1.6.2.1

In the period under review, the Supervisory Board (hereinafter referred to as the ‘Board’) has devoted particular attention in its supervision to the ongoing challenges on farm, both in the Netherlands and abroad, to determine the potential influence on the Horizon 2020 strategy. In this context, the Board supports the initiatives that ForFarmers develops with and for its customers in the areas of efficient, sustainable and profitable business, based on its mission ‘For the Future of Farming’. Furthermore, ForFarmers has devoted a lot of attention to reporting on sustainability as part of the GRI (Global Reporting Initiative) process.

In 2016, ForFarmers has, inter alia, worked on further implementation of its efficiency programme One ForFarmers and has taken the first steps to further streamline the organisation in the United Kingdom to enable it to more quickly roll out the Total Feed approach. Furthermore, plans are being developed to achieve an optimal specialisation, spread of locations and size of factories and logistics, in line with the One ForFarmers approach and initiatives. These plans should lead to significant cost savings in 2020. Last year, the Board has devoted particular attention in a number of meetings to the acquisition strategy, reinforcing the organisation and adjusting the composition of the Executive Committee from 1 January 2017 as a result of Nico de Vos’ retirement on that date.

During the General Meeting of 15 April 2016, Mr Cees van Rijn was reappointed as member of the Supervisory Board. Cees van Rijn is also a member of the Audit Committee of ForFarmers and qualifies as a financial expert as defined in best practice provision III.3.2 of the Dutch Corporate Governance Code 2008 (the ‘Code’). He also chairs the Remuneration Committee.

On 24 May 2016, the listing of all ordinary shares of ForFarmers N.V. on Euronext Amsterdam took place. With this listing, ForFarmers wishes to make trading in ordinary shares in its capital easier and more accessible. The Board is delighted to report that, partly because of the attention paid to good communication, the transition of the trading platform to Euronext went smoothly. The application for the listing was almost unanimously approved on 15 April 2016 by the General Meeting of Shareholders. In the meantime, growing interest for the ForFarmers share has been observed from the increase in the average daily trading volume on Euronext.

Supervision

During the meetings of the Supervisory Board, the Board has, over the course of the period under review, been informed by the Executive Board, among other things on the strategic developments, investment proposals, financial results, organisational developments, operational progress, specific market developments and sustainability themes. To prepare the items on the agenda, these were often discussed in advance in a meeting of one of the committees.

Horizon 2020 strategy

In 2014, the Horizon 2020 strategy was introduced and a good start was made with its implementation. The Supervisory Board has noted that within the period under review, further progress has been made with the implementation of the strategy. As follows are the main subjects discussed with the Executive Board and the other Directors.

Strategic partnerships

The results of the strategic and production partnerships entered into by ForFarmers in 2014 became distinctly visible in 2015 in the marketing of high-quality nutritional products and the bundling of purchasing power and knowledge. This continued in 2016.

Acquisitions

As at 1 October 2016, ForFarmers completed the takeover of VleutenSteijnVoeders B.V. (‘Vleuten-Steijn’). With this, ForFarmers has strengthened its position in the Dutch and German swine sector, especially as regards knowledge of larger and specialist companies. The integration of Vleuten-Steijn started immediately after the takeover. During every meeting of the Supervisory Board, developments in the area of acquisitions were discussed. The Supervisory Board also exchanged ideas with the Executive Board on potential acquisitions in the four key countries in which ForFarmers operates, as well as other countries within the Europe region and surroundings (Europe+). Making acquisitions is a part of the strategy of ForFarmers. In the countries and regions where ForFarmers operates, the Company continues to aim for the regional number one or number two spot to be able to optimise economies of scale.

Organisation, Executive Board and Executive Committee

During every meeting the Executive Board informed the Supervisory Board of organisational developments, in particular in terms of the filling of senior management positions and other positions relevant to the matrix organisation. Moreover, attention was devoted to the available management potential among senior managers. In addition the Supervisory Board was informed during the year of the various Management Development Programmes. Moreover, the members of the Supervisory Board attended the two senior management conferences that take place each year.

In the period under review, Ronald van de Ven was succeeded by Adrie van der Ven. As a result thereof the Executive Committee was composed of Yoram Knoop, Arnout Traas, Jan Potijk, Stijn Steendijk, Steven Read, Iain Gardner, Nico de Vos and Adrie van der Ven. The Executive Board, composed of Yoram Knoop, Arnout Traas and Jan Potijk, forms part of the Executive Committee. Nico de Vos retires as of 1 January 2017. His roles and responsibilities are taken over by Steven Read as of that date. In 2016, the Supervisory Board members conducted evaluations with all directors, in which two members of the Supervisory Board always spoke to one director. The conclusions from these meetings were discussed in the plenary meeting of the Supervisory Board. The Supervisory Board is of the opinion that the Executive Committee works well under the leadership of Yoram Knoop as CEO.

A member of the Executive Board may not be on the Supervisory Board of more than two companies and may not chair a supervisory board of another entity or company as referred to in Article 2:132a of the Civil Code and best practice provision II.1.8 of the Code. The Supervisory Board is not aware of potential significant conflicts of interest among members of the Executive Board and the Supervisory Board with the Company.

Remuneration

The Supervisory Board, following advice from the Remuneration committee, has drawn up the Executive Board’s remuneration policy. The remuneration policy was established by the General Meeting of Shareholders of 15 April 2016. The remuneration report of the Supervisory Board includes a report on the procedure for remuneration over the last financial year. A small number of changes to the current remuneration policy will be put to the upcoming General Meeting on 26 April 2017 for enactment.

Financial reporting

The Supervisory Board has received the financial reports and they were clarified and discussed in the meetings by the Executive Board. The matters discussed here were the general affairs, market developments, strategic and financial developments and risks, as well as the performance compared to the budget of the group as a whole and the individual units. The Board discussed the conclusions of the Audit committee on the internal control and risk management systems (their set-up and operation), as well as the main risks faced by ForFarmers. The Supervisory Board observes and supports the internal risk management system, as described in the section on Risk Management in the present report. In this context, compliance with the accounts receivables policy and the internal audit function at ForFarmers, which is filled as of 1 January 2017, were discussed with the Executive Board. The Supervisory Board also approved the 2015 annual accounts and the 2016 interim report, and assessed the trading update of November 2016. In addition, the dividend policy and the dividend proposal for 2015, corporate governance, and the financial reporting process of the Company were discussed.

The Supervisory Board discussed the 2016 annual accounts with the Executive Committee and the external auditor (KPMG Accountants N.V.) and approved these in the meeting of 13 March 2017. KPMG issued an unqualified audit opinion. On 26 April 2017 the annual accounts will be submitted to the Annual General Meeting for adoption as well as the proposal for dividend distribution for 2016.

Listing on Euronext Amsterdam

The Supervisory Board closely followed the preparations for listing on Euronext and was informed on their progress in the meetings of February, March and April 2016 by the Executive Board. Items covered were, inter alia, corporate governance, the prospectus and the risk paragraph, the transition to IFRS, the presentation for analysts, the equity story and communication. In its March 2016 meeting, the Supervisory Board approved the proposal for listing on Euronext Amsterdam. A conference call was held on 11 May 2016 to inform the Supervisory Board further on the final preparations for the listing on 24 May 2016.

Other subjects and activities

ForFarmers leads the way as regards a number of initiatives in the industry regarding sustainability. In these matters, the Supervisory Board has spoken with the Executive Board on the feedback given by the Sustainability Advisory Board and the relating implementation, the structure of the annual report according to GRI, and raising awareness of sustainability matters among suppliers through the Supplier Code of Conduct. Furthermore, the importance of good communication in the area of sustainability, also in light of the ‘For the Future of Farming’ approach, was discussed with the Executive Board. The Supervisory Board supports these initiatives and is delighted with the proactive approach used by ForFarmers in matters of sustainability.

The Supervisory Board sees the Code of Conduct as a means of promoting integrity. The overview of alerts to incidents and the follow-up thereof is periodically discussed with the Audit committee and the Supervisory Board. New employees receive a personal letter and a brochure about the Code of Conduct. This information is also available on the intranet (Connect). Moreover, new employees follow an online training module about this. Following an employee engagement survey, the Supervisory Board spoke with the Executive Board about culture and conduct within the Company. Aspects such as putting the strategy into practice, workload, attracting and retaining talent, career opportunities, and giving and receiving feedback were all enquired into. The outcomes of the survey are incorporated into the management development programmes. A new survey on employee engagement is planned for 2017.

Sustainable performance is also relevant to the way in which ForFarmers handles safety and development of employees. The Supervisory Board underlines the importance of the ongoing attention that should be devoted to this. The Supervisory Board supports the campaign #bettersafethansorry that has started at ForFarmers.

Meetings and attendance

In 2016 the Supervisory Board met seven times in plenary meetings. These Supervisory Board meetings were always attended by the CEO and the CFO. The members of the Executive Committee team were present during the Supervisory Board meetings insofar as the subject matters discussed included the annual accounts, half-year results, and the budget. There have also been five tele-conferences. Three of these conferences concerned the approval of the annual accounts (financial statements) and half-year results on the eve prior to their publication as well as discussions on the trading update of November 2016. The tele-conference of May was held in relation to the listing on Euronext, and during the tele-conference held in July, the Supervisory Board approved the takeover of Vleuten-Steijn. Not all plenary meetings were fully attended by the Supervisory Board. Due to health reasons, Henk Mulder was unable to attend three meetings. Another member was not present at one meeting. These members have nevertheless at all times acknowledged the items on the agenda and made their opinions known to the Chairman of the Board prior to the meeting.

The Supervisory Board has in addition met twice without the (representatives of the) Executive Board. Items discussed included: the structure of the internal organisation as well as the method and remuneration (including the variable part thereof) of the Executive Board and the other members of the Executive Committee, as well as the operation of the Executive Committee as a team and that of the individual directors, and the associated conclusions arising therefrom. The Supervisory Board has also discussed, without the presence of the Executive Board, its own operation, the operation of its independent committees, and that of the individual members and the associated conclusions arising therefrom. Finally the respective members met in the three committees (see Committees of the Supervisory Board).

Preparation for the Annual General Meeting that ForFarmers held in April 2016 was carried out by the Supervisory Board during its regular meetings in February and March. During the latter meeting the annual accounts and the 2015 Executive Board report were also discussed as well as developments in light of Horizon 2020. The external auditor was also present to provide an explanation. In addition, during the said meeting, without the presence of the auditor, the employee participation plans for 2016 were discussed. In the period under review, on several occasions the Supervisory Board dwelled upon the reorganisation process in the United Kingdom with the Executive Committee. The Supervisory Board has sought in-depth information as to the background thereto, and asked for attention to be paid to social aspects, culture and good communication. In June, the Supervisory Board met in Beelitz, Germany and paid a site visit to the factory there. In addition, some members of the Board visited an operating site in the United Kingdom in 2016.

The interim report of 2016 and the 2017 budget were discussed in the meetings of August and December respectively. In August’s meeting, a presentation was given on the development and structure of the IT processes and the harmonisation of the application landscape. In that meeting, progress in the area of sustainability was also discussed. In its meeting of December, the Board gave its approval for the 2017 budget with a recent version of the long-term plans and the main aspects of the strategic policy, the general and financial risks, the Company’s management and control system and compliance with all relevant legislation and regulations. This strategy also includes the operational and financial targets of the Company, the preconditions that are used in connection therewith, and the aspects of corporate social responsibility relevant to the Company. Evaluation of the General Meeting of Shareholders took place in April and the meetings of June and November focussed on, inter alia, the employee engagement survey and the evaluation of the listing on Euronext, the detailed plans as regards potential acquisitions, and the internal risk management and control systems.

Self-evaluation

Once every three years, the Supervisory Board discusses its operation with an external advisor. Given that the latest evaluation under the guidance of an external advisor had been at the end of 2013/beginning of 2014, the Supervisory Board had a self-evaluation again under the guidance of an external advisor in Q4 2016. As part of this, the Supervisory Board discussed its operation, both as regards the Board as a whole and as regards its individual members. The desired profile, composition and competence of the Supervisory Board was, among other things, discussed. The Supervisory Board strives towards an equal distribution of men and women, age, expertise, experience and background.

The Board concluded that, both as a whole and as regards its individual members, it performed satisfactorily. In addition, the Supervisory Board evaluated its meetings in the past year and the development and strategy of the Company, and the role of the Supervisory Board in connection therewith were also addressed. The self-evaluation was prepared by the Selection and appointment committee of the Supervisory Board.

The information as referred to in provisions III.1.3 and III.5.2 of the Code is included in the section 'Composition of the Supervisory Board' and 'Committees of the Supervisory Board'.