Arla Foods Consolidated Annual Report 2021
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Arla Foods Consolidated Annual Report 2021 / Governance Governance framework
GOVERNANCE FRAMEWORK/CONTINUED
Contents
III
COOPERATIVE
GOVERNANCE
The two main farmer owner representation and
decision-making bodies of Arla are the 20-member
Board of Directors (BOD) and the 187-member
Board of Representatives (BOR). Their primary tasks
are to develop the ownership base, safeguard the
cooperative democracy, embed decisions and
develop leadership competencies among farmer
owners and set the overall strategic direction
for Arla.
Owners
In 2021, 8,956 milk producers in Sweden,
Denmark, Germany, the UK, Belgium, the
Netherlands and Luxembourg were the joint
owners of Arla. All cooperative owners have the
opportunity to influence significant decisions. Last
year, the cooperative had 9,406 joint owners. The
decline in the number of farmers is partly due to
farmers who stopped producing milk or sold their
business to another member, and to a lesser extent
due to farmers resigning to supply another dairy
company. This decline is in line with the trend
seen in the whole dairy sector over a number
of years.
District councils
Each year, cooperative owners convene for a local
annual assembly in their respective countries to
ensure their democratic influence on Arla's
decision-making. The members in the district
elect members to represent their district on
the BoR.
Board of Representatives
The BoR is the supreme decision-making body
of our cooperative governance comprising
187 members, of whom 175 are cooperative
owners and 12 are employee representatives.
Owner representatives are elected every other
year. The next election is scheduled for 2022*.
The BoR makes decisions including appropriation
of profit for the year and elects the BoD. The BoR
meets at least twice a year.
Board of Directors
Appointed by the BOR, the BoD is responsible
for ensuring that Arla is managed in the best
interest of the farmer owners. This responsibility
involves strategic direction setting, monitoring
the company's activities and asset management,
maintaining the accounts satisfactorily and
appointing the Executive Board. They also
take care of other stakeholders' interests in the
company: lenders, investors in bond instruments
and employees, among others. The BoD consists
of 15 elected farmer owners, three employee
representatives and two external advisors. The
composition of the elected members of the
BoD reflects Arla's ownership structure across
the countries.
Area councils
Arla has four area councils that are sub-committees
of the BoD and consist of members of the BoD, as
well as members of the BOR. The area councils are
established in the four democratic areas: Sweden,
Denmark, Central Europe and the UK to take care of
matters of special interest to the farmer owners in
each geographic area.
* The 2021 elections were postponed to 2022 due to Covid-19.
CORPORATE
GOVERNANCE
ㅁㅁㅁ
Corporate governance in Arla is shared between
the Executive Board and the Board of Directors
(BOD). Together they define and ensure adherence
to the company's strategic direction, organise and
manage the company, supervise management and
ensure compliance.
Executive Board
The Executive Board, appointed by the BoD,
is responsible for managing the company,
ensuring the proper long-term growth, driving
the strategic direction, following up on targets
and defining company policies, while striving
for a sustainable increase in company value.
Furthermore, the Executive Board ensures
appropriate risk management and risk controlling,
as well as compliance with statutory regulations
and internal guidelines. The Executive Board
is usually comprised of the CEO and another
member of the Executive Management Team,
currently the Executive Vice President of our
Europe segment.
Executive Management Team
The Executive Management Team (EMT) is
appointed by the Executive Board. The EMT
is responsible for Arla's day-to-day business
operations, preparing strategies and planning the
future operating structure. The EMT consists of
the Executive Board plus five functional experts
and one commercial leader. The functional experts
cover the management areas of Finance, IT and
Legal (CFO), Marketing and Innovation (CMO),
Agriculture, Sustainability and Communications,
Human Resources (CHRO), and Supply Chain
(CSO), while the commercial leader is responsible
for our International commercial segment. The
members of the EMT keep each other informed of
all significant developments in their business areas
and align on all cross-functional measures.
Employees
Arla has 20,617 full-time equivalents (FTE) globally,
compared to 20,020 last year. Our employees are
represented by three elected members on the BoD
and 12 elected members on the BoR.View entire presentation