The Lippens Code came into force on 1 January 2005. It applies to all companies incorporated under Belgian law the shares of which are traded in a regulated market. The Code uses the ‘comply or explain’ concept, which means that if a company chooses to deviate from any of the Code’s principles, it must explain its reasons for doing so in the ‘Corporate Governance’ section of its annual report. As already explained in the Fortis Annual Reviews of previous years, Fortis applies all the Code’s main principles. Three items require more detailed explanation:
- Principle 2.3: Independence of directors. The Lippens Code states that: “To be considered independent, a director should be free from any business, close family or other relationship with the company, its controlling shareholders or the management of either that creates a conflict of interest such as to affect that director’s independent judgement.” The phrasing of this principle generally requires little comment. Questions may be raised, however, regarding its implementation and the way specific criteria in respect of a director’s independence are formulated. The Lippens Code, the Tabaksblat Code, Article 524 of the Belgian Companies Act and the recommendation of the European Commission of 15 February 2005, for instance, all set out independence criteria which, if not actually contradictory, nevertheless differ from one another. For that reason, we have opted for our own criteria at Fortis, as defined in our Governance Statement. These match those of the Lippens Code, with the exception that Fortis considers it necessary to limit to listed companies the restrictions on cross-directorships.
- According to principle 7.18, the annual report should disclose the main contractual terms of employment and termination arrangements with executive managers. The remuneration policy for Fortis directors and Executive Committee members – described in detail in note 11 of our Financial Statements – sets out the main terms of our contracts with executive managers. As from 1 January 2005, the contracts provide for a termination indemnity, in the case of termination without cause at the initiative of Fortis. The indemnity equals twice the amount of the base salary, without prejudice to commitments taken by Fortis before 1 January 2005.
- The Annual General Meetings of Shareholders in May 2007 endorsed the view that the re-appointment of Baron Piet Van Waeyenberge as non-executive Board Member for a period of one year would be in Fortis’s interest and that this re-appointment, leading to a total term of directorship of more than the twelve years laid down in the Fortis Governance Statement, would not affect Baron Van Waeyenberge’s independence.
