the director o the Pay-TV division (NagraVision)
beore taking over the position o Chairman and CEO
o the Kudelski Group in 1991. In addition, he becam
Chairman o Nagra Plus SA, a joint venture o
Kudelski SA and Canal Plus in 1992.
Andr Kudelski serves on the Board o Directors
and the Audit Committee o Dassault Systmes SA,
France, and Edipresse Group, Switzerland. Furthermo
he is a Board member o HSBC Private Banking
Holdings (Suisse) S.A. and Vice Chairman o the Boa
o Directors o the Swiss-American Chamber o
Commerce.
CarolinaMller-Mhl
Carolina Mller-Mhl started her career a
a PR consultant. In 1999 she served as
Vice Chairperson o the Board o Director
o Mller-Mhl Holding AG and becamePresident o the Mller-Mhl Group in 200
Carolina Mller-Mhl is a Board member o NZZ
Mediengruppe, Switzerland, and o SMG,
Schweizerische Management Gesellschat. She is als
Chairperson o Hyos Invest Holding AG, Switzerland,
and a Board member o Orascom Development
Holding AG, Switzerland.
In addition, she is a member o the Foundation
Board o Pestalozzianum, Switzerland, a member o
the Advisory Board o the Swiss Economic Forum,
a member o the Board o the Pestalozzi Foundation
and a ounding member and Co-President o theForum Bildung. Furthermore, Carolina Mller-Mhl is
also a member o the Foundation Board o Avenir
Suisse, a think tank or economic and social issues.
She was nominated as a Young Global Leader 200
by the World Economic Forum, and does a lot o wo
in the socio-political feld, with a particular commitme
to education policy and gender issues.
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Corporate Governance Repor t 2011
StevenG.Hoch
Steven G. Hoch started his career in 1978
at the Chemical Bank in New York and
Zurich, where he held a series o positions
in commercial banking, principally advising
multi-national companies. Steven G. Hochwas Senior Vice President and a member o the
Management Committee at Bessemer Trust Company,
N.A., New York, rom 1990 to 1994, and a member o
the Executive Committee and Head o Client Service
at Pell Rudman Trust Company, Boston, rom 1994
to 2002. In 2002, he ounded Highmount Capital, LLC,
a US-based investment management frm where he
is a Senior Partner.
Steven G. Hoch is Chairman o the American
Swiss Foundation, a trustee o the Woods Hole
Oceanographic Institution, USA, and a member o the
National Board o the Smithsonian Institution, USA.
NanaLalKidwai
Nana Lal Kidwai started her career
in 1982 and until 1994 was at ANZ
Grindlays Bank Plc.
From 1994 to 2002, she was Vice
Chairperson and Head o Investment
Banking at Morgan Stanley India beore moving to
HSBC. Currently she is Country Head o the HSBC
Group o Companies in India. In 2010, she was
appointed to the Board o HSBC Asia-Pacifc. She is
Senior Vice President o the Federation o Indian
Chambers o Commerce & Industry (FICCI).She serves the Government o India on the
Government-Industry Task Force and the Indo-
German Consultative Group. She is Chairperson o
the India Advisory Council o the City o London and
the India Advisory Board o the Harvard Business
School, where she is also a Global Advisor. Other
engagements include, being on the Board o the
Aspen Institute India, NCAER (National Council o
Applied Economics Research) and NIBM (National
Institute Bank Management). Her interests in the
Environment include being on the Board o Shakti
Sustainable Energy Foundation, the World EconomicForums Global Agenda Council on Climate Change
and TERIs Advisory Council.
Nana Lal Kidwai was given the Padma Shri
Award by the Indian government in 2007, has been
recognised in India and abroad with awards and
been repeatedly ranked in global lists o Top Women
in business.
BeatHess
Beat Hess started his career in 1977
BBC Brown Boveri Ltd in Baden as
Counsel where he was promoted to
General Counsel in 1986. From 1988
2003, he was Senior Group Ofcer,General Counsel and Secretary or ABB Ltd in Z
From 2003 until his retirement in January 2011,
Hess is Group Legal Director and a member o t
Group Executive Committee o Royal Dutch Sh
The Hague, The Netherlands, responsible on wo
level or legal and intellectual property services
well as or the Shell Compliance Ofce.
Beat Hess is a member o the Board o Holci
Switzerland and he has been nominated or ele
the Board o Sonova Holding AG. He is also a m
o the The Hague Academy o International Law
a member o the Supervisory Board o the The
Institute or the Internationalisation o Law.
TitiadeLange
Titia de Lange earned her doctoral a
post-doctoral degrees in biochemis
Amsterdam, London and San Franc
In 1997, she was appointed Proesso
at the Rockeeller University, New Y
where since 1999 she holds as well the Leon H
Proessorship. In 2006 she became Associate D
o the Anderson Cancer Center at that same Un
Titia de Lange is also an elected member o the
American National Academy o Sciences and hworked extensively with the National Institutes
Health. In addition to these research activities,
currently serves on many scientifc advisory bo
and award committees o universities and othe
research centres around the world, as well as o
review panels and editorial boards. Furthermore
has been awarded numerous honours and awa
since 1980.
For Nestl, Titia de Lange serves as a memb
the Nestl Nutritional Council (NNC) a group o
international experts who advise Nestl on nutr
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10 Corporate Governance Repor t 2
Jean-PierreRoth
Jean-Pierre Roth spent his whole career at
the Swiss National Bank, which he joined
in 1979. Ater various senior positions, he
was appointed a member o the Swiss
Governing Board in 1996 beore becomingits Chairman in 2001 until 2009. From 2001 he was a
member o, and since 2006 the Chairman o the Board
o Directors o the Bank o International Settlements
until his retirement in 2009. Jean-Pierre Roth also
served as Swiss Governor o the International
Monetary Fund rom 2001 until 2009 and as a Swiss
representative on the Financial Stability Board rom
2007 until 2009.
As o 2010, Jean-Pierre Roth has been a member
o the Board o Swatch Group AG and a member
o the Foundation Board and Programme Committee
o Avenir Suisse, Switzerland. Since 1 July 2010, he
has served as Chairman o the Board o Directors o
Geneva Cantonal Bank as well as a Board member
o the global (re)insurance company Swiss Re.
AnnM.Veneman
An attorney by training, Ann M. Veneman
was Secretary o the United States
Department o Agriculture (USDA) rom
2001 to 2005. She then served a fve-year
term as the Executive Director o the
United Nations Childrens Fund. Earlier in her career
she was in various positions in the USDA and also
served our years as the Secretary o the CaliorniaDepartment o Food and Agriculture. She is currently
a member o the Boards o Alexion Pharmaceuticals,
the Close Up Foundation, Malaria No More, and 4-H.
She is also Co-Chair o Mothers Day is Every Day and
on a number o advisory boards including BRAC, The
Chicago Council Global Agriculture Development
Initiative, and the Bipartisan Policy Council Nutrition
and Physical Activity Initiative. She is a member o
the Council on Foreign Relations, and the Trilateral
Commission.
In 2009, she was named to the Forbes 100 Most
Powerul Women list, and she has been the recipiento numerous awards and honours throughout her
career.
Ann M. Veneman also serves as member o the
Nestl Creating Shared Value Advisory Board.
3.3 Electionsandtermsofofce
The Annual General Meeting has the competence to
elect and remove the members o the Board. In
principle, the initial term o ofce o a Board member
is three years. Outgoing Directors are re-eligible. Eac
year the Board is renewed by rotation in a way that,ater a period o three years, all members will have
been subject to re-election.
The Board o Directors elects, or a one-year term,
the Chairman, the Chie Executive Ofcer (CEO), two
Vice Chairmen and the members o the Committees.
The term o ofce o a Board member expires no
later than the Annual General Meeting ollowing his o
her 72nd birthday.
For the principles o the selection procedure: see
point 3.4.2 below (Nomination Committee).
For the time o frst election and remaining term o
ofce see point 3.1 above.
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3.4.2 Tasks and area o responsibility or each Committee
o the Board o Directors (1)
The powers and responsibilities o each Committee
are established in the applicable Committee Charter,
which is approved by the Board. Each Committee isentitled to engage outside counsel.
The Chairmans and Corporate Governance
Committee consists o the Chairman, the two Vice
Chairmen, the CEO (Administrateur dlgu) and other
members as elected by the Board. It liaises between
the Chairman and the ull Board o Directors in order
to act as a consultant body to the Chairman and
to expedite whenever necessary the handling o the
Companys business. The Committee periodically
reviews the Corporate Governance o the Company
and prepares recommendations or the Board. It alsoadvices on certain fnance-related tasks including
the Companys fnancing and fnancial management.
While the Committee has limited authority as per
the Board Regulations, it may in exceptional and
urgent matters deal with business matters which
might arise between Board meetings. In all cas
keeps the Board ully appraised. It reviews the
annual work plan.
The Compensation Committee is chaired by anindependent and non-executive member o the
the other members are one Vice Chairman and
minimum o two other non-executive members
Board o Directors. All members are independe
Compensation Committee determines the princ
or remuneration o the members o the Board
submits them to the Board or approval. It overs
and discusses the remuneration principles or t
Company and the Group. In addition, it propose
remuneration o the Chairman, the CEO and ap
the individual remunerations o the members o
Executive Board. It reports on its decisions to thBoard and keeps the Board updated on the ove
remuneration policy o the Group.
The Nomination Committee includes a Chairpe
who is an independent and non-executive mem
3.4 Internalorganisationalstructure
3.4.1 Allocation o tasks within the Board o Directors
Chairmans and Corporate Compensation Nomination Audit
Governance Committee Committee Committee Comm
Peter Brabeck-Letmathe (Chair) Chairman
Paul Bulcke
CEO
Andreas Koopmann (Chair)
1st Vice Chairman
Rol Hnggi (Chai
2nd Vice Chairman
Jean-Ren Fourtou
Daniel Borel (Chair)
Jean-Pierre Meyers
Andr Kudelski
Carolina Mller-Mhl
Steven G. Hoch
Nana Lal Kidwai
Beat Hess
Titia de Lange
Jean-Pierre Roth
Ann M. Veneman
(1) For complete inormation please reer to the Board o Directors Regulations and Committee Charters on www.nestle.com.
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12 Corporate Governance Repor t 2
the Board; the other members are the Chairman o the
Board o Directors and a minimum o two independent
and non-executive members o the Board. The
Nomination Committee establishes the principles or
the selection o candidates to the Board, selects
candidates or election or re-election to the Board andprepares a proposal or the Boards decision. The
candidates to the Board must possess the necessary
profles, qualifcations and experience to discharge
their duties. Newly appointed Board members receive
an appropriate introduction into the business and
aairs o the Company and the Group. I required, the
Nomination Committee arranges or urther training.
It reviews, at least annually, the independence o the
members o the Board and it prepares the annual
sel-evaluation o the Board and its Committees. It
oversees the long-term succession planning o the
Board.
The Audit Committee consists o a Vice Chairman,
who chairs the Committee, and a minimum o two
other members o the Board, excluding the CEO
and any ormer member o the Executive Board. At
least one member has to have recent and relevant
fnancial expertise, the others must be amiliar with
the issues o accounting and audit. In discharging
its responsibilities, it has unrestricted access to the
Companys management, books and records. The
Audit Committee supports the Board o Directors in
its supervision o fnancial controls through a direct
link to KPMG (external auditors) and the Nestl GroupAudit (corporate internal auditors). The Audit
Committees main duties include the ollowing:
to discuss Nestls internal accounting procedures
to make recommendations to the Board o Directors
regarding the nomination o external auditors to be
appointed by the shareholders
to discuss the audit procedures, including the
proposed scope and the results o the audit
to keep itsel regularly inormed on important
fndings o the audits and o their progress
to oversee the quality o the internal and external
auditing to present the conclusions on the approval o the
Financial Statements to the Board o Directors
to review certain reports regarding internal controls
and the Groups annual risk assessment.
The Audit Committee regularly reports to the Board
on its fndings and proposes appropriate actions.
The responsibility or approving the annual Financial
Statements remains with the Board o Directors.
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3.4.3 Work methods o the Board o Directors
and its Committees
The Board meets as oten as necessary, at least
quarterly, and on notice by the Chairman or by the
person designated by him. In addition, the Board must
be convened as soon as a Board member requests the
Chairman to call a meeting. All Committees provide
a detailed report to the ull Board at each meeting in
a dedicated Chairmanss session.
The Board reserves at least one day per year to
discuss the strategic long-term plan o the Company.
In addition, every year the Board visits one operating
company or three to fve days, in 2011 Nestl in Brazil.
The average attendance at the Board meetings was
100%. Board meetings, with the exception o certain
Chairmans andin camera sessions, are attended by
all members o the Executive Board. In addition,
selected members o the Executive Board and senior
management participate in certain Committee
meetings.
At each Board meeting the Chairmen o the various
Committees report on their Committees activities.
3.5 Denitionofareasofresponsibility
The governing bodies have responsibilities as ollows:
3.5.1 Board o Directors (1)
The Board o Directors is the ultimate governing
body o the Company. It is responsible or the ultimate
supervision o the Group. The Board attends to all
matters which are not reserved or the Annual General
Meeting or another governance body o the Company
by law, the Articles o Association or specifc
regulations issued by the Board o Directors.
The Board has the ollowing main duties:a) the ultimate direction o the Company, in particular
the conduct, management and supervision o
the business o the Company, and the provision
o necessary directions;
b) the determination o the Companys organisation;
c) the determination o accounting and fnancia
control principles, as well as the principles o
fnancial planning;
d) the appointment and removal o the Chairma
the Vice Chairmen, o the Committee memb
members o the Executive Board;
e) the ultimate supervision o the Chairman and
members o the Executive Board, in particula
respect to their compliance with the law, the
Articles o Association, the Board Regulation
instructions given rom time to time by the B
) the preparation o the Annual Report, the An
General Meeting and execution o its resolut
g) the notifcation o the court in the event o
overindebtedness;
h) the discussion and approval o:
the Groups long-term strategy and annua
investment budget;
major fnancial operations;
any signifcant policy issue dealing with th
Companys or the Groups general structu
with fnancial, commercial and industrial p
Corporate Governance Principles o theCompany;
the review o and decision on any report
submitted to the Board;
the Groups annual risk assessment.
3.5.2 Executive Board
The Board o Directors delegates to the CEO, w
the authorisation to subdelegate, the power to
the Companys and the Groups business, subje
to law, the Articles o Association and the Regu
o the Board o Directors.
The CEO chairs the Executive Board and deleto its members individually the powers necessa
or carrying out their responsibilities, within the
fxed in the Executive Boards Regulations.
Meetings held in 2011 Frequency Average duration (hours)
Board o Directors o Nestl S.A. 8 times 3:40
Chairmans and Corporate Governance Committee 8 times 4:20
Compensation Committee 3 times 1:20
Nomination Committee 3 times 1:05
Audit Committee 3 times 2:10
(1) For complete inormation please reer to the Board o Directors Regulations on www.nestle.com.
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14 Corporate Governance Repor t 2
3.6 Informationandcontrolinstruments
vis--vistheExecutiveBoard
The Board o Directors, on a regular basis, is inormed
on material matters involving the Companys and
the Groups business. The members o the Executive
Board attend the Board o Directors meetings andreport on signifcant projects and events. In addition,
regular written reports are provided, including
consolidated fnancial inormation, capital investment
and strategy progress reports.
The Chairman and the CEO ensure the proper
inormation ow between the Executive Board and
the Board o Directors.
The Board o Directors receives regular and ad hoc
reports rom the Boards Committees, the Chairman,
the CEO, as well as rom the Executive Board. The
minutes o Committee meetings are made available
to the ull Board. The Board pays a visit to a major
market every year, where it meets members o senior
management.
Furthermore, the Audit Committee reviews the
fnancial perormance and assesses the eectiveness
o the internal and external audit processes as well
as the internal risk management organisation and
processes.
Members o the Executive Board and other senior
management attend the Audit Committee meetings,
except or certainin camera sessions.
Additional inormation and control instruments
include:
The external auditors, KPMG (auditors o Nestl S.A.and o the Consolidated Financial Statements o
the Nestl Group), who conduct their audit in
compliance with Swiss law and in accordance with
Swiss Auditing Standards and with International
Standards on Auditing.
The Nestl Group Audit unction, the corporate
internal auditors, which has a direct link to the Audit
Committee. It comprises a unit o international
auditors who travel worldwide, completing audit
assignments.
Group Risk Services, the corporate risk management
unit, providing assistance to all corporate entitieswith regard to risk management, loss prevention,
claims handling and insurance. A top-level risk
assessment is perormed once a year or all
businesses. For more inormation, please reer
to Note 23 o the 2011 Consolidated Financial
Statements o the Nestl Group.
Group Compliance and other risk and control-
related unctions provide additional guidance and
oversight. Risk and compliance activities are
regularly coordinated through the Group Complian
Committee to ensure a holistic, entity-wide
approach. For more inormation, please reer topage 8 o the Annual Report 2011.
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4. ExecutiveBoard
4.1 MembersoftheExecutiveBoard
Name Year o birth Nationality Education/Current unction
Paul Bulcke 1954 Belgian Economics and Business Administration
CEOWerner Bauer 1950 German Chemical Engineering
EVP: Chie Technology Ofcer: Innovation,
Technology and R&D
Jos Lopez 1952 Spanish Mechanical Engineering
EVP: Operations, GLOBE
John J. Harris 1951 American Business Administration
EVP: Nestl Waters
James Singh 1946 Canadian Business Administration
EVP: CFO, Finance and Control, Legal, IP, Tax, Tre
Global Nestl Business Services
Laurent Freixe 1962 French Business Administration
EVP: Zone Europe
Chris Johnson 1961 American Economics and Business Administration
EVP: Zone Americas
Patrice Bula 1956 Swiss Economics and Business Administration
EVP: Strategic Business Units, Marketing,
Sales and Nespresso
Doreswamy Nandkishore 1958 Indian Electrical Engineering and Postgraduate in Manag
(Nandu) EVP: Zone Asia, Oceania and Arica
Wan Ling Martello 1958 American Business Administration and Accountancy
EVP: *
Marc Caira 1954 Canadian Marketing
Deputy EVP: Nestl Proessional
Jean-Marc Duvoisin 1959 Swiss Economics and Political Science
Deputy EVP: Human ResourcesKurt Schmidt 1957 American Business Administration and Chemistry
Deputy EVP: Nestl Nutrition
David P. Frick 1965 Swiss Law
SVP: Corporate Governance, Compliance and
Corporate Services
(EVP: Executive Vice President; SVP: Senior Vice President)
For complete inormation: please reer to individual CVs on www.nestle.com)
* CFO as o 1 April 2012
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4.2 Professionalbackgroundandotheractivities
andfunctions
PaulBulcke
Please reer to point 3.2 above.
WernerBauerWerner Bauer began his career in 1975
as an Assistant Proessor in Chemical
Engineering at the University o Erlangen-
Nrnberg. In 1980, he was appointed
Proessor in Chemical Engineering at the
Technical University, Hamburg, and in 1985 he obtained
the Directorship o the Fraunhoer Institute or Food
Technology and Packaging and a position as Proessor
in Food Biotechnology, Technical University, Munich.
In 1990, Werner Bauer became Head o the Nestl
Research Center, Lausanne, moving on to become
Head o Nestl Research and Development in 1996.
Ater serving as Technical Manager and then Market
Head or Nestl Southern and Eastern Arica Region,
he moved to the position o Executive Vice President
and Head o Technical, Production, Environment,
Research and Development in 2002. In 2007, he was
appointed Chie Technology Ofcer, Head o Innovation,
Technology, Research and Development.
As a representative o Nestl, Werner Bauer also
undertakes the ollowing duties: Chairman o the
Supervisory Board o Nestl Deutschland AG; Board
member o LOral S.A. in France; Chairman or both
Lie Ventures S.A. and Nutrition-Wellness Venture AG,
Switzerland; Chairman o Sofnol S.A. in Switzerland.Furthermore, Werner Bauer is Chairman o the Nestl
Institute o Health Sciences, Switzerland, Board
member o Nestl Health Science S.A. and Board
member o Galderma Pharma, Switzerland.
He is also Chairman o the Board o Trustees or
the Bertelsmann Foundation and a member o the
Bertelsmann Verwaltungsgesellschat (BVG) in
Germany. Werner Bauer is member o the Supervisory
Board o GEA Group AG, Germany and is a Board
member o scienceindustries, Switzerland.
JosLopezJos Lopez joined Nestl in 1979 as
Engineering Trainee. From 1983 to 1995, he
completed various technical assignments
in Spain, USA, Japan and France. In 1995,
he was appointed Technical Manager of
the Oceania Region, becoming in 1997 the Operations
Director responsible for Technical, Supply Chain and
Exports. In 1999, Jos Lopez became Market Head
responsible for the Malaysian/Singaporean Region;
in 2003, he was appointed Market Head of Nestl
Japan. As Executive Vice President of Operations
since 2007, Jos Lopez is responsible or Procureme
Manufacturing, Supply Chain, Quality Management,Health & Safety, Environment and Engineering. As o
2008, he has also been in charge of GLOBE (Global
Business Excellence; IS/IT).
As a representative o Nestl, Jos Lopez serves
as Chairman o Nestec SA as well as o Nestrade SA
and is a member o the Supervisory Board o Cereal
Partners Worldwide, Switzerland.
Presently, Jos Lopez is Chairman o the
Management Board o GS1 (ormerly EAN Internation
in Belgium and a member o the Advisory Board o t
University o Cambridges Programme or Sustainabili
Leadership (CPSL).
JohnJ.Harris
John J. Harris began his career in 1974
as a Marketing Management Trainee
at Carnation Company in the United State
(acquired by Nestl in 1985). From 1974
to 1987, John J. Harris held various positio
in both Friskies PetCare and Carnation Products
Division. In 1987, he was promoted to Vice President
and General Manager o the Carnation Products
Division.
In 1991, he was transerred to the Friskies PetCare
Division as Vice President and General Managerand was instrumental in Friskies PetCares acquisition
o Alpo Pet Foods, announced in January 1995. In
January 1997, John J. Harris was named Senior Vice
President o Nestl S.A. in Vevey responsible or
the Nestl Worldwide PetCare Strategic Business Un
In March 1999, he returned to Nestl USA as Preside
o Friskies PetCare Company. In early 2001, he was
nominated Chie Worldwide Integration Ofcer
ollowing the acquisition o Ralston Purina Company
He was nominated Chie Executive Ofcer o Nest
Purina PetCare Europe in 2002 and received added
responsibility or Asia, Oceania and Arica in 2005.Eective December 2007, John J. Harris was
appointed Executive Vice President o Nestl S.A. an
Chairman and Chie Executive Ofcer o Nestl Wate
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JamesSingh
James Singh joined Nestl Canada, Inc.
in 1977 as a Financial Analyst. In 1980,
he became Manager Financial Analysis and
Planning, moving on to Director o Finance
FoodServices and then Vice PresidentFinance and Treasurer. In 1993, James Singh was
appointed Senior Vice President Finance beore taking
his position as Executive Vice President and Chie
Financial Ofcer o Nestl Canada, Inc. in 1995. In
2000, he was transerred to Nestls International
Headquarters in Vevey, Switzerland as Senior Vice
President in charge o Mergers & Acquisitions, Joint
Ventures, Divestments, Corporate Real Estate
and Corporate Venturing Investments as well as or
special strategic corporate projects. As o January
2008, James Singh has been appointed Executive
Vice President and Chie Financial Ofcer with
responsibility or Finance and Control, Legal, Treasury,
Intellectual Property and Tax departments as well as
the Global Nestl Business Services.
As a representative o Nestl, James Singh is
Chairman o Nestl Capital Advisers S.A. and o Nestl
International Travel Retail S.A.; he is a Board member
o both Lie Ventures S.A. and Nutrition-Wellness
Venture AG.
Furthermore, James Singh was elected as a Director
o the RTL Group in Luxembourg on 20 April 2011.
LaurentFreixe
Laurent Freixe joined Nestl Francein 1986 as a sales representative and got
increasing responsibilities in the feld o
sales and marketing. In 1999, he became
a member o the Management Committee
and was nominated Head o the Nutrition Division.
In 2003, Laurent Freixe became Market Head o Nestl
Hungary. In January 2007, he was appointed Market
Head o the Iberian Region taking responsibility or
Spain and Portugal. As o November 2008, Laurent
Freixe has been serving as Executive Vice President
in charge o Zone Europe.
As a representative o Nestl, he is Chairman oNestl Entreprises S.A.S. in France, Nestl Suisse S.A.,
Socit des Produits Nestl S.A. and Beverage
Partners Worldwide S.A. in Switzerland as well as
Board member o Lactalis Nestl Produits Frais S.A.S.
in France and member o the Supervisory Board o
Cereal Partners Worldwide, Switzerland.
In addition, Laurent Freixe is a member o th
Foreign Investment Advisory Council o Russia,
a Board member o Association des Industries
Marque (AIM) in Belgium, member o the Board
and Executive Committee o the CIAA, membe
the Liaison Committee with the CIAA and memo the Executive Board o ECR Europe in Belgiu
ChrisJohnson
Chris Johnson started his career wit
Nestl in 1983 as a marketing traine
Carnation Inc. During his frst eight
he took on increasing responsibilitie
mainly in the commercial area, at Nes
and then, rom 1991, in Japan. Senior Area Man
or the Asian region o Nestl Waters in Paris ro
1995, he was then transerred to Taiwan in 1998
Market Head. From 2000, Chris Johnson led the
worldwide development and implementation o
GLOBE (Global Business Excellence; IS/IT), the
Strategic Supply Chain as well as eNestl. He w
appointed Deputy Executive Vice President in A
2001, and later moved back to Japan in 2007 as
Market Head. As o January 2011, Chris Johnso
has been serving as Executive Vice President in
charge o Zone Americas.
As a representative o Nestl, Chris Johnson
Chairman o the Board o Nestl Brasil Ltda. as
as o Nescalin S.A. de C.V., Mexico and o Nest
Mexico S.A. de C.V. He is also Co-Chairman o
Supervisory Board o Dairy Partners Americas amember o the Supervisory Board o Cereal Par
Worldwide, Switzerland.
In addition, Chris Johnson is a Board membe
the Swiss-Latin American Chamber o Commer
Treasurer o the Swiss-American Chamber o
Commerce.
PatriceBula
Patrice Bula joined Nestl in 1980 a
entrusted with various responsibiliti
Marketing and Sales in Kenya, Japa
Taiwan beore being promoted to Markor Taiwan in 1992, Market Head or
Republic in 1995, then Head or the South and
Arica Region in 1997. In 2000 he was appointed H
Chocolate, Conectionery and Biscuits Strategic B
Unit based at Nestls International Headquarters in
In October 2003, Patrice Bula was transerred as
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18 Corporate Governance Repor t 2
Head o Nestl Germany and in August 2007 he took up
the role as Market Head or the Greater China Region.
As o May 2010, Patrice Bula was appointed to the
Executive Board o Nestl S.A. as Executive Vice
President with responsibility or the Strategic Business
Units, Marketing and Sales, and Nespresso.As a representative o Nestl, Patrice Bula serves as
Chairman o Nespresso S.A., as a Board member o
both Lie Ventures S.A. and Nutrition-Wellness
Venture AG as well as o Beverage Partners
Worldwide S.A., Switzerland. Furthermore, Patrice
Bula is Chairman o the Board o Shanghai Totole
Food Ltd. as well as o Shanghai Totole First Food Ltd,
China and is a Board member o both Yinlu Food
Group Companies and Hsu Fu Chi Group Companies,
China.
Doreswamy(Nandu)Nandkishore
Nandu Nandkishore joined Nestl as a
mid-career hire in 1989 in India where,
over the next seven years, he took on
increasing responsibilities, mainly in
marketing. His international career started
in 1996 when he was transerred to Indonesia to run
the Conectionery Business Unit.
In 2000, ater a short period at Nestls International
Headquarters in Vevey, Switzerland, he returned to
Indonesia where he was promoted to Market Head
o Indonesia in March 2003. In April 2005, Nandu
Nandkishore became Market Head o Nestl Philippines,
which he ran until October 2009, when he returnedto Nestls International Headquarters in Vevey,
Switzerland to take up the role o Global Business
Head, Inant Nutrition at Nestl Nutrition.
In 2010, Nandu Nandkishore was nominated to the
Executive Board o Nestl S.A. as Deputy Executive
Vice President in charge o Nestl Nutrition including
Inant Nutrition, Perormance Nutrition and Weight
Management. As o October 2011, the Board o
Directors appointed Nandu Nandkishore Executive
Vice President responsible or Asia, Oceania, Arica
and Middle East.
As a representative o Nestl, he is Chairman othe Supervisory Board o both P.T. Nestl Indonesia
and P.T. Nestl Indoood Citarasa Indonesia and
a Board member o Nestl (China) Ltd. and Hsu Fu Chi
International Ltd., China. In addition, Nandu Nandkishore
is a Board member o Osem Investments Ltd., Israel
and a member o the Supervisory Board o Cereal
Partners Worldwide S.A.
WanLingMartello
Wan Ling Martello joined Nestl S.A. as
Executive Vice President in November 20
and is the designated Chie Financial
Ofcer eective 1 April 2012.
Wan Ling Martello came to Nestl S.Arom Walmart Stores Inc., where she was EVP, Globa
eCommerce in 2010 and 2011. From 2005 to 2009 sh
was SVP, CFO & Strategy or Walmart International.
Prior to Walmart, Wan Ling Martello built her career
the consumer packaged goods industry. She worked
at Krat in increasingly broader fnance roles rom 19
to 1995. She was the Corporate Controller at Borden
Foods during its turn-around years owned by KKR
in 1995 until 1998. She was the CFO and then the
President o the U.S. business o NCH, a ormer
subsidiary o AC Nielsen rom 1998 to 2005.
Wan Ling Martello serves on the Board o Committ
o 100, a U.S. national organisation o Chinese Americ
leaders, as well as the Board o Royal Neighbors
o America. She is also a member o the Board o
Trustees o the Museum o Chinese in America.
MarcCaira
Marc Caira started at Nestl Canada in 197
In 1986, he was appointed Regional Sales
Vice President and then, in 1990, Vice
President FoodServices, eventually servin
as President o FoodServices & Nesca
Beverages or Nestl Canada rom 1997 to 2000.
In October 2000, Marc Caira joined ParmalatCanada and became President and CEO o Parmalat
North America in 2004.
In May 2006, Marc Caira returned to Nestl and
was appointed Deputy Executive Vice President in
charge o FoodServices Strategic Business Division
which became Nestl Proessional, a globally
managed business unit, in 2009.
Jean-MarcDuvoisin
Jean-Marc Duvoisin joined Nestl in 1986
ater a short period at the Centre he start
his international career in the area o Sale& Marketing, frst in Colombia, and then
in Central America until 1997 as a Busine
Executive Manager in the Dairy, Inant Nutrition and
Cereal sector. He came back to the Centre to Zone
AMS as Operations Manager or two years ater whic
he returned to Latin America where he assumed
the role o Country Manager in 1999 in Ecuador. He
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Corporate Governance Repor t 2011
became Market Head o the Bolivarian Region
(Colombia, Ecuador and Venezuela) in 2003 and
Market Head o Mexico in 2004. From 2007,
Jean-Marc Duvoisin held the position o Senior Vice
President, Head o Corporate Human Resources.
Eective January 2010, he was appointed to theExecutive Board o Nestl S.A. as Deputy Executive
Vice President, Human Resources and Centre
Administration.
As a representative o Nestl, Jean-Marc Duvoisin
serves as Chairman o Nestl Pension Funds and
as a Board member o Nestl Capital Advisers S.A.
KurtSchmidt
Kurt Schmidt began his career in Marketing
with the Krat Food U.S. Rerigerated
Products Group in 1985, beore starting
his international assignments as Head
o Food & Beverages or Australia and
New Zealand. In 1993, he was appointed to the position
o Marketing Director or Krat Jacobs Suchard in
Hungary. In 2002, he joined Novartis and managed the
Animal Health Business. Kurt Schmidt fnally took over
the position o President and Chie Executive Ofcer
o Gerber, a division o Novartis, beore joining Nestl
with the acquisition o Gerber Products Company.
In 2007, he became Regional Business Head or
Inant Nutrition and responsible or the coordination
o Nestl Nutrition North America. As o September
2011, Kurt Schmidt was appointed Deputy Executive
Vice President in charge o Nestl Nutrition.As a representative o Nestl, he is a Board member
o both Lie Ventures S.A. and Nutrition-Wellness AG
as well as o the Nestl Nutrition Council.
Furthermore, Kurt Schmidt is Chairman o the
International Association o Inant Food Manuacturers
(IFM).
DavidP.Frick
David P. Frick began his career in 1991 at
the Meilen District Court in Zurich and
as an assistant to the Banking Law Chair at
Zurich University Law School.From 1994, he was an attorney in the
International Corporate and Litigation practice groups
o Cravath, Swaine & Moore, the New York law frm.
In 1999, he became Group General Counsel and
Managing Director o Credit Suisse Group, Zurich,
where he was appointed a Member o the Executive
Board and served as the companys Head o Le
and Compliance.
David P. Frick joined Nestl S.A. in 2006 and
as Senior Vice President, Corporate Governanc
Compliance and Corporate Services.
He is a member o the Board o Economiesuichairs its Legal Commission. He also represents
at SwissHoldings and serves on the SIX Regula
Board, the Committee on Extraterritoriality or t
International Chamber o Commerce in Paris an
Legal Committee or the Swiss-American Cham
o Commerce.
4.3 Managementcontracts
There are no management contracts with third
at Nestl.
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20 Corporate Governance Repor t 2
5. Compensations,shareholdingsandloans
Please reer to the Compensation Report, Appendix 1
o this document.
6. Shareholdersparticipation
6.1 Votingrightsandrepresentationrestrictions6.1.1/ All voting rights restrictions and rules /
6.1.2 Reasons or granting exceptions in the year
under review
Only persons entered in the share register as
shareholders with voting rights may exercise the
voting rights or the other rights related thereto
(art. 5 par. 2 o the Articles o Association).
No person may exercise, directly or indirectly,
voting rights, with respect to own shares or shares
represented by proxy, in excess o 5% o the share
capital as recorded in the commercial register. Legal
entities that are linked to one another through capital,
voting rights, management or in any other manner,
as well as all natural persons or legal entities achieving
an understanding or orming a syndicate or otherwise
acting in concert to circumvent such a limit shall be
counted as one shareholder (art. 11 par. 2 o the Articles
o Association; see art. 11 par. 3 o the Articles o
Association, or exceptions to this voting restriction).
To permit the exercise o voting rights in respect o
shares deposited with banks, in line with art. 11 par. 4
o the Articles o Association, the Board o Directors
may and has granted exceptions to certain banks
to vote shares deposited by their clients which in
aggregate are in excess o 5% o the share capital.In order to acilitate trading o the shares on the
Stock Exchange, the Board o Directors has issued
regulations and authorised certain nominees to exceed
the 5% limit to be registered as nominees with voting
rights.
6.1.3 Procedure and conditions or abolishing
statutory voting rights restrictions
A resolution to amend the provisions o the Articles
o Association relating to:
(i) restrictions on the exercise o voting rights and the
change or removal o such restrictions, or(ii) the limitation on registration or the limitation on voting
rights and the change or removal o such limitations
requires a majority o two thirds o the shares
represented and the absolute majority o the nominal
value represented at the General Meeting (art. 13 o
the Articles o Association). See also art. 11 par. 4
o the Articles o Association.
6.1.4 Statutory rules on participation in the General
Meeting o shareholders i they dier rom applicable
legal provisions
There are no restrictions to the legal regime provided
by Swiss Law. Shareholders with voting rights
may have their shares represented by the proxy otheir choice.
6.2 Statutoryquorums
Please reer to art. 13 o the Articles o Association.
6.3 ConvocationoftheGeneralMeeting
ofshareholders
Nestl S.A. statutory rules (art. 7 to 9 o the Articles
o Association) do not dier rom applicable legal
provisions. An Extraordinary General Meeting request
by one or more shareholders whose combined
holdings represent at least 10% o the share capital
as recorded in the commercial register must be
held as promptly as practicable ollowing such reque
(art. 8 par. 2 o the Articles o Association).
6.4 Inclusionofitemontheagenda
One or more shareholders with voting rights whose
combined holdings represent at least 0.15% o the
share capital as recorded in the commercial register
may request that an item be included in the agenda
o the General Meeting by making the request in
writing to the Board o Directors at the latest 45 days
beore the meeting and speciying the agenda
items and the proposals made (art. 9 par. 2 and 3o the Articles o Association).
6.5 Inscriptionsintotheshareregister
The relevant date to determine the shareholders righ
to participate in the General Meeting on the basis o
the registrations appearing in the share register is set
by the Board o Directors in the invitation to the
General Meeting.
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Corporate Governance Repor t 2011
7. Changeofcontrolanddefencemeasures
7.1 Dutytomakeanoffer
Nestl S.A. does not have a provision on opting out
or opting up in the Articles o Association.
Thus, the provisions regarding the legally
prescribed threshold o 33% o the voting rightsor making a public takeover oer set out in art. 32
o the Swiss Stock Exchange Act are applicable.
7.2 Clausesonchangeofcontrol
There are no such agreements.
8. Auditors
8.1 Durationofthemandateandtermofofce
oftheleadauditor
KPMG Klynveld Peat Marwick Goerdeler SA were frst
appointed on 22 May 1993, and KPMG SA (replacing
KPMG Klynveld Peat Marwick Goerdeler SA) were frst
appointed on 23 April 2009 as auditors o Nestl S.A.
On 14 April 2011 KPMG SA (hereater KPMG)
were appointed as auditors o Nestl S.A. and o the
Consolidated Financial Statements o the Nestl Group
or a term o ofce o one year.
The audit report is signed jointly by two KPMG
partners on behal o KPMG. The frst year that
Mr Mark Baillache, in his capacity as lead auditor,
signed the Financial Statements o Nestl S.A. and the
Consolidated Financial Statements o the Nestl Group
was or the year ending 31 December 2006.
8.2 AuditingfeesThe total o the auditing ees paid to the auditors
or 2011 amounts to CHF 41 million, o which KPMG,
in their capacity as Group auditors, received
CHF 39 million.
8.3 Additionalfees
Fees paid to the auditors or 2011 related to additional
services amount to CHF 8 million, o which KPMG
received CHF 1.5 million or tax services and
CHF 1.5 million or other various non-audit services
(mainly IS/IT advisory support).
8.4 Supervisoryandcontrolinstruments
pertainingtotheaudit
KPMG presents to the Audit Committee a detailed
report on the conduct o the 2011 Financial Statements
audit, the fndings on signifcant fnancial accounting
and reporting issues together with the fndings on
the internal control system as well as an overvie
o issues ound during the interim audit.
In 2011, KPMG participated in all three Audit
Committee meetings at the end o which they m
with the Audit Committee without the Groups
management being present.Nestl Group Audit (corporate internal audito
three times with the Audit Committee. In additi
head o internal audit regularly met with the Ch
o the Audit Committee or interim updates.
The Audit Committee reviews annually the
appropriateness o retaining KPMG as the audit
the Nestl Group and Nestl S.A., prior to prop
to the Board and to the Annual General Meeting
o Nestl S.A. the election o KPMG as auditors
Audit Committee assesses the eectiveness o
work o the auditors in accordance with Swiss l
based on their understanding o the Groups bu
control, accounting and reporting issues, toget
with the way in which matters signifcant at Gro
level or in the statutory accounts are identifed
resolved.
The Audit Committee is also inormed on the
work o KPMG through regular briefngs o its Ch
The lead auditor is rotated every seven years in
accordance with Swiss law. Audit ees are ultim
approved by the Audit Committee.
The Group and KPMG have agreed on clear
guidelines as to audit services which it is appro
or KPMG to provide. These services include du
diligence on mergers, acquisitions and disposatax and business risk assurance and IS/IT advis
support. These guidelines ensure KPMGs
independence in their capacity as auditors to th
Group. KPMG monitors its independence throu
the year and confrms its independence to the A
Committee annually.
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22 Corporate Governance Repor t 2
9. Informationpolicy
InvestorRelationsguidingprinciples
Nestl is committed to managing an open and
consistent communication policy with shareholders,
potential investors and other interested parties.
The objective is to ensure that the perception o thoseparties about the historical record, current perormance
and uture prospects o Nestl is in line with
managements understanding o the actual situation
at Nestl. The guiding principles o this policy are that
Nestl gives equal treatment to shareholders in equal
situations, that any price-sensitive inormation is
published in a timely ashion and that the inormation
is provided in a ormat that is as ull, simple, transparent
and consistent as possible.
Methodology
Nestl produces each year a detailed Annual Report,
which reviews the business. It also provides detailed
audited Financial Statements or the year under
review, prepared according to the International
Financial Reporting Standards (IFRS). These are
complemented by the Hal-Yearly Report.
Nestl publishes its ull-year and hal-year results,
and its frst-quarter and nine-months sales fgures;
it also publishes press releases at the time o any
potentially price-sensitive event, such as signifcant
acquisitions and divestments, joint venture agreements
and alliances. Major announcements, such as results
o corporate activity, are accompanied by a presentation
which is broadcast live on the Internet and whichanyone can choose to access, whether or not that
person is a shareholder.
Furthermore, Nestl has an active investor relations
programme, including both group meetings and
one-to-one meetings. This includes the Annual General
Meeting, as well as presentations at the time o its
ull-year and hal-year results. The Group also has
a programme o roadshows, which take place in most
fnancial centres around the world, and hosts themed
events or institutional investors and investment
analysts at which members o line management give
an overview o their particular areas o responsibility.These meetings ocus either on recently announced
fnancial results, recent corporate activity or the
longer-term strategy o the Group; they are not an
occasion or the disclosure o new inormation which
might encourage an investment decision.
Specifcally on governance topics, the Company
engages into an active dialogue with investors through
regular Chairmans roundtables, surveys and bilatera
exchanges which are reported to the Chairmans and
Corporate Governance Committee or the Board.
The Company utilises the World Wide Web
(www.nestle.com) to ensure a rapid and equitable
distribution o inormation. Nestl does not just relyon people visiting the site to be updated on the lates
developments within the Group: anyone can sign
up on the site to be alerted automatically by Nestl
whenever there is a change to the Investor Relations
Web site; also press releases are distributed to
major wire and news services. There are links to
non-fnancial inormation that may be o interest
to investors, including areas such as the environmen
sustainability, the Nestl Corporate Business Principl
and the Nestl Human Resources Policy. A Corporate
calendar o relevant dates is available on the Corpora
Web site (www.nestle.com).
The Nestl Investor Relations Department can be
contacted, either through the Web site, or by telephon
ax, e-mail or letter.
Contact
Investor Relations
Nestl S.A., Avenue Nestl 55
CH-1800 Vevey (Switzerland)
Tel. +41 (0)21 924 35 09
Fax +41 (0)21 924 28 13
E-mail: [email protected]
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Corporate Governance Repor t 2011
GeneralOrganisationofNestlS.A.
31 December 2011
Chairmano the Board
Chie Executive Ofcer Nestl Health Science
Zone AOA:
Asia, Oceania and Arica
Zone AMS:
Americas
Executive Board
P.BulckeW. BauerJ. Lopez
J. J. HarrisJ. Singh
L. FreixeC. JohnsonP. Bula
D. NandkishoreW. L. MartelloM. CairaJ.-M. DuvoisinK. SchmidtD. P. Frick
CorporateCommunications
Human ResourcesCorporate Governance
Compliance &Corporate Services
Operations Finance & ControlStrategic Business Units,
Marketing and Sales
Nestl WatersNestl Nutrition
Zone EUR:
Europe
InnovationTechnology and R&D
Nestl Proessional
P.Brabeck-Letmathe
P.Bulcke L.Cantarell
D.Nandkishore C.Johnson
R.Ramsauer J.-M.DuvoisinD.P.Frick
J.Lopez J.Singh* P.Bula
J.J.HarrisK.Schmidt
L.Freixe
W.Bauer
M.Caira
*W. L. Martello as o 0
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24 Corporate Governance Repor t 2
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Corporate Governance Report 2011 Appendix 1
Appendix 1: Compensation Report 2011
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26 Corporate Governance Report 2011 Appendi
Compensation Report 2011
Introduction
The uture success o Nestl is dependent on its ability to
attract, motivate and retain good people. Among the various
programmes to support this ambition is a competitive
remuneration policy. Nestl believes in a perormance
culture as well as good corporate governance and corporatesocial responsibility.
Thereore, remuneration at Nestl is based on the ollowing
principles:
pay or perormance to support the short-term and
long-term objectives;
compensation aligned with long-term Group strategy
and shareholders interests;
coherence in our remuneration plans and levels
throughout the Company;
appropriate balance o fxed and variable remuneration
depending on hierarchical level to ensure a direct
participation in results achieved.
As last year, the Compensation Report shall be submitted
to the advisory vote o the shareholders at the next Annual
General Meeting.
Changestothecompensationsystem
The Compensation Committee has decided on the ollowing
material changes to our compensation system or 2012:
as anticipated in last years report, the Compensation
Committee has decided to introduce a second
perormance measure to our Perormance Share Unit
Plan (PSUP). The currently used relative perormancemeasure o Total Shareholder Return versus peers, which
is an external one, will be supplemented by an absolute,
internal perormance measure in the orm o Earnings per
Share. The vesting level o the PSUP will be determined
with equal weight by each o these two measures;
the Board has decided to change the compensation
structure o the CEO as rom 2012. The target Short Term
Bonus as well as the Long Term Incentives will be
reduced rom 200% to 150% o the Annual Base Salary,
which will be increased proportionally. This change will
result in a lower ratio between fxed and variable
remuneration.
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Corporate Governance Report 2011 Appendix 1
Governance
The Board o Directors has the overall responsibility or defning the compensation principles used in the Group. It ap
the compensation o the members o the Board, its Chairman, the CEO and the Executive Board as a whole.
The governance or setting the compensation o the members o the Board o Directors and the Executive Board
defned as ollows:
Compensation o Recommended by Approved by
Chairman o the Board, CEO andExecutive Board as a whole
Compensation Committee Board o Directors(a)
Non-executive members o the Board o Directors Compensation Committee Board o Directors(b)
Members o the Executive Board CEO together with Chairman Compensation Committe
(a) Chairman as well as CEO not voting on own compensation.
(b) Members not voting on own compensation to the extent that Committee ees are concerned.
CompensationCommittee(CC)
The CC is governed by the Compensation Committee Charter. The Committee consists o the Chairperson who is an
independent and non-executive member o the Board, one o the Vice Chairmen o the Board and two other non-exe
members o the Board.
The members o the CC and its Chairperson are appointed by the Board o Directors or a period o one year.
On 31 December 2011, the composition o the CC was as ollows:
Chairman Members
Mr Daniel Borel Mr Andreas Koopmann
Mr Jean-Ren Fourtou
Mr Jean-Pierre Meyers
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28 Corporate Governance Report 2011 Appendi
Compensation2011forthemembersoftheBoardofDirectors
Boardmembershipfeesandallowances
With the exception o the Chairman and the CEO, each member o the Board o Directors receives a Board membership
ee o CHF 280 000 and an Expense Allowance o CHF 15 000. These fgures have remained unchanged since 2006.
Members o a Board Committee receive the ollowing additional ees:
Chair Members
Chairmans and Corporate Governance Committee (a) CHF 200 000
Compensation Committee CHF 100 000 CHF 40 000
Nomination Committee CHF 100 000 CHF 40 000
Audit Committee CHF 150 000 CHF 100 000
(a) The Chairman and the CEO receive no Committee ee.
Committeemembershipon31December2011
Chairmans and CorporateGovernance Committee
CompensationCommittee
NominationCommittee
AuditCommittee
Peter Brabeck-Letmathe (Chair)
Paul Bulcke
Andreas Koopmann (Chair)
Rol Hnggi (Chair)
Jean-Ren Fourtou
Daniel Borel (Chair)
Jean-Pierre Meyers
Andr Kudelski
Carolina Mller-Mhl
Steven G. Hoch
Nana Lal Kidwai
Beat Hess
Titia de Lange
Jean-Pierre Roth
Ann M. Veneman
The above ees and allowances cover the period between the Annual General Meeting 2011 and the Annual General
Meeting 2012. Board membership and the Committee ees are paid 50% in cash and 50% in Nestl S.A. shares, which ar
subject to a three-year blocking period. As anticipated in last years report, the blocking period was extended rom two
years to three years.
The number o Nestl S.A. shares is determined by taking the closing price o the share on the SIX Swiss Exchange
on the ex-dividend date o the respective fnancial year, discounted by 16.038% to account or the blocking period o three
years. In 2011 the value was CHF 43.83.
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Corporate Governance Report 2011 Appendix 1
Summaryofcompensation
Cash in CHF(a)
Number
o sharesDiscounted value
o shares in CHF b)T
remunera
Peter Brabeck-Letmathe, Chairman(c) 1 600 000 122 606 5 373 821 6 973
Paul Bulcke, Chie Executive Ofcer(c)
Andreas Koopmann, 1st Vice Chairman 325 000 5 939 260 306 585
Rol Hnggi, 2nd Vice Chairman 330 000 6 035 264 514 594
Jean-Ren Fourtou 275 000 4 981 218 317 493
Daniel Borel 205 000 3 640 159 541 364
Jean-Pierre Meyers 175 000 3 066 134 383 309
Andr Kudelski 205 000 3 640 159 541 364
Carolina Mller-Mhl 175 000 3 066 134 383 309
Steven G. Hoch 175 000 3 066 134 383 309
Nana Lal Kidwai 205 000 3 640 159 541 364
Beat Hess 205 000 3 640 159 541 364
Titia de Lange 155 000 2 682 117 552 272
Jean-Pierre Roth 155 000 2 682 117 552 272
Ann M. Veneman 155 000 2 682 117 552 272
Totalfor2011 4340000 171365 7510927 118509
Total or 2010 4 185 000 127 407 8 867 028 (d) 13 052
(a) The cash amount includes the expense allowance o CHF 15 000. The Chairman receives no expense allowance.
(b) Nestl S.A. shares received as part o the Board membership and the Committee ees are valued at the closing price o the share on the SIX Swiss Exc
the ex-dividend date, discounted by 16.038% to account or the blocking period o three years.
(c) The Chairman and the Chie Executive Ofcer receive neither Board membership or Committee ees nor expense allowance.
(d) Including the air value o stock options granted to the Chairman in 2010.
During 2011, one new Board member (Ms Ann M. Veneman) joined the Board.
Peter Brabeck-Letmathe, in his capacity as active Chairman, received a cash compensation as well as Nestl S.A.
shares, which are blocked or three years. This in particular reects certain responsibilities or the direction and cont
the Group including the Nestl Health Science Company and the direct leadership o Nestls interests in LOral, Gaand Laboratoires innov. He also represents Nestl at the European Round Table o Industrialists and at the Foundati
Board o the World Economic Forum (WEF). All corresponding compensation is included in the disclosed amount. H
compensation was:
2011 2
Number Value in CHF Number Value in C
Cash compensation 1 600 000 1 600
Blocked shares (discounted value) 122 606 5 373 821 80 475 3 526
Stock options (air value at grant) (a) 477 600 3 199
Totalcompensation 6973821 8326
(a) As anticipated in last years report, compensation or the Chairman o the Board is paid in the orm o cash and Nestl S.A. shares, which are blocked o
years. The use o stock options was discontinued.
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30 Corporate Governance Report 2011 Appendi
Sharesandstockoptionsownershipofthenon-executivemembersoftheBoardofDirectors
andcloselyrelatedpartieson31December2011
Number oshares held(a)
Number ooptions held(b)
Peter Brabeck-Letmathe, Chairman 2 237 853 2 733 600
Andreas Koopmann, 1st Vice Chairman 72 973
Rol Hnggi, 2nd Vice Chairman 72 440
Jean-Ren Fourtou 27 754
Daniel Borel 225 426
Jean-Pierre Meyers 1 425 574
Andr Kudelski 50 036
Carolina Mller-Mhl 168 008
Steven G. Hoch 213 844
Nana Lal Kidwai 16 216
Beat Hess 15 816
Titia de Lange 5 414
Jean-Pierre Roth 5 414
Ann M. Veneman 2 682
Totalasat31December2011 4539450 2733600
Total as at 31 December 2010 4 048 300 3 093 600
(a) Including blocked shares.
(b) The ratio is one option or one Nestl S.A. share.
Loans
There are no loans to non-executive members o the Board o Directors.
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Corporate Governance Report 2011 Appendix 1
Principlesofcompensationformembers
oftheExecutiveBoard
Principles
The compensation programmes or members o the
Executive Board are based on three major objectives:
Pay or perormance
As a direct reection o this objective, the Total Direct
Compensation package or the members o the Executive
Board includes a fxed Annual Base Salary and a variable
part, which is a combination o a Short-Term (Annual) Bonus
and Long-Term Incentives. For the members o the Executive
Board, the variable and perormance-related part was
between 50% and 75% o the Total Direct Compensation.
The criteria and objectives which are used are reecting
perormance as well as the quality and sustainability o
such perormance and risk considerations. All variable
compensation includes maximum award limits.
Alignment with long-term company strategy and
shareholders interests
Executive compensation is aligned with company strategy
and shareholders interests. Part or all o any Short-Term
Bonus is paid in the orm o Nestl S.A. shares instead o
cash. Long-Term Incentives are provided in the orm o
Perormance Share Units (PSUs), Stock Options on Nestl S.A.
sha