German Corporate Governance Code
4. Management Board
|4.1||Tasks and Responsibilities
|4.1.1||The Management Board assumes full responsibility for managing the company in the best interests of the company, meaning that it considers the needs of the shareholders, the employees and other stakeholders, with the objective of sustainable value creation.|
|4.1.2||The Management Board develops the strategy for the company, agrees it with the Supervisory Board and ensures its implementation.|
|4.1.3||The Management Board ensures that all provisions of law and the company’s internal policies are complied with, and endeavours to achieve their compliance by the group entities (Compliance). It shall also institute appropriate measures reflecting the company's risk situation (Compliance Management System) and disclose the main features of those measures. Employees shall be given the opportunity to report, in a protected manner, suspected breaches of the law within the company; third parties should also be given this opportunity.|
|4.1.4||The Management Board ensures appropriate risk management and risk control in the company.|
|4.1.5||When appointing the company's executives, the Management Board shall consider the principle of diversity, and in particular endeavour to achieve the appropriate consideration of women for such positions. The Management Board lays down targets for increasing the share of women in the two management levels below the Management Board.|
|4.2||Composition and Remuneration
|4.2.1||The Management Board shall consist of several members and shall have a Chair or Spokesperson. Rules of procedure shall govern the work of the Management Board, in particular the allocation of duties among individual Management Board members, matters reserved for the Management Board as a whole and the required majority for Management Board resolutions (unanimity or resolution by majority vote).|
|4.2.2||The full Supervisory Board determines the total remuneration for each Management Board member. If the contracts of Management Board members are dealt with by a committee, the committee submits its proposals to the Supervisory Board for approval in plenary session. The full Supervisory Board resolves the Management Board remuneration system and reviews it regularly.
The total remuneration of each Management Board member is determined by the Supervisory Board in plenary session based on a performance evaluation, taking into consideration any payments made by group entities. The criteria for determining the appropriateness of remuneration consist of the duties of the individual member of the Management Board, their personal performance, the economic situation, the performance and future prospects of the company as well as the customary level of remuneration that takes into account peer corporations as well as the remuneration structure in place elsewhere in the corporation. The Supervisory Board shall consider the ratio of Management Board remuneration to the remuneration paid to the senior management and entire staff, including its development over time, whereby the Supervisory Board determines how senior managers and other relevant staff are to be differentiated for the comparison.
If the Supervisory Board calls upon an external remuneration expert to evaluate the appropriateness of the remuneration, it shall ensure that the expert is independent from the Management Board and the company.
|4.2.3||The total remuneration of Management Board members comprises monetary remuneration components, pension commitments, other commitments (especially in the event of termination of activity), fringe benefits of all kinds as well as benefits from third parties that were promised or granted during the financial year for the work performed on the Management Board.
The remuneration structure must be focussed on the sustainable growth of the company.Monetary remuneration shall comprise fixed and variable components. Variable remuneration components generally have a multiple-year assessment basis that shall have essentially forward-looking characteristics. Both positive and negative developments shall be taken into account when determining variable remuneration components.All remuneration components must be appropriate, both individually and in the aggregate, and in particular must not encourage the recipients to take unreasonable risks. The amount of remuneration shall be capped with maximum levels, both as regards variable components and in the aggregate. Variable remuneration components shall be based on demanding and relevant comparison parameters. Subsequent amendments to the performance targets or comparison parameters shall be excluded. Early disbursements of multiple-year, variable remuneration components should not be permitted.
The Supervisory Board shall establish the target level of pension benefits for every pension commitment – including based on the duration of membership of the Management Board – and shall consider the resulting annual and long-term expense incurred by the company.
When contracts are entered into with Management Board members, it shall be ensured that payments, including fringe benefits, made to a Management Board member due to early termination of their contract do not exceed twice the annual remuneration (Severance Cap) and do not constitute remuneration for more than the remaining term of the employment contract. If the employment contract of a Management Board member is terminated for good cause for which the Management Board member is responsible, no payments are made to that Management Board member. The severance cap shall be calculated on the basis of the total remuneration paid for the previous financial year and, if appropriate, shall take into account the expected total remuneration for the current financial year.
Benefit commitments made in connection with the early termination of a Management Board member’s activity due to a change of control (Change of Control) shall not exceed 150% of the severance cap.
The Chair of the Supervisory Board shall outline to one General Meeting the salient points of the remuneration system and shall inform subsequent General Meetings about any amendments.
|4.2.4||The total remuneration of every Management Board member is to be disclosed, indicating their name, and classified by fixed and variable remuneration components. The same applies to benefit commitments granted to Management Board members in the event of early or regular termination of Management Board activity, and to benefit commitments amended during the respective financial year. There is no disclosure, if the General Meeting resolves this with a three-quarters majority.|
|4.2.5||Management Board remuneration is disclosed in the notes to the financial statements or the management report. The remuneration report, which is part of the management report, describes the principal features of the Management Board remuneration system. The description shall be made in a generally comprehensible way.
The remuneration report shall also include information on the nature of the fringe benefits provided by the corporation.
In addition, the remuneration report shall present the following information for every Management Board member:
The model tables provided as appendices to this document shall be used to disclose this information.
|4.3||Conflicts of Interest
|4.3.1||Members of the Management Board are bound to observe the best interests of the company. When taking decisions, they must not pursue any personal interests, they are subject to comprehensive non-competition arrangements during their term of office and they must not exploit for themselves business opportunities to which the company is entitled.|
|4.3.2||Members of the Management Board and employees must not demand or accept inappropriate benefits from third parties for themselves or for any other person in connection with their work rendered for the company, nor should they grant inappropriate benefits to third parties.|
|4.3.3||Every Management Board member shall disclose conflicts of interest to the Supervisory Board without undue delay and inform the other Management Board members. All transactions between the company and Management Board members, including their related parties, must comply with standards customary to the sector. The Supervisory Board represents the corporation in transactions with members of the Management Board. Significant transactions with a Management Board member’s related parties shall be subject to Supervisory Board approval.|
|4.3.4||Members of the Management Board shall only assume sideline activities, especially Supervisory Board mandates outside the company, with the approval of the Supervisory Board.|