In 2019, our Board of Directors and management continued to evolve our strategy and governance to anticipate and reflect changing needs of society. We have been driving growth through innovation with significant investments in R&D, and have streamlined Nestlé’s portfolio. Our value creation model continued to deliver both top- and bottomline growth, as well as capital efficiency.
We are delivering on our commitments to execute our proven Nutrition, Health and Wellness strategy and expanding the boundaries of nutrition. At the same time, we continue to pursue our Creating Shared Value approach to business. Our conviction is that our business will only be successful in the long term by creating value for both our shareholders and society.
Our Board of Directors considers the interests of our shareholders as well as our other stakeholders. Adjusting our business model to changing consumer priorities makes business sense and is fundamental to sustainable value creation. We see no contradiction between pursuing our business interests and investing into our longterm sustainability. This has been reflected in the purpose clause of our Articles of Association since 2008. Accordingly, Nestlé shall, in pursuing its business purpose, aim for long-term, sustainable value creation.
Our diverse Board of Directors is critical to our ability to effectively oversee the direction of our company. Since 2015, we have strengthened the Board through nine new independent directors with diverse experience and expertise directly relevant to Nestlé. We will continue to ensure that our Board understands the trajectory of our business and can ask relevant questions from all angles.
Engagement with our shareholders through our roadshows, investor meetings and analyst calls has sharpened our focus on our core priorities, strategic vision and governance. Our Chairman’s Roundtables took place this past year in Singapore, Frankfurt, Paris, Zurich, London and New York. We continue to listen to all our shareholders and other stakeholders.
Our Chairman’s and Corporate Governance Committee regularly reviews aspects of our governance, as well as asset and liability management.
Our Nomination and Sustainability Committee, chaired by our Lead Independent Director, evaluates Board composition, structure and succession planning. It assesses candidates for nomination to the Board in the coming years. Importantly, this Committee reviews all aspects of our environmental and social sustainability including our responses to climate change.
Our Compensation Committee sets our remuneration principles and submits the proposals for remuneration of the Board and the Executive Board to the Board and the AGM. It ensures the alignment of our values, strategies and performance. Our compensation proposals and our compensation report are submitted to annual votes by our shareholders.
Our Audit Committee oversees internal and external audit, financial reporting, compliance and risk management. In 2019, our mandate for external audit was put up for tender. The Board will propose EY to be elected as our new audit firm for the business year 2020 at the upcoming AGM.
We recognize that for our company to be successful over time and create sustainable value for shareholders, we must also create value for society. We see governance as a framework to align the interests of all our stakeholders behind our purpose of enhancing quality of life and contributing to a healthier future.
Share capital distribution by geography
Share capital by investor type, long-term evolution (a)
Institutions 81% Private Shareholders 19%
(a) Percentage derived from total number of registered shares. Registered shares represent 57.3% of the total capital. Statistics are rounded, as at 12/31/2019.
Our Compensation Committee sets our remuneration principles and prepares the proposals for remuneration. In 2015, we implemented the new Swiss ‘say on pay’ law both in letter and in spirit. Our proposals were adopted with large majorities of our shareholders. Our Compensation Report explains our compensation system and pay-outs. It is submitted annually to an advisory vote of our shareholders.
Changes for 2019 Compensation
- The Compensation Budget was adjusted to the number of Executive Board members at December 31 of the prior Business Year.
- Share Ownership: Each Executive Board Member in principle should hold shares at least equal to twice his/her annual base salary, absent specific circumstances. The CEO should hold at least five times his annual base salary.
- Market Value (for blocked shares): We will start disclosing the market value (instead of tax value) for blocked shares given to the Board of Directors (50% of their remuneration) and the Executive Board (as part of the Short Term Bonus) in the Compensation Report 2019.
- Personal objectives for Executive Board members will be integrated into the business objectives.
The following chart presents the evolution of the total compensation to the Board of Directors and Executive Board in relation to Nestlé’s share price and dividend payout.
Year Nestlé Dividend Nestlé Share closing price Total Compensation (BoD + EB) 2008 100 100 100 2009 114 121 99 2010 132 132 112 2011 139 130 100 2012 146 143 101 2013 154 157 99 2014 157 175 97 2015 161 179 104 2016 164 176 99 2017 168 199 85 2018 175 192 88