The Supervisory Board has four committees to cover key areas in greater detail: Nomination, Remuneration, Sustainability and Audit. These are described in more detail below.
The Nomination Committee comprises Thomas Leysen (Chair), Eileen Kennedy and Pradeep Pant. The Chair of the Remuneration Committee has a standing invitation to the Nomination Committee and participated in all five meetings. Geraldine Matchett, Dimitri de Vreeze and Cristina Monteiro, Executive Vice President People & Organization, were also involved in this Committee’s discussions. The Committee met five times in 2021. The recommendations of all Nomination Committee meetings were shared with the entire Supervisory Board. This feedback included advice and recommendations regarding topics to be approved by the full Supervisory Board. The Supervisory Board also has access to all the meeting materials posted for the Nomination Committee meetings.
In 2021, discussions in this committee focused on succession planning for the Managing Board, the Executive Committee, and the Supervisory Board. With respect to the Executive Committee, the discussions focused on the replacement of Cristina Monteiro, who, as of 15 October took a temporary leave of absence due to family circumstances. It was decided that Geraldine Matchett, Co-CEO DSM, would assume the role of Executive Vice President People & Organization, ad interim, supported by CEO.works, led by Hein Knaapen, safeguarding the continuity of critical initiatives such as the roll-out of the P&O strategy and the further shaping of an inclusive and diverse culture while focusing on talent development and the talent pipeline.
As in other years, the Supervisory Board established that the composition of the Managing Board is, and will remain, diverse in nationality, gender, background, expertise and experience, and that it provides a good foundation to support all Business Groups in achieving their targets and thus delivering on the company strategy. For detailed background information on the Managing Board members, see the company website under Corporate Governance and in the Managing Board section of this Report.
Taking into account the Supervisory Board profile as laid down in the Supervisory Board regulations, the Nomination Committee continued discussions on the overall composition of the Supervisory Board and discussed succession planning for the Supervisory Board. At the 2021 Annual General Meeting of Shareholders, Carla Mahieu and Corien Wortmann-Kool were appointed to the Supervisory Board. Frits van Paasschen and John Ramsay were reappointed as members of the Supervisory Board. In addition, in view of Rob Routs stepping down as Chair of the Board with effect from the Annual General Meeting of Shareholders on 6 May 2021, Thomas Leysen was appointed by the Supervisory Board as his successor. In 2021, the Nomination Committee also discussed several profiles that could potentially replace Eileen Kennedy when she is to step down as member of the Supervisory Board at the 2022 Annual General Meeting of Shareholders.
The Remuneration Committee had five meetings in 2021. Carla Mahieu (Chair), Thomas Leysen, John Ramsay and Frits van Paasschen are members of this committee. Recommendations of the Remuneration Committee meetings were shared with the full Supervisory Board and were used to determine the final remuneration of the members of the Managing Board. The Supervisory Board also has access to all the meeting materials provided for the Remuneration Committee meetings. For more information on the remuneration policy, see the company website. For the implementation of that policy in 2021, see the Renumeration report 2021.
Discussions focused on the performance and the related remuneration of the members of the Managing Board, in respect of both company and individual performance in 2021. The majority of discussion time in 2021 was spent on remuneration topics related to the Short-Term Incentive (STI) and Long-Term Incentive (LTI) scorecard. Attention was given both to the setting of targets for 2021 and to first estimates of performance against those targets, gender pay gap, equal pay, and next steps to be taken in the Remuneration Report in terms of disclosures. Initial discussions also took place on possible amendments to the company’s remuneration policy. The performance and remuneration of the Executive Committee members were also shared with the Remuneration Committee. Geraldine Matchett, Dimitri de Vreeze and Cristina Monteiro were also partly involved in these discussions.
The Sustainability Committee prepares the Supervisory Board’s discussions on sustainability topics. The Sustainability Committee met four times in 2021. This Committee comprises Eileen Kennedy (Chair), Erica Mann, Frits van Paasschen and Corien Wortmann-Kool. The Chair of the Supervisory Board has a standing invitation and participated in all meetings. The recommendations of these meetings were shared and discussed with the entire Supervisory Board during its meetings with the Managing Board. The Supervisory Board has access to all the meeting materials provided for the Sustainability Committee meetings. The feedback from the Committee to the full Board included advice and recommendations regarding topics to be approved by the Supervisory Board, in particular the sustainability reporting in this Report. Taking into consideration the draft Assurance report of the independent auditor on the Sustainability Information by KPMG, the full Supervisory Board approved the reporting against these topics on 1 March 2022. The assurance report was finalized by KPMG after the approval of the Supervisory Board. The Sustainability Information complies with the Standards of the Global Reporting Initiative and our internal reporting criteria, which are included in this Report, and is also aligned with the international Integrated Reporting Council <IR> Framework where possible.
During the year, recurring topics were the company’s performance against its People and Planet aspirations, with a focus on safety, emissions reduction, Brighter Living Solutions, and Inclusion & Diversity. Through these discussions, the Sustainability Committee followed up on the progress made with the implementation of the sustainability and safety aspirations set as part of the company’s strategy. Safety was extensively addressed, including an increased focus on the implementation of DSM’s Life Saving Rules at newly acquired sites. In addition, the Sustainability Committee extensively discussed the company’s new Food System Commitments as well as the implementation of a water target. The Sustainability Committee also performed a deep dive on our ESG KPIs, Precision Solutions, and the new sustainable portfolio steering methodology for Brighter Living Solutions. In terms of Inclusion & Diversity, the Sustainability Committee reviewed and discussed the company’s performance as well as our long-term strategic ambitions.
Financials and auditing
The activities of the Supervisory Board in the area of financials and auditing are prepared by the Audit Committee. The Audit Committee met six times in 2021. John Ramsay (Chair), Pradeep Pant, Erica Mann and Corien Wortmann-Kool are members of the Audit Committee. All Supervisory Board members have a standing invitation to attend Audit Committee meetings. In 2021, most of them used this standing invitation for the two conference calls in which the financial developments and interim results for the first and third quarter were discussed, as these are not followed by a full Supervisory Board meeting. The Chair of the Supervisory Board participated in all meetings and calls. The highlights of all Audit Committee meetings were shared with the full Supervisory Board. This feedback included advice and recommendations regarding topics to be approved by the full Supervisory Board. In 2021, these included the approval of the 2021 COA Audit plan and the proposed reappointment of the external auditor (approved by the 2021 Annual General Meeting of Shareholders). All Supervisory Board members have access to all the meeting materials posted for the Audit Committee meetings.
Our external auditor KPMG, Geraldine Matchett in her capacity as CFO, and the Senior Vice President Group Controller participated in all the meetings of the Audit Committee. So did Dimitri de Vreeze in his capacity as Co-CEO, along with the managers responsible for internal audit, risk management and compliance, with the exception of the two meetings in which the financial developments and interim results for the first and third quarter were discussed. Four times a year, the Audit Committee meets with the external auditor without the Managing Board being present.
The Committee had in-depth discussions of the company’s financials: the Finance plan, the Capital Expenditure plan, dividend proposals, the financial statements, and accounting policy changes. The discussions of internal risk management and control systems included the Internal Control Framework, compliance with recommendations and observations made by internal and external auditors, and the role and functioning of COA. This included the endorsement of COA’s proposed audit plan for 2022, which was subsequently approved by the full Board, as well as the COA Vision 2023 document. As part of the Corporate Risk Assessment, the company’s main risks and their mitigation were discussed. The Committee also discussed and evaluated cases submitted under the company whistleblower policy (DSM Alert), fraud cases, on-going litigation, and privacy compliance. Another recurring topic is our cybersecurity resilience, about which the Audit Committee is informed through a dashboard, as well as information on running cybersecurity programs and cybersecurity governance. In addition, the Audit Committee discussed the progress of the update of the Internal Control Framework.
Discussions were held with KPMG about the audit plan, management letter, audit report and financial statements for 2021, including managerial judgments and key accounting estimates. In its management letter, KPMG shared the outcome of its evaluation of the company’s procedures and system of internal controls to the extent necessary within the scope of the audit of the financial statements. The observations of KPMG were presented along the pillars that support our in-control statement with a continued focus on the Internal Control Framework pillar (for the Statements of the Managing Board, and for a visualization of our control environment see Corporate governance). KPMG confirmed that DSM continued the journey of improving its Internal Control Framework. At the same time it also encouraged DSM to continue further improving, specifically in the area of documentation of controls. The management letter contained constructive recommendations to continue to monitor whether the organization is able to keep up with the rapid changes that the company is going through.
Finally, in 2021, the Audit Committee formally evaluated the external auditor, and discussed the reappointment of KPMG. The proposal to reappoint KPMG is based on the Audit Committee’s own assessment of KPMG, on discussions with KPMG in the absence of management, and on the outcome of an evaluation among DSM executives.
Brighter Living Solutions (BLS) is DSM’s program for the development of sustainable, innovative solutions with environmental and/or social benefits, creating shared value for our stakeholders. Brighter Living Solutions are products, services and technologies that, considered over their life cycle, offer a superior environmental impact (ECO+) and/or a superior social impact (People+) when compared to the mainstream alternative for the same application. The impact of Brighter Living Solutions can be realized at any stage of the product life cycle, from raw materials through the manufacturing process to potential re-use and end-of-life disposal.
More information and definitions can be found on the company website.