Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

LLB GB uk LLB GB englisch by nikeborome

VIEWS: 41 PAGES: 16

									68   As time goes by




     Corporate governance




     This corporate governance report describes the    In December 2010, the Board of Directors was awarded the
                                                       «Best Board Practice» labels of the Swiss Association for Qual-
     Liechtensteinische Landesbank's corporate         ity and Management Systems (SQS) as well as of the Liechten-
     governance principles in accordance with the      stein Association for Quality Assurance Certificates (LQS). In
     directives concerning information about corpo-    the corresponding assessment it was stated that the activity
                                                       and organisation of the Board of Directors of the Liechtenstei-
     rate governance required by the SIX Swiss Ex-
                                                       nische Landesbank exhibited a high level of quality. The gover-
     change and Liechtenstein legal provisions (in     nance and management system of the Board of Directors fulfil
     particular the law concerning the control and     the standards set down in the best board practice specifica-
     supervision of public companies as well as the    tions. Accordingly, the Board of Directors was awarded the SQS
                                                       and LQS labels for a period of three years. This positive assess-
     law concerning the Liechtensteinische Landes-
                                                       ment underlines the Board's constant efforts to improve corpo-
     bank). If information required by the direc-      rate governance.
     tives is disclosed in the Notes to the financial
                                                       Basis
     statement, a corresponding reference is shown.
                                                       On 1 January 2010, the law concerning the control and super-
                                                       vision of public companies and the law concerning the Liechten-
                                                       steinische Landesbank came into force. On account of the new
                                                       legal corporate governance regulations changes to the bank's
                                                       statutes and business regulations were necessary. The modi-
                                                       fications to the statutes were approved by the General Meeting
                                                       of Shareholders on 7 May 2010 and can be seen by clicking on
                                                       the following link: www.llb.li/statutes.
                                                           The principles and directives defining corporate governance
                                                       are laid down in the law of 19 November 2009 concerning the
                                                       control and supervision of public companies and in the law of
                                                       21 October 1992 concerning the Liechtensteinische Landes-
                                                       bank, as well as in the statutes, the regulations governing the
                                                       conduct of business and the charters of the Board of Directors
                                                       Committees. They are regularly reviewed and, if necessary,
                                                       modified. They are based on the directives and recommenda-
                                                       tions contained in the Swiss Code of Best Practice for Corpo-
                                                       rate Governance issued by the Swiss Business Federation
                                                       (economiesuisse).
                                                                                                                                         Corporate governance   69




1 Group structure and shareholders                                       Members of the Board of Management of Liechtensteinische
                                                                         Landesbank are represented on the Boards of Directors of the
1.1 Group structure                                                      consolidated companies. Either the Chairman (CEO) or a mem-
                                                                         ber of the Board of Management of Liechtensteinische Landes-
1.1.1 Description of the operative Group structure                       bank serves as the Chairman of the Board of Directors of the
The Liechtensteinische Landesbank is structured as an «Aktien-           subsidiary companies.
gesellschaft» according to Liechtenstein law. It is the parent               The following companies are exceptions to this rule: Bank
company of the LLB Group. The LLB Group is therefore based on            Linth LLB AG, LLB Fund Services AG, LLB Fondsleitung AG, swiss-
a parent company structure.                                              partners Investment Network AG and Jura Trust AG. At these
    The Group regulations, «Management and organisation of               companies – with the exception of swisspartners Investment
the LLB Group companies», approved by the Liechtensteinische             Network AG – a member of the Board of Management of
Landesbank's Board of Directors, ensure a proper conduct of              Liechtensteinische Landesbank serves as the Vice Chairman.
business, a practical organisational structure, and a centralised            The organisational structure of the LLB Group on 1 January
management of the LLB Group. This is provided by the Group               2011 is shown on pages 16 to 17. The detailed segment reports
Board of Directors and Group Internal Audit, the Group Execu-            are shown on pages 34 to 51.
tive Management Board, the Board of Directors committees of
the LLB Group companies and the Group Service Centre.                    1.1.2 Listed companies included in the scope of consolidation
    The Group Board of Directors and Group Executive Manage-             The Liechtensteinische Landesbank, with its registered office in
ment Board are composed of the same persons who comprise                 Vaduz, is listed on the SIX Swiss Exchange. As at 31 December
the LLB parent company's Board of Directors and Board of                 2010, its market capitalisation stood at CHF 2.2 billion
Management. Within the scope of the powers and duties                    (30'800'000 bearer shares having a nominal value of CHF 5.–
vested in them by the Group regulations, the LLB Group func-             at a year-end price of CHF 73.–).
tions can, for example, make decisions and give instructions                 Bank Linth LLB AG, Uznach, in which the Liechtenstei-
which are binding not just for the parent company but also               nische Landesbank holds a majority equity stake of 74.2 per-
for the LLB Group companies – but taking into consideration              cent, is also listed on the SIX Swiss Exchange, Segment «Local
the provisions of local law applicable to the individual Group           Caps». As at 31 December 2010, its market capitalisation
companies.                                                               stood at CHF 374.5 million (805'403 registered shares having
                                                                         a nominal value of CHF 20.– at a year-end price of CHF 465.–).



Listed companies included in the scope of consolidation

                                                                                       Market-
                                                                                 capitalisation                   Security
 Company                              Reg. office   Listed on              (in CHF thousands)     Stake (in %)    number        ISIN number

 Liechtensteinische Landesbank AG     Vaduz         SIX Swiss Exchange             2'248'400                     3019524      LI0030195247
 Bank Linth LLB AG                    Uznach        SIX Swiss Exchange               374'512             74.2     130775     CH0001307757




1.1.3 Unlisted companies included                                        development of the Principality of Liechtenstein's equity stake
in the scope of consolidation                                            in the Liechtensteinische Landesbank can be obtained at
Details of the unlisted companies included in the scope of               www.llb.li/capital+structure. As per 31 December 2010, Thorn-
consolidation (company, activity, registered office, share capi-         burg Investment Management Inc. held a total of 1'272'656
tal and equity interest) can be seen in the Notes to the finan-           LLB shares, this corresponds to an equity stake of 4.13 percent.
cial statement of the LLB Group in the table «Scope of consoli-          0.1 percent of the shares were held by the Board of Directors
dation» (pages 156 to 157).                                              and the Board of Management, while the LLB Group held
                                                                         7.5 percent of its own shares. This share proportion serves to
1.2 Major shareholders                                                   secure the convertible bond that is due on 12 April 2011. All
The Principality of Liechtenstein is the majority shareholder of         remaining shares were in free float by the end of 2010, where-
the Liechtensteinische Landesbank. In accordance with the Law            by none of the other shareholders holds more than three
concerning the Liechtensteinische Landesbank, in terms of                percent of the share capital. There are no binding shareholder
capital and voting rights, the Principality of Liechtenstein must        agreements.
hold at least 51 percent of the shares. These may not be sold.
    At the end of 2010, the Principality's participation remained        1.3 Cross participations
unchanged at 57.5 percent. Detailed information about the                There are no cross participations between the Liechtensteinis-
                                                                         che Landesbank and its subsidiaries or other companies.
70   As time goes by




                       2 Capital structure                                                    share, one vote). However, on account of the regulations
                                                                                              concerning the purchase of own shares (Art. 306a ff. PGR),
                       2.1 Capital                                                            the shares held by the Liechtensteinische Landesbank and its
                       At the end of 2010, the share capital of the Liechtensteinische        subsidiaries are not eligible for voting. There are no priority
                       Landesbank amounted to CHF 154 million (30'800'000 bearer              rights or similar entitlements. Shareholders have a subscrip-
                       shares having a nominal value of CHF 5.–).                             tion right with the issue of new shares, which entitles them
                                                                                              to subscribe to new shares in proportion to the number of
                       2.2 Conditional and approved capital                                   shares they already hold.
                       On the balance sheet date, the Liechtensteinische Landesbank                 The Liechtensteinische Landesbank has not issued parti-
                       had no conditional capital or approved capital.                        cipation certificates.


                       2.3 Changes to capital                                                 2.5 Profit-sharing certificates
                       Details regarding changes to capital during the last three             The Liechtensteinische Landesbank has not issued profit-
                       report years are shown in the table «Consolidated statement            sharing certificates.
                       of changes in equity» (page 97).
                                                                                              2.6 Transfer limitations and nominee registrations
                       2.4 Shares and participation certificates                               The Liechtensteinische Landesbank has issued only bearer
                       As at 31 December 2010, the share capital amounted to                  shares; these are fully transferable.
                       30'800'000 fully paid up shares made out to the bearer with a
                       par value of CHF 5.–. With the exception of the LLB shares             2.7 Convertible bonds and options
                       held by the Liechtensteinische Landesbank and its subsidiaries         On 12 April 2006, the Liechtensteinische Landesbank made a
                       (2'300'000 shares on 31 December 2010), all the shares are             convertible bond issue to the value of 270 million Swiss Francs
                       eligible for dividend. As at 31 December 2010, therefore, share        with a term up to 12 April 2011. The coupon amounts to 1.65
                       capital eligible for dividend amounted to CHF thousands                percent per year, payable for the first time on 12 April 2007.
                       142'500. In principle, all LLB shares are eligible for voting (one



                       Convertible bond


                        Validity                             Conversion ratio          Conversion price          Reason for adjustment

                        Up to 9 May 2007                     0.848572                  CHF 1'178.45              –
                        10 – 17 May 2007                     8.485362                  CHF 117.85                Split of bearer shares in ratio 1:10
                        From 18 May 2007                     8.492569                  CHF 117.75                Dividend of CHF 32.– gross per
                                                                                                                 bearer share for the 2006 business year




                       From 18 May 2007 to 7 April 2011, or up to the early redemp-           The convertible bond of Liechtensteinische Landesbank is
                       tion date of the bond issue, each bond with a denomination             listed on the SIX Swiss Exchange (security number 2481854,
                       of CHF 1'000.– can be converted free of charge into 8.492569           ISIN number LI0024818549).
                       bearer shares of the Liechtensteinische Landesbank having                    More details regarding the convertible bond issue can be
                       a par value of CHF 5.– (share capital concerned: CHF 11.5 mil-         seen in the Notes to the consolidated financial statement of
                       lion). The conversion price therefore amounts to CHF 117.75.           the LLB Group in the table «Debt issued» (page 141).
                       Fractions having a value in excess of CHF 1.– will be reim-                  As per 31 December 2010, the Liechtensteinische Landes-
                       bursed in cash.                                                        bank had no options on its own shares outstanding.
                           The Liechtensteinische Landesbank may – while observing
                       a period of notice of 30 days – redeem the convertible bonds
                       under the following conditions at par plus accrued interest:
                       ◆ at any time, provided that less than 15 percent of the
                         original bond issue amount is outstanding;
                       ◆ from 27 April 2009, provided the closing price of the LLB
                         bearer share exceeds 130 percent of the applicable con-
                         version price on 20 days during a period of 30 consecutive
                         trading days.
                                                                                                                                    Corporate governance   71




3 Board of Directors


3.1 Members


a) Name, nationality, education and professional career


 Name                                Year of birth           Profession                                                   Nationality

 Hans-Werner Gassner *               1958                    Business consultant and certified public accountant           FL
 Markus Foser                        1969                    Business consultant                                          FL
 Markus Büchel                       1953                    Human resources manager                                      FL
 Ingrid Hassler-Gerner               1947                    Asset manager                                                FL
 Siegbert Lampert                    1965                    Attorney-at-law and fiduciary                                 FL
 Roland Oehri                        1968                    Fiduciary                                                    FL
 Konrad Schnyder                     1956                    Entrepreneur                                                 CH


 * Chairman.




Hans-Werner Gassner                                                 ◆ Member of the Executive Board of Banque Pasche (Liechten-
                                                                         stein) SA, Vaduz, responsible for Fund & Investment Services
  Education:                                                             (Asset Management), 2008 – 2009
◆ Licentiate in economics at the University of St. Gallen, 1983     ◆ Proprietor of MAFOS Consult Anstalt, since 2009
◆ Swiss federal diploma in accountancy, 1988
◆ Dr. oec. HSG, 1989                                                Markus Büchel
◆ Swiss Banking School, 1996
                                                                         Education:
  Professional career:                                              ◆ Apprenticeship as a draughtsman, 1969 – 1973
◆ Accountant at Neutra Treuhand Group, 1984 – 1989                  ◆ Commercial college Buchs, 1973 – 1974
◆ Head Internal Audit at the Liechtensteinische Landesbank,         ◆ Mechanical engineer (Dipl. Ing. FH), Vaduz, 1974 – 1978
  1990 – 1998
◆ Head Finances at the Liechtensteinische Landesbank,                    Professional career:
  1998 – 2000                                                       ◆ Hilti AG, Schaan, (various technical functions), 1973 – 1981
◆ Partner at Gassner & Partner Wirtschaftsprüfung und               ◆ ThyssenKrupp Presta AG, Eschen, development / engineering
  Beratung AG, Balzers, since April 2000                                 (various functions), 1981 – 1991
◆ Proprietor of Adcom Treuunternehmen reg., Balzers,                ◆ ThyssenKrupp Presta AG, Eschen, Head Technical Services,
  since April 2000                                                       1991 – 1995
                                                                    ◆ ThyssenKrupp Presta AG, Eschen, Head Human Resources
Markus Foser                                                             Presta Group, since 1995


  Education:                                                        Ingrid Hassler-Gerner
◆ Licentiate in economics at the University of Zurich,
  major in business IT, 1996                                             Education:
◆ Swiss federal diploma in financial analysis and                    ◆ Commercial diploma, 1964
  asset management, CEFA 2000                                       ◆ Liechtenstein University of Applied Sciences, legal studies
                                                                         in accordance with Art. 180a of person and company law,
  Professional career:                                                   2005 – 2006
◆ Equity research and fund management at the
  Liechtensteinische Landesbank, 1997 – 2002                             Professional career:
◆ Advisor to mainly institutional clients with derivatives and      ◆ Head Asset Management and Research, A.M.I.S., Schaan,
  structured products at Bank Vontobel (Liechtenstein) AG,               1976 – 1989
  Vaduz, 2002 – 2003                                                ◆ Managing Director, Pan Portfolio AG, Schaanwald,
◆ Head of Fund & Investment Services (Asset Management)                  since 1989
  at swissfirst Bank (Liechtenstein) AG, Vaduz, 2004 – 2007          ◆ Managing Director, PanFinanzPartner AG, Schaanwald,
                                                                         since 2005
72   As time goes by




                       Siegbert Lampert                                              b) Executive / non-executive members
                                                                                     Pursuant to Art. 22 of the Liechtenstein banking law in con-
                         Education:                                                  nection with Art. 10 of the law concerning the Liechtenstei-
                       ◆ Licentiate in law at the University of St. Gallen, 1991     nische Landesbank, special bodies must be constituted for
                       ◆ Attorney-at-law, 1994                                       the direction, supervision and control of a bank. A member of
                       ◆ L.L.M., University of Miami, 1995                           the Board of Directors may not at the same time be a member
                                                                                     of the Board of Management. All members of the Board of
                         Professional career:                                        Directors of Liechtensteinische Landesbank are therefore non-
                       ◆ Partner in the law firm Lampert & Schächle Attorneys-        executive members.
                         at-Law, Vaduz, since 1996
                       ◆ Managing Director of EUROYAL Treuhand Anstalt, Vaduz,       c) Independence
                         since 1996                                                  All members of the Board of Directors are independent within
                                                                                     the context of the SIX directives concerning corporate gover-
                       Roland Oehri                                                  nance information. In the three years prior to the period under
                                                                                     report, no member of the Board of Directors was a member
                         Education:                                                  of the Board of Management of the Liechtensteinische Landes-
                       ◆ Commercial apprenticeship, 1987                             bank or a Group company. No member of the Board of Direc-
                       ◆ Licentiate in economics (HWV), 1993                         tors has a significant business relationship with the Liechten-
                       ◆ Liechtenstein trustee and fiduciary examinations, 1998       steinische Landesbank or with another Group company. In ac-
                                                                                     cordance with Art. 12 of the law concerning the control and
                         Professional career:                                        supervision of public companies, all contracts with members
                       ◆ Investment advisor, Foreign Private Clients Department      of the Board of Directors must be in writing and they must
                         of VP Bank AG, Vaduz, 1993 – 1999                           be approved by the Board of Directors. The same conditions
                       ◆ Head Foreign Private Clients Department of VP Bank AG,      must apply as to contracts concluded with third parties.
                         Vaduz, 1999
                       ◆ Client advisor, Private Trust Banking, VP Bank AG, Vaduz,   3.2 Other activities and commitments
                         2000                                                        Since 1 January 2010, Ingrid Hassler-Gerner has been Chair-
                       ◆ Client advisor and Head Intermediaries Department of        woman of the Foundation Board of the Liechtenstein Civil Ser-
                         Bank Wegelin (Liechtenstein) AG, Vaduz, subsequently        vice Pension Fund.
                         swissfirst Bank (Liechtenstein) AG, Vaduz, 2000 – 2003           Siegbert Lampert has served as a judge at the State Court
                       ◆ Vice President of LOPAG Louis Oehri & Partner Trust reg.,   of the Principality of Liechtenstein since the end of 2004.
                         Ruggell, 2004 – 2009                                            Konrad Schnyder has been Chairman of the Board of Direc-
                       ◆ Partner and Managing Director of Sequoia Treuhand           tors of Raility AG, Biel, since 2006, Delegate of the Board of
                         Trust reg., Ruggell, since 2006                             Directors of Euroswitch AG, Pfäffikon / SZ since 2004, a mem-
                       ◆ Partner and Managing Director of Sequoia Capital            ber of the Board of Directors of Sustra Tiefbau + Strassen AG,
                         Management AG, Ruggell, since 2007                          Sursee, since 1998, a member of the Board of Directors of
                                                                                     Dedalus Holding AG, Sursee, since 2005, Vice Chairman of the
                       Konrad Schnyder                                               Association of Swiss Railway Trackwork Contractors (VSG),
                                                                                     Zurich, since 2000, a member of the Supervisory Board of the
                         Education:                                                  Federation of Swiss Rail Engineering Companies (VSBTU),
                       ◆ Training as mechanical engineer, 1977                       Baden, since 2001, and Delegate of the VSBTU to the European
                       ◆ Technical businessman, 1979                                 Federation of Railway Trackwork Contractors (EFRTC), Paris,
                       ◆ SKU Swiss Management Course, 1992                           since 2007.
                                                                                         Otherwise, the members of the Board of Directors are
                         Professional career:                                        not involved in the management or supervisory boards of im-
                       ◆ Proprietor, Vice Chairman and Delegate of the Board of      portant Liechtenstein, Swiss or foreign private or public law
                         Directors of the Sersa Group of companies, since 1985       corporations, establishments or foundations, nor do they ex-
                       ◆ Member of the Board of Directors of Bank Linth LLB AG,      ercise any permanent management or consultancy functions
                         Uznach, 1998 – 2008                                         for important Liechtenstein, Swiss or foreign interest groups,
                       ◆ Delegate of the Board of Directors of Euroswitch AG,        nor do they perform official functions or hold political office.
                         Pfäffikon / SZ, since 2004
                       ◆ CEO Sersa Group Management AG, Pfäffikon / SZ, since 2001
                                                                                                                                      Corporate governance   73




3.3 Election and term of office                                       New members elected as substitutes shall be elected for a full
                                                                      term of office of three years. The General Meeting can dismiss
3.3.1 Principles governing election procedure                         members of the Board of Directors on important grounds. Per-
The Board of Directors of the Landesbank is composed of               sons aged 70 or over may not be members of the Board of Di-
from five to seven members, who are appointed individually by          rectors. Prior to the coming into force of the new statutes, the
the General Meeting. The members of the Board of Directors            Board of Directors of the Liechtensteinische Landesbank was
are elected for a term of office of three years, whereby a year       composed of seven members, four of whom were appointed
corresponds to the period from one General Meeting to the             by the Landtag of the Principality of Liechtenstein, and three
next. Re-election is possible for a further two terms. The Chair-     elected by the General Meeting.
man of the Board of Directors can be re-elected again in justi-           Dr. Hans-Werner Gassner is the Chairman of the Board of
fied cases for an extraordinary term of office of at most two          Directors. Markus Foser is the Vice Chairman. The Secretary
years upon expiry of three terms of office. The Chairman of the       (recorder of the minutes) is Patrick Helg (Head Group Internal
Board of Directors is elected by the General Meeting. The Board       Audit).
of Directors elects a Vice Chairman from among its members.



3.3.2 First-time election and remaining term of office


 Name                                               Elected by                              First-time appointment          Elected until

 Hans-Werner Gassner                                Landtag                                 2006                            2012
 Markus Foser                                       Landtag                                 2009                            2012
 Markus Büchel                                      Landtag                                 2009                            2012
 Ingrid Hassler-Gerner                              General Meeting                         2005                            2011
 Siegbert Lampert                                   General Meeting                         2002                            2011
 Roland Oehri                                       Landtag                                 2009                            2012
 Konrad Schnyder                                    General Meeting                         2008                            2011




3.4 Internal organisation


3.4.1 Separation of tasks of the Board of Directors


 Name                                               Function                       Committee memberships

 Hans-Werner Gassner                                Chairman                       Appointments and Compensation Committee *
                                                                                   Strategy Committee *
 Markus Foser                                       Vice Chairman                  Group Audit & Risk Committee
                                                                                   Appointments and Compensation Committee
                                                                                   Strategy Committee
 Markus Büchel                                      Member
 Ingrid Hassler-Gerner                              Member                         Group Audit & Risk Committee
 Siegbert Lampert                                   Member                         Appointments and Compensation Committee
 Roland Oehri                                       Member                         Group Audit & Risk Committee*
 Konrad Schnyder                                    Member                         Strategy Committee


 * Chairman.
74   As time goes by




                       3.4.2 Composition of all Board of Directors committees,                Dr. Hans-Werner Gassner (Chairman), Markus Foser and
                       their tasks and terms of reference                                     Siegbert Lampert. This Committee has the following duties
                       The Board of Directors may delegate a portion of its duties to         and responsibilities:
                       specific committees. To support the Board of Directors in per-          ◆ development of criteria for proposals concerning the selec-
                       forming its tasks, the following standing committees exist: the          tion and assessment of the members of the Board of Direc-
                       Group Audit & Risk Committee, as well as the Appointments                tors to be elected at the General Meeting, as well as the
                       and Compensation Committee. In addition, there is a Strategy             submission of election proposals to the Board of Directors
                       Committee formed on an ad hoc basis. The Board of Directors              for the attention of the General Meeting;
                       appoints the committee members and the Chairman from                   ◆ formulation of successor plans and their periodic review
                       among its members. The committees must be composed of                    both in the event of the age related and the ad hoc stepping
                       at least three members. As preparatory bodies, these commit-             down of members of the Board of Directors;
                       tees deal in detail with the tasks assigned to them, submit the        ◆ development of criteria for proposals concerning the selec-
                       results of their activities to the Board of Directors, and make          tion and appointment of members of the Board of Manage-
                       proposals if decisions are required. The Board of Directors is           ment for the attention of the Board of Directors;
                       entitled to transfer decision-making authority to the commit-          ◆ formulation and annual review of the principles and regula-
                       tees. However, so far this has not occurred. Accordingly, the            tions for the compensation of the members of the Board
                       committees act solely in an advisory capacity.                           of Directors, the members of the Board of Management and
                           The committee members must have the knowledge neces-                 the employees of the Liechtensteinische Landesbank for
                       sary for the scope of duties and tasks. All committee members            submission to the Board of Directors;
                       must be independent. The Board of Directors has issued sepa-           ◆ formulation of proposals for the compensation of members
                       rate regulations for the standing committees, whose terms                of the Board of Directors, the members of the Board of
                       of reference and competences are described in the following.             Management and the staff of the Internal Audit Department
                                                                                                for submission to the Board of Directors in accordance with
                       Group Audit & Risk Committee                                             existing principles and regulations;
                       The Group Audit & Risk Committee supports the Board of Di-             ◆ annual review of the compensation of the members of the
                       rectors in fulfilling the duties and responsibilities vested in it by     Board of Directors and the members of the Board of Manage-
                       banking law with respect to the direction, supervision and               ment for submission to the Board of Directors in accordance
                       control of the company. The regulations concerning the «Group            with existing principles and regulations.
                       Audit & Risk Committee of the LLB Group», specify the organi-
                       sation, the working methods, the terms of reference and the            Representation in staff welfare foundations
                       tasks of the Group Audit & Risk Committee, insofar as these are        Markus Büchel is Chairman of the Board of the Staff Welfare
                       not stipulated by the law, statutes or business regulations. The       Foundation and a member of the Supplementary Pension
                       Group Audit & Risk Committee is composed of Roland Oehri               Foundation and the Employer Foundation of Liechtenstei-
                       (Chairman), Markus Foser and Ingrid Hassler-Gerner.                    nische Landesbank AG. Ingrid Hassler-Gerner is a member of
                                                                                              the Board of the Staff Welfare Foundation, and Chairwoman
                       The Group Audit & Risk Committee has the following tasks               of the Board of the Supplementary Pension Foundation and of
                       in particular:                                                         the Employer Foundation of Liechtensteinische Landesbank AG.
                       ◆ monitors and evaluates the integrity of the financial
                         reporting including the structure of the accounting systems,         3.4.3 Working methods of the Board of Directors
                         the financial controls and financial planning;                         and its committees
                       ◆ monitors and evaluates the internal controls in relation             In general, the Board of Directors convenes an ordinary meet-
                         to financial reporting;                                               ing each month (with the exception of July). A meeting must
                       ◆ monitors and evaluates the effectiveness of the external             last at least half a day. During the 2010 business year, the
                         auditors and their cooperation with Group Internal Audit;            Board held twelve meetings, whereby one extraordinary meet-
                       ◆ evaluates the internal controls extending beyond the                 ing was convened to discuss the cooperation with the VP Bank
                         financial reporting system and Group Internal Audit;                  in the fields of logistics and information technology. Six meet-
                       ◆ monitors and evaluates the risk profile and the risk situation        ings lasted a day, five meetings lasted half a day and a two-
                         of the LLB Group.                                                    day seminar was held. In June 2010, the Board of Directors, fol-
                                                                                              lowing the ordinary meeting, held a seminar together with the
                       Appointments and Compensation Committee                                Board of Management to discuss and decide on, among other
                       The organisation, the working methods, the terms of reference          things, the Group's organisation, and in particular, further pro-
                       and the tasks of the Appointments and Compensation Com-                cedure regarding shared services as well as the results of the
                       mittee are specified in the regulations concerning the «Appoint-        staff survey.
                       ments and Compensation Committee», insofar as these are                    All board members were present at all the meetings. The
                       not stipulated by the law, statutes or business regulations. The       Board is convened by invitation of its Chairman and is presided
                       Appointments and Compensation Committee consists of                    over by him, or if he is absent, by its Vice Chairman. Together
                                                                                                                                      Corporate governance   75




with the written invitation, the members of the Board of Direc-     international private banking. During the 2010 business year,
tors also receive the agenda for the meeting, the minutes of        no external experts were called in.
the last meeting and other important documentation required             Resolutions at the meetings are passed with a simple
for the meeting. If there are important grounds, two members        majority of the members present. Only the members of the rel-
of the Board can demand an immediate meeting. A quorum              evant committee are eligible to vote. In the case of a tie, the
of the Board of Directors is constituted when a majority of its     Chairman has the casting vote. The subjects dealt with and
members is present. The Board of Directors passes its resolu-       resolutions passed are recorded in the corresponding minutes.
tions by a simple majority of the votes present. In the event of    The minutes are circulated to the meeting participants and
a tie, the Chairman has the casting vote. Resolutions may           the Board of Directors. The Chairmen of the committees in-
be passed by circular in urgent cases. Unanimity is required for    form the full Board of Directors about the agenda dealt with at
resolutions to be dealt with by circular. Resolutions shall be      the last committee meeting, and submit proposals for those
passed by a simple majority of votes. In the case of a tie, the     points requiring decisions. Furthermore, they submit an activ-
Chairman shall have the casting vote. Members of the Board of       ity report to the full Board of Directors once a year on the work
Directors are obliged to inform the Chairman in cases of pos-       of the committees.
sible conflicts of interest. The Board of Directors shall decide
whether there are grounds for the member concerned to ab-           3.5 Definition of areas of responsibility
stain from voting. In such a case, the member concerned may         The Board of Directors is responsible for the direction, super-
neither participate in the discussion of the matter concerned       vision and control of the company. It is responsible for all duties
nor vote on it. In general, the Chairman of the Board of Man-       and is vested with all powers not reserved to other corporate
agement attends the meetings of the Board of Directors. The         bodies by the law, the statutes or other internal regulations. In
other members of the Board of Management attend meetings            addition to the duties and responsibilities specified in the sta-
of the Board of Directors when matters involving them are           tutes, the Board of Directors has the following non-transfer-
dealt with. No external experts were called in during the 2010      able duties and responsibilities:
business year.                                                      ◆ the formulation and periodic review of medium and long-
    The members of the Group Audit & Risk Committee meet              term corporate strategy and the allocation of resources to
at least four times a year. These ordinary meetings are con-          attain the objectives specified in the corporate strategy;
vened by the Chairman. An agenda is compiled prior to each          ◆ the approval of the annual budget;
meeting which is sent together with the necessary information       ◆ the definition of management policy;
to the meeting participants. The members of the Group Audit         ◆ the appointment of
& Risk Committee, the external auditors, the head of Group            ◆ the members of the committees from among its
Internal Audit and the Chairman of the Group Risk Committee             members;
can request the Chairman of the Group Audit & Risk Commit-            ◆ the Chairman and other members of the Board of
tee to convene an extraordinary meeting. In 2010, six ordinary          Management;
meetings were held. The meetings lasted between four and              ◆ the staff of the Internal Audit Department;
eight hours. All committee members were present at all the          ◆ the discussion of the reports submitted by Internal
meetings. To deal with specific issues, the Group Audit & Risk         Audit and the external auditors as well as the approval
Committee can invite other persons such as members of the             of measures implemented on the basis of audit reports;
Group Executive Management, the Chairman of the Group               ◆ the duty to keep itself regularly informed about the
Risk Committee, other staff of the LLB Group companies, rep-          course of business and special occurrences, in particular by:
resentatives of the external auditors or external consultants.        ◆ discussing and approving the quarterly reports with com-
Generally, the Chairman of the Board of Management and the              ments on the development of business, earnings situation,
Head of Internal Audit participate in the meetings in an advi-          balance sheet development, liquidity, equity requirements
sory capacity. No external experts were called in during the            and risk situation;
2010 business year.                                                   ◆ ensuring prompt information in the event of imminent risk
    The Appointments and Compensation Committee meets                   threats;
as often as business requires, but at least once a year. In 2010,   ◆ the issuing of guidelines and regulations concerning the
four meetings were held. The meetings lasted between one              principles of risk management as well as the accountabilities
and three and a half hours. All committee members were pres-          and the processes for the approval of risk-related transac-
ent at all the meetings. The Chairman of the Board of Manage-         tions, whereby in particular market, credit, default, process,
ment did not participate. During the 2010 business year, no           liquidity and reputation risks as well as operational and
external experts were called in.                                      legal risks are to be identified, limited and monitored;
    The Strategy Committee convened twice in 2010 for meet-         ◆ the decision regarding the acquisition or sale of participa-
ings, at which all committee members were present. One meet-          tions in other companies as well as the establishment
ing lasted half a day and the other a whole day. The members          or liquidation of subsidiaries and the appointment of board
of the Board of Management also participated in the meetings.         members, who are employees of the Liechtensteinische
The subject of the meetings was the updating of strategy in           Landesbank;
76   As time goes by




                       ◆ the decision regarding the setting up and closure of bank        ◆ regular reporting to the Board of Directors, the responsible
                         offices, branches and representative offices;                      committees and above all to the Chairman regarding the
                       ◆ the decision regarding the initiation of legal actions as well     development of business, extraordinary occurrences, as well
                         as judicial and extrajudicial settlements involving amounts        as the presentation of the draft annual report;
                         of over CHF 10 million;                                          ◆ issuing of the rulings and directives necessary for the
                       ◆ the stipulation of credit competences and decisions regard-        conduct of business by the Liechtensteinische Landesbank,
                         ing large commitments (including cluster risks) and loans          its branches and representative offices;
                         to corporate bodies, as well as the issuing of regulations       ◆ deciding on cross-business unit transactions or business
                         regarding transactions for the account of corporate bodies         transactions which exceed the joint authority vested in the
                         and employees;                                                     head of a business unit and the Chairman of the Board of
                       ◆ the stipulation, at least once a year, of overall commitment       Management;
                         and individual limits;                                           ◆ coordinating the management and administration of
                       ◆ the approval of the annual report and decisions regarding          subsidiaries and participations;
                         all other proposals to the General Meeting;                      ◆ stipulating take up limits for securities and value rights
                       ◆ the formulation of the principles governing the compen-            within the scope of primary market transactions;
                         sation system including stipulation of the salaries of the       ◆ coordinating the product offer of Liechtensteinische Landes-
                         members of the Board of Management and the staff of                bank and specifying the pricing policy as well as conditions
                         the Internal Audit Department;                                     for the offered products and services;
                       ◆ the stipulation of competence to authorise expenditure           ◆ deciding on or issuing rulings governing the exercise of
                         and decisions concerning business dealings that exceed             external mandates and activities by employees, where this
                         specified limits;                                                   is not reserved to the authority of the Board of Directors;
                       ◆ the decision regarding the exercising of external mandates       ◆ performing representation duties as a full corporate body
                         and activities by members of the Board of Management               and / or as individual members of the Board of Management;
                         and the Internal Audit Department.                               ◆ signing of cooperation and partnership agreements as well
                                                                                            as membership of professional bodies and associations;
                       The Board of Management is the supreme governing body of           ◆ deciding on the acquisition and sale of properties within the
                       the company and it represents the company vis à vis external         scope of the general power to authorise expenditure.
                       parties, provided the Board of Directors does not appoint a
                       special delegation for specific cases. In addition to the duties    3.6 Information and control instruments
                       and responsibilities specified in the statutes, the Board of        vis à vis the Board of Management
                       Management is responsible, in particular, for the following:       The Chairman of the Board of Directors participates once a
                       ◆ ensuring that the resolutions of the Board of Directors and      month in the meetings of the Board of Management in an
                         its committees are implemented;                                  advisory capacity.
                       ◆ submitting suggestions concerning the organisation of busi-          In general, the Board of Directors is kept informed by the
                         ness operations in general, and proposals for specific busi-      Chairman of the Board of Management. The Chairman of the
                         ness matters, to the Board of Directors and the responsible      Board of Management generally attends the meetings of
                         committees, provided these matters exceed the scope of           the Board of Directors in an advisory capacity. He informs the
                         authority of the Board of Management, in particular with         Board of Directors about the development of business, about
                         respect to:                                                      extraordinary occurrences and answers any questions the
                         ◆ the formulation and periodic review of medium and long-        members of the Board of Directors have. The other members
                           term corporate strategy and the allocation of resources        of the Board of Management attend meetings of the Board
                           to attain the corporate objectives;                            of Directors when matters involving them are dealt with. The
                         ◆ participations, subsidiaries, business offices, branches       Chairman of the Board of Management usually also partici-
                           and representative offices;                                    pates in the meetings of the Group Audit & Risk Committee.
                         ◆ annual income and expenditure budget;                              Every member of the Board of Directors can request in-
                         ◆ preparation of the annual report;                              formation about all matters relating to the Liechtensteinische
                       ◆ implementing of efficient processes and procedures as well       Landesbank at the meetings. Outside board meetings, every
                         as an effective internal control system to avoid and limit       member of the Board of Directors can request to see the
                         risks of all kind;                                               minutes of the Board of Management meetings, information
                       ◆ appointing persons (excluding staff of the Internal Audit        about the development of business from members of the
                         Department) to sign on behalf of the Liechtensteinische          Board of Management and, with the approval of the Chairman
                         Landesbank as authorised signatories, bank officers, assis-      of the Board of Directors, also about individual business trans-
                         tant directors, deputy directors and directors in accordance     actions.
                         with legal provisions;
                                                                                                                                   Corporate governance   77




The Chairman of the Board of Management informs the Chair-        and procedure for approval of business transactions involving
man of the Board of Directors – if necessary, outside board       various levels of risk. The risk management specialists strive to
meetings – about the development of business and extraordi-       create and maintain a uniform risk culture and risk approach.
nary occurrences. The Chairman of the Board of Directors is       This establishes the fundamentals for an appropriate risk /
responsible for informing the full Board of Directors about ex-   return profile and an optimum allocation of capital. The Group
traordinary occurrences.                                          Audit & Risk Committee invites the Chairmen of the following
    Monthly reports concerning the course of business are         Group Risk Committees to a quarterly discussion of the status
submitted to the Board of Directors. The management infor-        reports: the Group Risk Management Committee, the Group
mation system (MIS) used for this purpose supplies both quan-     Credit Risk Committee and the Group Operational Committee.
titative and qualitative historical and future-related data. It   Their reports are summarised every six months in an overall
enables the Board of Directors to be kept informed in concen-     risk report of the LLB Group, which is dealt with by the Board of
trated form about the most important business developments,       Directors. Further details concerning risk management can
earnings situation, balance sheet structure, liquidity and risk   be seen in Notes to the consolidated financial statement of the
situations.                                                       LLB Group on pages 105 to 123.
    In exercising its supervision and control functions, the           All employees of the LLB Group are obliged to comply with
Board of Directors is also assisted by the Group Internal Audit   all legal, regulatory and internal regulations. In doing so, they
Department, which is subordinate directly to the Board. As        are supported by the Group Compliance Staff Department,
an independent body, it examines in particular the risk manage-   whose tasks and principles are specified in a set of internal reg-
ment, as well as the effectiveness of the internal control and    ulations. Its responsibilities include the systematic training
steering system and the management processes. The powers          of LLB staff and the issuing of detailed compliance directives, as
and duties of the Internal Audit are stipulated in a special      well as the management of effective control and monitoring
set of regulations (terms of reference). The annual auditing      instruments. The Board of Directors, with the assistance of the
activity is defined in accordance with the risk and controlling    Group Audit & Risk Committee, is responsible for the super-
criteria and is guided by a long-term auditing plan. To avoid     vision and control of the compliance function. At least once a
duplication of work and to optimise controls, the auditing        year, the Board of Directors reviews whether the compliance
plans are coordinated with the statutory auditors. The short-     standards applicable to it and the company are sufficiently well
term auditing plan and the personnel requirement plan are         known and whether they are permanently observed.
reviewed by the Group Audit & Risk Committee and submitted
to the Board of Directors for approval. In addition, Group        4 Board of Management
Internal Audit regularly monitors whether the deficiencies
found have been rectified and whether its recommenda-              4.1 Members
tions have been implemented, and submits reports about this       The Board of Management of the parent bank, which also forms
to the Group Audit & Risk Committee.                              the Group Executive Board, comprises four members: Dr. Josef
    At the LLB Group great importance is attached to proactive,   Fehr is Chairman, Elfried Hasler is responsible for the Interna-
comprehensive opportunity / risk management. The Board of         tional Market, Roland Matt is responsible for the Domestic and
Directors has issued guidelines and regulations concerning the    Institutional Markets and Dr. Kurt Mäder for the Corporate
principles of risk management, as well as the responsibilities    Service Center.



Members of the Board of Management


 Name                          Year of birth     Nationality      Function / Area of responsibility   Member of Board since

 Josef Fehr                    1957              FL               Chairman                            1992,
                                                                                                      since 2000 Chairman
 Elfried Hasler                1965              FL               Member Board of Management          2000
                                                                  International Market
 Kurt Mäder                    1962              CH               Member Board of Management          2009
                                                                  Corporate Service Center
 Roland Matt                   1970              FL               Member Board of Management         2009
                                                                  Domestic and Institutional Markets
78   As time goes by




                       Josef Fehr                                                      ◆ Head of Private Banking Products Division, Liechtenstei-
                                                                                         nische Landesbank, 2000 – 2006
                         Education:                                                    ◆ Member of the Board of Management, Liechtensteinische
                       ◆ Licentiate in law at the University of Fribourg, 1981           Landesbank, 2000 – 2006
                       ◆ Dr. iur., University of Fribourg, 1984                        ◆ Member of the Board of Management and Group Executive
                       ◆ Swiss Banking School, 1995                                      Board, Liechtensteinische Landesbank, since 2007


                         Professional career:                                            Board of Directors mandates in the Liechtensteinische
                       ◆ Legal counsel at the Liechtensteinische Landesbank,             Landesbank Group companies:
                         1986 – 1992                                                   ◆ Liechtensteinische Landesbank (Switzerland) Ltd. (Chairman)
                       ◆ Head of Trading Division, Liechtensteinische Landesbank,      ◆ Liechtensteinische Landesbank (Österreich) AG (Chairman
                         1992 – 1998                                                     of the Supervisory Board)
                       ◆ Head of Private Clients Division, Liechtensteinische          ◆ LLB Asset Management AG (Vice Chairman)
                         Landesbank, 1998 – 2000                                       ◆ LLB Fund Services AG (Member)
                       ◆ Member of the Board of Management, Liechtensteinische         ◆ LLB Fondsleitung AG (Member)
                         Landesbank, 1992 – 2000                                       ◆ LLB Treuhand AG (Vice Chairman)
                       ◆ Chairman of the Board of Management, Liechtensteinische       ◆ Jura Trust AG (Vice Chairman)
                         Landesbank, 2000 – 2006                                       ◆ swisspartners Investment Network AG (Member)
                       ◆ Chairman of the Board of Management and Group Executive
                         Board, Liechtensteinische Landesbank, since 2007                Board of Directors mandates in the following participations
                                                                                         of the Liechtensteinische Landesbank:
                         Board of Directors mandates in the Liechtensteinische         ◆ Elips Life AG (Member)
                         Landesbank Group companies:                                   ◆ FIO Partners AG (Vice Chairman)
                       ◆ Liechtensteinische Landesbank (Switzerland) Ltd. (Member)
                       ◆ Liechtensteinische Landesbank (Österreich) AG (Vice             Other functions:
                         Chairman of the Supervisory Board)                            ◆ Member of the Board of the Employer Foundation of
                       ◆ Bank Linth LLB AG (Member)                                      Liechtensteinische Landesbank AG
                       ◆ LLB Asset Management AG (Member)
                       ◆ LLB Treuhand AG (Member)                                      Kurt Mäder
                       ◆ Jura Trust AG (Member)
                       ◆ swisspartners Investment Network AG (Member)                    Education:
                                                                                       ◆ Federally qualified physicist, ETH Zurich, 1987
                         Other functions:                                              ◆ Dr. sc. nat., ETH Zurich, 1992
                       ◆ Member of the Executive Board of the Liechtenstein
                         Chamber of Industry and Commerce (since 2002)                   Professional career:
                       ◆ Member of the Executive Board of the Liechtenstein            ◆ Scientist, National Renewable Energy Laboratory,
                         Bankers Association                                             Golden, Colorado, 1992 – 1994
                       ◆ Member of the Board of the Staff Welfare Foundation           ◆ Senior Scientist, Centre Européen de Calcul Atomique
                         of Liechtensteinische Landesbank AG                             et Moléculaire, Lyon, 1994 – 1996
                       ◆ Member of the Board of the Supplementary Welfare              ◆ Head of Operations, ELCA Informatik AG, Zurich,
                         Foundation of Liechtensteinische Landesbank AG                  1996 – 2004
                       ◆ Member of the Board of the Employer Foundation of             ◆ Member of the Board of Management, Bank Linth LLB AG,
                         Liechtensteinische Landesbank AG                                Uznach, 2005 – 2008
                                                                                       ◆ Member of the Board of Management and Group Executive
                       Elfried Hasler                                                    Board, Liechtensteinische Landesbank, since 2009


                         Education:                                                      Board of Directors mandates in the Liechtensteinische
                       ◆ Graduate in business administration, HWV, 1989                  Landesbank Group companies:
                       ◆ Federally qualified financial analyst and asset manager, 1993   ◆ Liechtensteinische Landesbank (Switzerland) Ltd. (Vice
                       ◆ Federally qualified finance and investment expert, 1998           Chairman)
                                                                                       ◆ Bank Linth LLB AG (Member)
                         Professional career:
                       ◆ Head of Research at VP Bank AG, Vaduz, 1989 – 1997              Other Board of Directors mandate:
                       ◆ Head of Asset Management Division, Liechtensteinische         ◆ Chairman of the Board of Directors of Scout & Sport AG, Bern
                         Landesbank, 1997 – 2000
                                                                                                                                 Corporate governance   79




Roland Matt                                                      compensation for the members of the Board of Directors and
                                                                 the Board of Management. The Board of Directors in corpore
  Education:                                                     approves the principles and regulations governing the com-
◆ Federally qualified business economist FH, 1995                 pensation of the members of the Board of Directors and speci-
◆ Federally qualified financial analyst and asset manager, 1999    fies the amount of the compensation for the members of the
◆ Federally qualified finance and investment expert, 2002          Board of Management.
                                                                     No advisor is called in for the formulation of the compen-
  Professional career:                                           sation structure. Once a year, the Board of Directors prepares
◆ Head of Research at VP Bank AG, Vaduz, 1999                    a summary of the compensation of board members, board
◆ Head of Asset Management Division at VP Bank AG, Vaduz,        chairman and management executives derived from publicly
 2000 – 2001                                                     available sources and taking into consideration comparable
◆ Family Office Project Head at VP Bank AG, Vaduz, 2002          banks (exchange-listed private banks and cantonal banks with
◆ Head of Investment Services, Liechtensteinische Landes-        significant private banking business) in Liechtenstein and
 bank, 2002 – 2006                                               Switzerland. This summary serves as a guide to the market sit-
◆ Head of Domestic Clients Business Unit, Liechtensteinische     uation for the Board of Directors. The decision regarding the
 Landesbank, 2007 – 2008                                         amount of the compensation of the members of the Board of
◆ Member of the Board of Management and Group Executive          Directors and the Board of Management is made at the discre-
 Board, Liechtensteinische Landesbank, since 2009                tion of the Board of Directors. The members of the Board of
                                                                 Management are not present at the discussion and decision
 Board of Directors mandates in the Liechtensteinische           concerning the amount of the compensation for them. In ac-
 Landesbank Group companies:                                     cordance with Art. 12, Para 2 of the law concerning the Liecht-
◆ Liechtensteinische Landesbank (Switzerland) Ltd. (Member)      ensteinische Landesbank, the Board of Directors must inform
◆ Bank Linth LLB AG (Vice Chairman)                              the government about the compensation ruling specified for
◆ LLB Asset Management AG (Chairman)                             the Board.
◆ LLB Fund Services AG (Vice Chairman)
◆ LLB Fondsleitung AG (Vice Chairman)                            5.1.2 Fundamentals
◆ swisspartners Investment Network AG (Member)                   The principles and regulations governing the compensation
                                                                 of the members of the Board of Directors and the Board of Man-
 Board of Directors mandate in the following participation       agement are reviewed periodically. The amount of the com-
 of the Liechtensteinische Landesbank:                           pensation for the members of the Board of Directors and the
◆ Elips Life AG (Member)                                         Board of Management is stipulated each year.
                                                                     The compensation for members of the Board of Directors
  Other functions:                                               comprises a fixed compensation fee, meeting allowance (for
◆ Member of the Board of the LLB Liechtenstein Pension           meetings of committees and foundation boards) and a variable
 Fund Foundation                                                 compensation component. The latter amounts (not including
                                                                 employer contributions) to 0.175 percent of the Group net pro-
4.2 Other activities and commitments                             fit for the respective year and may not exceed the amount of
Apart from the mandates specified in Point 4.1, no other im-      the fixed compensation component. The variable component is
portant commitments exist.                                       paid in cash. On account of legal provisions, no severance pay-
                                                                 ment may be made in the event of the ending of a mandate
4.3 Management contracts                                         (Art. 21, para.2 of the law concerning the control and super-
The Liechtensteinische Landesbank has not concluded any          vision of public companies).
management contracts.                                                The compensation for members of the Board of Manage-
                                                                 ment is composed of a fee or basic salary plus a performance or
5 Compensation, participations and loans                         profit-related remuneration component. The fixed compensa-
                                                                 tion is paid in cash. The variable component of compensation is
5.1 Contents and stipulation procedure                           contingent upon the attainment of quantitative targets. The
                                                                 variable component amounts (not including employer contribu-
5.1.1 Responsibility and stipulation procedure                   tions) to a maximum of 0.8 percent of the Group net profit for
The Appointments and Compensation Committee (see Point           the respective calendar year. Individual performance is taken
3.4.2 «Composition of all Board of Directors committees, their   into consideration in allocating the variable component to the
tasks and terms of reference» on page 74), which is composed     members of the Board of Management. The variable compo-
solely of independent members of the Board of Directors,         nent is limited to the amount of the fee or basic salary. Payment
prepares the principles and regulations governing the compen-    is made in cash and through the allocation of LLB shares. The
sation for the members of the Board of Directors and the Board   cash / shares allocation is defined in internal regulations as fol-
of Management, as well as the proposed amount of the             lows: three quarters LLB shares and one quarter cash payment.
80   As time goes by




                       The members of the Board of Management do not have the                 5.2 Transparency of compensation, participation and
                       right to specify the cash / share ratio. The price per share for the   loans of issuers domiciled abroad
                       share-based remuneration component is calculated on the                The Liechtensteinische Landesbank has its registered office in
                       basis of the average share price in the last quarter of the finan-      Vaduz, Liechtenstein. In principle, therefore, it is not subject to
                       cial year. The issued shares are subject to a blocked period of        Art. 663 of the Swiss Code of Obligations. However, to enable
                       three years. If the shareholder leaves the bank's employ, the          investors nevertheless to obtain the corresponding informa-
                       blocked period is removed. Apart from the allocation of shares         tion, the SIX Swiss Exchange obliges issuers, whose registered
                       as a profit-related component of compensation, there are no             office is not in Switzerland, to apply the provisions of Art. 663
                       other share plans.                                                     Code of Obligations in the same manner within the scope of
                           The employment relationship of members of the Board of             corporate governance reporting.
                       Management is stipulated in individual employment contracts.               Details of the compensation and participations of mem-
                       The period of notice is either three or four months. The con-          bers of the Board of Directors and the Board of Management,
                       tracts of employment do not contain any special clauses in re-         as well as loans to them can be found in the Notes to the
                       lation to a termination of employment in the event of a change         financial statement of the LLB Group in «Related party trans-
                       in control of the company.                                             actions» on pages 151 to 154.
                           The Liechtensteinische Landesbank extends the preferen-
                       tial conditions customary in the banking industry to all its           6 Shareholders' participation rights
                       staff (including management) on bank products. This generally
                       takes the form of limited preferential interest rates on mort-         6.1 Voting right limitation and representation
                       gage loans and credit balances. Standard market conditions             The Liechtensteinische Landesbank has issued bearer shares.
                       apply to all transactions made by the Board of Directors with          At the Landesbank's General Meeting of Shareholders, each
                       the bank.                                                              share carries one vote. In accordance with Art. 306a ff. of per-
                                                                                              son and company law, the LLB shares held by the Liechtenstei-
                       5.1.3 Elements                                                         nische Landesbank itself and its subsidiaries (2'300'000 shares
                       For the 2010 business year, the members of the Board of Direc-         per 31 December 2010) are not eligible to vote.
                       tors received a fixed compensation of CHF thousands 769 and                 At the General Meeting, each shareholder can vote his / her
                       a variable remuneration of CHF thousands 204. These were               own shares or authorise a third party to vote them by proxy.
                       paid out in cash. Contributions to welfare and pension schemes
                       amounted to CHF thousands 41. For the members of the Board             6.2 Statutory quorum
                       of Directors, the variable remuneration in the year under re-          At the General Meeting, a quorum is present if half of the
                       port amounted to between 16.3 and 41.4 percent of the fixed             share capital is represented. Provided that legal provisions do
                       compensation and between 12.5 and 29.3 percent of the total            not stipulate to the contrary, the General Meeting passes its
                       compensation.                                                          resolutions and decides its elections by an absolute majority
                           For the 2010 business year, the members of the Board of            of the votes cast.
                       Management received a fixed compensation of CHF thousands
                       2'212 and a variable remuneration of CHF thousands 743. Con-           6.3 Convening of the General Meeting
                       tributions to welfare and pension schemes amounted to CHF              The Board of Directors convenes an ordinary General Meeting
                       thousands 354. The fixed compensation component was paid                by invitation with a period of notice of three weeks. The meet-
                       in cash. The payment of the variable component was made in             ing must be held within six months following the end of a
                       cash (¼) and through the allocation of LLB shares (¾). The price       business year. The invitation to the General Meeting is to be
                       per share for the share-based remuneration component is cal-           publicised in the official gazettes. The invitation must list the
                       culated on the basis of the average share price in the last quar-      agenda to be dealt with at the meeting, the proposals of the
                       ter of the 2010 financial year (CHF 69.30). For the members             Board of Directors and, in the event of elections, the names
                       of the Board of Management, the variable remuneration in the           of the proposed candidates.
                       year under report amounted to 33.6 percent of the fixed com-                An extraordinary General Meeting may be convened by the
                       pensation and 22.5 percent of the total compensation.                  Board of Directors if this is in the urgent interest of the Liechten-
                           In comparison with the previous year, the total compen-            steinische Landesbank, or at the request of one or more share-
                       sation of the members of the Board of Directors and the                holders representing ten percent of the share capital.
                       members of the Board of Management decreased by 14.4 and
                       2.3 percent respectively. This was attributable in particular          6.4 Agenda
                       to the decline in variable compensation of 39.5 and 19.7 per-          The Board of Directors specifies the agenda for the General
                       cent respectively.                                                     Meeting in accordance with the Liechtensteinische Landes-
                           The entire remuneration of the members of the Board of             bank's statutes. The statutes can be read at www.llb.li/statutes.
                       Directors and the members of the Board of Management in the            Liechtenstein equities law contains no regulations comparable
                       2010 business year is reported on an accrual basis. The variable       in nature to the Swiss legal provisions (Art. 699, para. 3, Code
                       component is debited to the 2010 profit and loss account. Pay-          of Obligations), which stipulate the rights of shareholders in
                       ment is made, however, only in the following year.                     setting the agenda for General Meetings. However, legally
                                                                                                                                    Corporate governance   81




stipulated minority rights do exist which ensure that signed        8.3 Additional fees
and detailed items that are submitted to the Board of Directors     For other services, PricewaterhouseCoopers AG invoiced the
may be placed on the agenda for discussion and resolution.          companies of the LLB Group for CHF thousands 615 in 2010
At the present time, it is not possible to amend the statutes in    (previous year: CHF thousands 360).
favour of improving shareholders' rights in setting the agenda
on account of the applicable regulations of Liechtenstein
company law.                                                        Auditing fees and additional fees


6.5 Registration in the company's share register                     in CHF thousands                                  2010       2009

The Liechtensteinische Landesbank has issued only bearer             Auditing fee                                  2'381         2'422
shares.                                                              Additional fees                                   615        360
                                                                        International accounting                        59          27
7 Change of control and defensive measures                              Taxation advice                                 95        112
The Liechtensteinische Landesbank is a banking institute li-            Legal advice                                    59          56
censed under Liechtenstein law with its registered office in the        Regulatory issues and questions                129          38
Principality of Liechtenstein. The regulations of the Swiss stock       Project consulting IT platform                 273        127
exchange law concerning public purchase offers are not there-
fore applicable to the Liechtensteinische Landesbank as a pos-
sible target company. The Landesbank's statutes contain no
regulations comparable with the Swiss provisions regarding          8.4 Information instruments of the external auditors
opting out or opting up. Likewise, there are no change of con-      The Group Audit & Risk Committee fulfils a supervisory, control
trol clauses in favour of the Board of Management, the Board        and monitoring function, which extends to the external audi-
of Directors or other senior executives.                            tors. It is responsible, among other tasks, for:
    Pursuant to the law on the Liechtensteinische Landesbank,       ◆ taking note and discussing the risk analysis made by the
the Principality of Liechtenstein must hold at least 51 percent       external auditors, the auditing strategy derived from it
of the capital and votes.                                             and the respective risk-oriented auditing plan;
                                                                    ◆ the critical analysis of the audit reports submitted by the
8 Independent auditors                                                external audit and the Group Internal Audit functions to
                                                                      the Group Board of Directors;
8.1 Duration of mandate and term of office                          ◆ discussing serious problems identified during the auditing
of the auditor in charge                                              process with the external auditors;
                                                                    ◆ the monitoring and implementation of recommendations
8.1.1 Date of acceptance of existing auditing mandate                 put forward by the external auditors and Group Internal
PricewaterhouseCoopers AG, St. Gallen has served as the in-           Audit to eliminate weak points and deficiencies;
dependent auditors of the Liechtensteinische Landesbank ac-         ◆ assessing the quality of the external and internal audit
cording to company and banking law since 1998. The auditing           functions (external and internal auditors according to bank-
mandate was taken over in 1998 from Revisuisse Price Water-           ing law and person and company law), as well as their
house AG, St. Gallen and its predecessor Revisa Treuhand AG,          cooperation;
St. Gallen. Pursuant to person and company law and banking          ◆ discussing the annual activity report and the annual audit
law, the independent auditors are appointed by the General            plan of Group Internal Audit including the evaluation of
Meeting at the proposal of the Board of Directors for the period      whether this function has sufficient resources and compe-
of one year.                                                          tences, as well as approving proposals to the Group Board
                                                                      of Directors;
8.1.2 Term of office of the auditor in charge of the                ◆ assessing the qualification, independence, objectivity and
current auditing mandate                                              performance of the external auditors and Group Internal
Hans Wey has been the responsible auditor in charge since the         Audit;
General Meeting 2007. The auditor in charge changes every           ◆ checking the reconcilability of external auditors' auditing
seven years.                                                          activities with possible consulting mandates, as well as
                                                                      evaluating and discussing their professional fees;
8.2 Auditing fee                                                    ◆ submitting a proposal to the Group Board of Directors for
In the 2010 business year, PricewaterhouseCoopers AG in-              the attention of the General Meeting regarding the appoint-
voiced the companies of the LLB Group for CHF thousands 2'381         ment or dismissal of the external auditors (appointed accord-
(previous year: CHF thousands 2'422) in respect of auditing           ing to banking law and person and company law). The Group
fees. These fees include the work carried out by the auditors as      Audit & Risk Committee is responsible for defining the proce-
required by the regulatory authorities. The Group Audit &             dure to appoint new external auditors.
Risk Committee oversees the fees paid to Pricewaterhouse-
Coopers AG for their services.
82   As time goes by




                       The external auditors perform their work in accordance with          The Group Audit & Risk Committee reports to the full Board of
                       the legal provisions, and according to the principles of the         Directors once a year concerning the activities of the external
                       profession in the respective country of domicile of the Group        auditors and the assessment of their performance.
                       company, as well as according to the international standards             The external auditors have direct access to the Board of
                       on auditing. The independent auditors regularly report to the        Directors at all times. They hold regular discussions with the
                       Board of Directors, the Group Audit & Risk Committee and             Chairman of the Board of Directors and the Chairman of the
                       the Board of Management about their findings and submit sug-          Group Audit & Risk Committee.
                       gestions for improvements to them. The most important re-
                       port is the audit report on the LLB Group required by banking        9 Information policy
                       law. This summarised report is submitted in writing once a           The Liechtensteinische Landesbank is committed to providing
                       year to the Board of Directors. In addition, the responsible au-     its shareholders, clients, staff and the general public with com-
                       ditor in charge of the external auditors presents a report at one    prehensive and regular information. This ensures that all stake-
                       meeting of the Group Audit & Risk Committee. All reports from        holders are treated equally and fairly. By institutionalising and
                       the internal and external auditors concerning all Group com-         nurturing these ties, by building up and preserving relation-
                       panies are submitted to the Group Audit & Risk Committee.            ships based on trust with the financial community on the one
                           Important findings in the reports of the internal and exter-      hand, and with the media and all other interested parties on
                       nal auditors since the last meeting and all reports concerning       the other, equality of opportunity and transparency are con-
                       the Group companies are addressed at the next meeting of the         sistently ensured.
                       Group Audit & Risk Committee. The head of Internal Audit is              The most important information media of Liechtenstei-
                       responsible for providing the relevant information. This person      nische Landesbank are its internet website www.llb.li, as well
                       reports directly to the Group Audit & Risk Committee. The head       as its annual and semi-annual reports, media communiqués,
                       of Internal Audit is appointed by the Board of Directors and is      its financial result presentation and the conference call for
                       subordinate to the Board's Chairman.                                 media and analysts, and its General Meeting of Shareholders.
                           Representatives of the external auditors participated            The Liechtensteinische Landesbank has not compiled a com-
                       in two meetings of the Group Audit & Risk Committee but no           pensation report for the 2010 business year in line with Point 8
                       meeting of the full Board of Directors during the report period.     of Appendix 1 (Recommendations concerning the compen-
                       The head of Internal Audit attended all the meetings of the          sation of the board of directors and management board) of the
                       Group Audit & Risk Committee and those of the full Board of          «Swiss Code of Best Practice for Corporate Governance» of
                       Directors. The external auditors submit periodic reports deal-       economiesuisse. Details of the compensation and participa-
                       ing with the audit planning based on risk analysis, the current      tions of members of the Board of Directors and the Board of
                       audit reporting, the annual activity report, as well as a com-       Management, as well as loans to them can be found in the
                       parison of actual to budgeted fees.                                  Notes to the financial statement of the LLB Group in «Related
                           The Group Audit & Risk Committee evaluates the perform-          party transactions» on pages 151 to 154. In line with the
                       ance of the external and internal auditors in their absence          «Swiss Code of Best Practice for Corporate Governance», spe-
                       annually. The following criteria are applied in assessing the per-   cial attention will be paid to the subject of compensation at
                       formance of the external auditors and their professional fees        the General Meeting on 6 May 2011 during the discussion
                       (auditing and additional fees): comparison of fees and budgeted      of the agenda point «Approval of the annual report and the
                       fees as well as the previous year's fees, feedback from the de-      consolidated annual report».
                       partments audited, quality of the auditors' findings, structured          As a listed company, the Liechtensteinische Landesbank
                       assessment of the auditors' expertise. The independence of the       is obliged to publish price-relevant information (ad hoc public-
                       external auditors is evaluated on the basis of the information       ity, Art. 72 of the exchange listing regulations). To receive ad
                       concerning independence provided in the annual report of Price-      hoc announcements in accordance with the directives for ad
                       waterhouseCoopers AG, and an assessment of their conduct.            hoc publicity automatically, an interested party can register at
                       The cost planning and its observance are also reviewed and dis-      www.llb.li/registration. Ad hoc announcements are published
                       cussed annually. Moreover, the Group Audit & Risk Committee          under the link www.llb.li/mediacommuniques.
                       annually reviews alternatives, and submits a proposal to the
                       full Board of Directors for the attention of the General Meet-
                       ing regarding the appointment of the external Group auditors.
                           Additional orders are placed on the basis of offers from
                       competitors taking into consideration the level of expertise.
                       The Group Audit & Risk Committee bases its assessment regard-
                       ing the placing of orders for additional services on the periodic
                       reports it receives from Group Internal Audit regarding the reli-
                       ability, scope and relationship to audit fees.
                                                                                                                                          Corporate governance   83




Agenda 2011


 Date                              Time                              Event

 24 March 2011                     7.00 a. m.                        Publishing of 2010 business result, release of online
                                                                     annual report 2010 at www.llb.li
                                   10.30 a. m.                       Financial reporting and analyst media conference
 25 March 2011                                                       2010 business result advertisement in the «Liechtensteiner Vaterland»,
                                                                     the «Liechtensteiner Volksblatt» and in the «NZZ»
 26 March 2011                                                       2010 business result advertisement in the «Finanz und Wirtschaft»
 15 April 2011                                                       Publishing of printed annual report 2010
 6 May 2011                        6.00 p. m.                        General Meeting of Shareholders
 10 May 2011                                                         Payment of dividend
 25 August 2011                    7.00 a. m.                        Publication of interim financial statement 2011,
                                                                     publishing of printed interim financial statement 2011 and
                                                                     release of online interim financial statement 2011 at www.llb.li
                                   10.30 a. m.                       Conference call
 26 August 2011                                                      2011 interim financial result advertisement in the «Liechtensteiner
                                                                     Vaterland», the «Liechtensteiner Volksblatt» and in the «NZZ»
 27 August 2011                                                      2011 interim financial result advertisement in the
                                                                     «Finanz und Wirtschaft»




If you have any questions, please contact the following              At the beginning of 2011, the new EU compensation regula-
person who is responsible for investor relations:                    tions come into force. As a member of the EEA, Liechtenstein
                                                                     will incorporate this directive in national law. In January 2011,
Dr. Cyrill Sele                                                      the Liechtenstein Financial Market Authority will commence
Head Group Corporate Communications                                  the consultancy phase by sending a draft implementing order
Telephone +423 236 82 09                                             for the new EU compensation regulations to interested parties
Fax +423 236 87 71                                                   for their views and opinions. The goal is for this to come into
E-mail cyrill.sele@llb.li                                            force on 1 July 2011. The Board of Directors and the Appoint-
                                                                     ments and Compensation Committee have initiated a project
10 Important changes since the balance sheet date                    with the aim of implementing a group directive concerning
The Board of Directors of the Liechtensteinische Landesbank          compensation and remuneration during the year.
AG will propose to the General Meeting of Shareholders on
6 May 2011 that Dr. Felix R. Ehrat be elected as a new member
of the Board of Directors, and that Ingrid Hassler-Gerner and
Konrad Schnyder be re-elected. On account of the period of
office limitation statute, Siegbert Lampert is stepping down
from the Board after nine years.
    For personal reasons and at his own request, Elfried Hasler
will step down from the Group Executive Board and the Board
of Management of Liechtensteinische Landesbank on 30 June
2011. Urs Müller, formerly head of the Institutional Clients Busi-
ness Unit, has been appointed by the Board of Directors as a
new member of the Group Executive Board and the Board of
Management. From 1 April 2011, he will take over the function
of Roland Matt as head of the Domestic and Institutional Mar-
kets. Roland Matt will take over responsibility for the Interna-
tional Market Business Unit, which was previously headed by
Elfried Hasler. Dr. Kurt Mäder continues in his function as head
of the Corporate Service Center and Dr. Josef Fehr continues
as Chairman of the Group Executive Board and the Board of
Management.

								
To top