Corporate Governance Report 2018 Compensation Report 2018 Financial Statements 2018
Total Page:16
File Type:pdf, Size:1020Kb
Financial Statements 2018 Compensation Report 2018 Corporate Governance Report 2018 Good Food, Good Life Good Food, Nestlé – Corporate Governance Report 2018 | Compensation Report 2018 | Financial Statements 2018 Contents 1 Corporate Governance Report 2018 3 Group structure and shareholders 4 Capital structure 6 Board of Directors 18 Executive Board 22 Compensation, shareholdings and loans 23 Shareholders’ participation 24 Change of control and defence measures 25 Auditors 26 Information policy 27 General Organization of Nestlé S.A. 29 Compensation Report 2018 49 Statutory Auditor’s Report to the General Meeting 51 Articles of Association of Nestlé S.A. 61 Financial Statements 2018 63 Consolidated Financial Statements of the Nestlé Group 2018 65 Principal exchange rates 66 Consolidated income statement for the year ended December 31, 2018 67 Consolidated statement of comprehensive income for the year ended December 31, 2018 68 Consolidated balance sheet as at December 31, 2018 70 Consolidated cash flow statement for the year ended December 31, 2018 71 Consolidated statement of changes in equity for the year ended December 31, 2018 73 Notes 160 Statutory Auditor’s Report – Report on the Audit of the Consolidated Financial Statements 166 Financial information – 5 year review 168 Companies of the Nestlé Group, joint arrangements and associates 191 152nd Financial Statements of Nestlé S.A. 193 Income statement for the year ended December 31, 2018 194 Balance sheet as at December 31, 2018 195 Notes to the annual accounts 204 Proposed appropriation of profit 206 Statutory Auditor’s Report – Report on the Audit of the Financial Statements Front cover S.Pellegrino Essenza: Capturing the consumer shift to healthy hydration Our flagship premium waters brand is well positioned to strengthen its segment leadership with the addition of exciting fruit flavors. The new formats appeal to consumers shifting away from fruit juice and carbonated soft drinks. Corporate Governance Report 2018 Corporate Governance Report 2018 1 Situation at December 31, 2018 3 1. Group structure and shareholders 22 5. Compensation, shareholdings 1.1 Group structure and loans 1.2 Signifi cant shareholders 1.3 Cross-shareholdings 23 6. Shareholders’ participation rights 6.1 Voting rights restrictions 4 2. Capital structure and representation 2.1 Capital 6.2 Quorums required by the Articles 2.2 Conditional capital of Association 2.3 Changes in capital 6.3 Convocation of the General Meeting 2.4 Shares and participation certifi cates of shareholders 2.5 Dividend-right certifi cates 6.4 Inclusion of items on the agenda 2.6 Limitations on transferability 6.5 Entries in the share register and nominee registrations 2.7 Convertible bonds and options 24 7. Change of control and defense measures 6 3. Board of Directors (1) 7.1 Duty to make an offer 3.1 Members of the Board of Directors 7.2 Clauses on change of control 3.2 Professional background and other activities and functions 25 8. Auditors 3.3 Mandates outside Nestlé 8.1 Duration of the mandate and term 3.4 Elections and terms of offi ce of offi ce of the lead auditor 3.5 Internal organizational structure 8.2 Auditing fees 3.6 Defi nition of areas of responsibility 8.3 Additional fees 3.7 Information and control instruments 8.4 Information instruments pertaining vis-à-vis the Executive Board (2) to the external audit 18 4. Executive Board (2) 26 9. Information policy 4.1 Members of the Executive Board 4.2 Professional background and other 27 General Organization of Nestlé S.A. activities and functions 4.3 Mandates outside Nestlé 29 Compensation Report 2018 4.4 Management contracts 51 Articles of Association of Nestlé S.A. (1) The full Board of Directors Regulations and Committee Charters are published on www.nestle.com/investors/ corporate-governance/boardcommittees. (2) The term Executive Committee, as used in the SIX Directive, is replaced by Executive Board throughout this document. 2 Corporate Governance Report 2018 Group structure and shareholders Preliminary remarks 1. Group structure and shareholders The Nestlé Corporate Governance Report 2018 follows the 1.1 Group structure SIX Swiss Exchange Directive on Information relating to Please refer to the Annual Review 2018, page 60 for the Corporate Governance. Additional information can be found overview of Directors and Offi cers. in the Compensation Report. Nestlé S.A. complies with the recommendations of the Swiss Code of Best Practice for 1.1.1 Description of the issuer’s operational group structure Corporate Governance, as in force at December 31, 2018. For the general organization chart of Nestlé S.A., refer To avoid duplication of information, cross-referencing to to page 27 of this document. The Group’s Management other reports is made in some sections, namely the Annual structure is represented in the analysis by operating Review 2018, the Financial Statements 2018 that comprise segments (refer to Note 3 of the Consolidated Financial the Consolidated Financial Statements of the Nestlé Group Statements of the Nestlé Group 2018, page 83). and the Financial Statements of Nestlé S.A., as well as the Articles of Association of Nestlé S.A., whose full text can 1.1.2 All listed companies belonging to the issuer’s group be consulted in this report (page 51) or on: The registered offi ces of Nestlé S.A. are in Vevey and Cham www.nestle.com/investors/corporate-governance/articles. (Switzerland). Nestlé S.A. shares are listed on the SIX Swiss The Consolidated Financial Statements of the Nestlé Exchange in Switzerland (ISIN code: CH0038863350). At Group 2018 comply with the International Financial December 31, 2018, the market capitalization of Nestlé S.A. Reporting Standards (IFRS) issued by the International was CHF 237 363 463 000. For further information see also Accounting Standards Board (IASB) and with Swiss law. page 65 of the Annual Review 2018 and visit our website on Where necessary, these disclosures have been extended www.nestle.com/investors. to comply with the requirements of the SIX Swiss Exchange Please refer to the Consolidated Financial Statements Directive on Financial Reporting. of the Nestlé Group 2018, page 168, for the list of publicly listed companies of the Nestlé Group, with an indication of the company name, registered offi ce, share capital, place of listing, securities’ ISIN number, their market capitalization and the Company’s participation. 1.1.3 The non-listed companies belonging to the issuer’s group Please refer to the Consolidated Financial Statements of the Nestlé Group 2018, page 168, for the enumeration of companies of the Nestlé Group, joint arrangements and associates, with an indication of the company name, registered offi ce, share capital and the Company’s participation. Corporate Governance Report 2018 3 Group structure and shareholders Capital structure 1.2 Signifi cant shareholders 2. Capital structure BlackRock, Inc., New York, announced on August 31, 2017, 2.1 Capital holding, directly or indirectly, 4.7% of Nestlé S.A.’s share The ordinary share capital of Nestlé S.A. is CHF 306 300 000. capital, and The Capital Group Companies, Inc., Los Angeles, The conditional share capital is CHF 10 000 000. Nestlé S.A. announced on October 30, 2017 holding, directly or indirectly, does not have any authorized share capital. 3.55% of Nestlé S.A.’s share capital. Apart from the foregoing, Nestlé S.A. is not aware of any other shareholder holding, 2.2 Conditional capital as at December 31, 2018, Nestlé S.A. shares in excess of 3% The share capital may be increased (without time limitation) of the share capital. in an amount not to exceed CHF 10 000 000 by issuing up During 2018, the Company published on the electronic to 100 000 000 registered shares with a nominal value of publication platform of the SIX Swiss Exchange two CHF 0.10 each (representing 3.26% of the currently issued disclosure notifi cations pertaining to the holding of its own share capital) through the exercise of conversion rights shares. On May 30, 2018, the Company disclosed holding and/or option rights granted in connection with the issuance 3.01% of its own shares. This holding fell below the threshold by Nestlé or one of its subsidiaries of newly or already issued of 3% on June 25, 2018 as a consequence of the share capital convertible debentures, debentures with option rights or reduction by cancellation of own shares effected by the other fi nancial market instruments. Thus the Board of Company. Directors has at its disposal a fl exible instrument enabling With respect to nominees, Chase Nominees Ltd, London, it, if necessary, to fi nance the activities of the Company was a registered Nominee N (refer to point 2.6.3. below) through convertible debentures. of 363 415 006 shares, i.e. 11.87% of the shares of the For a description of the group of benefi ciaries and of the Company as at December 31, 2018. At the same date, terms and conditions of the issuance of conditional capital, Citibank N.A., London, as depositary for the shares refer to art. 3bis of the Articles of Association of Nestlé S.A.(*) represented by American Depositary Receipts, was the registered holder of 243 575 492 shares, i.e. 7.95% of 2.3 Changes in capital the shares of the Company. Also on December 31, 2018, The share capital was reduced twice in the last three Nortrust Nominees Ltd, London, was a registered Nominee N fi nancial years as a consequence of a share buy-back of 114 428 906 shares of the Company, representing 3.74% program of CHF 8 billion, initiated by the Company on of the shares. August 25, 2014, and completed on December 7, 2015, and of a further share buy-back program of up to CHF 20 billion, 1.3 Cross-shareholdings launched on July 4, 2017.