Supervisory Board committees

Since 2002, an Audit Committee is in place and a Remuneration Committee was installed early 2004. A new committee, the Innovation & Sustainability Committee, was established in response to the Revised Corporate Governance Code’s best practice recommendations in the area of CSR. The Supervisory Board also functions as the Selection and Appointment Committee. Reference is made to the reports of these committees set out below.

The Audit Committee, the Remuneration Committee, the Innovation & Sustainability Committee and the Selection and Appointment Committee have as main role to provide a focused analysis and preparation of the subjects within their respective areas of expertise and to report and make recommendations to the Supervisory Board, thus enhancing the effectiveness of the Supervisory Board’s supervision and advisory work.

Remuneration Committee

Since most of the amendments brought by the Revised Corporate Governance Code relate to Executive Board remuneration issues, the Remuneration Committee met five times, which is more often than usual. Some of these meetings were attended by the Supervisory Board’s remuneration advisers, Towers Perrin.

February meetings
The Remuneration Committee met twice during the course of February. At these meetings, the Executive Board’s performance against the 2008 performance targets was rated, the 2009 performance targets were determined and interim calculations of the TSR related to the LTI plans 2007 and 2008 were made. A preliminary report of the implications of the Revised Corporate Governance Code’s best practice recommendations on the remuneration of the Executive Board and the remuneration structure within the Company was received and would be discussed in depth later in the year. The proposal to continue the employee share participation scheme received support.

October meeting
The implications of the Revised Corporate Governance Code, more particularly the scenario analysis, executive pay in relation to the remuneration structure within the Company’s businesses, the up- or downwards adjustment of the variable components of the remuneration of members of the Executive Board as a consequence of the occurrence of extraordinary circumstances giving rise to an unfair outcome were reviewed. The remuneration of the members of the Executive Board was benchmarked with the assistance of the Supervisory Board’s remuneration consultants against the base salary peer group in accordance with the remuneration policy as approved by the AGM.

November meeting
The conclusion by the Supervisory Board’s remuneration consultants that the base salary of the Executive Vice-Presidents needed to be increased to bring it in line with the peer group’s median remuneration as prescribed by the approved remuneration policy was discussed and an increase of the base salary of the Executive Vice-Presidents received support from the Remuneration Committee and was subsequently approved by the Supervisory Board. Details can be found on page 65 of the 2009 annual report.

December meeting
The best practice recommendations of adjustment of variable pay components and the clawback recovery of variable pay amounts granted on the basis of incorrect results were discussed further and it was decided that the Supervisory Board will have the authority to claim back any variable pay elements that have been paid out on the basis of incorrect financial statements over a time period including a full financial year prior to the financial year in which the cause for this claim presented itself. Different scenario analyses simulating the effects of a decrease or rise in the Company’s share price were carried out. The base salary of the CEO and of the CFO was reviewed and the conclusion of the Supervisory Board’s remuneration consultant was that their base salary was below median level. The proposal of performance targets for the year 2010 for the members of the Executive Board was reviewed. As set out in the 2009 annual report, the performance targets include specific CSR targets. The proposal to continue the employee share participation scheme was approved.

Audit Committee

The Audit Committee met three times and held one formal telephone conference. All meetings, including the telephone conference, were attended by the external auditor, KPMG Accountants N.V.

February meeting
Review of the draft annual accounts 2008 including the dividend proposal, the report of the external accountant and the management letter of KPMG Accountants N.V. The Audit Committee had a private meeting with the external auditor. The Audit Committee received a report from an external forensic accountant on a fraud case valued at approximately EUR 500,000 which was uncovered at one of its Spanish plants and reviewed the compliance certificates received from management and senior staff. There were a few minor cases of non-compliance, none of which were of material importance. The compliance officer informed the Audit Committee about the launch of the Nutreco Integrity Line, a system operated by a specialised external operator allowing staff worldwide to anonymously report irregularities with the Company’s Code of Ethical Conduct. Finally, the Audit Committee held a self-assessment session.

June meeting
The Audit Committee focused on risk management and received a detailed report on the losses incurred by the Hendrix business on commodities positions which amounted about EUR 20 million. Corrective actions taken by the Executive Board included a significant strengthening of the timely monitoring of raw material positions with biweekly reporting to the Executive Board and a reorganisation of business management. The group internal auditor gave a presentation on the working of the internal audit department and the internal audit and information security activities and 2009 plan. The audit plan of the external accountant was reviewed.

July telephone conference
The Audit Committee reviewed the draft interim results and the interim dividend proposal and discussed the report of the external accountant. The draft press release was reviewed and approved for release. In addition, the Company’s preparedness for the Mexican flu pandemic and actions taken by management to mitigate its effects on the Company’s staff and the continuity of its operations was reviewed.

December meeting
The Audit Committee reviewed the report of the external accountant on the hard close of the third quarter, the financial highlights of the recent acquisitions, the internal audit approach and the outcome of the internal audits and IT audits and an update on the Nutreco Integrity Line.

Selection and Appointment Committee – Composition of the Supervisory Board and of the Executive Board

The Supervisory Board acts as the Selection and Appointment Committee and is chaired by the chairman of the Supervisory Board. The Committee meets on an ad hoc basis and deliberated, during the year under review, on the termination of the employment agreement with Mr J.B. Steinemann. The Committee discussed the proposal to appoint Mr K. Nesse, Executive Vice-President Aquaculture Division, Mr F.J. Tielens, Executive Vice-President Specialties Division, and Mr J.A. Vergeer, Executive Vice-President Agriculture Division, as members of the Executive Board and a delegation of the Committee interviewed the proposed candidates. Subsequently, these proposed appointments were approved by the General Meeting of Shareholders. The Committee noted the end-of-final-term resignation of Mr L.J.A.M. Ligthart at the AGM of 2009 and proposed to the General Meeting of Shareholders to appoint Mr R.J. Frohn and Mr A. Puri as new members of the Supervisory Board. In addition, the end-of-term resignation of Mr J.A.J. Vink was noted and the Committee proposed to reappoint Mr J.A.J. Vink for a new four-year term. Subsequently, these proposed appointments were approved by the General Meeting of Shareholders and Mr R.J. Frohn was appointed chairman of the Audit Committee, whereas Mr A. Puri was appointed chairman of the newly created Innovation & Sustainability Committee. Mr. J.M. de Jong was appointed vice-chairman of the Supervisory Board.

Innovation and Sustainability Committee

The Committee centres its activities around governance of areas of science and technology of importance to the Company’s innovation strategy, product-related risk management model and, in line with the best practices of the Revised Corporate Governance Code, on certain sustainability objectives. The Committee met twice.

September meeting
The Committee was installed and its charter was approved and has been published on the Company’s website. The focus areas of the Committee were defined as research & development, feed-to-food safety and sustainability. The status and future plans concerning the focus areas were reviewed.

November meeting
The Committee focused on the Company’s sustainability objectives and on feed-to-food safety and the Company’s NuTrace tracking and tracing system.

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