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GOVERNANCE OF RABOBANK GROUPCorporate governanceIn recent years the corporate governance of organisations has been of particular public interest. RabobankGroup uses a system of checks and balances at all its corporate levels. A distinguishing element in RabobankGroup’s governance is the Central Delegates Assembly (Centrale Kringvergadering (“CKV”)), RabobankGroup’s parliament, which meets at least four times a year and where Rabobank Nederland’s members areable to participate in Rabobank Nederland’s strategic decisions. Rabobank Group’s corporate governance isbroadly consistent with the Dutch corporate governance code. Additionally, it will take into account anyoutcomes from the Frijns committee’s (a committee monitoring compliance with the Dutch corporategovernance code) review of this code that may be relevant to the Bank. The following pages discuss allaspects, demonstrating Rabobank Group’s balanced corporate governance.Cross-guarantee systemRabobank Group consists of the local Rabobanks, their central organisation, Rabobank Nederland, and itssubsidiaries and other affiliated entities. Through their mutual financial association, various legal entitieswithin Rabobank Group together make up a single organisation. An internal liability relationship existsbetween these legal entities, as referred to in Section 3:111 of the Financial Supervision Act. This relationshipis formalised in an internal “cross-guarantee” system, which stipulates that if a participating institution hasinsufficient funds to meet its obligations towards its creditors, the other participants must supplement thatinstitution’s funds in order to enable it to fulfil those obligations.Executive BoardThe Executive Board (raad van bestuur) of Rabobank Nederland is responsible for the management ofRabobank Nederland and, indirectly, its affiliated entities. This includes responsibility for the achievement ofthe objectives of Rabobank Group as a whole, its strategic policy, its results, the synergy within RabobankGroup, compliance with all relevant laws and regulations, the management of business risks and the financingof Rabobank Group. The Executive Board reports on all these aspects to the Supervisory Board (raad vancommissarissen) of Rabobank Nederland, the Central Delegates Assembly (the organisation’s “parliament”,which is authorised to take decisions on behalf of the local Rabobanks) and the General Meeting (algemenevergadering) of Rabobank Nederland, which is formed by the members, i.e. the local Rabobanks.The management of Rabobank Group is based in part on the interrelationship among risk, return and capital.The Financial Supervision Act and the subordinate legislation based thereon, as well as regulations imposedby the supervisory authorities – i.e. the DNB and the AFM – have formulated standards for financialinstitutions. The supervision on the Bank’s solvency and stability – i.e. prudential supervision – is performedby DNB, while the AFM has the supervision of the Bank’s conduct. Obviously, these regulations form theframework for the organisation and control of Rabobank Group’s activities.The members of the Executive Board are appointed by the Supervisory Board for a four-year period, but theircontracts of employment are for an indefinite period. They may be dismissed and suspended by theSupervisory Board. The Supervisory Board determines the remuneration of the members of the ExecutiveBoard and reports on this to the Confidentiality Committee of the Central Delegates Assembly. The principlesof the remuneration policy for the Executive Board, as recommended by the Supervisory Board, areestablished by the Central Delegates Assembly. Finally, the Supervisory Board periodically assesses andfollows up on the Executive Board’s performance. The Executive Board is responsible for the authorisation ofdebenture issues of Rabobank Nederland, under the approval of the Supervisory Board.292