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Corporate Governance

Stock Information

Board of Directors Guidelines

This document sets out guidelines on significant corporate governance principles to assist the board of Coca-Cola European Partners plc (“CCEP”) (the “Board”) in performing its duties; in each case, the Board will take into account the specific facts and circumstances of the matter before it and it may be appropriate for the Board in certain cases to deviate from these guidelines. This is a working document and will be reviewed by the Nomination Committee at least annually. The Nomination Committee will report any recommended changes to the Board for its approval and this document will be revised as necessary to ensure that it is fit for purpose and accurately reflects the significant corporate governance principles followed by the Board and set out in the Shareholders’ Agreement, the CCEP articles of association (the “CCEP Articles”), the committees’ terms of reference and the Chart of Authority. CCEP will, where appropriate, comply with the UK Corporate Governance Code and, where it has not complied, provide an explanation of the reasons for not doing so.

THE BOARD

  • Subject to the CCEP Articles and any special resolutions passed in general meeting, the business of CCEP will be managed by the Board and the Board may exercise all the powers of CCEP whether relating to the management of the business of CCEP or not.
  • The Board is responsible for the overall strategic guidance of the CCEP group and the long-term success of CCEP and for ensuring that adequate financial and other resources are in place to allow CCEP to meet its objectives. It should provide leadership to CCEP and oversee CCEP’s internal controls, ensuring that they are prudent and effective and enable risks to be properly assessed and managed.
  • The Board should ensure that the business of the CCEP group is managed in accordance with CCEP’s constitutional documents, business plans and company policies and that obligations to its shareholders and other stakeholders are met. The Board should lead by example and set high standards for the culture, values, behaviours and ethics of CCEP.

The Board should meet as often as needed to discharge its duties effectively and will meet a maximum of six times per calendar year for scheduled routine meetings and, additionally, as necessary to deal with extraordinary business. Directors should have access to CCEP’s operations and staff in order to function effectively and fulfil their duties. Management has an obligation to provide accurate, timely and clear information to directors and directors will seek clarification or amplification where necessary.

There are certain matters which are reserved to the Board in the Chart of Authority and Schedule 3 of the Shareholders’ Agreement. No action can be taken, and no resolution can be passed, in relation to these matters without the approval of the Board and, in the case of the matters listed in Schedule 3 of the Shareholders’ Agreement, (if the relevant equity threshold is met) approval by one director nominated by Olive Partners, S.A. (an “Olive Nominee”) and one director nominated by European Refreshments, Coca-Cola Gesellschaft mit beschränkter Haftung and Vivaqa Beteiligungs GmbH & Co. KG together (a “Red Nominee”).

BOARD COMPOSITION

The Board will be composed of between two and 17 members, the majority of whom must be independent, based upon the concept of independence under the UK Corporate Governance Code. At all times a majority of directors must not be U.S. citizens and must not be resident in the U.S.

There should be a clear division of responsibilities between the running of the Board and the management of CCEP’s business. The roles of the Chairman and the Chief Executive Officer (the “CEO”) must not be combined and the division of responsibilities between the Chairman and the CEO must be clearly established, set out in writing and agreed by the Board.

The Chairman

  • Subject to the Shareholders' Agreement and the CCEP Articles, the Chairman will be appointed by, and will report to, the Board and will be responsible for the leadership and overall effectiveness of the Board.
  • The Chairman should ensure that the Board and its committees have effective decision-making processes and directors apply sufficient challenge to proposals.
  • The Chairman will set the Board's agenda and should ensure that adequate time is available for discussion of agenda items, in particular, strategic issues and contentious/complex matters.
  • The Chairman is responsible for facilitating a constructive dialogue between the executive and the non-executive directors and between the directors and the management.
  • The Chairman will be supported by the Senior Independent Director (the “SID”) and the Company Secretary.

The CEO

  • The CEO will be appointed by the Board and will report to the Chairman and the Board directly.
  • The CEO will lead CCEP and will be responsible for the day-to-day running of CCEP and its business in the interests of shareholders collectively so as to maximise CCEP’s equity value. The CEO should oversee the profitable operation and development of the business in accordance with business plans.
  • The CEO should act under the supervision of, and within the authority delegated by, the Board.

The SID

  • The SID will be appointed by the Board and will act as an interface for the independent non-executive directors (the “INEDs”) between the INEDs and each of (1) the Chairman, (2) the Board and (3) members of senior management and will be a sounding board for the Chairman.
  • The SID may lead meetings of the non-executive directors on occasions as deemed appropriate.
  • Where the Board is undergoing a period of stress, the SID will work with the Chairman and other directors and shareholders to resolve significant issues.
  • The SID should be available to shareholders if they have concerns which contact through the normal channels of the Chairman and the CEO has failed to resolve or for which such contact is inappropriate.

Company Secretary

  • The Company Secretary will be appointed by the Board and will be responsible for ensuring that board procedures are complied with. The Company Secretary will report to the Chairman on all governance matters and will, under the direction of the Chairman, ensure good information flows within the Board and its committees and between senior management and non-executive directors, as well as facilitating induction and assisting with professional development as required.
  • The Company Secretary will also review with the Chairman regularly whether the Board’s, its committees’ and CCEP’s governance processes are suitable and will consider how the corporate governance arrangements of CCEP may be improved.
  • All directors should have access to the advice and services of the Company Secretary.

Non-executive directors play a critical role on the Board. They should constructively challenge the Board, scrutinise management’s performance in meeting CCEP’s objectives, monitor the reporting of CCEP’s performance and assist in developing strategic proposals. They, through the Audit Committee, should satisfy themselves on the integrity of financial information and that the financial controls and systems of risk management are robust and defensible.

Board meetings must be held regularly, with sufficient frequency at all times to enable the Board to manage and control CCEP’s business. The location of board meetings will be determined by taking into account, among other things, the intention for CCEP to be tax resident and taxed solely in the UK.

SELECTION OF MEMBERS

Subject to the below, directors may be appointed by an ordinary resolution of the shareholders or by the Board.

  • Nominee Directors
    For as long as certain ownership thresholds are met:
    • Olive Partners, S.A. will have the right to nominate up to five directors to the Board ("Olive Nominees"); and
    • European Refreshments, Coca-Cola Gesellschaft mit beschränkter Haftung and Vivaqa Beteiligungs GmbH & Co. KG together will have the right to nominate up to two directors to the Board ("Red Nominees").

  • Chairman
  • The selection procedure for the Chairman will depend on whether Olive Partners, S.A. meets the relevant equity threshold.

    If the equity threshold is met, Olive Partners, S.A. will be entitled to nominate one of the Olive Nominees as Chairman, subject to the approval of the Board (including, provided the relevant equity threshold is met, one Red Nominee).

    In the case that the Board does not approve either the first or second director nominated by Olive Partners, S.A. or the relevant equity threshold is not met, the nomination of the Chairman will be made by the Nomination Committee and will be subject to approval by the Board (including approval by a simple majority of all INEDs present and, subject to relevant equity thresholds being met, approval by an Olive Nominee and a Red Nominee).

  • CEO
  • Any replacement for the CEO will be subject to the approval of the Board, including, if the relevant equity threshold is met, at least one Olive Nominee and one Red Nominee.

    SELECTION CRITERIA

    The Nomination Committee will establish criteria for selecting candidates for proposing to the Board for the roles of the CEO, the SID, the INEDs and, in the circumstances where the Nomination Committee has a role in the Chairman's selection, the Chairman. Such criteria shall, at the minimum, reflect the requirements of applicable law and listing standards and, in the case of INED candidates, will be consistent with those criteria set out in Schedule 5 of the Shareholders’ Agreement. The Nomination Committee may determine that a person is not suitable to be an INED or ineligible to be an INED if he or she is not “independent” for the purposes of the UK Corporate Governance Code and does not meet the suitability criteria set out in Schedule 5 of the Shareholders’ Agreement.

    The search for board candidates should be conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender.

  • INEDs and SID
  • Any proposed replacement for the INEDs and SID will be nominated by the Nomination Committee in accordance with its terms of reference and approved by the Board.

    SELECTION CRITERIA

    The Nomination Committee will establish criteria for selecting candidates for proposing to the Board for the roles of the CEO, the SID, the INEDs and, in the circumstances where the Nomination Committee has a role in the Chairman's selection, the Chairman. Such criteria shall, at the minimum, reflect the requirements of applicable law and listing standards and, in the case of INED candidates, will be consistent with those criteria set out in Schedule 5 of the Shareholders’ Agreement. The Nomination Committee may determine that a person is not suitable to be an INED or ineligible to be an INED if he or she is not “independent” for the purposes of the UK Corporate Governance Code and does not meet the suitability criteria set out in Schedule 5 of the Shareholders’ Agreement.

    The search for board candidates should be conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender.

RE-ELECTION: Each director (excluding the initial Chairman in respect of her initial nine-year term and the initial INEDs in respect of their initial terms) shall stand for re-election at each annual general meeting of CCEP, subject to continued satisfactory performance. A non-executive director who has served a term of nine years will automatically be deemed to no longer be independent unless the Board unanimously resolves otherwise.

SUCCESSION PLANNING: The Board and its committees should have the appropriate balance of skills, experience, independence and knowledge of CCEP to enable them to discharge their respective duties and responsibilities effectively. The Board should be satisfied that plans are in place for orderly succession for appointments to the Board and to senior management so as to maintain an appropriate balance of skills and experience within CCEP and on the Board and to ensure progressive refreshing of the Board. The Nomination Committee should give full consideration to succession planning for directors (other than Olive Nominees or Red Nominees) and other senior executives in the course of the work of the committee, taking into account the challenges and opportunities facing CCEP and the skills and expertise that will, therefore, be needed on the Board in the future. Subject to the Shareholders’ Agreement and the CCEP Articles, the Nomination Committee will make recommendations to the Board concerning formulating plans for succession for both the executive and non-executive directors (other than Olive Nominees or Red Nominees) and, in particular, for the key roles of the Chairman and the CEO.

BOARD COMMITTEES

Currently, the committees of the Board are:

  • Affiliated Transaction Committee
    • The committee will have between three and five members. The majority of members will be INEDs; the chair will be an INED. In addition, if the relevant equity threshold is met, the committee will include at least one Olive Nominee. No Red Nominee may be a member.
    • Any significant transaction between CCEP and The Coca-Cola Company will be referred to the Affiliated Transaction Committee.
    • The committee will review, consider and make a recommendation to the Board with regard to any affiliated transactions.

  • Audit Committee
    • The committee will have between three and five members. All members will be INEDs; the chair will be an INED.
    • All committee members will be financially literate; at least one member will have recent and relevant accounting or related financial management experience or otherwise will qualify as an "audit committee financial expert."
    • The primary responsibility of the committee is to oversee CCEP's financial controls and reporting processes on behalf of the Board and to make regular recommendations and reports on its activities to the Board.

  • Corporate Social Responsibility Committee
    • The committee will have five members. The majority of members will be INEDs; the Board will designate one member of the committee to be the chair. In addition, if the relevant equity threshold is met, the committee will include at least one Olive Nominee and one Red Nominee.
    • The committee will: (i) review CCEP's policies and practices relating to significant public issues of concern to CCEP and its stakeholders, with specific oversight of corporate social responsibility ("CSR") strategy and goals, health and well-being trends, legislative and regulatory issues and diversity management programs; and (ii) review CCEP's environmental and social risks and their management and mitigation.

  • Nomination Committee
    • The committee will have five members. The majority of members will be INEDs; the chair will be an INED. In addition, if the relevant equity threshold is met, the committee will include at least one Olive Nominee and one Red Nominee.
    • The committee will establish criteria for selecting candidates to propose to the Board for the roles of the CEO, the SID, the INEDs and, in the circumstances where the committee has a role in the Chairman's selection, the Chairman.
    • The committee will oversee the evaluation of the Board and will give full consideration to succession planning for directors (other than Olive Nominees and Red Nominees) and other senior executives.

  • Remuneration Committee
    • The committee will have five members. The majority of members will be INEDs; the chair will be an INED. The Chairman must not be a member of the committee. In addition, if the relevant equity threshold is is met, the committee will include at least one Olive Nominee and one Red Nominee.
    • The committee will recommend to the Board for its approval the remuneration policy for the Chairman, the CEO and the non-executive directors and will approve the remuneration policy and set the remuneration for each senior manager (other than the CEO).

Each committee’s terms of reference sets out the frequency of, and procedure for, committee meetings and the responsibilities of the committee. The terms of reference of a committee may be adopted or amended by resolution of the Board. Each committee will review and reassess their terms of reference at least annually and any proposed changes will be submitted to the Board for approval. In addition, the Corporate and Social Responsibility Committee will review and submit to the Board for approval the proposed revision of any other committees’ terms of reference to ensure that the tasks delegated to such other committees are sufficient to help CCEP meet its CSR responsibilities.

The Board may delegate any of the powers, authorities and discretions that are conferred on it under the CCEP Articles to a committee or sub-committee as it thinks fit, provided that the majority of persons on the committee or sub-committee must be directors and provided that the Board may not delegate any of its powers, authorities or discretions which would have the effect of giving the committee or sub-committee the power to take any action which abrogates or has the effect of abrogating the authority of the Board to make any decision affecting CCEP, without the consent of, if the relevant equity threshold is met, one Olive Nominee and one Red Nominee.

Committees to which the directors delegate any of their powers must follow procedures that are based, as far as they are applicable, on the provisions of the CCEP Articles that govern the taking of decisions by directors. No committee of the Board is entitled to take any action on behalf of the Board outside the scope of the relevant committee’s terms of reference.

Appointments to the committee will be for a period of up to three years, which may be extended for up to two further periods each of up to three years (up to a maximum of nine years) if the relevant director continues to be eligible for membership of the committee. The chairman of a committee of the Board shall be appointed for a term of up to three years which, if recommended by that committee, may be extended by the Board for an additional term of three years (up to a maximum term of six consecutive years) provided that that the chairman of the committee continues to be eligible for membership of that committee.

The chairmanship and membership of committees should be decided in light of all relevant factors, including the value of refreshing committee membership balanced against the advantages of continuity. Undue reliance should not be placed on particular individuals.

Any director is entitled to receive notice of, attend and speak at committee meetings and have access to the same documents and information as committee members, provided that proper notice is given and he does not have an interest in the business to be conducted at the meeting.

BOARD CONDUCT

All directors should ensure they can commit sufficient time to their role to discharge their responsibilities effectively. For example, the CEO, being a full time executive director, should not be a non-executive director of more than one major public company (a member of FTSE 100 or equivalent) nor the chairman of such a company. These restrictions shall not apply retroactively to board memberships held at the date of adoption of these guidelines.

Directors are expected to uphold high standards of integrity, probity and corporate governance. Members of the Board must comply with CCEP’s policies and procedures including any anti-corruption, sanctions, share dealing and conflict of interest policies. All directors should act in the best interests of CCEP and in a manner consistent with their statutory and other duties.

BOARD TRAINING AND DEVELOPMENT

All directors should receive a full, formal and tailored induction on joining the Board. As part of this, directors should utilise opportunities to meet the major shareholders.

Directors should regularly update and refresh their skills and knowledge. The Chairman, with the assistance of the Company Secretary, is responsible for facilitating this and CCEP should provide the necessary resources for developing and updating directors’ knowledge and capabilities.

The Chairman will regularly review and agree with each director their training and development needs.

BOARD AND COMMITTEE EVALUATION

The Board will undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors. This evaluation, which will be overseen by the Nomination Committee, should consider the balance of skills, experience, independence and knowledge of CCEP on the Board, its diversity, including gender, how the Board works together as a unit and other factors relevant to its effectiveness. The evaluation of directors individually should show whether each director continues to contribute effectively and to demonstrate commitment to the role.

The Board will be evaluated externally at least every three years.

The performance and effectiveness of each committee will be evaluated annually and as part of that evaluation, the Board will review the composition and structure of each committee. The Board will be responsible for determining the process to be adopted for these evaluations.

The continuation of a director as a member of a committee (other than an Olive Nominee or a Red Nominee) and the continuation of the relevant director in the role of chairman of a committee will be subject to the outcome of the annual evaluations.

DIRECTORS’ REMUNERATION

The Remuneration Committee will recommend to the Board for its approval the remuneration policy for the Chairman, the CEO and the non-executive directors and will approve the remuneration policy and set the remuneration for each senior manager (other than the CEO). In approving or recommending any remuneration policy, and particularly when considering annual salary increases, the Remuneration Committee should consider all legal and regulatory requirements (including the provisions of the UK Corporate Governance Code and the remuneration conditions elsewhere in CCEP’s group and determine an appropriate balance between fixed and performance-related remuneration and between immediate and deferred remuneration. There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No person will be involved in any decisions as to their own remuneration.

The executive director’s remuneration should be designed to promote the long-term success of CCEP. Performance-related elements should be transparent, stretching and rigorously applied. Incentive schemes should include provisions that allow clawback or withholding with appropriate circumstances for such action specified.

Comparisons with other companies’ remuneration should be treated with caution as there is a risk of increasing remuneration levels with no corresponding improvement in corporate and individual performance and paying more than necessary.

Levels of remuneration for non-executive directors should reflect the time commitment and responsibilities of the role. Such remuneration should not include share options or other performance-related elements.

COMMUNICATION WITH STAKEHOLDERS

The Board is responsible for ensuring that CCEP’s communications with shareholders and others present a fair, balanced and understandable assessment of CCEP’s position and prospects and should establish appropriate arrangements to achieve this. Appropriate, timely and accurate disclosures should be made to the market, with issues escalated as appropriate within the CCEP group.

There should be a dialogue with shareholders based on the mutual understanding of objectives. Most shareholder contact will be with the CEO and the Chief Financial Officer; the Chairman should ensure that all directors are made aware of their major shareholders’ issues and concerns.

The Chairman will discuss governance, strategy and remuneration with major shareholders and non-executive directors will be offered the opportunity to attend scheduled meetings with major shareholders where that is appropriate and should expect to attend meetings if requested by major shareholders.

The SID will be available to shareholders if they have concerns which contact through the normal channels of the Chairman and the CEO has failed to resolve or for which such contact is inappropriate. The SID should attend sufficient meetings with a range of major shareholders to listen to their views in order to help develop a balanced understanding of the issues and concerns of major shareholders.

The Remuneration Committee will ensure that CCEP maintains contact as required with its principal shareholders about remuneration through its chair.

The Board should use general meetings to communicate with investors and to encourage their participation. The Chairman should make arrangements for the chairs of the audit, remuneration and nomination committees to be available to answer questions at the annual general meeting and for all directors to attend.

The Board should communicate effectively with all stakeholders (including employees, customers, suppliers, regulatory and governmental authorities, the media and the community).

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