Corporate Governance Report
The Executive Board - also on behalf of the Supervisory Board - reports in the following on corporate governance at ThyssenKrupp in accordance with section 3.10 of the German Corporate Governance Code:
ThyssenKrupp has always been guided by internationally and nationally recognized standards of good and responsible corporate management. We regard corporate governance as an issue which embraces all areas of the Group. We aim to justify on a sustained basis the trust placed in us by investors, financial markets, business partners, employees and the general public and to continuously further develop corporate governance in the Group. We are convinced that good corporate governance is an essential element of the Company's success.
Detailed information on corporate governance at ThyssenKrupp is also available on our website. The current Declaration of Conformity and previous Declarations of Conformity can also be accessed from the website.
- Unqualified Declaration of Conformity again
- Services and internet information for our stockholders
- Close cooperation between Executive Board and Supervisory Board
- Responsible risk management
- Compliance as a key management duty of the Executive Board
- Active and transparent communications
- Financial-statement audit by KPMG
- Focus on good corporate governance to continue
Unqualified Declaration of Conformity again
On October 01, 2007 the Executive Board and Supervisory Board issued the statutory Declaration of Conformity in accordance with Art. 161 of the Stock Corporation Act (AktG), stating that ThyssenKrupp complies with all the recommendations of the German Corporate Governance Code as amended on June 14, 2007.
Beyond this, with one exception, ThyssenKrupp also complies with the suggestions of the Code, including the new provisions introduced in the Code on June 14, 2007 on the so-called severance payment cap. ThyssenKrupp will comply with these suggestions when concluding and renewing Executive Board contracts. The only suggestion we continue not to implement is that in section 5.4.6 of the Code on the election and re-election of Supervisory Board members at different dates and for different periods of office. In the interests of the continuity of Supervisory Board work, we consider it expedient to stick to a common period of office, especially for the stockholder representatives.
At our exchange-listed subsidiary Eisen- und Hüttenwerke AG, the German Corporate Governance Code is implemented taking into account the particularities of its membership in the Group. Variances are set out in the company’s Declaration of Conformity of September 19, 2007.
Services and internet information for our stockholders
Stockholders, analysts, stockholder associations, the media and interested members of the public are kept regularly informed about important recurring dates, such as the date of the Annual General Meeting, by a financial calendar which is published in the Annual Report, the quarterly reports and on the Company’s website. As part of our investor relations activities, we hold regular meetings with analysts and institutional investors. In addition to the annual analysts' conferences on the annual financial statements and half-year financial statements, conference calls for analysts are organized to coincide with the publication of the interim reports on the 1st and 3rd quarters. All the presentations we prepare for these events and also for roadshows and investors’ meetings are accessible on the internet. The venues and dates of roadshows and investors’ meetings are also available online.
The Annual General Meeting of ThyssenKrupp is organized and conducted in such a way as to ensure all stockholders receive all the information they need quickly and efficiently before and during the meeting. We also aim to make it easier for them to register for the Annual General Meeting and exercise their rights. Ahead of the Annual General Meeting, stockholders therefore receive detailed information on the past fiscal year and the individual agenda items for the meeting in the Annual Report and the invitation to the meeting. All documents and information on the Annual General Meeting as well as the Annual Report are also available on our website. Other information is made available on our website seven days before and during the Annual General Meeting.
We also publish the attendance figure and voting results directly after the Annual General Meeting. This promotes and simplifies the exchange of information between us and our stockholders on all matters relating to the Annual General Meeting.Stockholders unable to attend the Annual General Meeting can view it on the internet in full. Stockholders can exercise their voting rights in person or by proxy, for which they can authorize a representative of their choice or a company-nominated proxy acting on their instructions. Proxy voting instructions can also be issued in advance and during the meeting up to the end of the general debate by electronic media.
Close cooperation between Executive Board and Supervisory Board
The Executive Board and Supervisory Board work closely together in the interest of the Company. Their joint goal is to increase the value of the enterprise on a sustainable basis. To ensure independent advice and supervision of the Executive Board, the Supervisory Board comprises no more than two former Executive Board members. The Executive Board provides the Supervisory Board with regular detailed updates on all issues of relevance to the Company related to planning, business development, the risk situation and the risk management system. These updates explain and give reasons for variances between the actual course of business and the Company’s plans and targets. The Executive Board’s reports also include the subject of compliance, i.e. the measures in place at ThyssenKrupp to ensure compliance with statutory provisions and the Group’s internal policies. Under the Articles of Association, important business transactions are subject to Supervisory Board approval. For more details, please turn to the Report by the Supervisory Board.
The Company has taken out directors and officers (D&O) liability insurance with an appropriate deductible for the members of ThyssenKrupp AG's Executive and Supervisory Boards.
Again this year, the only case of a consultancy or other service contract between members of the Supervisory Board and the Company related to Dr. v. Schenck, who is both a member of our Company's Supervisory Board and a partner in the international law firm Clifford Chance. Insofar as this law firm acted in a legal advisory capacity for the Company during the reporting period, the engagement was approved by the Supervisory Board Personnel Committee. Conflicts of interest of Executive or Supervisory Board members, which must be disclosed immediately to the Supervisory Board, did not occur.
The period of office of the stockholder representatives on the Supervisory Board ends at the close of the Annual General Meeting which resolves on discharging the Supervisory Board from responsibility for fiscal 2008/2009. The period of office of the employee representatives ends at the close of the Annual General Meeting which resolves on discharging the Supervisory Board from responsibility for fiscal 2007/2008.
Responsible risk management
Good corporate governance involves dealing responsibly with risks. The Executive Board ensures that an appropriate risk management and risk control system is in place in the Company. The systematic risk management activities performed as part of our value-based Group management approach identify and assess risks at an early stage and optimize risk exposure. The Executive Board keeps the Supervisory Board informed about existing risks and their development. The risk management system is continuously evolved and adapted to changing conditions. For more details, please turn to the Risk report.
Compliance as a key management duty of the Executive Board
Compliance, in the sense of measures to ensure adherence to statutory provisions and internal Company policies, is a key management duty at ThyssenKrupp. A compliance program was introduced directly after the merger of Thyssen and Krupp in 1999. It has been regularly reviewed and revised as necessary ever since. The Groupwide compliance activities focus on antitrust law and anticorruption policies.
In April 2007 the Executive Board of ThyssenKrupp AG unequivocally reiterated its rejection of antitrust violations and corruption in the ThyssenKrupp Compliance Commitment. Antitrust violations and corruption will not be tolerated and will result in sanctions against the persons concerned. All employees are requested to cooperate actively in their areas of responsibility in implementing the compliance program. The compliance commitment is supplemented by various Group policy statements and publications which explain the underlying statutory provisions in more detail.
The segments are responsible for implementing the compliance program. Their legal and compliance departments hold regular training sessions to inform employees about the relevant statutory provisions and internal policies and are available to answer individual questions. Classroom training sessions are supplemented by a Groupwide interactive e-learning program, which around 20,000 employees have taken part in to date.
To supplement the compliance program we also introduced a whistleblower hotline in the reporting period which is operated by a law firm appointed by us.
The whistleblower hotline is available to employees of the Group to report possible infringements of laws or policies, in particular antitrust violations and corruption, at ThyssenKrupp companies. The hotline can be contacted from anywhere in the world and is toll-free for employees. Information can be submitted by telephone or e-mail. Contact data are available on our website.
Further compliance measures relate to capital market law and compliance with the corresponding Group policy. To supplement the prohibition of insider dealing under Art. 15a of the Securities Trading Law (WpHG), an insider policy sets out principles for dealing with inside information and ensures the requisite transparency. The Group has a long-established clearing office for ad hoc disclosures in which representatives of various specialist departments carry out assessments to identify any matters subject to ad hoc reporting requirements, with a view to ensuring potential inside information is handled in compliance with the law. All persons with access to inside information are entered in an insider register.
Active and transparent communications
To maximize transparency and ensure equal opportunities for everyone, the aim of our corporate communications is to make the same information available to all target groups at the same time. Stockholders and potential investors have access to the latest news and developments at the Group on our website. All press and stock exchange (ad hoc) announcements made by ThyssenKrupp ag are published online. The Company’s Articles of Association and the Rules of Procedure for the Executive Board, Supervisory Board and Audit Committee can also be viewed on our website, as can the annual report, interim reports and details of how ThyssenKrupp is implementing the recommendations and suggestions of the German Corporate Governance Code. All stockholders and interested readers can subscribe to an electronic newsletter which reports news from the Group.
According to Art. 15a of the Securities Trading Law (WpHG) the members of the Executive Board and Supervisory Board of ThyssenKrupp ag are obligated to disclose the purchase and sale of ThyssenKrupp shares and related financial instruments. This also applies to specific employees with management duties and parties closely related to them. At September 30, 2007 ThyssenKrupp AG had received two notifications for the reporting period which are published on our website. These state that Dr. Ulrich Middelmann and Dr.-Ing. Ekkehard D. Schulz purchased shares as follows:
At September 30, 2007 the total volume of shares in ThyssenKrupp AG held by all Executive and Supervisory Board members was less than 1% of the shares issued by the Company. There were therefore no cases of share ownership subject to disclosure under section 6.6 of the German Corporate Governance Code at this date.
The other directorships held by Executive and Supervisory Board members are listed in the Financial Report. Details of related party transactions are given in the Notes to the Consolidated Financial Statements.
Financial-statement audit by KPMG
Since fiscal year 2005/2006 accounting at ThyssenKrupp has been based on the International Financial Reporting Standards (IFRS). For the reporting period we again agreed with the auditors KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Berlin that the Chairman of the Audit Committee would be informed immediately of any possible grounds for exclusion or bias arising during the audit insofar as they are not immediately eliminated, and that the auditors would report immediately on any findings and occurrences during the audit which have a significant bearing on the duties of the Supervisory Board. It was also agreed that the auditors would inform the Supervisory Board or make a note in the audit report of any facts ascertained during their examination which are inconsistent with the Declaration of Conformity issued under Art. 161 Stock Corporation Act (AktG) by the Executive Board and Supervisory Board.
Focus on good corporate governance to continue
Compliance with the principles of good corporate governance will continue to be a central management duty for us in the current fiscal year. We will continue to be guided by the rules of the German Corporate Governance Code and will implement the Code accordingly. This also applies to the Code's most recent rules adopted in June 2007 on the severance payment cap and the nomination committee, which was established by the Supervisory Board of ThyssenKrupp AG in September 2007. The Executive Board and Supervisory Board will continue their close cooperation based on trust and will jointly discuss all major business transactions. We will offer our stockholders the usual facilities for authorizing proxies and exercising their voting rights for the Annual General Meeting on January 18, 2008, and we will transmit the meeting live on the internet. The implementation of our Groupwide compliance program on antitrust law and combating corruption is likewise an ongoing management duty which we will systematically pursue.
Source: Annual Report 2006/2007, p. 24-28