DE

Corporate Governance Statement

Corporate Governance Statement pursuant to section 289f of the German Commercial Code (HGB)
As at 20 March 2020

 

Declaration of Compliance pursuant to section 161 of the Stock Corporation Act (AktG)

The Executive Board and the Supervisory Board of Schaltbau Holding AG issued the last Declaration of Compliance pursuant to section 161 of the German Stock Corporation Act (AktG) on 12 December 2019. The declaration relates to the recommendations in the version of the Code dated 7 February 2017 and published in the electronic Federal Gazette on 24 April 2017 and 19 May 2017 (revised version).

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:

Re 3.8:

  • 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.


Re 4.2.3:

  • 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. Therefore, if a position on the Executive Board is prematurely terminated, 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. The resolution applies to the disclosure of the compensation of Executive Board members for the fiscal years 2016 to 2020.


Re 5.1.2:

  • 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 difficult to implement. 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 5.3.3:

  • The Supervisory Board has not formed a Nomination Committee that exclusively consists of shareholder representatives. No Nomination Committee has been formed, 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. Furthermore, the current practice of preparing personnel decisions to be taken by the Supervisory Board concerning the Executive Board in the Personnel Committee has proven to be efficient.


Re 5.4.1:

  • The provisions set out in articles 8 and 9 of the Articles of Association in their current version govern the composition of the Supervisory Board, the term of office of its members and their resignation from office. In this context, the Supervisory Board ensures that its members have the requisite knowledge, skills and professional experience to perform their duties in a proper manner.

  • Despite the Supervisory Board having refrained from setting specific targets for its composition to date, it fundamentally aims to increase the percentage of female members on a sustained basis.

  • An age limit and a standard limit for the length of service on the Supervisory Board have not been set to date, as the Supervisory Board is of the opinion that the individual knowledge and experience of its members is of vital importance for the appointment to such a position. If membership were terminated solely on the basis of a fixed age limit, the Company would be deprived of that knowledge and experience without sufficient reason.

  • To date, the Company has not published the CVs of the Supervisory Board members on its website and has not provided any information in the Corporate Governance Report regarding a competence profile for the full Supervisory Board. Furthermore, the Company's Corporate Governance Report does not yet provide information on the appropriate number of independent members in the opinion of the Supervisory Board and the names of these members.


Re 5.4.6:

  • The compensation of Supervisory Board members has not been individually disclosed, as the compensation structure is set out in the Articles of Association. The level of compensation is partially dependent on the amount of work performed. Committee memberships are compensated on a fixed basis.

 

Munich, 12 December 2019

Executive Board and Supervisory Board

Schaltbau Holding AG


Corporate Governance Report pursuant to section 3.10 of the German Corporate Governance Code

Schaltbau Holding AG understands corporate governance to mean the responsible, transparent management and supervision of companies designed to create long-term value. Good corporate governance thus forms the basis for sustained economic success and is also a key requirement for us to strengthen the confidence of our stakeholders in our activities.

Corporate governance forms the regulatory framework for the management and control of an enterprise. This includes its organisation and values as well as the principles and guidelines of its business policy. The German Corporate Governance Code (GCGC) provides recommendations and suggestions for sound, responsible corporate management and control. The Government Commission established for this purpose has drawn up the contents of the GCGC based on substantive regulations and nationally as well as internationally recognised standards of corporate governance. It reviews the GCGC on a regular basis in light of current developments and makes amendments to the extent considered necessary.

The Executive Board and the Supervisory Board of Schaltbau Holding AG base their work on the recommendations and suggestions of the GCGC. We view good corporate governance as an essential prerequisite for increasing the value of the company on a sustained basis in the interests of all stakeholders. It contributes towards fostering the confidence of our shareholders, customers, employees, business partners and investors in our work and meeting the constantly growing need for information among national and international stakeholders.

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 Association 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, i.e. 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 the 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.

Executive 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 the 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 the 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 a schedule of responsibilities. The activities of the Executive Board are geared towards long-term, sustainable growth in corporate value.

Supervisory Board

In accordance with article 8 (1) of the Articles of Association in the version dated 18 June 2019, the Supervisory Board of Schaltbau Holding AG comprises six members, two thirds of whom are shareholder representatives and one third employee representatives. The shareholder representatives are elected by the Annual General Meeting, the employee representatives by the employees. Unless shareholder representatives are elected for a shorter period, the term of office of Supervisory Board members runs until the end of the Annual General Meeting at which the acts of the members are ratified for the fourth fiscal year after 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 held on 14 June 2016. At the Annual General Meeting held on 8 June 2017, one new member of the Supervisory Board was elected and at the Annual General Meeting held on 7 June 2018, a total of three members of the Supervisory Board were elected. The term of office of all shareholder representatives runs until the end 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 its members.

As at 31 December 2019, the Supervisory Board consisted of the following persons:

Shareholder representatives:

  • Dr Hans Fechner (Chairman)
  • Thorsten Grenz (Deputy Chairman)
  • Andreas Knitter
  • Jeannine Pilloud

Employee representatives:

  • Achim Stey
  • Herbert Treutinger

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 five times a year. 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 Strategy & Technology Committee, a Personnel Committee, an ad hoc Committee for Personnel Development and Organisational Structure and an Audit Committee. The Strategy & Technology Committee comprises the members Dr Hans Fechner (Chair), Andreas Knitter, Jeannine Pilloud and Achim Stey. The Personnel Committee is made up of Dr Hans Fechner (Chair), Herbert Treutinger and Prof. Thorsten Grenz. The ad hoc Committee for Personnel Development and Organisational Structure consists of Jeannine Pilloud (Chair), Herbert Treutinger and Andreas Knitter. Finally, the Audit Committee comprises the members Prof. Thorsten Grenz (Chair), Dr Hans Fechner, Andreas Knitter and Achim Stey.

No further committees were 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. However, further committees can be formed as the need arises.

The Supervisory Board is quorate, provided a minimum of four members take part in the resolution process. Unless otherwise stipulated by law or the Articles of Association, resolutions are passed by a simple majority. In the event of a tied vote, 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. In accordance with the German Corporate Governance Code, it regularly reviews the efficiency of its work, at least every two years. 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.

Diversity concept

Schaltbau Holding AG does not pursue a separate diversity concept with regard to the composition of its Executive Board and Supervisory Board. The principle of equal opportunity and the strict rejection of any form of discrimination are firmly embedded in the corporate culture of Schaltbau Holding AG. With these points in mind, 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 the gender, race, age, skin colour, religion, marital status, sexual orientation, origin, or physical or mental impairment of the person in question are not considered.

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. These targets must be achieved by 30 June 2022. At 31 December 2019, the proportion of women on the Supervisory Board was 16.67% and the proportion of women on the Executive Board was 0%.

With regard to the proportion of women working in executive positions below board level, the Executive Board has set a target of 10% for managing director level and a target of 10% for middle management. These targets must be achieved by 30 June 2022. At 31 December 2019, the proportion of women at managing director level was 0% and the proportion of women at middle management level was 9%.

Annual General Meeting

The Annual General Meeting is the third body of the Company. Shareholders may exercise their right to vote at the Annual General Meeting. Schaltbau Holding AG has shares with full voting rights only; 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 Annual General Meeting. The agenda of the Annual General Meeting is published on the Company’s website, including all of the necessary reports and documents pertaining to it.

The Annual General Meeting makes decisions in all matters empowered to it by law, particularly regarding the appropriation 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 auditor, changes to the Articles of Association and capital measures. Every shareholder has the right to participate in the Annual General Meeting.

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.

Financial reporting and the audit of the financial statements

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 financial statements and the 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 financial statements and the 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 auditor 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 any 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 throughout the enterprise. The risk management system implemented within 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 financial reporting-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 considerable number of internal measures and processes, which are overseen by a full-time Compliance Officer, who is supported by employees performing compliance functions within the Schaltbau Group's 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 as necessary to take new developments, changing risks and new legal requirements into account. It is the permanent task of management to adjust and improve the compliance and risk management systems as the need arises.

Transparency

Schaltbau Holding AG utilises the Company website in order to provide shareholders and investors with prompt information at: www.schaltbaugroup.com/. In addition to the annual report and various interim reports, shareholders and third parties are additionally kept informed of current developments by means of ad hoc announcements, financial announcements and press releases. Schaltbau Holding AG publishes a financial calendar displaying all the 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 notifications of directors’ dealings in accordance with section 19 MAR, i.e. any notifications regarding securities transactions involving members of the Executive Board, the Supervisory Board or any individuals who perform management functions in the legal sense of Section 19 MAR, as well as any persons or legal entities closely related to any of the above-mentioned with regard to the purchase or sale of Schaltbau Holding AG shares. These reports are also published on the Company’s website at: www.schaltbaugroup.com/.

In accordance with section 40 of the German Securities Trading Act (WpHG), the Company is required to publish without delay, and no later than three trading days after receipt, notifications of the acquisition or sale of significant voting shares or of the holding of corresponding financial instruments (information in accordance with section 33 (1) sentence 1, (2), section 38 (1) sentence 1 and section 39 (1) sentence 1 or in accordance with corresponding provisions of other member states of the European Union or other states party to the Agreement on the European Economic Area).

Shareholdings of Executive Board and Supervisory Board members

At 31 December 2019, CEO Dr Albrecht Köhler held a total of 1,888 Schaltbau Holding AG shares, equivalent to 0.02% of the voting rights. At 31 December 2019, no further members of either the Executive Board or the Supervisory Board held 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

As from the fiscal year 2020, securities-based incentive systems are in place at Schaltbau Holding AG.

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.schaltbaugroup.com/.

 

Munich, March 2020

Executive Board and Supervisory Board

Schaltbau Holding AG