Board of Directors

The Board of Directors of Galenica is responsible for the overall management and ultimate supervision of the Group. It determines the strategic goals, the general ways and means to achieve them while harmonising strategy, risks, and financial resources, and issues instructions and oversees the managers responsible for conducting the company’s businesses. The Board of Directors pursues the aim of increasing enterprise value on a sustainable basis and ensures a balanced relationship between management and control (corporate governance). It decides on the Group’s medium-term planning, budget, and annual objectives. The values and essential framework of the company’s activities are also determined by the Board of Directors. For the Board of Directors, sustainability is of central importance. With regard to personnel, the Board of Directors is responsible for the selection and deselection of the members of the committees, the CEO, and the members of the Corporate Executive Committee, as well as the organisation of the remuneration system.

The specific duties of the Board of Directors of Galenica are based on the Code of Obligations (in particular Article 716a CO), the company’s Articles of Association, and its Organisational Regulations. Pursuant to the Articles of Association, the Board of Directors consists of five to nine members.

The Board of Directors consisted of six members as of the end of 2021. Philippe Nussbaumer did not stand for re-election at the Annual General Meeting on 12 May 2021, and no new member was proposed to the shareholders for election to the Board of Directors.

The Board of Directors proposes Judith Meier for election as a new member of the Board of Directors to the Annual General Meeting on 11 May 2022.

Board of Directors competence and evaluation

In selecting the members of the Board of Directors, care is taken to ensure that the relevant competences for Galenica’s activities are represented and that the necessary specialised expertise is available. The Board of Directors evaluates current and prospective members of the Board according to a competence matrix to ensure that an appropriate mix of relevant skills and experience is represented. Particular attention is paid to diversity and complementarity.

In 2020, an assessment was carried out with external support (Thomas Hammer, Board Consulting), and in 2021, the Board of Directors and its committees carried out a self-assessment. The Chair of the Board of Directors initiates the self-assessment of the Board of Directors by distributing an evaluation questionnaire and by having an individual discussion with each member. The self-evaluation will again be followed by an external assessment in 2022. The Board of Directors is a well-constituted team of good size, with a range of experience, complementary expertise, and a good combination of different personalities. Expert know-how in increasingly strategically relevant areas will be gradually expanded.

The Articles of Association of Galenica restrict the ability of its directors to act in the highest management and administrative bodies of other legal entities outside the Group (Article 17 (3) of the Articles of Association). This includes, in particular, limiting such outside activity to five mandates in listed legal entities and seven mandates in profit-oriented, non-listed legal entities.

None of the members reached this limit in 2021. None of the members of the Board of Directors was actively involved in Galenica or in any of the companies within the Group in the year under review. Based on the criteria of the Swiss Code of Best Practice for Corporate Governance, all members are therefore independent.

Disclosure of potential conflicts of interest

No member of the Galenica Board of Directors has any significant relations with Galenica or any of its subsidiaries. Philippe Nussbaumer (Board member until AGM 2021) is a pharmacist in the canton of Neuchâtel and is a customer of Galexis and a Winconcept partner. The business relationships between the companies of the Galenica Group and Philippe Nussbaumer are on an arm’s length basis.

Election and term of office

Each member of the Board of Directors and the Chairman are elected individually by the Annual General Meeting for a term of office of one year until the end of the next Annual General Meeting.

Internal organisation

The Chairwoman calls a meeting of the Board of Directors at least four times a year and prepares and leads the meetings. The individual agenda items are set by the Chairwoman. She decides on a case-by-case basis whether to involve additional persons in the consultations of the Board of Directors. The Corporate Executive Committee also participates in part of every meeting to report on ongoing business and to explain in more detail the documentation in light of the decisions to be taken. Any member of the Board may request that the Chairwoman call a meeting of the Board of Directors and that items be included on the agenda. The members of the Board receive the documentation they need to prepare for the agenda items in a timely manner, normally ten days before the meeting in question. The Board of Directors constitutes a quorum when the majority of its members are present. Minutes are kept, recording all discussions and resolutions.

As part of its risk management, the Board of Directors receives from the Corporate Executive Committee an overview of the most important risks, along with preventive measures to be implemented Group-wide as part of the risk management process. This is provided when circumstances require it, but at least twice a year.

A commitment to abiding by the law and guidelines (compliance) and acting with integrity is the cornerstone of the corporate culture of the Galenica Group and is a consistent focus of its corporate governance. The Board of Directors ascertained the current status of the various compliance measures at a meeting held during the year under review. The Code of Conduct of the Galenica Group is particularly important for the Board of Directors. It sets out all of the key principles relating to corruption, bribery, gifts and the provision of hospitality for all employees.

The Galenica Group operates in Switzerland. Accordingly, the OECD's action plan regarding taxes on multinational companies (BEPS action plan) is not applicable to Galenica.

Committees

The Board of Directors forms the following committees from its members:

• Governance, Nomination and Sustainability Committee
• Remuneration Committee
• Audit and Risk Committee
• Strategy Committee (until AGM 2021)

In order to support the Board of Directors on ESG topics, the Governance and Nomination Committee has been enlarged to encompass sustainability, and in January 2021, it became the Governance, Nomination and Sustainability Committee.

The Strategy Committee, which had been initiated in 2018 to support the Board of Directors, was terminated as of AGM 2021 and its topics integrated again in the full Board.

The committees prepare the business of the Board of Directors in the areas of activity assigned to them and submit recommendations to the entire Board of Directors. They meet as often as business requires and report to the Board of Directors on their activities and results. They draw up their own agendas and keep minutes.

Each committee has its own duties and responsibilities, which are stipulated in a charter. The charters of the committees are published on the Galenica website.

Governance, Nomination and Sustainability Committee

The Governance, Nomination and Sustainability Committee comprises four members. This committee supports the Board of Directors in the ultimate direction and supervision of the Company and the Group. It supports the Board of Directors in determining the appropriate size, function, and needs of the Board, as well as the identification of individuals qualified to become or be re-elected as Board members. It also evaluates the appointment of and changes to the members of the Executive Committee and is kept informed about the succession planning for the Senior Management levels.

The Committee assists the Board in advising on the sustainability strategy, targets, initiatives and legislation regarding ESG topics. It includes assessing the completeness and accuracy of the reporting of the sustainabiity matters and monitoring progress on sustainability goals.

Remuneration Committee

The Remuneration Committee is made up of three members, the majority of whom must be independent. The Remuneration Committee carries out the following duties in particular:

• Proposes a remuneration strategy and objectives for the Group and the members of the Corporate Executive Committee to the Board of Directors;
• Proposes the salaries and remuneration for the members of the Board of Directors, the Chairwoman, the CEO, and the Corporate Executive Committee as a whole to the Board of Directors;
• Approves the remuneration for the members of the Corporate Executive Committee (excluding the CEO) according to the proposal of the CEO and in agreement with the Chairwoman of the Board of Directors.

The regulations in the Articles of Association governing remuneration as well as the activities and focuses of the Remuneration Committee in the year under review are detailed in the Remuneration report.

Audit and Risk Committee

The Audit and Risk Committee comprises three members and supports the Board of Directors in fulfilling its duties with regard to accounting, financial reporting, risk management, and compliance, as well as internal and external audits. The Audit and Risk Committee carries out the following duties in particular:

• Audits reports by the Corporate Executive Committee on the company’s compliance and risk management process;
• Monitors measures taken by the Corporate Executive Committee for compliance with internal and external regulations;
• Evaluates the effectiveness of the external auditor and approves its fees;
• Evaluates the internal audit programme, accepts reports from Internal Audit and checks whether the Corporate Executive Committee has used appropriate measures to implement Internal Audit’s recommendations;
• Submits recommendations to the Board of Directors on the Group’s capital structure, financing of investments and acquisitions, and setting of long-term objectives.

Frequency of meetings of the Board of Directors and its committees in 2021

In 2021, the Board of Directors held six meetings. Each meeting lasted between two to ten hours, including a two-day strategy meeting. The Remuneration Committee met five times, the Audit and Risk Committee seven times. The Governance Nomination and Sustainability Committee met six times, and the Strategy Committee met once. Furthermore, various videoconferences regarding specific issues were held.

In principle, all the members participate in all the meetings of the Board of Directors. Attendance of meetings of the Board of Directors in 2021 was 98%, and that of committee meetings was 98%.

The CEO and CFO attended each meeting of the Board of Directors and the Audit and Risk Committee. The Board of Directors and its Committees invites members of the Corporate Executive Committee and the Enlarged Corporate Executive Committee to attend the meetings related to specific topics.