Nestlé Corporate Governance Business Principles

Nestlà © Corporate Governance Business Principles Nestle is a flat organisation with few levels of management and span of control was founded in 1866 by Henri Nestlà © at VeVey (Switzerland). Currently Nestle` is one of the worlds largest Nutrition, health and wellness company and committed to provide the best Nutritional food products around the world, moreover, in order to ensure company long term sustainable growth, Company constantly reviews its product portfolio and focuses on its efforts. Also better understand the need of customer, nestle monitor consumer panels by conducting research. Consequencely, success of Nestle is a reflection of clear define responsibilities, reflection of professionalism, responsible attitude of management, well defined objective as well as significant global leadership position Company Brands: The Nestlà © brand portfolio such as milk and dairy products, nutritions, weight management, performance and healthcare, breakfast cereals, ice cream, coffee and culinary products (prepared dishes, cooking aids, sauces) pet care, bottled water etc. practically cover all food and beverage categories. Many of them have leadership both locally and globally market and existed for several years, for instance S.Pellegrino the mineral water from Italy and Nestlà © Moà §a in Brazil, are l over 100 years old.The best-known global brands include Nescafà ©, Nestea, Maggi, Buitoni, Purina and Nestlà © itself other brands also sell in many countries for instance Milo, Nespresso, Nesquik, Kit Kat, Smarties, Polo, Friskies, Perrier and Vittel. It is considered that total number of brands including local and international reaches into several thousands Nestlà © Corporate Governance Management Management professional skills, Curiosity and open-mindedness as well as a high level of interest in other cultures, also commitment to continuous learning, improving, and sharing knowledge, also ability to motivate staff in order to contribute wider group performance and willing to take risks and maintain composure under pressure and involvement of each employee at all levels are concerned with continuously adding value to company. Business Principles Company business principles are based on fairness, honesty and sound human values also to follow local legislation, religious practices and culture, Therefore, company respect and follow all applicable local laws around the world. Company objective is to market and manufacture the products such a way to create long term value for business partner, shareholders, consumers, and employees, to ensure the highest standard of organisation Nestle believes legislation is the effective safeguard of responsible conduct Code of Business Conduct The Nestlà © Code of Business Conduct helps the continued implementation of the Corporate  Business Principles and the nature of this Code are designed to provide a frame of reference against all possible situations that may occur. Moreover the purpose of this code is to Employees should seek guidance when they are in doubt situation, act legally and honestly and avoid all those conduct which may damage Nestle reputation also give preference to Companys interests instead of personal or other interests. Compliance with laws, rules and regulations Conflicts of Interest Outside directorships and other outside activities Families and Relatives Corporate opportunities Insider trading Antitrust and fair dealing Confidential information Fraud, protection of company assets, accounting Bribery and corruption Gifts, meals, entertainment Discrimination and harassment Failure to comply Reporting illegal or non-compliant conduct Articles of Association Company amends new Articles of association in General meeting of 23 April 2009.Article of association consist of five main categories, which is as under  General  Article 1 Article 2 Corporate name; registered offices; Duration and Purpose. This category is consisting of two sub category or bias in which they explain company name, company registration and company purpose Share Capital. Article 3 Share capital Article 3bis Conditional share capital. On this section it has been explained the share capital of Nestle which is 100 000 000 registered shares and the value of each is CHF0.10 is worth CHF 10 000 000 (ten million Swiss francs). Also explain the shareholder rights to subscribe the new share and also point out the board of director power to may limit or withdraw the shareholder right to subscribe for new shares. Article 4 Share certificates; Dematerialised shares This article section has discussed the issue regarding registered shares or certificate. Moreover, it shows that valid certificate must be signed by two boards of directors, in case of cease shareholder have right to demand back the certificate at no cost. Article 5 Share register: This section of article has explained Recoganisation request of shareholder for voting right is based on company Recoganisation furthermore, registered shareholder with voting rights must have account owner and the minimum limit for voting right is more than 5 % of the share also Board of Directors shall announce regulations relating to the registration of nominees to ensure compliance with these Articles of Association. III. Organisation of Nestlà © Article 6 Powers of the General Meeting The firs article of this category has explained the power of General Meeting for instance: The General Meeting of shareholder will discuss the article of association also elect and remove the member of the board and approve the consolidated annual financial report also take all decisions which is by law and or under the articles of Association. Article 7 Annual General Meeting The Annual General Meeting held each year twice after the close of the financial year of Nestlà ©. Article 8 Extraordinary General Meeting 1 Extraordinary General Meetings convened by the Board of Directors on the request of shareholder whose holdings at least one tenth of the share capital. Article 9 Notice of General Meetings; Agenda 1 Extraordinary General Meetings convened by notice in the Swiss Official Gazette of Commerce with in twenty days before the date fixed also Shareholders may be informed by ordinary mail and allow one or more share holder whose combined represent at least 0.15 % of share capital allow request about the agenda of general meeting and made proposal . Article 10 Presiding officer; Minutes: The secretary of the board kept the minutes of General Meeting also Chairman or any member of the Board of Directors shall pre ­side and carry all procedural powers about General Meeting. Article 11 Voting rights; Proxies This article will explain that each recorded share with voting rights confers one Vote also in General meeting with respect to own shares or represented in excess of 5% shall be counted as one share holder. Article 12 Quorum and decisions This article will discuss about the voting and decision making process for instance duly constituted General Meetings irrespective of the number of shareholders or by the Articles of Association or law, also shareholders elections and resolutions will be decide by the majority of the shares represented. B. Board of Directors Article 14 15 Number of Directors and Term of office The Board of Directors shall consist of at least seven members also board shall be elected for a three years by the General Meeting. Furthermore each year board renewed by rotation also board will establish new order of rotation in the case of increase or decrease of board of director. Article 16 Organisation of the Board; Remuneration This article explains about board of director responsibility for instance the selection of chairman and voice chairmen also define board regulation and assignment of responsibilities. Article 17 Powers of the Board in general This article define the general power of board director can conduct business to the extent that is not within the board regulation or general meeting. Article 18 Specific powers of the Board the section of article define the board of director power for instance the board regulation, accounting and financial control, the appointment of new staff, the ultimate supervision, the preparation of business report , preparation of General meeting also the opening and closing of new and old branch office. Auditors Article 20 21 Number of Auditors; Term of office and Rights and duties of Auditors The auditor shall appoint for a term of one year in General Meeting and will verify the annual financial statement of company and submits this report in the General Meeting. Nestle- Nespresso AAA sustainable quality program Nestle has organised multi-stakeholder Programme in the coffee sector to introduce environmental, social and economical consideration in the supply chain for instance management of raw material from supplier to manufacturer or service provider to customer with improvement of environmental and social impact. Nestle Recent News. Nestlà © to sell remaining Alcon shares to Novartis 04 Jan 2010 Nestlà © S.A. has transfer the Alcon remaining 156,076,263 shares representing around 52% of the companys issued and outstanding share to Novartis, accordance with the contract agreed on 6 April 2008.Moreover, the reason for transfer the control are gradually based on three issues for instance, the divestment of Alcon the initial IPO of 23.25% in 2002, the sale of 24.8% in 2008 and the exercise of the call option by Novartis. Alcon was acquired by Nestlà © in 1977 for USD 280 million. Nestlà © opens global RD Centre to develop new generation of biscuits On 05-Jan-2010 Nestlà © has open a Global RD Center in Santiago de Chile. The New RD Center will help to reduce the sugar and fat level in biscuits also it will include bioactive ingredients and more lighter without compromising the biscuit quality to improve health quality Nestlà © to acquire Kraft Foods frozen pizza business Nestle has showed the agree ness to acquired Kraft food frozen business in the US and Canada on 05-January, 2010 for USD 3.7 billion in cash, the reason for this acquisition is that US is the largest pizza market in the world about 37 billion USD and business includes brands California Pizza, DiGiorno, Tombstone, Jacks and Delissio, therefore this acquisition will provide a strong strategic pillar in the US and Canada where the company already established a leadership in dishes and hand held products such as Lean Cuisine, Buitoni, Lean Pockets, Stouffers and Hot Pockets Consequently on 01 March 2010 after completion of closing conditions Nestlà © has concluded the acquisition of Kraft Foods frozen pizza According to Paul Bulcke, CEO of Nestlà © This acquisition bringing together a selection of great US and Canadian brands and also enhances Nestlà ©s frozen food activities in North America where Nestlà © only had a minor presence until no Brands Nestlà © markets its products in 130 countries across the world Nestlà © manufactures around 10,000 different productsand employs some  250,000 people Nestlà © sells over  a billion products every day Around 3,500 people from  over 50 countries work in  Nestlà ©s worldwide network  of 17 research, development  and product testing centres. The Nestlà © Research Center  in Switzerland is our major  think-tank. Its a constant  source of new ideas and  scientific knowledge that  feeds the pipeline for all  Nestlà © products. It covers over 100 different  professional areas   including nutritional  science, the life sciences,  raw materials, ingredients  and production processes. Appendix No 1: Article of Associations General Article 1 Article 2 Corporate name; registered offices; Duration and Purpose. This category is consisting of two sub category or bias in which they explain company name, company registration and company purpose Share Capital. Article 3 Share capital Article 3bis Conditional share capital. On this section it has been explained the share capital of Nestle which is 100 000 000 registered shares and the value of each is CHF0.10 is worth CHF 10 000 000 (ten million Swiss francs). Also explain the shareholder rights to subscribe the new share and also point out the board of director power to may limit or withdraw the shareholder right to subscribe for new shares. Article 4 Share certificates; Dematerialised shares This article section has discussed the issue regarding registered shares or certificate. Moreover, it shows that valid certificate must be signed by two boards of directors, in case of cease shareholder have right to demand back the certificate at no cost. Article 5 Share register: This section of article has explained Recoganisation request of shareholder for voting right is based on company Recoganisation furthermore, registered shareholder with voting rights must have account owner and the minimum limit for voting right is more than 5 % of the share also Board of Directors shall announce regulations relating to the registration of nominees to ensure compliance with these Articles of Association. III. Organisation of Nestlà © Article 6 Powers of the General Meeting The firs article of this category has explained the power of General Meeting for instance: The General Meeting of shareholder will discuss the article of association also elect and remove the member of the board and approve the consolidated annual financial report also take all decisions which is by law and or under the articles of Association. Article 7 Annual General Meeting The Annual General Meeting held each year twice after the close of the financial year of Nestlà ©. Article 8 Extraordinary General Meeting 1 Extraordinary General Meetings convened by the Board of Directors on the request of shareholder whose holdings at least one tenth of the share capital. Article 9 Notice of General Meetings; Agenda 1 Extraordinary General Meetings convened by notice in the Swiss Official Gazette of Commerce with in twenty days before the date fixed also Shareholders may be informed by ordinary mail and allow one or more share holder whose combined represent at least 0.15 % of share capital allow request about the agenda of general meeting and made proposal . Article 10 Presiding officer; Minutes: The secretary of the board kept the minutes of General Meeting also Chairman or any member of the Board of Directors shall pre ­side and carry all procedural powers about General Meeting. Article 11 Voting rights; Proxies This article will explain that each recorded share with voting rights confers one Vote also in General meeting with respect to own shares or represented in excess of 5% shall be counted as one share holder. Article 12 Quorum and decisions This article will discuss about the voting and decision making process for instance duly constituted General Meetings irrespective of the number of shareholders or by the Articles of Association or law, also shareholders elections and resolutions will be decide by the majority of the shares represented. Board of Directors Article 14 15 Number of Directors and Term of office The Board of Directors shall consist of at least seven members also board shall be elected for a three years by the General Meeting. Furthermore each year board renewed by rotation also board will establish new order of rotation in the case of increase or decrease of board of director. Article 16 Organisation of the Board; Remuneration This article explains about board of director responsibility for instance the selection of chairman and voice chairmen also define board regulation and assignment of responsibilities. Article 17 Powers of the Board in general This article define the general power of board director can conduct business to the extent that is not within the board regulation or general meeting. Article 18 Specific powers of the Board the section of article define the board of director power for instance the board regulation, accounting and financial control, the appointment of new staff, the ultimate supervision, the preparation of business report , preparation of General meeting also the opening and closing of new and old branch office. Auditors Article 20 21 Number of Auditors; Term of office and Rights and duties of Auditors The auditor shall appoint for a term of one year in General Meeting and will verify the annual financial statement of company and submits this report in the General Meeting. Nestle- Nespresso AAA sustainable quality program Nestle has organised multi-stakeholder Programme in the coffee sector to introduce environmental, social and economical consideration in the supply chain for instance management of raw material from supplier to manufacturer or service provider to customer with improvement of environmental and social impact. Title: Nestle Nespresso AAA sustainable quality program: an investigation into the governance dynamics in a multi-stakeholder supply chain network Author(s): Gabriela Alvarez, Colin Pilbeam, Richard Wilding Journal: Supply Chain Management: An International Journal Year: 2010 Volume: 15   Issue:2   Page: 165 182 DOI: 10.1108/13598541011028769 Publisher: Emerald Group Publishing Limited NOTABLE FACTS Nestle is the top four water bottling companies in the world Moreover Nestle control one third bottled water market in America and sell water under 70 different brands name. Nestle Claims that Bottled water sales contributes to the plastic waste problem on the contrary. Nestlà © has been criticized for its marketing of infant formula in countries where potable water is scare also leading to reduction in breast feeding and increased risk of infants and also repeatedly sued for false advertising of its products and the impacts of its bottled water operations in different communities. according to a 2006 global survey of online consumers by the Reputation Institute, Nestlà © has a reputation score of 70.4 on a scale of 1-100. THE MODE OF INTERNATIONAL OPERATION (Source Nestlà © Fact book, Nestlà ©, 2007) MERGERS ACQUISITIONS Key Dates 1866 Company Founded 1905 Merger between Nestlà © and Anglo-Swiss Condensed Milk Company 1929 Merger with Peter, Cailler, Kohler Chocolats Suisses S.A. 1947 Merger with Alimentana S.A. (Maggi) 1969 Vittel (equity interest) 1971 Merger with Ursina-Franck1974LOrà ©al (equity interest) 1977 Acquisition of Alcon (2002: partial IPO) 1985 Acquisition of Carnation 1988 Acquisition of Buitoni-Perugina 1988 Acquisition of Rowntree 1992 Acquisition of Perrier 1998 Acquisitions of San Pellegrino and Spillers Petfoods 2000 Acquisition of PowerBar 2001 Acquisition of Ralston Purina 2002 Acquisition of Schà ¶ller and Chef America 2003 Acquisition of Mà ¶venpick, Powwow and Dreyers 2004 Acquisition of Valio (ice cream activities) 2005 Acquisition of Wagner, Protà ©ika, Musashi JOINT VENTURES Key Dates 1974 LOrà ©al 1981 Galderma (joint venture with LOrà ©al) 1990 Cereal Partners Worldwide (joint venture with General Mills) 1991 Beverage Partners Worldwide (formerly CCNR) (joint venture with Coca Cola) 2002 Dairy Partners Americas (joint venture with Fonterra) Laboratories innà ©ov (joint venture with LOrà ©al) STRATEGIES ADOPTED TO REDUCE POLITICAL, OPERATIONAL AND ADMINISTRATIVE VULNERABILITIES Corporate Business Principles (International)(Source: Nestlà © Corporate Business Principles Document, Third Edition, September 2004, Nestlà © S.A., Public Affairs. Nestlà © is committed to the following Business Principles in all countries, taking into account local legislation, cultural and religious practices: Nestlà ©s business objective, and that of management and employees at all levels, is to manufacture and market the Companys products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, business partners and the large number of national economies in which Nestlà © operates; Nestlà © does not favor short-term profit at the expense of successful long-term business development, but recognizes the need to generate a healthy profit each year in order to maintain the support of our shareholders and the financial markets, and to finance investments; Nestlà © recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and actions of the Company behind brands in which they place their trust, and that without its consumers the Company would not exist; Nestlà © believes that, as a general rule, legislation is the most effective safeguard of responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary business principles is beneficial in order to ensure that the highest standards are met throughout the organization; Nestlà © is conscious of the fact that the success of a corporation is a reflection of the professionalism, conduct and the responsible attitude of its management and employees. Therefore recruitment of the right people and ongoing training and development are crucial; Nestlà © operates in many countries and in many cultures throughout the world. This rich diversity is an invaluable source for our leadership. No single document can capture every legal obligation that may be required in each of these countries. Indeed, there may be conflicting legal requirements. Nestlà © continues to maintain its commitment to follow and respect all applicable local laws in each of its markets. If an interpretation of anything contained in Nestlà ©s Corporate Business Principles is construed as contrary to local laws, such interpretation should not be followed in that country. 1. Customer Meeting Consumers Needs: Nestlà © aims to create value that can be sustained over the long term by meeting consumer needs for nutrition, enjoyment, and quality they can trust. Nestlà ©s Communication with consumers is based on the following Basic Principles: Nestlà © consumer communication should reflect moderation in food consumption, and not encourage over-eating. This is especially important regarding children. Wherever possible, we should show children in healthy energetic pursuits and avoid the portrayal of an inactive lifestyle combined with unhealthy dietary patterns. 3. Nestlà © consumer communication must be congruent with healthy, balanced diets. Our advertising must not imply the replacement of meals with indulgence or snack foods, nor encourage heavy snacking. 4. Nestlà © is committed to advertising to children in a way that does not undermine the authority, responsibility, or judgment of parents or care providers. It must not encourage pester power. 5. Nestlà © advertising to children must not portray children in unsafe situations nor encourage them to accept invitations from people they do not know. 6. Nestlà © consumer communication about health benefits of products must have a sound nutritional basis. 7. Nestlà © consumer communication should not exploit violence, bad manners, or profanity. Its content must reflect good taste in a given country and culture. It should not depict attitudes that are discriminatory or offensive to religious, ethnic, political, cultural, or social groups. 8. Nestlà © communications must not show or encourage the consumption of our products in a way that could be considered dangerous. 2. Infant Health and Nutrition When Henri Nestlà © developed his milk food for babies over 130 years ago, it saved the life of a baby who could not be breast-fed. Nestlà ©s invention responded to the need for a nutritionally safe alternative to breast milk. Today, Nestlà © research and development creates high quality infant formula products for use when an alternative to breast milk is needed that is specifically nutritionally adapted. Nestlà © also offers superior complementary (weaning) foods.Henri Nestlà © also insisted that every mother able to breast-feed should do so. This principle is still the cornerstone of Nestlà © policy today, and is in line with the aim of the International  (WHO) Code of Marketing of Breast-milk Substitutes, which was adopted by the  World Health Assembly  in 1981. The International Code recognizes a legitimate market for breast-milk substitutes and provides recommendations to governments on how its marketing should be regulated. Therefore Nestlà ©:- encourages and supports breastfeeding as the best start in life;  carries out research and development aimed at the constant improvement of infant formula products for use when a safe alternative to breast milk is needed;- ensures that its infant food marketing practices conform strictly to national legislation, regulations, or other measures taken by governments to give effect to the aim and principles of the International Code.In addition, in all developing countries, whether or not their governments have taken action to fully implement the International Code, Nestlà ©:- gives detailed instructions to its staff on how to implement the International Code; provides a summary of its policy for the information of employees and the public in the form of the Nestlà © Instructions, which is transl ated into many languages; regularly conducts training of employees to ensure complete understanding of the Companys responsibilities under the International Code; Company on potential non-compliance with the International Code in a confidential way, outside line management structures. In each country the designated ombudsman investigates and reports alleged violations of the International Code directly to a member of the Nestlà © S.A. Executive Committee at the Companys global headquarters; Nestlà © is a founding member of the  International Association of Infant Food Manufacturers (IFM), which was formed to facilitate industry dialogue with  WHO  and governments, and to encourage responsible marketing standards for the infant food industry Human Rights Nestlà © fully supports the  United Nations Global Compacts  two guiding principles on human rights. Nestlà © therefore: Supports and respects the protection of international human rights within its sphere of influence (Principle 1) and Ensures that its own companies are not complicit in human rights abuses (Principle 2)Nestlà © aims to provide an example of good human rights practices throughout its business activities and has an interest in encouraging the improvement of social conditions, which are an important factor for sustainable development. Nestlà © also recognizes that governments are ultimately responsible for the establishment of a legal framework for protecting human rights within their markets. Nestlà © expects each market to respect and follow the local laws and regulations concerning human rights practices Nestlà © fully supports the  United Nations Global Compacts  four guiding principles on labor. Nestlà © therefore upholds:Freedom of association and the effective recognition of the right to collective bargaining (Principle 3) The elimination of all forms of forced and compulsory labor (Principle 4)The effective abolition of child labor (Principle 5)The elimination of discrimination in respect of employment occupation (Principle 6) Nestlà © also respects the local laws and regulations applicable to human resources in each of its markets. Human Resource Policy is also set by the local markets, which must follow local legal requirements. Nestlà © regards its personnel as its most valuable asset. Involvement at all levels starts with open communication, whether on specific aspects of the business, or about the activities of the Company in general. Suggestions for changes and proposals for improvements of Nestlà ©s practices are encouraged.