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Corporate Governance
GILDEMEISTER has placed a high value on good corporate governance for years and it is thus a core element of our corporate management. All areas of the company are aligned with these measures. For years GILDEMEISTER has been complying with the recommendations of the German Corporate Governance Code and, even following the amendments resolved by the Commission of the German Corporate Governance Code on 6 June 2008, still complies with all the recommendations. The Executive Board and Supervisory Board issued the following declaration of compliance in December 2008. Our shareholders can view the declaration on our website at any time.
“GILDEMEISTER Aktiengesellschaft complies with all recommendations of the “Government Commission of the German Corporate Governance Code”, as amended on 6 June 2008, and has complied with these since making the last declaration of compliance on 31 December 2007.”
The joint goal of the Executive Board and Supervisory Board is a sustainable increase in enterprise value. The Corporate Governance Code is implemented at GILDEMEISTER by responsible and transparent management, as well as by monitoring of the group. We have amended our internal company guidelines to comply with these rules and principles, and follow them in all areas of the group.
Remuneration of the Executive Board and Supervisory Board
Pursuant to clause 5.4.7 of the German Corporate Governance Code, we report on the remuneration of the Supervisory Board individually and broken down into components.
Remuneration of the Supervisory Board of GILDEMEISTER Aktiengesellschaft
The remuneration of the Supervisory Board is determined by the Annual General Meeting of shareholders and is regulated under Section 12 of the articles of association of GILDEMEISTER Aktiengesellschaft. The remuneration includes performance-related and nonperformance related components. The remuneration components not dependent upon performance include the fixed remuneration that each member of the Supervisory Board receives and remuneration for committee work. The performance-related components comprise a short term incentive (STI) and a long-term incentive (LTI), which support a sustainable value-based management.
In the financial year 2008, the fixed remuneration for each individual member of the Supervisory Board was € 12,000; the chairman received 2.5-times that amount (€ 30,000) and the deputy chairman 1.5-times that amount (€ 18,000). The fixed remuneration therefore totalled € 168,000 (previous year: € 165,403). Remuneration for committee work amounted to a total of € 109,877 € (previous year: € 106,586) and took into account the work carried out by the Finance and Auditing Committee, the Personnel, Nominations and Remuneration Committee, and of the Technology and Development Committee. There was no remuneration for work carried out by the Conciliation and Nominations Committee, which is a sub-committee of the Personnel, Nominations and Remuneration Committee. The individual committee members each received € 6,000. The chairperson of a committee also receives an additional fixed remuneration of a further € 6,000 and the deputy chairperson € 3,000.
The performance-related remuneration components, STI and LTI, are based on indexoriented target values. The earnings per share (EPS) are used as the performance-related index in both remuneration components.
The EPS is a fixed index, by which a performance orientation is given considering the respective share capital. It is calculated by dividing the annual profit, less the profit share of minority interests, by the weighted average number of shares. The STI and LTI are variable, which means they are not a secured remuneration. Again the Supervisory Board chairman receives 2.5-times the amount in each component and the deputy chairman 1.5-times the remuneration of the other members of the Supervisory Board. Both the STI and the LTI are capped at the level of the respective fixed remuneration.
The STI is only paid if, in the reporting year, the EPS amounts to at least € 0.15. The performance-based remuneration for the Supervisory Board calculated from the STI totalled € 168,000 (previous year: € 165,403). The LTI takes into account not only the reporting year but also the two previous years. The index is the mean average of the eps values in the corresponding financial years. The LTI is only paid if the average EPS for the relevant three years amounts to at least € 0.15. The LTI calculated performance-based remuneration for the Supervisory Board totalled € 168,000 (previous year: € 144,727).
In 2008 the Supervisory Board remuneration was made up as follows:
To top| Fixed
remuneration in € | Committee remuneration Finance & Auditing (F&A) in € | Committee remuneration Personnel Nomination & Remuneration (PNR) in € | Committee vremuneration Technology &- Development (T&D) in € | STI in € | LTI in € | Total in € | |
|---|---|---|---|---|---|---|---|
| Hans Henning Offen Chairman SB, Chairman PNR | 30,000 | 6,000 | 12,000 | 0 | 30,000 | 30,000 | 108,000 |
| Prof. Dr.-Ing. Uwe Loos Chairman T&D | 12,000 | 0 | 0 | 12,000 | 12,000 | 12,000 | 48,000 |
| Günther Berger Chairman F&A | 12,000 | 12,000 | 0 | 0 | 12,000 | 12,000 | 48,000 |
| Dr.-Ing. Jürgen Harnisch Deputy Chairman T&D from 16 May 2008 | 12,000 | 0 | 0 | 7,877 | 12,000 | 12,000 | 43,877 |
| Dr. jur. Klaus Kessler | 12,000 | 6,000 | 0 | 0 | 12,000 | 12,000 | 42,000 |
| Prof. Dr.-Ing. Walter Kunerth | 12,000 | 0 | 6,000 | 0 | 12,000 | 12,000 | 42,000 |
| Gerhard Dirr Deputy Chairman SB, Deputy Chairman PNR Member T&D until 16 May 2008 | 18,000 | 6,000 | 9,000 | 2,246 | 18,000 | 18,000 | 71,246 |
| Wulf Bantelmann | 12,000 | 0 | 0 | 6,000 | 12,000 | 12,000 | 42,000 |
| Harry Domnik Deputy Chairman F&A | 12,000 | 9,000 | 6,000 | 0 | 12,000 | 12,000 | 51,000 |
| Norbert Zweng | 12,000 | 6,000 | 0 | 0 | 12,000 | 12,000 | 42,000 |
| Günther Johann Schachner | 12,000 | 0 | 0 | 0 | 12,000 | 12,000 | 36,000 |
| Rainer Stritzke Member SB until 16 May 2008 | 4,492 | 0 | 0 | 0 | 4,492 | 4,492 | 13,475 |
| Matthias Pfuhl Member SB as of 16 May 2008 Member T&D as of 16 May 2008 | 7,508 | 0 | 0 | 3,754 | 7,508 | 7,508 | 26,279 |
| Total | 168,000 | 45,000 | 33,000 | 31,877 | 168,000 | 168,000 | 613,877 |
In the financial year 2008 the total remuneration of the Supervisory Board amounted to € 613,877 (previous year: € 582,119). Pursuant to Section 15a of the German Securities Act (WpHG), the members of the Supervisory Board, or other persons subject to reporting requirements, must disclose any acquisition or disposal of shares or related rights of purchase or disposal, such as options or rights that are directly dependent on the company’s stock exchange price. In the reporting year, we received the following director’s dealings notification, which has been published on our website:
To top| Name | Function | Date | Type and place of transaction | Number of shares | Share price in € | Transaction volume in € |
|---|---|---|---|---|---|---|
| Hans Henning Offen | Chairman SB | 30. Oct. 2008 | Purchase of shares, Frankfurt | 10,000 | 7.55 | 75,500 |
The members of the Supervisory Board together hold less than 1% of the total shares issued; no member of the Executive Board owns any GILDEMEISTER shares.
To topInsurance for Supervisory and Executive Board members of the GILDEMEISTER group
GILDEMEISTER has D&O insurance (manager liability insurance) and legal costs insurance for all members of the Supervisory and Executive Boards, as well as for managing directors and executive staff. The D&O insurance allows for a reasonable retention amount.
Remuneration of the Executive Board of GILDEMEISTER Aktiengesellschaft
The structure of the remuneration system for members of the Executive Board is discussed and decided by the Personnel, Nomination and Remuneration Committee of the Supervisory Board. The chairman of the Supervisory Board has provided the Supervisory Board with detailed information on discussions held by the Committee. The chairman will also report on this to the Annual General Meeting.
Members of the Executive Board receive direct and indirect remuneration components, whereby the indirect components primarily consist of pension plan expenses. The direct remuneration of the Executive Board members of GILDEMEISTER Aktiengesellschaft contains fixed and variable components. The variable components comprise a short-term incentive (STI) and a long-term incentive (LTI). Both variable components are fixed in such a way that they represent a clear incentive for the Executive Board members to achieve the targets. In this way they support a sustainable and value-based management. The criteria for the appropriateness of the remuneration include in particular the tasks rendered by each Executive Board member, his personal performance and the performance of the Executive Board, as well as the company’s economic situation, success and future prospects within the scope of its comparative environment.
Direct remuneration of the members of the Executive Board amounted to € 7,441 K (previous year: € 5,407 K). Of this amount, € 1,328 K were attributed to fixed remuneration (previous year: € 1,297 K), € 6,000 K to the STI (previous year: € 4,000 K) and € 113 K as payment in kind (previous year: € 110 K). In 2008 the direct remuneration of the Executive Board was made up as follows:
| Fixed € K | STI € K | Payment in kind € K | Total € K | |
|---|---|---|---|---|
| Dr. Rüdiger Kapitza, Chairman | 455 | 1,500 | 37 | 1,992 |
| Michael Welt | 345 | 1,500 | 21 | 1,866 |
| Günter Bachmann | 252 | 1,500 | 30 | 1,782 |
| Dr. Thorsten Schmidt | 276 | 1,500 | 25 | 1,801 |
| Total | 1,328 | 6,000 | 113 | 7,441 |
The fixed remuneration is the contractually defined basic remuneration, which is paid in equal monthly amounts.
The STI is based on index aligned target values. In the reporting year the earnings after taxes (eat) provided the reference value used. The scale of the target values is redefined annually. In addition, this is capped at € 1,500 K, respectively, for 2008. The cap is also fixed anew each year. Should the eat not reach the fixed value that is also set annually, the STI is not paid.
As a remuneration component with long-term incentive effect, the LTI combines the achievement of fixed targets in relation to the EBIT of the company with the performance of the GILDEMEISTER share. This involves a performance-units plan which is comparable to virtual shares and which does not include any dividend payments or voting rights. In addition, the units may not be traded nor sold to third parties. The performance units awarded at the beginning of each year have a term of three years. The first performance units awarded following this model for the year 2007 will thus be allocated on 31 December 2009 and, following the Annual General Meeting of Shareholders in 2010, will be paid out on the basis of the EBIT target achieved in the allocation year 2009 and the corresponding share price. The performance units awarded for the financial year 2008 will be allocated on 31 December 2010 and, following the Annual General Meeting of Shareholders in 2011, will be paid out taking into account the EBIT target achieved in 2010 and the respective share price. A cap has been set at 2-times the annual fixed salary of each Executive Board member per tranche for the year in which the award takes place. The following table shows the number of performance units awarded in 2007 and in 2008 and the amount of the provisions for each executive board member.
| 2008 tranche | 2007 tranche | |||
|---|---|---|---|---|
| Number of performance units awarded shares | Amount of provisions at 31 Dec. 2008 € K | Number of performance units awarded shares | Amount of provisions at 31 Dec. 2008 € K | |
| Dr. Rüdiger Kapitza, Chairman | 10,422 | 81 | 14,401 | 110 |
| Michael Welt | 7,817 | 61 | 11,521 | 88 |
| Günter Bachmann | 7,817 | 61 | 11,521 | 88 |
| Dr. Thorsten Schmidt | 7,817 | 61 | 11,521 | 88 |
| Total | 33,873 | 264 | 48,964 | 374 |
Both the STI and the LTI are variable, which means neither is a secure remuneration.
Remuneration in kind arises mainly from amounts for the use of company cars, which will be assessed in accordance with applicable tax regulations, and individual insurance contributions. Every member of the Executive Board is contractually entitled to remuneration in kind, which may vary depending on the personal situation and is subject to tax payable by each Executive Board member.
Pension commitments for members of the Executive Board are primarily implemented through a contribution-based pension plan. A defined-benefit pension commitment exists for the chairman of the Executive Board.
| € K | |
|---|---|
| Dr. Rüdiger Kapitza, Chairman | 114 |
| Michael Welt | 143 |
| Günter Bachmann | 60 |
| Dr. Thorsten Schmidt | 50 |
| Total | 367 |
In accordance with the International Accounting Standards (IAS), provision expenses of € 114 K arose for the defined-benefit contribution commitment in 2008 (previous year: € 119 K) The payments restricted to the contribution-based pension plan amounted to € 253 K (previous year: € 155 K).
Advances and loans to Executive Board members or Supervisory Board members were not granted, nor were any declarations of liability in favour of any of the aforementioned members entered into. There was no share option programme or similar securities based incentive system.
The companies of the GILDEMEISTER group did not pay any remuneration to officers for services personally rendered, in particular consulting and introduction services. Former members of the Executive Board and their surviving dependants received € 597 K (previous year: € 587 K). The amount of the pension commitments (cash value of future pension commitments or defined benefit obligations) for former members of the Executive Board and their surviving dependants amounted to € 6,646 K (previous year: € 7,007 K).
To topResponsible management of opportunities and risks
Good Corporate Governance also includes responsible corporate handling of risks. GILDEMEISTER uses a systematic opportunity and risk management to identify and monitor significant opportunities and risks regularly. In this way we ensure that risks are recognised and assessed timely. The opportunities and risk management is continuously being further developed and is regularly adapted to changing conditions. More information on the opportunities and risk management system can be found in the chapter “Opportunities and risk report”.
Cooperation between the Executive Board and Supervisory Board
The Executive Board and Supervisory Board work closely together in the interests of the company. Their joint goal is a sustainable increase in enterprise value. The Executive Board informs the Supervisory Board regularly, timely and comprehensively on current business development and corporate planning, as well as on the risk situation, risk management and compliance. The Executive Board passes the quarterly and six months’ reports to the Supervisory Board, so that the latter can discuss them before publication. In particular, the strategic direction and further development of the group were discussed and any deviation in business development from the targets or budget was explained immediately. The Articles of Association provide for any transactions of fundamental significance to be subject to the agreement of the Supervisory Board.
Avoidance of conflicts of interest
In making decisions and in connection with their functions, the members of the Executive Board and of the Advisory Board may not pursue any personal interests or business opportunities that the company is entitled to, nor may they grant any unjustified benefits to any other person. Such transactions or secondary occupations must be immediately reported to, and approved by, the Supervisory Board. The Supervisory Board reports any conflicts of interest and the handling of these to the Annual General Meeting. In the reporting year there were neither conflicts of interest with respect to the members of the Executive Board nor with respect to members of the Supervisory Board.
To topSafeguarding the interests of the shareholders
GILDEMEISTER demands of itself that it ensures both the highest possible transparency as well as timely communication. Shareholders and potential investors can obtain information in the Internet at any time on the current situation of the company. On our website, www.gildemeister.com, press releases, annual and quarterly reports, in both German and English, are published. In addition, a detailed financial calendar can be found there, which is an inherent part of our annual and quarterly reports. All dates are continuously updated. Through candour and transparency, the Executive Board and Supervisory Board aim to strengthen the confidence of our shareholders and investors, business partners and employees, as well as of the general public, in our company. Shareholders may either exercise their voting rights themselves at the Annual General Meeting, through an authorised person of their choice or through a proxy bound by their directives. Through an amendment to the Articles of Association of 16 May 2008, we have also made it possible to broadcast the images and sound of the Annual General Meeting, in full or in part, or to record it. In this way, shareholders who are not able to attend the Annual General Meeting in person have an opportunity to receive timely information, for example via the Internet.
Reporting and auditing of annual accounts
In accordance with the regulations of the German Corporate Governance Code, it has been agreed with the auditor, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, to inform the chairman of the Supervisory Board promptly of any grounds of exclusion or bias that may arise during the audit. It has been further agreed that the auditor shall report promptly on all findings and events arising during the audit that are of significance for the duties of the Supervisory Board. Moreover, the auditor will inform the Supervisory Board of, or include in the auditing report, any facts found during the audit process that are inconsistent with the Declaration of Compliance with the German Corporate Governance Code given by the Executive Board and Supervisory Board pursuant to Section 161 German Companies Act (AkG).
Suggestions of the German Corporate Governance Code
GILDEMEISTER also complies with the suggestions of the Code to a large extent. Deviations from the Code currently exist in the following areas:
- Annual General Meeting of Shareholders: The Code suggests that the proxy exercising the shareholder’s voting rights at the shareholder’s directive should be contactable during the Annual General Meeting.
- Supervisory Board: In codetermined supervisory boards, the representatives of the shareholders and of the employees should prepare the meetings of the supervisory board separately each time, if necessary with the members of the executive board. This procedure is only followed at GILDEMEISTER in exceptional cases.