Annual Report 2014

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Corporate structure and shareholders

The organizational structure of GF is illustrated in the diagram on this page. The Corporation has the operational divisions: GF Piping Systems, GF Automotive, and GF Machining Solutions, plus the Corporate Staff Units Finance & Controlling and Corporate Development. The Chief Executive Officer is also the Head of Corporate Development.

The CEO, supported by the other members of the Executive Committee, bears responsibility for the management of the Corporation, where this is not delegated to the divisions or the Corporate Staf Units. The Heads of the Divisions, supported by the Heads of the Business Units and Service Centers, bear responsibility for the management of the divisions. The Corporate Staff Units support the Board of Directors and the Executive Committee in their management and supervisory functions.

The parent company of all the Corporate Companies is Georg Fischer Ltd. It is incorporated under Swiss law and is domiciled in Schaffhausen, Switzerland. Georg Fischer Ltd is listed on the SIX Swiss Exchange (FI-N, security number 175 230). Its share capital is CHF 4 100 898, and its market capitalization was CHF 2 579 million as of 31 December 2014 (previous year: CHF 2 573 million).

Affiliated companies //

An overview of all affiliated companies in the scope of consolidation can be found in the Financial Report on pages 106 to 108. The list contains the company name, domicile, share capital, and percentage held by GF.

Significant shareholders and shareholder groups //

As of 31 December 2014, no shareholder or shareholder group had voting rights in excess of 5%. The Norges Bank (the Central Bank of Norway), Oslo (Norway), LSV Asset Management, Chicago (USA), and the UBS Fund Management (Switzerland) AG, Basel (Switzerland), had voting rights between 3% and 5%. Eleven disclosure notifications were published in the year under review: eight in relation to the BlackRock Group (see group structure as published on the SIX disclosure platform), held indirectly by BlackRock Inc (USA), two in relation to LSV Asset Management, Chicago (USA), and one in relation to Norges Bank (the Central Bank of Norway), Oslo (Norway). Disclosure notifications pertaining to shareholdings in Georg Fischer Ltd that were filed with Georg Fischer Ltd and the SIX Swiss Exchange are published on the latter’s electronic publication platform. The notifications can be accessed via the above weblink to the database search page of the disclosure office.

Cross-shareholdings //

There are no cross-shareholdings or shareholder pooling agreements with other companies.

Capital structure

Capital and share information //

Fully paid-in share capital amounts to CHF 4100898 and is divided into 4 100 898 registered shares each with a par value of CHF 1. Each registered share has one vote at the Annual Shareholders’ Meeting. The authorized capital and the conditional capital amount to a maximum of CHF 600 000. The maximum authorized or conditional capital is reduced by the amount that conditional or authorized capital is created by the issue of equity-linked bonds or similar debt instruments or new shares.

By no later than 19  March 2016, the maximum authorized share capital will be CHF 600 000 divided into no more than 600 000 registered shares each with a par value of CHF 1. Moreover, the share capital may be increased via the conditional capital by a maximum of CHF 600 000 by the issue of no more than 600 000 fully paid-in registered shares with a nominal value of CHF 1 each, through the exercise of conversion rights and/or warrants granted in connection with the issuance on capital markets of bonds or similar debt instruments of the company or one of its Corporate Companies. As of 31  December 2014, no such bonds or debt instruments were outstanding. The beneficiaries and the conditions and modalities of the issue of authorized capital are described in § 4.4 a) of the Articles of Association of Georg Fischer Ltd and those of conditional capital in § 4.4 b) of the Articles of Association of Georg Fischer Ltd.

Corporate Governance

The subscription to and acquisition of the new shares, and any subsequent transfer of the shares, are subject to the statutory restrictions on transferability (see the next section “Restrictions on transferability”).

Further information on the share capital and changes in capital in the last five years can be found on pages 122 to 124. No participation or profit-sharing certificates exist.

Restrictions on transferability //

Entry in the company’s share register as a shareholder or beneficiary with voting rights is subject to the approval of the Board of Directors. Approval of registration is subject to the following conditions: a natural person or legal entity may not accumulate, either directly or indirectly, more than 5% of the registered share capital. Persons who are bound by capital or voting rights, by consolidated management or in a similar manner, or who have come to an agreement for the purpose of circumventing this rule, shall be deemed as one person.

Nominee registration //

Persons who hold shares for third parties (referred to as nominees) are only entered in the share register with voting rights if the nominee declarestheir willingness to disclose the names, addresses, and shareholdings of those persons on whose behalf they hold the shares. The same registration limitations apply, mutatis mutandis, to nominees as to individual shareholders.

Cancellation or amendment of restrictions //

Cancellation or easing of the restrictions on the transferability of registered shares requires a resolution of the Annual Shareholders’ Meeting passed by at least two-thirds of the shares represented and an absolute majority of the par value of the shares represented.

Convertible bonds and options //

There are no outstanding convertible bonds, and GF has issued no options.

Board of Directors

Responsibilities //

The Board of Directors has ultimate responsibility for supervising and monitoring the management of Georg Fischer Ltd. The Board of Directors is responsible for all matters vested to it by the law or the Articles of Association, provided it has not delegated these to other bodies. These are in particular:

  • decisions on corporate strategy and the organizational structure
  • appointing and dismissing members of the Executive Committee
  • organizing finance and accounting
  • determining the annual and investment budgets

Unless otherwise provided for by law or the Articles of Association, the Board of Directors delegates operational management to the Chief Executive Officer, who is assisted in this task by the Executive Committee. The extent to which competencies are delegated by the Board of Directors to the Executive Committee and the nature of the cooperation between the Board and the Executive Committee are defined by the Organization and Business Rules.

Corporate Governance

Independence //

All members of the Board of Directors are non-executive. There are no significant business relationships between the members of the Board or the companies or organizations they represent and Georg Fischer Ltd or a Corporate Company. 

Elections and term of office //

As per § 16.2 of the Articles of Association of Georg Fischer Ltd, the members of the Board of Directors have to be elected individually, and their term of office ends at the next Annual Shareholders’ Meeting. Re-election is possible.

When selecting Board members, particular emphasis is placed on entrepreneurial experience, relevant expertise, or particular international ties. The Board of Directors also aims to achieve a proper balance of competence and knowledge, taking into account the main operational focus of the Corporation, its international orientation, and the accounting requirements of listed companies. Members of the Board must resign their mandate at the Annual Shareholders’ Meeting following their 70th birthday.

2014 //

At the 118th Annual Shareholders’ Meeting on 19 March 2014, Dr. iur. Hubert Achermann was elected as new member of the Board of Directors. Kurt E. Stirnemann resigned from the Board of Directors as he had reached the age limit.

Internal organizational structure //

Pursuant to § 16.3 of the Articles of Association of Georg Fischer Ltd, the Annual Shareholders’ Meeting elects a member of the Board of Directors as its Chairman for the period of one year until the next ordinary Annual Shareholders’ Meeting. Re-election is possible.

With the exception of the election of a Chairman of the Board of Directors, who is elected by the Annual Shareholders’ Meeting, the Board of Directors constitutes itself by electing a Vice Chairman from within its ranks once a year. Alongside the election of Andreas Koopmann as Chairman of the Board of Directors, Gerold Bührer was elected by the Board of Directors as its Vice Chairman on the day of the Annual Shareholders’ Meeting on 19 March 2014.

In addition, pursuant to § 20.1 of the Articles of Association of Georg Fischer Ltd, the Annual Shareholders’ Meeting elects the members of the Compensation Committee.

Areas of responsibility //

The members of the three standing Board Committees are listed on page 49. The Board Committees provide preliminary advice to the Board of Directors and do not make any definitive decisions. They discuss the issues assigned to them and make proposals to the Board of Directors as a whole. The CEO attends the meetings of the Board Committees, but is not entitled to vote. Minutes of the committee meetings are sent to all members of the Board of Directors. The Chairmen of the individual committees also make a verbal report at the next meeting of the Board of Directors and submit any proposals.

Work methods of the Board of Directors //

Decisions are made by the Board of Directors as a body. Members of the Executive Committee also participate in Board meetings for agenda items relating to the company’s business, but are not entitled to vote. Only the Chief Executive Officer is present when personnel topics are dealt with. Personnel topics affecting him directly are treated in his absence. Invitations to Board meetings list all the issues that the Board of Directors, a Board Committee, or the CEO wish to discuss. All participants in a Board meeting receive detailed written material on the proposals in advance.

The Board of Directors meets at least four times a year under the leadership of its Chairman. During the year under review, it met six times: two meetings lasted less than two hours, three meetings lasted less than a day, and the strategy meeting lasted one and a half days in total. The dates of the regular meetings are generally set well in advance to enable all members to attend personally. In the year under review, the attendance rate was 98%. The three standing Board Committees met a total of 13 times.

External consultants are called on for their services when specific topics are involved. Further information is provided in the section on the Board Committees.

Evaluation //

The Board of Directors once again conducted a self-evaluation in 2014. The results will be discussed in 2015 and measures will be taken to further optimize the work done by the Board of Directors.

Audit Committee //

The Audit Committee consists of three Board members. The Audit Committee supports the Board of Directors in monitoring accounting and financial reporting, supervises internal and external audits, assesses the efficiency of the internal audit system including risk management and compliance with statutory provisions, acknowledges the sensitivity analysis of the pension funds of Georg Fischer Ltd, and issues its opinions on transactions concerning equity and liabilities at Georg Fischer Ltd. The Audit Committee also decides whether or not the consolidated financial statements and those of Georg Fischer Ltd can be recommended to the Board of Directors for presentation to the Annual Shareholders’ Meeting.

As a rule, the Chairman of the Board, the CEO, the CFO, the Head of Internal Auditing, and representatives of the external auditor also attend the meetings. At the request of the Audit Committee the external auditor also provides information on current questions relating to the financial statements and financial issues. During the business year just ended, the Audit Committee held seven meetings, three of which lasted half a day, and the other four lasted about two hours.

Compensation Committee //

The Compensation Committee consists of three Board members, which are elected on a yearly basis by the Annual Shareholders’ Meeting. It supports the Board of Directors in setting compensation policy at the highest corporate level. It uses knowledge of external compensation specialists about market data from comparable companies in Switzerland, in addition to publicly available data obtained on the basis of compensation disclosures. Comparable industrial corporations headquartered in Switzerland and the industrial market of Switzerland were used as a basis. In the reporting year, two comprehensive external expert opinions were commissioned regarding the remuneration of the Board of Directors and of the Executive Committee. The Compensation Committee proposes to the Board of Directors the total amount of compensation to be paid to the entire Executive Committee and the Chief Executive Officer. The Compensation Committee held three meetings during the past fiscal year, each of which lasted about an hour and a half.

Nomination Committee //

The Nomination Committee consists of three Board members. It supports the Board of Directors in succession planning and assists in the selection of suitable candidates for the Board of Directors and the Executive Committee. The Nomination Committee is kept informed annually about succession planning for the two senior operating management levels. In the year under review, the Nomination Committee held three meetings, which lasted an hour and a half on average.

Information and control instruments //

The Board of Directors is informed in depth about business performance every month. The members of the Board also receive the monthly report, which contains current information concerning business performance and the financial statements of the Corporation, the divisions, and Corporate Companies together with a detailed commentary. The Executive Committee presents and comments on business performance and tables all important matters at the Board meetings. It also presents its assessment of business performance for the coming months.

In addition, the Board of Directors receives the estimate prepared twice a year containing the figures for the entire business year. The Board of Directors also approves the budget of the Corporation and of the divisions for the following year. Once a year, it receives the results of medium-term planning derived from the strategy review. The Board of Directors holds as a general rule a two-day meeting once a year to discuss the strategies of the divisions and the Corporation as a whole.

The Chairman of the Board of Directors attends the Corporate Convention of the senior management and the Executive Committee’s planning meeting and is a regular attendee at other corporate management meetings. The Chairman of the Board of Directors and the CEO inform and consult each other regularly on all business matters that are of fundamental importance or have far-reaching ramifications. The Chairman of the Board receives the invitations and minutes of the Executive Committee and Corporate Staf Meetings. He visits Corporate Companies on a regular basis to see their operations in person and how they are implementing the Corporation’s strategies. In 2014, he visited Corporate Companies in Europe and in Asia.

Internal Auditing //

Internal Auditing reports to the Chairman of the Audit Committee operationally and to the CFO administratively. Based on the risk-oriented audit plan approved by the Audit Committee, Corporate Companies are audited either annually or every two to three years, depending on the risk assessment. In the year under review, 45 internal audits were conducted. The written report is discussed with the management of the company in question. Copies are sent to the line managers, the external auditor, the Executive Committee, and the Chairmen of the Board of Directors and of the Audit Committee. Audit reports with significant findings are presented to and discussed in the Audit Committee.

Internal Auditing also ensures that all discrepancies arising in internal and external audits are addressed and submits a report on such questions to the Executive Committee and the Audit Committee. The Head of Internal Auditing prepares an annual report, which is discussed by the Executive Committee and the Audit Committee. He also serves as the secretary of the Audit Committee.

Corporate compliance //

The Service Center Law & Compliance informs the Board of Directors and the Executive Committee about legal issues and significant changes to the law. The Corporate Compliance Officer (CCO) is appointed by the Chief Executive Officer and in this function reports to the General Counsel and can report to the CEO if necessary. Especially through preventive measures and training in the divisions along with information and advice to the Corporate Companies, the CCO ensures that the Corporate Companies comply with the law, internal directives, and the Corporation’s principles of business ethics in their business activities. The Executive Committee, in consultation with the CCO, defines priority issues.

A number of compliance measures were implemented in 2014: (i) introduction of a “Compliance Agreement for Intermediaries” as a guideline for GF business partners who act in the name or interest of Corporate Companies within the GF Corporation; (ii) an internal e-learning program on the subject of anti-corruption was held for about 700 employees; (iii) an internal e-learning program was conducted on competition and cartel law for approximately 360 employees; (iv) seven training courses on antitrust law, anti-corruption, export controls, and other compliance topics at Corporate Companies (including at US-based Corporate Companies) and at management meetings (including for general managers and sales heads at the Chinaust Joint Venture companies); (v) ongoing advice and support for internal revisions; (vi) introduction of specific compliance measures for intermediaries in China (e.g. ongoing hecks regarding the appropriateness of compensation paid to intermediaries as well as examination of their ownership structure so as to avoid conflicts of interests); (vii) a web-based system for the prevention of business with sanctioned persons and organizations was expanded; (viii) advice was given on issues relating to export controls, cartel law and labor law; (ix) introduction of a new supplier code.

Code of Conduct of GF

Risk management //

The Board of Directors and the Executive Committee attach great importance to the thorough handling of risks in the areas of strategy, finance, markets, management and resources, operations, and sustainability. The Head of the Service Center Risk, Tax & IP Services acts as the Chief Risk Oicer (CRO) and, in this function, directly reports to the CEO. The CRO is supported by a non-executive risk officer of each division. Supplemented by internal experts of the corporate risk management, the risk officers under the leadership of the CRO constitute the Corporate Risk Council which met twice during the year under review. In addition, the CRO conducted workshops with the management of the three divisions as well as with the Executive Committee to analyze the risk situation, to discuss measures to mitigate the risks and to define the actual top risks of each unit. Based on the results of the workshops, a risk report was prepared which was presented to and analyzed by the Board of Directors.

The handling of financial risks is explained in the financial part of the Annual Report on pages 79 to 81, whereas operational risks are described on pages 16 and 78.
 

Assessment //

The Board of Directors evaluates and assesses the performance of the Executive Committee and its members at least once a year in the absence of the Executive Committee members. The Chairman of the Board of Directors must approve any appointments of Executive Committee members  to external Boards of Directors or to high-level political or military functions.

Executive Committee

The Chief Executive Officer is responsible for the management of the Corporation. Under his leadership, the Executive Committee addresses all issues of relevance to the Corporation, takes decisions within its remit and submits proposals to the Board of Directors. The Heads of the three Divisions and two Corporate Staff Units are responsible for drafting and achieving their business objectives and for managing their units autonomously. No management responsibility is delegated to third parties at the Executive Committee level (management contracts).

Members //

As at the end of the year under review, the Executive Committee had the following members: Yves Serra, CEO and at the same time Head of Corporate Development; Pietro Lori, Head of GF Piping Systems; Josef Edbauer, Head of GF Automotive; Pascal Boillat, Head of GF Machining Solutions; Roland Abt, CFO and Head of Corporate Finance & Controlling.

Shareholders’ rights

As of 31 December 2014, Georg Fischer Ltd had 13 390 shareholders with voting rights (previous year: 12 215), most of whom reside in Switzerland. To maintain this broad base, the Articles of Association provide for the statutory restrictions summarized hereinafter.

Restriction on voting rights //

The total number of votes exercised by one person for their own shares and shares for which they vote by proxy may not exceed 5% of the votes of the company’s total share capital. Persons bound by capital or voting rights, by consolidated management, or otherwise acting in concert for the purpose of circumventing this provision are deemed to be one person.

The restriction of voting rights under § 4.10 of the Articles of Association may be revoked only by a resolution of the Annual Shareholders’ Meeting, passed by a two-thirds majority of the shares represented and an absolute majority of the par value of the shares represented.

Proxy voting //

A shareholder may, on the basis of a written power of attorney, be represented at the Annual Shareholders’ Meeting by another shareholder entitled to vote or the independent proxy. Shareholders can also confer powers of attorney and issue instructions to independent proxies electronically. Partnerships may be represented by a partner or authorized signatory, legal entities by a person authorized by law or the Articles of Association, married persons by their spouse, wards by their legal guardians, and minors by their legal representative, regardless of whether such representatives are shareholders or not.

Statutory quorum //

The following resolutions of the Annual Shareholders’ Meeting require a majority greater than that laid down by law. At least two-thirds of the shares represented and an absolute majority of the par value of the shares represented must be in favor of:

  1. the cases listed in Art. 704 para. 1 CO
  2. the alleviation or withdrawal of limitations upon the transfer of registered shares
  3. the creation, extension, alleviation, or withdrawal of the voting restrictions
  4. the conversion of registered shares into bearer shares
  5. the amendments to § 16.1 of the Articles of Association
  6. the removal of restrictions concerning the passing of resolutions by the Shareholders’ Meeting, particularly those of § 12 of the Articles of Association of Georg Fischer Ltd

Convocation of the general meeting of shareholders //

No regulations exist which deviate from those stipulated by law. 

Agenda //

Shareholders representing a minimum of 0.3% of the share capital may request that an item be added to the agenda. The application must be submitted in writing no later than 60 days before the meeting and must specify the item to be discussed and the shareholder’s proposal.

Entry in the share register //

The deadline for entering shareholders in the share register with regard to attendance at the Annual Shareholders’ Meeting is around ten days before the date of the Annual Shareholders’ Meeting. It is mentioned in the invitation to the Annual Shareholders’ Meeting.

Change of control and defense measures

The Articles of Association of Georg Fischer Ltd do not contain any regulations governing “opting-out” or “opting-up”. As of 1 January 2014, the contractually agreed period of notice for the members of the Executive Committee is basically twelve months. Furthermore, a change of control will result in the cancellation of all existing disposal limitations for shares allocated according to the share plan. In the event of a change of control, bondholders and banks have the right to demand the immediate repayment of bond issues and loans before they are due.

Auditors

Mandate //

PricewaterhouseCoopers, Zurich, became the external auditor in 2012. Since the Annual Shareholders’ Meeting 2012, Stefan Räbsamen is auditor in charge. The latter is changed every seven years. The statutory auditor is elected at the Annual Shareholders’ Meeting for a term of one year.

Audit fees //

In 2014, the Corporation spent about CHF 2.43 million (previous year: CHF 2.39 million) worldwide in connection with the audit conducted by Pricewaterhouse- Coopers of the financial statements of Georg Fischer Ltd, of the GF Corporation, and of the Corporate Companies. For additional services Price waterhouseCoopers received fees of approximately CHF  0.48 million (previous year: CHF 0.35 million). In 2014 these services related to tax advice of CHF 0.2 million (previous year: CHF 0.13 million) and other consulting mandates in connection with accounting of CHF 0.28 million (previous year: CHF 0.22 million).

Supervisory and control instruments //

The Audit Committee reviews and evaluates the effectiveness and independence of the external auditors annually. The Audit Committee bases its evaluation on the following criteria:

  • quality of the documents and management letters
  • time taken and costs
  • quality of oral and written reports on individual aspects and pertinent questions relating to accounting, auditing, or additional consulting mandates.

For the evaluation, the members of the Audit Committee use first of all the knowledge and experience which they have acquired as a result of similar functions at other companies. Internal Auditing also issues an annual list of all services rendered by external auditors for the Corporation and their costs. This report is discussed by the Executive Committee and the Audit Committee. Authorization of the costs for the audit of Georg Fischer Ltd and the audit of the financial statements of the Corporation and of all Corporate Companies was given by the Audit Committee. Further services from PricewaterhouseCoopers will be examined by the Head of Internal Auditing and will be approved either by the CFO or by the managing directors of the individual Corporate Companies, depending on the volume. A high level of cost transparency is ensured because Internal Auditing prepares a report every year.

In the presence of internal and external auditors, the Audit Committee also evaluates potential for improvement regarding collaboration, the processing of assignments, and any interfaces or overlapping of Internal and external Auditing. The auditor in charge of the external auditor attended the five ordinary meetings of the Audit Committee.
 

Communication policy

Corporate Communications and Investor Relations are the two departments responsible for information and communication in the Corporation. The communication strategy is based on GF’s business strategy and supports the positioning of both the Corporation and the divisions. Communication with all GF stakeholders is active, open, and timely. If possible and permissible, employees are notified first.

GF has been present on five social media channels (LinkedIn, Xing, Facebook, Twitter, YouTube) since October 2013 in order to present the Corporation to younger target groups in an up-to-date manner. The website www.georgischer.com is continuously updated and, along with media releases, remains a cornerstone of Corporate Communications. Facts and figures on the Corporation, presentations on important activities, and the dates of the events of relevance for shareholders, analysts, and journalists (Annual Shareholders’ Meeting, press conferences, etc.) can be found on the website. The redesigned employee magazine Globe received the Gold Award for the best employee magazine in Switzerland from the Swiss Association for Internal Communication (Schweizerischer Verband für interne Kommunikation,
 SVIK) in fall 2014.

The shares of Georg Fischer Ltd are listed on the SIX Swiss Exchange. Therefore, GF is subject to the requirements on ad hoc publicity, i.e., the obligation to report any potential share-price-relevant information. GF also maintains a dialog with investors and journalists at special events and roadshows.

Subscription to the email service is free of charge. All media releases, Annual Reports, and Mid-Year Reports go online at the website www.georgfischer.com at the same time as they are published. Shareholders receive the short version of the Annual Report and the Mid-Year Report automatically, and other interested parties receive them on request.

Investor Relations

Daniel Bösiger
Head of Corporate Controlling / Investor Relations
Georg Fischer AG
Amsler-Laffon-Strasse 9
8201 Schaffhausen
Switzerland

daniel dot boesiger #at# georgfischer dot com

Corporate Communications

Beat Römer
Head of Corporate Communications
Georg Fischer AG
Amsler-Laffon-Strasse 9
8201 Schaffhausen
Switzerland

media #at# georgfischer dot com

Changes after the balance sheet date

Between 1 January and the copy deadline on 13 February 2015, no disclosure notification was made.

Disclosure notifications pertaining to shareholdings in Georg Fischer Ltd that were filed with Georg Fischer Ltd and the SIX Swiss Exchange are published on the latter’s electronic publication platform. The notifications can be accessed via the following weblink to the database search page of the disclosure office.

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