Corporate governance overview
An introduction to corporate governance at Coca‑Cola HBC from Anastassis G David, Chairman of the Board
We adhere to the highest corporate governance practices and standards to deliver the best results for our stakeholders.
Good governance sits at the heart of our Company
We have a strong and effective governance system throughout the Group. Operating in widely differing countries, on three continents, in various economic and regulatory environments, we have long recognised that strong governance and effective leadership are of critical importance to the Group in order to achieve our strategic goals. Our commitment to best practices in corporate governance plays a key role in managing our risks and opportunities and maintaining the trust of our stakeholders. Recognising the value of effective corporate governance, we have regularly monitored and adopted best practices since the Group was formed.
The corporate governance regime applying to the Company, which is a Swiss corporation listed on the London Stock Exchange with a secondary listing on the Athens Exchange, and our compliance with such rules for the year ended 31 December 2018, are described in detail in the section in our 2018 Integrated Annual Report entitled Application of UK and Swiss Corporate Governance Codes and the UK City Code on takeovers and mergers.
Strategy and oversight
The Board’s principal focus during the year continued to be on the execution of our strategic pillars Community trust, Consumer relevance, Customer preference and Cost leadership which are described in detail in the Strategic Report in our 2018 Integrated Annual Report. We were also particularly focused on aligning strategically with The Coca‑Cola Company in all of our markets and managing effectively the risks related to the external environment. These include risks associated with currency volatility, geopolitical instability and adverse macroeconomic conditions. Our governance framework is designed to ensure appropriate oversight and challenge.
The Board’s meetings are split between strategy considering the longer‑term vision and strategy of the Group and operational and financial updates in the markets where we operate to provide links and context for the strategic discussions as well as governance oversight. Meetings take place in Zug, Switzerland, but also in certain of our markets, in order for the Board to interact with local senior management and learn about their challenges and the way they are operating at a local level. This year we chose to hold our June meeting in Russia, which represents one of our biggest markets.
Appointments and Board composition
During 2016, the Nomination Committee reviewed the composition of the Board to ensure it has the appropriate balance of skills, experience, independence and knowledge in order to discharge its duties and responsibilities effectively. As a result of this review, we appointed Mr Ahmet C Bozer, Mr William W (Bill) Douglas III, Mr Reto Francioni and Mr Robert Ryan Rudolph as new non‑Executive Directors following the retirement from the Board of Mr George A David, Mr Irial Finan, Sir Michael Llewellyn‑Smith and Mr Nigel Macdonald. Between them, Ahmet, Bill, Reto and Robert bring a wealth of relevant financial, legal, operational and industry‑specific international experience to the Board. The Board has concluded that Bill and Reto are independent in character and judgement and that they meet the independence criteria of the UK Corporate Governance Code.
In line with our commitment to adhere to best corporate governance practices, an external Board effectiveness evaluation was conducted in the second half of 2016. We will also run an internal evaluation in 2017 to build upon the learnings of the 2016 evaluation. Further details are set out in the Nomination Committee report in our 2016 Integrated Annual Report.
We will continue to keep the composition and size of the Board under review. We believe that our Board is well balanced and diverse, with the right mix of international skills, experience, independence and knowledge. Under Swiss law and our Articles of Association, the Company’s Board of Directors is subject to re‑election by our shareholders on an annual basis, with members being proposed by the Board’s Nomination Committee, which, since June 2015, has been composed of independent Directors.
We understand the importance of the Board’s role in establishing the Company’s ‘tone from the top’ in terms of its culture and values, and our Directors lead by example as ambassadors of our values in order to cascade good behaviour throughout the organisation.
The Board is committed to recruiting Directors from different backgrounds with diverse skills, personalities and experience. We continue to make good progress in improving the diversity of the Company’s senior management and have increased the number of women on our Operating Committee during 2018. We shall continue to attach importance to diversity of culture, gender and experience in our nomination processes, while at the same time seeking in candidates for Board and senior management positions the credentials that are necessary for the continuing growth of our operations within a highly competitive and specialised industry.
Further details of our approach to governance and our key achievements this year are described within our corporate governance report in our 2018 Integrated Annual Report.