The Supervisory Board has two committees as set out in the Corporate Governance chapter. The Audit and Risk Committee and the Nomination and Compensation Committee. Both committees met separately throughout the year. Their main considerations and conclusions were shared with the Supervisory Board, where formal decision-making takes place.
The composition of the committees is as follows:
Audit and Risk Committee
- Carla van der Weerdt (Chair)
- Fieke van der Lecq
- Gary Page
- Udo Philipp (from 18 May 2018 until 28 February 2019)
Nomination and Compensation Committee
- Ernst-Jan Boers (Chair)
- Aart de Geus
- Dineke Oldenhof (as of 18 May 2018)
- Udo Philipp (until 18 May 2018)
For more information on the Supervisory Board members, see the biographies.
Activities of the Audit and Risk Committee
The Audit and Risk Committee (ARC) met six times during 2018. Triodos Bank’s Chief Financial Officer was present at all meetings as well as the external auditor, the Head of Internal Audit, the Director Risk and the Director Finance. Other experts (on areas like Finance, Asset and Liability Management, ICT, Compliance or Investment Management) were invited when required during the meetings. In all ARC meetings time and attention was spent on audit, finance, risk and compliance. In addition, informal meetings were held with the external auditor as well as with the internal auditor, without the Executive Board being present. During the year, one new ARC member was appointed (Udo Philipp). The Chair of the Committee regularly held separate sessions with, amongst others, the Head of Internal Audit, the Director Risk, the Director Finance, as well as the external auditor.
In its regular meetings, the ARC discussed, amongst other things, the half year and annual results and the dividend proposal, the key audit matters as reported by internal and external audit and the outlook of the individual business units, before being discussed in the full Supervisory Board.
Moreover, the ARC discussed progress on risk control improvements (including risk culture), adherence to laws and regulations governing financial and regulatory reporting and tax-related issues. The Committee discussed the annual Internal Audit plan before it was discussed in the full Supervisory Board.
Other recurring items on the agenda of the ARC were the Enterprise Risk Management report (ERM-report, including all risk areas like credit risk, interest rate risk, currency risk, operational risk (including IT risk), compliance, strategic risk, liquidity risk), the Finance reports and the Internal Audit reports. Topics that required specific attention in 2018 were: the UK’s decision to leave the European Union (Brexit), compliance to new regulations, risk awareness and culture in Triodos Bank, cyber security, capital planning and a review of reporting standards (e.g. Dutch GAAP, IFRS) and a recommendation to explore migrating to a new reporting standard.
The Supervisory Board has been informed about the outcome regarding Triodos Bank of a sector wide survey that the Dutch Central Bank (DNB) has conducted among Dutch banks, focussing on the measures that the bank has taken to prevent money laundering and terrorism financing. From this survey, DNB concluded that Triodos Bank should put in place additional measures concerning customer due diligence and monitoring of customer transactions. Triodos Bank agrees with the required measures and is taking the necessary steps to remedy this situation. Both the findings, the instruction and the remediation plan have been discussed in depth with the Supervisory Board and the Supervisory Board challenged the Executive Board in submitting a comprehensive and realistic plan. The Supervisory Board will continue to monitor progress.
Moreover, as part of its regular agenda, the ARC reviewed and discussed the yearly update of the risk appetite statement, the risk appetite framework, the ICAAP and ILAAP reports, the liquidity funding and capital plan, the funds transfer pricing methodology, the risk governance framework and the recovery plan. In addition, quarterly reporting on regulatory affairs, Triodos Bank’s risk profile and the progress on relevant projects were presented and discussed. Furthermore, the external auditor presented their management letter as well as their independent auditor and assurance report.
During the year, one new ARC member was appointed (Udo Philipp). However, he resigned as per 28 February 2019 because of taking up a public political role in Germany as per 1 March 2019.
Activities of the Nomination and Compensation Committee
The Nomination and Compensation Committee (NCC) met five times formally. The CEO of the bank was present at the meetings and the Director HR was present for specific topics. The members of the NCC have senior management experience and knowledge of, and experience with, performance management and remuneration in general. Additionally, they seek advice from independent, external experts in case of specific issues. During the year, one new NCC member was appointed (Dineke Oldenhof). One member (Udo Philipp) changed committees from the NCC to the ARC.
One of the NCC’s primary roles is to advise the Supervisory Board about the remuneration and nomination policy of Triodos Bank in general and to set the remuneration packages of the members of the Executive Board. It also advises the Supervisory Board on the appropriateness of the general conditions of the remuneration packages of Managing Directors reporting directly to the Executive Board. For more information on the international remuneration and nomination policy please refer to page 110 of the annual report.
The nomination topics in 2018 included a review of the composition of the Supervisory Board which led to the recruitment of a candidate Supervisory Board member for appointment during the 2019 Annual General Meeting. The Chair of the NCC, together with the Supervisory Board Chair reviewed the performance of the members of the Executive Board in personal interviews, reviewing the priorities set for 2018 and setting new ones for 2019.
The recruitment process for the succession of the current CFO, Pierre Aeby was started (see Activities of the Supervisory Board). The NCC led the recruitment process and advised the Supervisory Board on the progress and decisions to be taken.