The Supervisory Board (the ‘Board’) has the following three core committees: an audit committee (AC), a remuneration committee (RC) and a selection and appointment committee (S&AC). These committees are composed by the Board from among its members. As laid down in the Supervisory Board Regulations, the Board remains responsible for decisions, even if they were prepared by one of its committees. The Board has prepared regulations for each committee. In addition, in the year under review, the Board established a temporary M&A committee. During the year under review, the Board received reports from each of its committees on their deliberations and findings. The composition of the committees, the number of committee meetings, the most important meeting items and the performance of duties by the committees are outlined below.

Audit committee

Until 1 July 2018 the Audit committee comprised two members, namely Mrs Sandra Addink-Berendsen (chair) and Mr Cees van Rijn (member, and financial expert). As of 1 July 2018 Mr Roger Gerritzen joined the Audit committee as member. As established in the Audit committee Regulations, this committee supports the Board in its supervisory duties and responsibilities in the area of (i) external financial reporting, audit and compliance with legislation and regulations for financial reporting, (ii) appointment and performance of the external auditor, (iii) quality and effectiveness of internal, financial and management reporting as well as internal control and risk management systems, and (iv) compliance with internal procedures, legislation and regulations and codes of conduct.

In 2018, the Audit committee met five times in a regular meeting and twice in an extra meeting. The external auditor was present during all of these meetings. The internal auditor was only present during the regular meetings. In addition, the CFO, the Director Accounting, Treasury & Tax and/or the Group Finance Director and the Corporate Secretary were present during all of these meetings. The CEO was absent during one regular meeting.

The committee has held extensive discussions with (representatives of) the Executive Board—as well as with the external auditor—on the 2017 annual accounts, the 2017 annual report, the 2018 half-yearly results, the trading updates and the press releases pertaining thereto and the internal and external audit plan for 2018. The external auditor explained the Management Letter in the December meeting, with findings with regard to the administrative organisation and internal control in as far as relevant for the assurance. The most important topics that were raised have to do with sharpening up the ICF-framework in the IT applications and the separation of duties within the acquired companies. The Executive Board has made the risks controllable by taking additional measures. Other matters that came up for discussion included follow-up of the internal auditor’s and external auditor’s recommendations, risks and risk management and control systems, financial integration of acquisitions, implementation of new IFRS standards, staffing of the finance department, enforcement of the accounts receivable and dividend policy, ICT (including risks in the area of cyber security and data protection), and tax planning and status of the tax declarations in the relevant countries.

As regards the staffing of the finance department, the committee asked again for consideration to be given to achieving a good balance between workload and cost control. During the extra meetings, the committee discussed the backgrounds of and the parameters for the goodwill impairment test, the purchase price allocation of the acquired companies and the accounting manner for the call option on 40% of the shares and the earn-out with respect to Tasomix (Poland). In addition, in light of IFRS 16,  the accounting manner of the lease contracts were discussed.
During the year, several members of the senior management team were invited to provide further information to the Audit committee on a range of subjects such as treasury, tax, insurance and the progress of investment projects. Aside from the agenda, the members of the Audit committee also always received an overview of (pending and/or potential) legal claims, as well as an overview of incident notifications. After each meeting, the Audit committee spoke with the external auditor, always without the presence of (representatives of) the Executive Board. The Audit Committee also shared its findings with the Board on relations with the external auditor. In formulating the role of the external auditor, attention was paid to the scope of the audit report, the materiality principle to be applied and the audit fees. The Executive Board and the committee have each had separate discussions about the selection of the new lead partner of KPMG Accountants N.V. (KPMG) in relation to the audit for the 2019 financial year. The committee is of the opinion that relations with the external auditor are satisfactory and supports the proposal to appoint KPMG Accountants N.V. as auditor for the 2019 financial year.
The Audit committee has discussed the effectiveness of the design and performance of the internal risk management and control systems as referred to in best practice provision 1.2.1 to 1.2.3 of the Dutch Corporate Governance Code (the ‘Code’) with the Executive Board and has established that the risks relating to the Company strategy have been identified and that the system for controlling risks, based on strategic, operational, compliance and reporting risks, have been implemented. The Executive Board informed the Audit committee about two infringements of the purchasing risk policy. The material consequences of these infringements were limited and the Executive Board has taken corrective measures with respect to those directly involved.
The Audit committee has reported to the Board on the subjects as referred to in best practice provision 1.5.3 of the Code and has been involved in the work plan set up by the internal auditor. In addition, an assessment interview took place with the internal auditor.

Selection and appointment committee

Until 1 July 2018 the Selection and appointment committee comprised two members, namely Mr Erwin Wunnekink (chair) and Mr Vincent Hulshof (member). As of 1 July 2018 Mr Cees de Jong joined the Selection and appointment committee as member. As established in the Regulations of the Selection and appointment committee, this committee, among other things, submits proposals to the Board regarding the selection criteria and appoint­ment procedures, and regarding the scope, composition, appointments, reappointments, and performance appraisal of the Board and the Executive Board.

In 2018 the Selection and nomination committee met two times. The committee performed the necessary preparations with respect to the reappointment of Erwin Wunnekink as member of the Board and the discussions were led by the chairman of the Board together with Vincent Hulshof. In the preparations, the diversity policy and the right of recommendation that Coöperatie FromFarmers U.A. has as priority shareholder were taken into consideration. Moreover, the division of competencies and the continuity within the Board was an important consideration for the committee. Seen in this light, the committee suggested to the Board to, at the recommendation of Coöperatie FromFarmers U.A., reappoint Erwin Wunnekink as member of the Board. The Board has followed up the proposal. The reappointment will be put on the agenda of the  Annual General Meeting of Shareholders (AGM) that will be held on 26 April 2019. In addition the appointment committee and the Board discussed the succession plan for members of the Executive Board, the Executive Committee and the Board. The chairman and vice-chair of the Board have held discussions with Arthur van Och, who started as Director Supply Chain on 14 May 2018. As was announced in the press release of 2 November 2018, Jan Potijk indicated that he is not eligible for reappointment in 2019. Finally, the chairman of the Board held assessment interviews, without guidance from an external advisor, with the individual members of the Board, and the Board discussed the performance of the Board as a whole. As regards the performance of the Executive Board and the Executive Committee, the committee discussed the outcome of the interviews that were held by the members of the Board with all individual members of the Executive Committee.

Remuneration committee

Until 1 July 2018 the Remuneration committee comprised two members, namely Mr Cees van Rijn (chairman) and Mr Cees de Jong (member). As of 1 July 2018 Mrs Sandra Addink-Berendsen joined the Remuneration committee as member. As established in the Regulation of the Remu­neration committee, this committee, among other things, submits proposals to the Board regarding the remuner­ation policy to be pursued and the remuneration of the individual members of the Executive Board. The remu­neration policy was determined by the General Meeting of 26 April 2017 and approval was granted to the regulations as regard rights for acquiring depositary receipts of ordinary shares for members of the Executive Board.

The Remuneration committee met four times in 2018. The CEO was always present during these meetings. The Director Strategy & Organisation, the Director in the Executive Committee responsible for HR portfolio, joined the committee meeting in December 2018.

The committee performed activities, not only during its meetings, such as among other things the formulation of the remuneration report, discussing the remuneration of new members of the Executive Committee and the short-term (2019) and long-term (2019-2021) performance bonus plans. In addition, the Remuneration committee held discussions with the CEO and made a proposal to the Board regarding the short and long-term variable bonus targets for the Executive Committee for 2018 (STI 2018 and LTI 2018-2020). The targets were subsequently discussed and approved by the plenary Board.
For the formulation of the proposal for the remuneration of the Executive Board, the Remuneration committee ascertained the individual directors’ vision as to the level and structure of their own remuneration as referred to in best practice provision 3.2.2. of the Code. The Remuneration committee discussed the realisation of the Executive Committee’s objectives stipulated in 2017, and the variable remuneration (STI and LTI 2016-2018) was determined. For this, the Remuneration committee relied on the report of the external auditor in which the accuracy of the calculation of the variable remuneration relating to the financial objectives was confirmed. The Board then approved the proposed bonus amounts.
Partly as part of the preparation of the remuneration report, discussions were held as to the progress with the realisation of the short- and long-term objectives and pay ratios within ForFarmers. The 2018 employee participation plans were approved by the Board pursuant to the advice of the Remuneration committee. The main aspects of the contracts with members of the Executive Board are published on the Company’s website.

Temporary M&A committee

The Board established a temporary M&A committee in the year under review comprising Messrs Cees de Jong and Roger Gerritzen. This committee discussed the preparation of one M&A project with the Executive Board and regularly informed the Board  on its findings.