1.1 Composition and workings of the Executive Board and Supervisory Board
In compliance with the requirements of the German Stock Corporation Law (AktG), euromicron AG has a dual management system consisting of the Executive Board and the Supervisory Board.
1.1.1 The Supervisory Board
The Supervisory Board consists of three members and is currently made up solely of shareholder representatives in accordance with Section 96 of the German Stock Corporation Law (AktG). Ms. Evelyne Freitag is Chairwoman of the Supervisory Board, her deputy is Mr. Rolf Unterberger, and the further member is Dr. Alexander Kirsch. The regular term of office of the members of the Supervisory Board expires at the end of the Ordinary General Meeting in 2021.
The composition of the Supervisory Board corresponds to the following general requirements and concrete objectives for its composition. These take into account the recommendations of the German Corporate Governance Code (referred to as “DCGK” or “Code” in the following) and are as follows:
General requirements for members of the Supervisory Board
- Every member of the Supervisory Board must fulfill the requirements defined by the law and Articles of Association to become a member of the Supervisory Board (cf. in particular Section 100 (1) to (4) of the German Stock Corporation Law (AktG)).
- Every member of the Supervisory Board must have the knowledge and skills required to properly discharge the tasks incumbent on him/her under the law and the Articles of Association.
- At least one independent member of the Supervisory Board must have expertise in the fields of preparing and auditing financial statements within the meaning of Section 100 (5) of the German Stock Corporation Law (AktG).
Concrete objectives for the composition of the Supervisory Board
- The Supervisory Board has specified that, ideally, the members of the Supervisory Board in its entirety should have the following qualifications and qualities; a combination of several qualifications and qualities in one person is also possible (competence profile):
- At least two independent members within the meaning of Section 5.4.2 Sentence 2 of the German Corporate Governance Code are to belong to the Supervisory Board.
- The members of the Supervisory Board are to have different educational backgrounds and expertise from different areas of business life. In particular, expertise in the fields of business management, preparing and auditing financial statements and in banking and finance is desirable.
- At least one member with expertise in the field of the euromicron Group’s international business is to sit on the Supervisory Board.
- The composition of the Supervisory Board is to represent as broad a range of experience of life as possible. No member of the Supervisory Board is to be older than 70 years of age.
- Anyone who is expected to be subject to a conflict of interests frequently or permanently in exercising his or her office is not to be elected as a member of the Supervisory Board.
The competence profile is met fully with the Supervisory Board’s current composition.
Pursuant to its resolution dated December 14, 2016, the Supervisory Board defined the target of 1/3rd for the ratio of women on the Supervisory Board by December 31, 2018. The ratio of women currently matches the defined target.
In the opinion of the Supervisory Board, all its members are independent within the meaning of Section 5.4.2 of the Code. Where members of the Supervisory Board hold a high-ranking post at other companies with which euromicron AG – directly or indirectly – has business relationships, these transactions are conducted at terms and conditions as with third-party companies and do not affect the independence of the affected members of the Supervisory Board.
There were also no conflicts of interest in fiscal year 2017.
The Supervisory Board advises the Executive Board in running the company, supervises its activities and is directly integrated in decisions of fundamental importance for the company. The Executive Board agrees the company’s business development and strategy as well as planning and implementation of the latter with the Supervisory Board and discusses these in regular meetings together with the Supervisory Board.
The Supervisory Board examines the annual financial statements, the consolidated financial statements, the respective management report and the proposal on appropriation of the net retained profits. It deals with the quarterly and half-yearly reports and is also responsible for adoption of the annual financial statements and approval of the consolidated financial statements, taking into account the audit reports of the independent auditor.
The Supervisory Board also deals with compliance with legal requirements, official regulations and internal guidelines on conduct by the company.
Furthermore, the Supervisory Board has the task of appointing the members of the Executive Board, setting the number of its members and defining spheres of authority. The Supervisory Board has defined rules for the work of the Executive Board in bylaws, where this is not already stipulated by the Articles of Association. In particular, the Supervisory Board has defined which important decisions by the Executive Board – such as large acquisitions, divestments and financial measures – require its consent.
The Chairman/Chairwoman of the Supervisory Board coordinates its work. Supervisory Board committees have not been formed.
The persons making up the Supervisory Board are presented in Section 1.1.1 of the Corporate Governance Report and in the section Supervisory Board and Executive Board of the Annual Report. The specific work of the Supervisory Board is presented in the section Report of the Supervisory Board of the Annual Report. The remuneration of the members of the Supervisory Board is explained in the section Compensation Report of the Annual Report.
1.1.2 The Executive Board
The members of the Executive Board manage the company’s business and run it in joint responsibility with the goal of creating sustainable value. They develop the strategic orientation as well as annual and multi-year planning, decide on fundamental matters relating to business policy, agree these with the Supervisory Board and ensure they are implemented. The members of the Executive Board are assigned individual spheres of authority by the Supervisory Board, meaning there are clear responsibilities.
The Executive Board consists of two members; the Supervisory Board has appointed the Executive Board member Ms. Bettina Meyer as Spokeswoman of the Executive Board. The duties of the Spokeswoman of the Executive Board include coordinating the work of the Executive Board, in particular as regards chairing its meetings, and representing the company.
The Executive Board prepares the quarterly and half-yearly financial statements of the company, the annual financial statements of euromicron AG and the consolidated financial statements. In addition, the Executive Board ensures compliance with legal requirements, official regulations and internal guidelines on conduct at the company and works to ensure compliance with them at the companies in the euromicron Group as well. You can find more information on the compliance program and related measures in fiscal 2017 in the section Compliance Report of the Annual Report.
The Executive Board and Supervisory Board work closely together to the benefit of the Group. The Executive Board regularly informs the Supervisory Board promptly and extensively about all matters of relevance to the company as a whole relating to strategy, planning, development of its business, financial position and results of operations, commercial risks and compliance.
In filling management posts, the Executive Board ensures adequate representation of women, as well as a wide range of skill structures (diversity).
The concrete targets for the ratio of women on the Executive Board in accordance with Section 111 (5) of the German Stock Corporation Law (AktG) and for the ratio of women in the management tier below the Executive Board in accordance with Section 76 (4) of the German Stock Corporation Law (AktG) are described in the subsection “Targets” in the Corporate governance declaration in accordance with Section 289f HGB (German Commercial Code).
The persons making up the Executive Board are presented in the section Supervisory Board and Executive Board of the Annual Report. The remuneration of the members of the Executive Board is explained in the section Compensation Report of the Annual Report.
1.2 Shareholders and General Meeting
All shares in euromicron AG are equal and in principle each share entitles the holder to one vote. Shareholders exercise their voting right, in addition to their other rights under the law and Articles of Association, before or during the General Meeting.
The annual Ordinary General Meeting is held within the first eight months of a fiscal year in accordance with Section 14 of the Articles of Association. The Executive Board submits the annual financial statements, the management report, the consolidated financial statements and the group management report to it. The General Meeting decides on the appropriation of profits, as well as discharge of the Executive Board and Supervisory Board, and regularly elects the shareholder representatives on the Supervisory Board. The General Meeting also decides on changes to the Articles of Association, measures relating to changes in equity, company agreements and other important commercial measures, which are then implemented by the Executive Board.
The General Meeting is convened along with details of the agenda and an explanation of the rights of shareholders. Documents that have to be made accessible and relate to the items on the agenda can be obtained on the homepage of euromicron AG.
1.3 Transparency
Our goal is to provide institutional investors, private shareholders, financial analysts, employees and interested members of the public equally with regular and up-to-date information on the company’s situation. We publish press releases, ad-hoc announcements, voting rights notifications, all financial reports and other important information on our homepage. All documents relating to our General Meeting can also be found there. We publish details on recurring events, such as the date of the next General Meeting, accounts press conferences, analysts’ conferences or quarterly reports, in a financial calendar, which is published on the company’s homepage.
In accordance with Article 19 of the Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation), members of the Executive Board and Supervisory Board or persons related to them are obligated to report transactions of shares in euromicron AG that require disclosure if the value of the transactions within a calendar year is €5,000.00 or more (directors’ dealings). There were no dealings that required reporting in fiscal 2017.
1.4 Independent auditor
PricewaterhouseCoopers (PWC) was appointed as the independent auditor of the financial statements of euromicron AG and as the auditor of the consolidated financial statements for the first time in 2010. The responsible audit partner since fiscal 2013 has been Dr. Ulrich Störk.
The corporate governance declaration in accordance with Section 289f or Section 315d in conjunction with Section 289f HGB (German Commercial Code) is part of the management report of euromicron AG and the group management report. In accordance with Section 317 (2) Sentence 6 HGB (German Commercial Code), the disclosures specified in Section 289f and Section 315d HGB (German Commercial Code) do not have to be included in the audit.
Wording of the declaration on conformance (Section 161 of the German Stock Corporation Law (AktG)) for the year 2017 dated December 8, 2017
“The Executive Board and Supervisory Board of listed stock corporations are obligated under Section 161 of the German Stock Corporation Law to declare once a year that their company has complied and will continue to comply with the recommendations of the government commission on the German Corporate Governance Code or which recommendations it has not applied or will not apply. In the latter case, reasons must be given why the company did not and will not comply with the recommendation in question.
The Executive Board and Supervisory Board of euromicron AG issued the last declaration on conformance in accordance with Section 161 of the German Stock Corporation Law on December 8, 2016.
The following declaration relates for the period from December 8, 2016, to April 23, 2017, to the recommendations of the Code in its version dated May 5, 2015, as published on June 12, 2015, in the Federal Official Gazette (“2015 version”). The following declaration relates for the period from April 24, 2017, to the recommendations of the Code in its version dated February 7, 2017, as published on April 24, 2017, in the Federal Official Gazette (“2017 version”).
This having been stated, the Executive Board and the Supervisory Board of euromicron AG declare in accordance with Section 161 of the German Stock Corporation Law:
euromicron AG complied and will comply with the recommendations of the government commission on the German Corporate Governance Code, with the following exceptions:
1. Establishment of a whistleblower system for company members (Section 4.1.3, first half of sentence 3, DCGK 2017 version)
Under the recommendation in Section 4.1.3, first half of sentence 3 DCGK, employees shall be given suitable opportunity to report, in a protected manner, suspected breaches of the law within the company. The company currently deviates from this.
Reason:
In its Code of Conduct, euromicron AG offers employees the possibility of reporting violations by contacting the company’s compliance officers personally or by phone and also the possibility of contacting the Chief Compliance Officer under the e-mail address verhalten [at] euromicron.de. Protected contact is therefore only possible at present from an anonymous e-mail address of the sender using appropriate encryption software or, if violations are reported by phone, with appropriate calling line identification restriction. By way of clarification, however, the Code of Conduct states that anonymous information is also taken note of and investigated. The Executive Board is currently examining whether to establish a system of reporting violations through an external ombudsman or an IT-aided portal.
2. Individualized presentation of the compensation for Executive Board members (Section 4.2.5 (3) and (4) DCGK)
In accordance with the recommendation in Section 4.2.5 (3) and (4) DCGK, the compensation for Executive Board members is to be disclosed in individualized form using model tables. The model tables in the Code’s appendix are to be used for disclosing this information. The company currently deviates from Section 4.2.5 (3) and (4) of the Code and will continue to do so in future.
Reason:
The compensation for Executive Board members is disclosed in compliance with statutory provisions. The company does not provide any further disclosures on or breakdowns of the compensation using the model tables due the work involved in this change and the extra administrative overhead.
3. Drafting of contracts with Executive Board members, severance pay cap (Section 4.2.3 (4) DCGK)
Pursuant to the recommendation in Section 4.2.3 (4) DCGK, in concluding contracts with Executive Board members, care shall be taken to ensure that severance payments made to an Executive Board member on premature termination of his/her contract do not exceed his/her compensation for the remaining term of the employment contract and at most the value of two years’ compensation (severance pay cap). The company currently deviates from Section 4.2.3 (4) of the Code and will continue to do so in future for the term of the current contracts with Executive Board members.
Reason:
In the view of euromicron AG, the deviation from the recommendation in Section 4.2.3 (4) DCGK is in the company’s interests. In the absence of an important reason, a contract with an Executive Board member can only be terminated prematurely by being rescinded through mutual consent. Consequently, negotiations on the level of the severance pay when an Executive Board member departs would not be ruled out by a severance pay cap. Moreover, the leeway in negotiations on the departure of an Executive Board member would also be constricted if a severance payment cap were agreed, which may be disadvantageous in particular if there is not clarity as to whether there is an important reason for the member being removed.
4. Formation of Supervisory Board committees (Section 5.3.1 to 5.3.3 DCGK)
The Supervisory Board of euromicron AG has not formed any committees in the past and will also not do so in future, meaning euromicron AG deviates from the recommendations in Sections 5.3.1 to 5.3.3 of the German Corporate Governance Code.
Reason:
In compliance with the Articles of Association, the Supervisory Board of euromicron AG consists of just three members. The formation of committees would not make the work of the three-member Supervisory Board easier, since the committees which adopt decisions would also have to have at least three members of the Supervisory Board on them.
Frankfurt/Main, December 8, 2017
The Executive Board The Supervisory Board“
Disclosures on corporate governance practices
The company’s Code of Conduct contains corporate governance practices that go further than the statutory requirements. It can be viewed on the company’s homepage at www.euromicron.de/en/company/code-of-conduct. The Code of Conduct contains in particular guidelines on business dealings with customers and suppliers, conduct toward competitors, third parties and employees, use of information, avoiding conflicts of interest, and health, safety and environment issues.
Description of the workings of the Executive Board and Supervisory Board
The persons making up the Executive Board and Supervisory Board are presented in the section Supervisory Board and Executive Board of the Annual Report. A general description of the tasks and workings of the Executive Board and Supervisory Board can be found in the section Composition and workings of the Executive Board and Supervisory Board in the Corporate Governance Report of theAnnual Report. The latter is also published in the Internet on our homepage in the section “Corporate Governance”.
Targets
Pursuant to its resolution dated December 14, 2016, the Supervisory Board defined, in accordance with the current status, the new target of 1/3rd for the ratio of women on the Supervisory Board by December 31, 2018.
Pursuant to the resolution adopted by the Supervisory Board on December 14, 2016, the Supervisory Board defined the target for the ratio of women on the Executive Board in accordance with Section 111 (5) of the German Stock Corporation Law (AktG) as being 50 % in accordance with the current status and set a deadline for implementation by December 31, 2018.
In filling management posts, the Executive Board ensures adequate representation of women, as well as a wide range of skill structures (diversity). At present there is one management tier below the Executive Board, consisting of four department heads who hold general commercial power of attorney. In view of the current contracts of employment, the Executive Board believes there is little leeway at present to improve the ratio of women in the management tier below the Executive Board apart from creating further departments. Under its resolution dated December 29, 2017, the Executive Board therefore defined the ratio of women in the management tier below the Executive Board in accordance with Section 76 (4) of the German Stock Corporation Law (AktG) as being 0% in accordance with the current status and set a deadline for implementation by December 31, 2018. The Executive Board also pledged its commitment to make intensified efforts to develop and acquire women with suitable professional and personal qualifications for management posts.
The defined targets for the ratio of women on the Supervisory Board, on the Executive Board and in the management tier below the Executive Board are thus met at present.
Diversity concept
The Supervisory Board’s diversity concept is part of the above-described competence profile. Due to the small number of Executive Board members, the company does not pursue a diversity concept within the meaning of Section 289f (2) No. 6 of the German Commercial Code (HGB) with regard to the Executive Board’s composition.
For the Executive Board of euromicron AG, corporate governance based on integrity means morally and legally responsible conduct, in particular toward executives, employees and all business partners. These maxims are actively practiced by the Executive Board, Supervisory Board and employees and have been incorporated in the company’s Code of Conduct. This serves as the basis for creating a basic, consistent understanding of ethical conduct in the Group. The Code of Conduct can be viewed on the company’s homepage at www.euromicron.de/en/company/code-of-conduct.
3.1 Focus of our compliance work
In addition to the general guidelines for compliance in practice, the Executive Board – in coordination with the compliance officer of euromicron AG – selects each year a special area of focus so as to ensure adequately at all times that our individual divisions are able to cope with the changes that they are subject to. The aim of this is to address the changes in requirements from operational business and in the market environment. Our divisions are to be developed further on the basis of the created compliance structure with reference to the separately defined areas of focus.
The focus of our compliance activities in 2017 was on antitrust and competition law. As part of that, there was particular emphasis on risk analysis; in addition, various training courses were held.
euromicron’s Code of Conduct provides guidelines that represent a framework for our commercial and personal conduct.
3.2 Compliance training
Various training measures ensure that the high standards euromicron AG demands of all executives and employees are implemented and practiced. In addition to on-the-job training in the form of e-learning, the compliance officers identify specific groups of executives and employees to attend in-person courses and learn what compliance involves. As a result, the specific requirements of our various divisions can be better addressed.
3.3 Compliance organization
The Executive Board has created an effective organizational structure to enforce, control and further develop the compliance principles and ensure that the Group lives up to its mission of complying with the law and company agreements. Local compliance officers have been appointed at all Group companies. The compliance officers act as primary contact persons for management and employees at the respective companies for all matters relating to the issue of compliance. However, they are also contact persons of the Chief Compliance Officer and responsible for implementing compliance-related guidelines issued by the Executive Board at their respective companies. A further important function is to receive information on compliance violations and to coordinate with the Chief Compliance Officer of euromicron AG in dealing with such violations. The Chief Compliance Officer reports regularly to the Executive Board on all compliance matters and notifies the Executive Board immediately if there is the suspicion of compliance violations. The Executive Board reports regularly to the Supervisory Board on compliance matters.
Meetings of all compliance officers in the euromicron Group ensure that information and experience are shared and that the guidelines on conduct issued by the Executive Board are carried through effectively and filled with life. To enable that, the compliance and IT officers are also in close dialog with the Group’s Data Protection Officer.
As a result, the compliance organization of euromicron AG is firmly established in all of the company’s units and ensures an effective structure that guarantees that Group-wide requirements are communicated to and applied at the individual companies, company-specific requirements are formulated, and all employees have a competent contact person for compliance-related questions and information.
3.4 Further information
To make sure that the contents of compliance are practiced not only by employees and executives, but also with our business partners, they are also implemented in our general standard terms and conditions of trade and other contractual agreements.
