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Committees of the Supervisory Board

The Supervisory Board has two committees as set out in the Corporate Governance chapter: the Audit and Risk Committee, and the Nomination and Compensation Committee. Both committees met separately throughout the year. Their main considerations and conclusions were shared with the full Supervisory Board, where formal decision-making takes place.

The composition of the Committees is as follows:

Audit and Risk Committee

  • Margot Scheltema (Chair)
  • Marcos Eguiguren Huerta
  • Carla van der Weerdt

Nomination and compensation committee

  • Marius Frank (Chair) up to 17 May 2013
  • Mathieu van den Hoogenband (Chair) from 17 May 2013
  • Hans Voortman
  • David Carrington from May 2013

For more information on the Supervisory Board members, see the biographies.

The competence matrix, adopted for the first time in 2011, was updated at the end of 2013. It highlights areas in which Board members have substantial expertise and helps to assess whether the Supervisory Board has the appropriate skills to perform its duties.

The matrix is based on requirements outlined in the collective profile of the Supervisory Board, which is regularly updated.

Activities of the Audit and Risk Committee

The Audit and Risk Committee (ARC) met on six occasions in 2013. Triodos Bank’s Chief Financial Officer, the Head of Internal Audit and the Head of Risk Management were present at each meeting. The external auditors were present at four meetings.

In addition, one meeting was held with the external auditor, without the Executive Board being present. The Chair of the Audit and Risk Committee also met separately with the external auditor from time to time. The ARC attached great importance to an effective, independent and professional audit capability in Triodos Bank and welcomes the continuing efforts of the Head of Internal Audit to increase its impact. This includes both adequate representation of key audit findings, and the follow-up of audit issues including management responses.

During its deliberations, the Committee reviewed issues including: Triodos Bank’s overall risk and control framework; the annual accounts and the quarterly results; the findings of the internal auditor; important accounting decisions, credit and concentration risk, treasury management and risk appetite. The ARC has paid special attention to the follow-up to suggestions for improvement by the Dutch Central Bank, and the need to further strengthen the risk management framework. To this end, a Director Risk will be appointed. The Chair of the ARC has been closely involved in this recruitment process. The ARC also supports the appointment of a Director Finance, and the thorough review of policies in the areas of risk monitoring and management, in particular credit risks. This includes data quality, collateral valuation, risk classification, loan reviews and adequate documentation. All of these matters have received the ARC’s special attention.

As before, an adequate Internal Liquidity Adequacy Assessment Process (ILAAP) and Internal Capital Adequacy Assessment Process (ICAAP) were performed during the year and the Recovery Plan was produced and presented to the Dutch Central Bank.

In 2013, credit losses were at a reasonable level given the economic circumstances. However, an increased exposure to changing government policies was noted in the area of subsidies for solar projects in Spain. The ARC is keeping itself closely involved in this matter.

The ARC welcomes the diversification of the loan portfolio delivered, in part, by the introduction of sustainable mortgage lending. It notes that further diversification approaches are under consideration, including investment opportunities for excess liquidity.

The ARC discussed the management letter with the external auditor containing, among others, the external auditor’s observations regarding internal control. The ARC is satisfied that Triodos Bank’s internal control environment is adequate on the basis of comprehensive information including external and internal audit, and compliance and risk management reports.

Activities of the Nomination and Compensation Committee

The full Nomination and Compensation Committee (NCC) met on several occasions during the year; in addition, members of the NCC met several times to consider a range of topics.

One of the NCC’s primary roles is to advise the full Supervisory Board about the remuneration policy of Triodos Bank in general and to set the remuneration packages of its Statutory Directors. It also advises the Supervisory Board on remuneration packages of Managing Directors reporting directly to the Statutory Directors. The members of the NCC have senior management experience and good knowledge of – and experience with – performance management and remuneration in general. Additionally they seek advice from independent, external experts in case of specific issues.

Existing employment contracts for the two Statutory Directors have been reviewed and updated to make sure they comply with regulations.

Coordinating the recruitment of a successor to the Supervisory Board Chair continued to be an important activity in 2013. The profile for the position of Chair was adjusted in the light of difficulties in finding a candidate with comprehensive banking experience, a proven management track record and a strong alignment with the values that underpin Triodos Bank’s work. It was decided that in-depth banking experience will be provided by a board member but not necessarily the Chair. As a result the recruitment for an additional new member of the Board, with thorough retail banking experience in a senior bank executive position, began during the year. This new member will succeed Jan Lamers who retires from the Board in 2014.

The NCC organised a two day session as part of a permanent education system for the Supervisory Board and the Executive Board. This programme meets the Banking Code’s requirement to create a life-long learning experience. In 2013 the programme addressed risk management and regulatory framework developments, the core values of Triodos Bank and their personal and professional relevance, and reviewed Triodos Bank’s Supervisory Board dynamics. The training was moderated by an external consultant.

In 2013, the NCC advised the Supervisory Board on the review of Triodos Bank’s international remuneration policy, which is fully in line with European and Dutch regulation regarding bank remuneration. For more information on the international remuneration policy please refer to the annual accounts.

Other issues discussed in the NCC or with the CEO during the meetings included:

  • A ‘Relationship at Work’ policy paper
  • The size and composition of the Supervisory Board and the Supervisory Board suitability matrix
  • Yearly reviews Statutory Directors
  • Recruitment of a Corporate Secretary
  • Reappointment of two Supervisory Board members
  • Succession of key positions at senior management level
  • Management development, including the career path of individual senior managers and high potential co-workers.