As of 16 April 2018
Declaration of the Executive Board and the Supervisory Board of Schaltbau Holding AG pertaining to the recommendations of the “Government Commission on the German Corporate Governance Code” pursuant to Section 161 of the German Stock Corporation Act (AktG) (“Declaration of compliance”).
The Executive Board and the Supervisory Board of Schaltbau Holding AG issued the last Declaration of Compliance with the German Corporate Governance Code pursuant to section 161 of the German Stock Corporation Act (AktG) on 20 December 2017. The following declaration relates to the version of the Code dated 7 February 2017 and published in the electronic Federal Gazette on 24 April 2017.
The Executive Board and the Supervisory Board of Schaltbau Holding AG hereby declare that the recommendations of the “Government Commission on the German Corporate Governance Code” have been and are being observed, with the following exceptions:
The D&O insurance policy taken out by Schaltbau Holding AG does not provide for a deductible for the members of the Supervisory Board. Schaltbau Holding AG is of the opinion that the motivation and responsibility with which the members of the Supervisory Board perform their tasks cannot be improved by the introduction of a deductible and has thus decided to refrain therefrom.
The Personnel Committee set up by the Supervisory Board deals with questions concerning the selection and total compensation of Executive Board members. Specific proposals for the selection and compensation of Executive Board members are prepared either by the Personnel Committee or the full Supervisory Board in each individual case and not exclusively dealt with by the Personnel Committee, to enable maximum flexibility in the handling of questions of compensation for Executive Board members in the course of Supervisory Board work. In this respect, please refer to the explanations for sections 5.2 and 5.3 of the Code.
The contracts of service for Executive Board members do not include payment arrangements pertaining to the premature termination of their positions in the Executive Board resulting from a change of control. Thus, in case of premature termination of a position in the Executive Board, the necessary flexibility is retained to allow an appropriate agreement to be reached in keeping with the particular situation. The contracts of service for Executive Board members contain payment arrangements pertaining to the premature termination of their positions in the Executive Board.
Re 4.2.4 / 4.2.5:
As a result of the resolution taken at the Annual General Meeting on 14 June 2016, the total compensation of each member of the Executive Board will not be disclosed.
Due to the function of Schaltbau Holding AG as holding Company, the number of staff members it employs is limited. For this reason, a long-term succession plan primarily based on the selection of potential internal successors is not practicable. In view of the current ages of the Executive Board members and the terms of their appointments, there is currently no age limit in place for Executive Board members.
Re 5.2 / 5.3:
The Supervisory Board has formed a Personnel Committee and an Audit Committee. No further committees have been appointed, particularly in view of the fact that a consistent flow of all company and other relevant information to all members of a six-person Supervisory Board is eminently achievable.
When making proposals for the selection of Supervisory Board members, apart from observing the statutory regulations, the Supervisory Board takes each candidate’s technical and personal suitability into consideration as well as their proper fitness for promoting the function of the Supervisory Board. This includes, for instance, the selecting of members with suitable corporate experience. The Company fully complies with the obligations set out in the German law governing the equal participation of men and women in management positions in the private sector and public service.
Even though the Company so far refrains from naming more specific aims for its composition, it is intended to increase the share of women in the Supervisory Board and in other executive committees.
Furthermore, the Supervisory Board’s rules of procedure state that persons who have already reached 70 years of age at the date they are due to take up their duties as Supervisory Board members should not be selected for the post, unless there are exceptional, specific reasons why the person proposed should be selected for membership in the Supervisory Board.
So far, neither the Company has yet published the curriculum vitaes of the Supervisory Board members on the Company’s website, nor the Company`s Declaration of Compliance has informed about a competence profile for the Supervisory Board and about what the Supervisory Board regards as the appropriate number of independent Supervisory Board members and the names of these members either.
The compensation of Supervisory Board members has not been individually disclosed as the structure of the compensation is stipulated in the Articles of Association. Compensation in part is driven by time and effort invested. Membership in committees is compensated vie extra time and effort invested.
The Group financial statements have not been made publicly accessible within 90 days after the end of the fiscal year, and at current there is no guarantee either that the interim reports can be published within 45 days after the end of each reporting period. However, the Company intends to comply with the periods mentioned from the publication of the Annual Report 2018.
Munich, 20 December 2017
S c h a l t b a u H o l d i n g A G
For the Executive Board: For the Supervisory Board:
Dr. Bertram Stausberg Dr. Ralph Heck
Corporate Governance Report pursuant to section 3.10 of the German Corporate Governance Code
Schaltbau Holding AG is fully committed to a high standard of responsible corporate governance. The German Corporate Governance Code (GCGC) stipulates guidelines for achieving this aim and makes the corporate governance system both transparent and comprehensible. Both the Executive Board and the Supervisory Board of Schaltbau Holding AG have always been aware of their responsibility for a transparent style of corporate governance and control aimed at sustainable growth in company value. For this reason they emphatically endorse the recommendations contained in the German Corporate Governance Code and see them as an additional opportunity to improve the performance of the Company and cement the trust of its shareholders, business partners and staff.
The following Corporate Governance Report serves to summarise the essential principles of corporate governance crucial for the governance of Schaltbau Holding AG. Furthermore, Schaltbau Holding AG has also issued a Corporate Governance Statement in accordance with § 289f of the German Commercial Code (HGB).
Dual board system
Schaltbau Holding AG is subject to the regulations enshrined in the German Stock Corporation Act, the One-Third Participation Act and the capital market regulations as well as the provisions laid down in the Articles of Incorporation and the rules of procedure governing the actions of both the Executive Board and the Supervisory Board. Schaltbau Holding AG is governed by a dual management and monitoring structure consisting of two bodies: the Executive Board and the Supervisory Board. The Executive Board and the Supervisory Board are both committed to and aware of their duty to safeguard the best interests of both the shareholders and the Company as a whole. They collaborate closely and in an atmosphere of trust in the best interest of Schaltbau Group. Please see the Report of the Supervisory Board for supplementary information regarding the main focus of cooperation between the Executive Board and the Supervisory Board.
The Executive Board of Schaltbau Holding AG (currently consisting of three members) is fully responsible for managing the Company and conducting its commercial operations. The Executive Board is responsible for the strategic orientation of Schaltbau Group, for preparing and determining financial planning and also for monitoring both the Company’s participating interests and financing throughout the Group. The Executive Board performs these duties in close cooperation with the Supervisory Board and reports regularly, promptly and comprehensively to the Supervisory Board in both oral and written reports on business performance, corporate policy and fundamental issues relating to financial, investment and personnel policies as well as on matters concerning the profitability and the risk situation of both Schaltbau Holding AG and Schaltbau Group.
Furthermore, the Executive Board is responsible for preparing the reports required by law such as Company and Group financial statements as well as interim reports. It also ensures that appropriate risk management measures are in place, including the internal control system, and reports regularly, promptly and comprehensively to the Supervisory Board on all questions of strategy relevant to the Group, corporate planning, business performance, financing, risk management and compliance. Matters subject to the approval of the Supervisory Board are defined in the Executive Board’s rules of procedure. Responsibilities within the Executive Board are governed by an organisational chart. The activities of the Executive Board are geared towards long-term, sustainable growth in Company value.
In accordance with article 8 (1) of the Articles of Association, the Supervisory Board of Schaltbau Holding AG comprises six members, of whom two thirds represent shareholders and one third represents employees. The shareholder representatives are elected by the Annual General Meeting, the employee representatives are elected by the employees. Unless a shareholder representative is elected for a shorter period, the term of office of Supervisory Board members runs until the close of the Annual General Meeting at which the acts of members are ratified for the fourth fiscal year since the beginning of the relevant member’s term of office.
The most recent scheduled election of Supervisory Board shareholder representatives took place at the Annual General Meeting on 14 June 2016. Following the resignation of two of the elected shareholder representatives in 2017, the Annual General Meeting elected one new member on 8 June 2017. In addition, Dr Albrecht Köhler was appointed as shareholder representative to the Supervisory Board by the Munich District Court on the basis of section 104 (2) of the German Stock Corporation Act (AktG) with effect from 13 September 2017. Dr Albrecht Köhler‘s period of office ends with the election of a new member of the Supervisory Board at the 2018 Annual General Meeting. The term of office of the remaining shareholder representatives runs until the close of the Annual General Meeting at which the acts of members are ratified for the fiscal year 2020. The Supervisory Board elects its Chairman and Deputy Chairman from among the members of the Supervisory Board.
As of 31 December 2017, the Supervisory Board consists of the following persons:
- Dr Ralph Heck (Chairman)
- Helmut Meyer (Deputy Chairman)
- Andreas Knitter
- Dr Albrecht Köhler
- Thomas Farnschläder
- Herbert Treutinger
Thomas Farnschläder left the Supervisory Board on 1 March 2018.
Helmut Meyer was delegated from the Supervisory Board to the Executive Board for the period from 1 December 2016 to 31 May 2017 and rejoined the Supervisory Board on 1 June 2017. Otherwise, no former member of the Executive Board is active on the Supervisory Board.
The Chairman of the Supervisory Board performs the external duties of the Supervisory Board. The Supervisory Board appoints the members of the Executive Board and both monitors and advises the Executive Board in business matters. The Supervisory Board holds regular discussions with the Executive Board regarding strategy and its implementation, planning, current business performance, the risk situation and topics related to compliance. The Executive Board requires the approval of the Supervisory Board when making major decisions. The Supervisory Board meets at regular intervals four times a year. It also holds unscheduled meetings when necessary, either personally or via telephone conferences. It examines the Company financial statements and the consolidated financial statements, paying due consideration to the written and oral reports of the external auditors, and on this basis adopts the Company financial statements and approves the consolidated financial statements.
The Supervisory Board of Schaltbau Holding AG has formed a Personnel Committee and an Audit Committee. The Personnel Committee comprises the members Dr Ralph Heck (Chairman), Dr Albrecht Köhler and Herbert Treutinger. The Audit Committee comprises the members Helmut Meyer (Chairman) and Andreas Knitter. No other committees exist within the Supervisory Board. The membership of Helmut Meyer in the above-mentioned committees was dormant during his delegation to the Executive Board.
No further committees were appointed, particularly in view of the fact that a consistent flow of all corporate and other relevant information to all members of a six-person Supervisory Board is eminently achievable. Further committees can be formed as the need arises.
The Supervisory Board may adopt resolutions provided that a minimum of four members take part in the procedure. Resolutions may be adopted by means of a simple majority. If the number of votes on both sides is equal, the Chairman of the Supervisory Board has the casting vote.
Based on its own assessment, the Supervisory Board has a sufficient number of independent members. The effectiveness of the Supervisory Board is subject to annual review. If there were any indications of conflicts of interest among members of the Supervisory Board, those members either declined to participate in or abstained from voting.
Schaltbau Holding AG does not pursue a separate diversity concept with regard to the composition of its Executive Board and Supervisory Board. Equal opportunities and the strict rejection of any form of discrimination are firmly embedded within Schaltbau Holding AG‘s corporate policies. Against this background, only the professional qualifications and competence of the candidates are taken into account when making appointments to the Company’s representative bodies. Aspects such as gender, race, age, skin colour, religion, marital status, sexual orientation, origin, or physical or mental impairment of the relevant person are not taken into account.
Definition of targets to promote the participation of women and men in management positions
The Supervisory Board has set a target of 33.33% for the proportion of women on the Executive Board of Schaltbau Holding AG and 16.67% for the proportion of women on the Supervisory Board of Schaltbau Holding AG. The intention is to achieve these targets by 30 June 2022. At the end of 2017, the proportion of women on the two boards was 0% in each case.
With regard to the proportion of women in management positions below board level, the Executive Board has set a target of 0% for managing director level and a target of 5% for middle management. The intention is to achieve these targets by 30 June 2022. At the end of 2017, the actual proportion of women was 0% at managing director level and 4% within middle management.
General Meeting of Shareholders
The General Meeting of Shareholders is the third body of the Company. The shareholders exercise their right to vote at the General Meeting. Schaltbau Holding AG has shares with full voting rights only, and each share entitles its holder to one vote. The Annual General Meeting takes place once a year within the first eight months of the fiscal year. The Chairman of the Supervisory Board chairs the General Meeting of Shareholders, which then makes all decisions within the scope of its legal responsibilities. The agenda of the General Meeting of Shareholders is published on the Company’s website, including all of the necessary reports and documents pertaining to it.
The General Meeting of Shareholders makes decisions in all matters empowered to it by law, with particular regard to the use of unappropriated profit, the election of the Supervisory Board, the ratification of the actions of the members of both the Executive Board and the Supervisory Board, the appointment of the external auditors, changes to the Articles of Incorporation and corporate activities. Every shareholder has the right to participate in the General Meeting of Shareholders.
In order to facilitate the exercising of their individual rights, Schaltbau Holding AG gives shareholders the option to vote via a company proxy who is bound to vote in accordance with their instructions at the Annual General Meeting. The invitation to the Annual General Meeting includes an explanation as to how voting instructions can be given prior to the meeting. Shareholders can, however, also be represented by a proxy of their choice. Shareholders may designate an authorised proxy for the Annual General Meeting, who is obliged to vote in accordance with the shareholder’s instructions. The corresponding proxy voting forms are contained in the entry tickets, which are issued to the shareholders.
The registration and legitimation procedure complies with the legal and customary international “record date” procedure. Shareholders must legitimate their participation at the General Meeting of Shareholders at least 21 days in advance.
Financial reporting and risk management, external audit
The Consolidated Financial Statements of Schaltbau Holding AG are prepared in accordance with International Financial Reporting Standards (IFRS). The Company financial statements of Schaltbau Holding AG are prepared in accordance with the German Commercial Code (HGB). Both the consolidated and Company financial statements were audited by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Munich, as elected at the Annual General Meeting in accordance with a proposal made by the Supervisory Board and adopted and approved by the Supervisory Board. The consolidated and Company financial statements are made publicly available.
The Chairman of the Supervisory Board issued the audit engagement letter after assuring himself of the impartiality of the external auditors prior to putting forward the proposal at the Annual General Meeting. The external auditor promptly reports to the Chairman of the Supervisory Board on any significant findings and events resulting from the external audit that could be of relevance for the work of the Supervisory Board. The Chairman is informed if the external auditor detects facts that point to an inaccuracy with respect to the Declaration of Compliance submitted by the Executive Board and the Supervisory Board in accordance with section 161 of the German Stock Corporation Act (AktG).
Risk management and compliance
Managing business risks on a responsible basis is an underlying principle of good corporate governance. The Executive Board ensures that appropriate risk management and risk controlling procedures are in place across the Company. The risk management system implemented in the Schaltbau Group is designed with the dual purpose of detecting or anticipating risks at an early stage in order to avoid losses to the Company on the one hand and of making conscious use of any business opportunities that present themselves on the other. The risk management system, including the accounting-related internal control system, and the specific risks to the Group are described in detail in the report on outlook, risk and opportunities, which is part of the Group management report.
Activities have been grouped under the term “Compliance” with a view to ensuring that Schaltbau Holding AG and its Group companies comply with all legal requirements, with the recommendations of the German Corporate Governance Code and with internal corporate guidelines and instructions.
Schaltbau Holding AG’s compliance management system comprises a variety of internal measures and processes, which are overseen by a full-time Compliance Officer, who is supported by employees performing compliance functions within the various subsidiaries. The compliance management system provides the framework for acting in accordance with ethical principles and complying with all applicable laws, internal corporate guidelines and voluntary commitments. In addition to the general areas of compliance, the Company is particularly keen to ensure compliance within the specific areas of data protection, IT security, competition and corruption.
The effectiveness of the compliance management system is continuously reviewed and adapted where necessary to new developments, changing risks and new legal requirements. It is seen as a permanent task of management to adjust and improve the compliance and risk management systems as the need arises.
Schaltbau Holding AG utilises the Company website in order to provide shareholders and investors with prompt information: www.schaltbau.com. In addition to the annual report and various interim reports, shareholders and third parties are additionally kept informed of the latest developments by means of ad hoc announcements and press releases. Schaltbau Holding AG publishes a financial calendar displaying all important dates and company publications well in advance.
Directors’ dealings, major participations and shareholdings subject to notification
In accordance with the stipulations contained in the Market Abuse Regulation (MAR), Schaltbau Holding AG promptly discloses any notification of directors’ dealings in accordance with section 19 MAR. This includes notifications about securities transactions involving Schaltbau Holding shares made by members of the Executive Board, members of the Supervisory Board or any individuals who perform management functions in the legal sense of Section 19 MAR, as well as notifications made by persons or legal entities closely related to any of the above mentioned. These reports are also published on the Company’s website at www.schaltbau.com.
The Company promptly publishes any notifications received regarding the purchase or sale of major participations in accordance with § 33 of the Securities Trading Act (WpHG) or pertaining to the holding of respective financial instruments in accordance with § 38 WpHG.
Shareholdings of Executive Board and Supervisory Board members
As of 31 December 2017, the members of the Executive Board and the Supervisory Board did not hold any Schaltbau Holding AG shares, neither directly nor indirectly through related individuals (spouses and first-degree relatives) or companies.
Stock option programmes and similar securities-related incentive systems
Schaltbau Holding AG does not currently have a stock option programme or any similar securities-related incentive system in place.
Further fundamental corporate governance practices
In order to promote the confidence and trust of investors, employees, business partners and the general public, Schaltbau Group has drawn up a Code of Conduct to supplement the principles of Corporate Governance. The Code of Conduct defines minimum standards of conduct, which are valid for every Schaltbau employee worldwide. The complete Code of Conduct is published on the Schaltbau Holding AG website at www.schaltbau.com.
Munich, in April 2018
S c h a l t b a u H o l d i n g A G
For the Executive Board: Dr Bertram Stausberg
For the Supervisory Board: Dr Ralph Heck