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NederlandsGovernance Statement
Umicore has adopted the 2009 Belgian Code on Corporate Governance (“the Code”) as its reference Code.
The English, Dutch and French versions of the Code can be found on the website of the Corporate Governance Committee www.corporategovernancecommittee.be.
The Corporate Governance Charter describes in detail the governance structure of the Company, the policies and procedures of the Umicore Group. The Charter is available on the Umicore website (www.governance.umicore.com) and may be obtained on request from Umicore’s Group Communications Department.
Umicore has articulated its mission, values and basic organizational philosophy in a document called “The Umicore Way”. This document spells out how Umicore views its relationship with its customers, shareholders, employees and society.
In terms of organizational philosophy, Umicore believes in decentralization and in entrusting a large degree of autonomy to each of its business units. The business units in turn are accountable for their contribution to the Group’s value creation and for their adherence to group strategies, policies, standards and sustainable development approach.
In this context, Umicore believes that a good corporate governance system is a necessary condition to ensure its long term success. This implies an effective decision-making process based on a clear allocation of responsibilities. It has to allow for an optimal balance between a culture of entrepreneurship at the level of its business units and effective steering and oversight processes. The Corporate Governance Charter deals in more detail with the responsibilities of the Shareholders, the Board of Directors, the CEO and the Executive Committee and also the specific role of the Audit Committee and of the Nomination & Remuneration Committee. This Statement provides information on governance issues which relate primarily to the financial year 2010.
Corporate structure
The Umicore Board of Directors (“the Board”) is the ultimate decision-making body of Umicore with the exception of matters reserved to the Shareholders by the Companies Code or by the Articles of Association. The Board is assisted in its role by an Audit Committee and a Nomination & Remuneration Committee. The day-to-day management of Umicore has been delegated to the Chief Executive Officer who is also the chairman of the Executive Committee. The Executive Committee is responsible for elaborating the overall strategy for the company and for submitting it to the Board for review and approval. It is responsible for implementing such strategy and for ensuring the effective oversight of the business units and corporate functions. The Executive Committee is also responsible for screening the various risks and opportunities that the company might encounter in the short, medium or longer term (see Risk Management section) and for ensuring that systems are in place to address these. The Executive Committee is jointly responsible for defining and applying Umicore’s approach to sustainable development.
Umicore is organized in business groups which in turn comprise business units that share common characteristics in terms of products, technologies and end-user markets. Some business units are further subdivided into market-focused business lines. Each business group is represented on the Executive Committee In order to provide a Group-wide support structure, Umicore has complementary regional management platforms in geographical areas. Umicore’s corporate centre is based in Belgium. This centre provides a number of corporate and support functions in the areas of finance, human resources, internal audit, legal and tax, information technology and public and investor relations.
Shareholders
Issued shares
At 31 December 2010 there were 120,000,000 Umicore shares in issue. The history of the Umicore capital representation can be found at www.investorrelations.umicore.com as well as the identity of shareholders having declared a participation of more than 3 %.
On 31 December 2010 Umicore owned 6,476,647 of its own shares representing 5.40 % of its capital. Information concerning the shareholders’ authorization for Umicore to buy back its own shares and the status of such buy-backs can be consulted in the Corporate Governance Charter and on Umicore’s website respectively.
Dividend policy and payment
Umicore’s policy is to pay a stable or gradually increasing dividend – there is no fixed pay-out ratio. The dividend is proposed by the Board at the Ordinary General Meeting of shareholders. No dividend will be paid which would endanger the financial stability of the company.
In 2010 Umicore paid a gross dividend of € 0.65 per share relating to the financial year 2009. This was the same amount per share as the dividend paid in 2009 for the financial year 2008.
In August 2010, the Board decided to institute an interim dividend payment, corresponding to half of the total dividend paid for the previous year. As a result of this change a gross interim dividend of € 0.325 per share was paid as from 13 October 2010. On 9
February 2011 the Board decided to propose to shareholders a total dividend of € 0.80 per share relating to financial year 2010. The pay out of this dividend in May 2011 would therefore amount to € 0.475 per share (the total dividend less the interim payment).
Shareholders’ meetings 2010
According to the Company’s Articles of Association, the Ordinary General Meeting (OGM) of shareholders takes place on the last Tuesday of April at 5 p.m.
The place of the shareholders’ meeting is mentioned in the convening notice which is published at least 24 days prior to the “record date” (the “record date” being midnight of the fifth working day prior to the general meeting).
In 2010, the OGM took place on April 27. At this meeting shareholders approved the standard resolutions regarding the annual accounts, the appropriation of the results and the discharges to the Directors and to the statutory auditor regarding their respective 2009 mandates and auditing assignment. In addition the shareholders re-appointed Mr Shohei Naito and Mrs Isabelle Bouillot as Directors for a further three years. The OGM also approved the remuneration of the Board for 2010. Details of the fees paid to the Directors in 2010 are disclosed in the Remuneration Report.
On 29 October 2010, an Extraordinary General Meeting of shareholders authorised the Company and its subsidiaries to acquire, until 28 April 2012, Umicore shares within a limit of 10 % of the subscribed capital, at a price per share between € 4 and € 75. This EGM also approved the absorption through a merger operation - by the Company of its 100 % owned subsidiary Umicore Oxyde Belgium NV/SA.
The Board of Directors
Composition
The Board of Directors, whose members are appointed by the Shareholders’ Meeting, must consist of at least six members. Their term of office may normally not exceed four years, but they may be re-elected.
Directors can be dismissed at any time following a resolution of a Shareholders’ Meeting deciding by a simple majority of the votes cast. There are no attendance requirements for the dismissal of directors. The Company’s Articles of Association provide for the possibility for the Board to appoint Directors in the event of a vacancy. The next general Shareholders’ Meeting must decide on the definitive appointment of the above Director. The new Director completes the term of office of his or her predecessor.
On 31 December 2010, the Board of Directors consisted of ten members: nine non-executive directors and one executive director. On 31 December 2010, six of the ten directors were independent in accordance with the criteria laid down in Article 526ter of the Belgian Companies Code. These criteria are listed in Appendix 3 of Umicore’s Corporate Governance Charter.
Meetings and topics
During 2010, the Board of Directors held seven meetings during which the following matters were reviewed: the financial performance of the Group, the environmental, health and safety performance, the budget and operational and investment plans. The Board also reviewed the strategic headlines and development projects, including Vision 2015 and potential acquisitions. The annual performance review of the Chief Executive Officer and the other members of the Executive Committee in respect of the year 2009 was completed in February 2010. The Board also discussed the succession planning at the level of the Board and the Executive Committee. On 1 June 2010 the Board appointed Mr Denis Goffaux with effect as of 1 July 2010 as a new member of the Executive Committee in the capacity of Chief Technology Officer. In 2010 the Board also resolved to the distribution of an interim dividend; it also approved the draft terms of the internal merger of the Company and its 100 % subsidiary Umicore Oxyde Belgium NV/SA. The Board also visited the Umicore sites in Hanau and Pforzheim (Germany).
Performance review of the Board and its Committees
The Chairman will conduct a review of the performance of the Board and its Committees in the course of 2011 and will discuss the results of this review with the Nomination & Remuneration Committee and subsequently with the Board.
Committees
Audit Committee
The Audit Committee’s composition and the qualifications of its members are fully in line with the requirements of Article 526bis of the Belgian Companies Code and the Code.
The Audit Committee consists of three non-executive directors, two of them being independent.
Four Audit Committee meetings were held in 2010. Besides the review of the 2009 accounts and those of the first half of 2010, the Committee also reviewed the following matters: the status of internal control projects, the tax department activities, the information technology common data management, the succession planning of the finance organization, the risk assessment process, the renewal of the statutory auditor mandate, and the internal audit activity reports. Furthermore, the Audit Committee conducted a review of its own performance and the fees paid to the statutory auditor.
Nomination & Remuneration Committee
The Nomination & Remuneration Committee consists of three members who are all non-executive directors, two of them being independent. It is chaired by the Chairman of the Board.
Three Nomination & Remuneration Committee meetings were held in 2010. During 2010 the Nomination and Remuneration Committee reviewed the remuneration policy for the Board members, the Board Committees members and Executive Committee members and the rules of the stock grant and option plans offered in 2010 as well as of the variable remuneration scheme for 2010. The Committee also conducted an end-ofmandate review of five board members, four of whom were later put forward for re-election by the shareholders. The Nomination & Remuneration Committee also discussed the succession planning at the level of the Board and the Executive Committee as well as the organisational changes resulting from the Vision 2015 strategy.
Executive Committee
Composition
The Executive Committee has the form of a “Comité de Direction / Directiecomité” within the meaning of Article 524bis of the Belgian Companies Code. Hereunder “Executive Committee” is used within this definition.
The Executive Committee is composed of at least four members. It is chaired by the CEO who is appointed by the Board of Directors. The members of the Executive Committee are appointed by the Board of Directors upon proposal by the CEO and recommendation of the Nomination & Remuneration Committee. The Executive Committee as a whole or any individual member can be dismissed at any time by the Board of Directors.
On 1 July 2010 Mr Martin Hess left Umicore and Mr Denis Goffaux was appointed member of the Executive Committee.
On 31 December 2010 the Executive Committee consisted of seven members including the CEO.
Performance Review
A review of the performance of each Executive Committee member is conducted annually by the CEO and discussed with the Nomination & Remuneration Committee. The results are presented to the Board of Directors and discussed by the Board.
The Board also meets annually in non-executive session (i.e. without the CEO present) to review and discuss the performance of the CEO.
Relevant information in the event of a takeover bid
Share transfer restrictions
The Company’s Articles of Association do not impose any restriction on the transfer of shares. The Company is furthermore not aware of any restriction imposed by law except in the framework of market abuse regulations.
Securities with special rights
The Company has not issued securities with special rights.
Voting right restrictions
The Company’s Articles of Association do not contain any restriction on the exercise of voting rights by shareholders, providing the shareholders concerned are admitted to the Shareholders’ Meeting and their rights are not suspended. The admission rules to Shareholders’ Meetings are laid down in Article 17 of the Articles of Association. According to Article 7 of the Articles of Association the rights attached to shares held by several owners are suspended until one person is appointed as owner vis-à-vis the Company.
To the Board’s best knowledge none of the voting rights attached to the shares issued by the Company were suspended by law on 31 December 2010, save for the 6,476,647 shares held by the Company itself on that date (Article 622 §1 of the Belgian Companies Code).
Employee stock plans where the control rights are not exercised directly by the employees
The Company has not issued such employee stock plans.
Shareholders’ agreements
To the Board’s best knowledge there are no shareholders’ agreements which may result in restrictions on the transfer of securities and/or the exercise of voting rights.
Amendments of the Articles of Association
Save for capital increases decided by the Board of Directors within the limits of the authorized capital, only an Extraordinary Shareholders’ Meeting is authorized to amend the Company’s Articles of Association. A Shareholders’ Meeting may only deliberate on amendments to the Articles of Association – including capital increases or reductions, as well as mergers, demergers and a winding-up – if at least 50 % of the subscribed capital is represented. If the above attendance quorum is not reached, a new Extraordinary Shareholders’ Meeting must be convened, which will deliberate regardless of the portion of the subscribed capital represented. As a general rule amendments to the Articles of Association are only adopted if approved by 75 % of the votes cast. The Belgian Companies Code provides for more stringent majority requirements in specific instances, such as the modification of the corporate object or the company form.
Authorized capital – buy-back of shares
The Company’s share capital may be increased following a decision of the Board within the limits of the so-called “authorized capital”. The authorization must be granted by an Extraordinary Shareholders’ Meeting; it is limited in time and amount and is subject to specific justification and purpose requirements. The Extraordinary Shareholders’ Meeting held on 24 October 2006 (resolutions published on 13 November 2006) has authorized the Board to increase the Company’s share capital in one or more times by a maximum amount of € 46,000,000. This authorization has not been used to date and will lapse on 12 November 2011. The Board will propose to the Shareholders’ Meeting of 26 April 2011 to renew this authorization, for a maximum amount of € 50,000,000.
Following a resolution of the Extraordinary Shareholders’ Meeting held on 29 October 2010 the Board is authorized to acquire own Company shares on a regulated market within a limit of 10 % of the subscribed capital, at a price per share comprised between € 4.00 and € 75.00 and for a duration of 18 months which will lapse on 28 April 2012. The same authorization was also granted to the Company’s subsidiaries.
Agreements between the Company and its Board members or employees providing for compensation if they resign, or are made redundant without valid reason, or if their employment ceases because of a take-over-bid
All the senior vice-presidents of the Group are entitled to a compensation equivalent to 36 months base salary in the event of a dismissal within twelve months of a change of control of the Company. As far as the members of the Executive Committee are concerned, reference is made to the Remuneration Report (p. 132-133 of the annual report 2010).
Art. 523 – 524ter Companies Code
On 10 February 2010, prior to the Board discussing or taking any decision, Marc Grynberg declared that he had a direct conflicting interest of a proprietary nature in the implementation of the decisions taken by the Board relating to his remuneration (including the grant of shares and options) and pension scheme.
In accordance with Article 523 of the Companies Code, Marc Grynberg did not take part in the Board’s discussions concerning this decision and did not take part in the voting.
The financial consequences of the above decisions are described in the Board’s annual report on the statutory accounts in accordance with the Belgian Companies Code.
During the financial year, no specific transactions or contractual commitments occurred between a Board member or an Executive Committee member on the one hand and Umicore or one of its affiliated companies on the other hand.
The statutory auditor
The statutory auditor’s mandate is subject for renewal at the 2011 Ordinary General Meeting. Upon proposal by the Audit Committee and nomination by the Works Council the Board will propose to the Annual Shareholders’ Meeting to renew the mandate of the statutory auditor, PricewaterhouseCoopers Bedrijfsrevisoren/ Réviseurs d’Entreprises BCVBA/SCCRL, jointly represented by BVBA Marc Daelman, represented by Marc Daelman, and Mrs Emmanuèle Attout (in replacement of the current legal representative, Mr Raf Vander Stichele).
A policy detailing the independence criteria for the statutory auditor may be requested from the company or accessed via www.governance.umicore.com.
Code of Conduct
Umicore operates a Code of Conduct for all employees, representatives and Board members. This Code is fundamental to the task of creating and maintaining a relation of trust and professionalism with its main stakeholders namely its employees, commercial partners, shareholders, government authorities and the public.
The main purpose of Umicore’s Code of Conduct is to ensure that all persons acting on behalf of Umicore perform their activities in an ethical way and in accordance with the laws and regulations and with the standards Umicore sets through its present and future policies, guidelines and rules. The Code of Conduct contains a specific section on complaints and expressions of concern by employees and “whistleblower” protection.
The Code of Conduct is published in Appendix 4 to Umicore’s Corporate Governance Charter.
Market Manipulation and Insider Trading
Annex 5 of Umicore’s Corporate Governance Charter contains a specific policy related to the application of Belgian legislation regarding market manipulation and insider trading.
Compliance with the Code
Umicore’s corporate governance systems and procedures are in line with the Code with the exception of provision 8.8 regarding the required shareholding level of 5 % for a shareholder to submit proposals to the general shareholders’ meetings. For reasons of efficiency, Umicore has decided not to endorse this provision for the time being, maintaining the sole possibility provided under Article 532 of the Belgian Companies Code to any shareholder representing 20 % or more of the Company’s capital to request that a general meeting of shareholders be convened by the Board of Directors. However, following the envisaged entry into force in 2011 of a new law on the exercise of certain shareholders’ rights in listed companies, shareholders holding alone or jointly at least 3 % of the subscribed capital will by law be entitled to submit proposals to the Shareholders’ Meetings.