Corporate Governance Report
In this section and in the corporate governance declaration in accordance with § 289a German Commercial Code (HGB) the Executive Board – also on behalf of the Supervisory Board – reports on corporate governance at ThyssenKrupp in accordance with section 3.10 of the German Corporate Governance Code. This section also includes the compensation report.
- Implementation of the German Corporate Governance Code
- Compliance as a management duty of the Executive Board
- Objectives of the Supervisory Board with regard to the composition of corporate bodies
- Avoiding conflicts of interest
- Directors' dealings
- Deductible in D&O insurance
- Shareholders and Annual General Meeting
- Appropriate control and risk management system
- Transparent governance through extensive information
- Accounting and financial statement auditing by KPMG
- Corporate governance declaration
Implementation of the German Corporate Governance Code
In the reporting year the Executive Board and Supervisory Board of ThyssenKrupp AG again dealt intensively with the requirements of the German Corporate Governance Code as amended on May 26, 2010. Up to the Annual General Meeting on January 21, 2011, ThyssenKrupp AG did not fully comply with the recommendation in section 5.4.5 of the Code that an executive board member should not hold more than three supervisory board seats in external listed companies or in the supervisory bodies of non-listed companies subject to comparable requirements. On Prof. Dr.-Ing. Ekkehard D. Schulz's retirement from the Executive Board of ThyssenKrupp AG at the close of the Annual General Meeting, the Code's recommendations were again complied with in full. After the Annual General Meeting on January 21, 2011 the Supervisory Board and Executive Board therefore issued an updated, unqualified Declaration of Conformity. At October 01, 2011 the Declaration of Conformity was again updated and issued without qualification. All Declarations of Conformity issued to date are permanently available on the ThyssenKrupp website.
The Code is also implemented at our listed subsidiary Eisen- und Hüttenwerke AG, taking into account the particularities of its membership of the Group. Individual deviations are presented and explained in the company's Declaration of Conformity of October 01, 2011.
Compliance as a management duty of the Executive Board
Compliance, in the sense of measures to ensure adherence to statutory requirements and internal company policies and observance of these measures by the Group companies, is a key management duty at ThyssenKrupp. A compliance program focusing on antitrust law and anti-corruption policies was introduced directly after the merger of predecessor companies Thyssen and Krupp in 1999. It has been regularly reviewed and enhanced ever since. In May 2011, in connection with the strategic development of the Group, the Executive Board of ThyssenKrupp AG decided to massively expand the compliance program and increase the number of staff in the compliance unit. The compliance program contains far-reaching measures to ensure adherence to corruption and antitrust regulations and the Group policies based on them.
The Executive Board of ThyssenKrupp AG has unequivocally expressed its rejection of antitrust violations and corruption in the ThyssenKrupp Compliance Commitment. Antitrust violations and corruption are not tolerated in any way and result in sanctions against the employees 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. In these, the underlying statutory requirements are explained in more detail. The key messages of our compliance policies and guidance notes are summarized in a Compliance Code of Conduct.
A compliance unit has been set up to develop, manage and implement the program. For example, full-time compliance officers inform employees about the relevant statutory provisions and internal policies in regular training sessions. They are also available to answer individual questions. As an additional compliance element, ThyssenKrupp has introduced a whistleblower hotline. It is run for us by an external law firm. The whistleblower hotline is available to employees of the Group and third parties to report possible infringements of laws or policies at Group companies. Here too the focus is on antitrust and anti-corruption compliance. The hotline can be contacted from anywhere in the world and is toll-free.
In May 2011 the Bochum public prosecutor's office and the Federal Cartel Office instigated investigations into antitrust violations in connection with the so-called "rail cartel". The matter involves allegations of anticompetitive agreements in sections of the rail business in Germany. Within the ThyssenKrupp Group, the investigations concern ThyssenKrupp GfT Gleistechnik GmbH and several employees. More information is provided in the risk report in the section "Expected developments and associated opportunities and risks".
Objectives of the Supervisory Board with regard to the composition of corporate bodies
In appointing Executive Board members and determining the composition of the Supervisory Board, the Executive Committee, Nomination Committee and Supervisory Board of ThyssenKrupp AG aim to maintain a balanced mix of specialist qualifications and also take into account the criterion of diversity. On September 03, 2010 concrete objectives were established for the future composition of the Supervisory Board. These objectives were published in the corporate governance report in the 2009/2010 Annual Report, which is accessible on the internet at www.thyssenkrupp.com/financial-reports/09_10/en/governance.html. These objectives are not limited to the issue of female representation but reflect further criteria to ensure the heterogeneous composition of the Supervisory Board – including an international background, suitable specialist knowledge, technical expertise, knowledge of the Company and not least independence. The Supervisory Board's proposals for the election of Supervisory Board members should continue to be based on the welfare of the Company while giving consideration to these objectives.
This was also the basis on which the election proposal submitted to the Annual General Meeting on January 21, 2011 was prepared. The Nomination Committee and the full Supervisory Board discussed and subsequently adopted the proposal of the Alfried Krupp von Bohlen und Halbach Foundation to elect Prof. Dr.-Ing. Schulz to the Supervisory Board as a shareholder representative. Both bodies consider the election of Prof. Dr.-Ing. Schulz appropriate in particular in view of his knowledge of the Company and his technical expertise.
Since the appointment of Ms. Maaßen to the Supervisory Board effective January 22, 2011, the Supervisory Board has one female member on the shareholder side and two on the employee side, which means that women now make up 15% of the Supervisory Board. The objective established in the prior year to maintain a female proportion of 10% has therefore been more than fulfilled. In the Supervisory Board meeting on November 26, 2010, Prof. Dr. Weder di Mauro was additionally appointed as a fourth member of the Nomination Committee.
Avoiding conflicts of interest
Again this reporting year, the only case of a consulting or other service agreement between Supervisory Board members and the Company related to Dr. Kersten v. Schenck, who is a member of our Company's Supervisory Board and at the same time an of counsel of the law firm Clifford Chance. To the extent that Clifford Chance provided legal advice to the Company in 2010/2011, the engagement was approved by the Personnel Committee of the Supervisory Board. Conflicts of interest of Executive or Supervisory Board members, which must be disclosed immediately to the Supervisory Board, did not occur.
Details of the other directorships held by Executive Board and Supervisory Board members on statutory supervisory boards or comparable German and non-German control bodies of business enterprises are provided in the section "Additional information". Details of related party transactions are given in Note 23 to the Consolidated Financial Statements.
Directors' dealings
According to § 15a Securities Trading Act (WpHG) the members of the Executive Board and Supervisory Board and persons close to them are required by law to disclose the purchase and sale of ThyssenKrupp AG shares or related financial instruments whenever the value of the transactions amounts to €5,000 or more within a calendar year. One transaction was reported to ThyssenKrupp AG for the 2010/2011 fiscal year; it is published on Directors' Dealings.
At September 30, 2011 the total volume of ThyssenKrupp AG shares held by all Executive Board and Supervisory Board members amounted to less than 1% of the shares issued by the Company.
Deductible in D&O insurance
In accordance with the statutory requirements, the Company has taken out directors and officers (D&O) liability insurance for the members of the Executive Board with an appropriate deductible pursuant to § 93 subs. 2, sentence 3 Stock Corporation Act (AktG). D&O insurance with an appropriate deductible has also been agreed for the members of the Supervisory Board in accordance with the German Corporate Governance Code.
Shareholders and Annual General Meeting
The shareholders of ThyssenKrupp AG exercise their rights at the Company's Annual General Meeting, which is chaired by the chairman of the Supervisory Board. The Annual General Meeting takes place once a year. Each share confers one vote.
Shareholders can exercise their voting rights at the Annual General Meeting in person or by proxy, for which they can authorize a person of their choice or a Company-nominated proxy acting on their instructions. Proxy voting instructions to Company-nominated proxies can be issued via the internet before and during the Annual General Meeting up to the end of the general debate. Shareholders can also cast their votes in writing by postal vote - without authorizing a proxy. Shareholders unable to attend the Annual General Meeting, as well as interested members of the public, can follow the meeting live and in full on the internet.
All documents and information on the Annual General Meeting are made available to shareholders in good time on our website. In addition, questions can be addressed to members of our investor relations department via an infoline or e-mail.
Appropriate control and risk management system
For us, the continuous and systematic management of business opportunities and risks is fundamental to professional corporate governance. It helps ensure that risks are identified and evaluated early and appropriately managed. The Executive Board reports regularly to the Supervisory Board about the status of material Group risks. The Supervisory Board Audit Committee regularly concerns itself with monitoring of the accounting process, the effectiveness of the internal control, risk management and auditing systems as well as monitoring of the financial statement audit. The individual systems are continuously enhanced and adapted to changing conditions throughout the Group. Key features of our control and risk management systems can be found in the section "Expected developments and associated opportunities and risks".
Transparent governance through extensive information
Our dialogue with the capital market is aimed at informing all target groups fully, equally and quickly. Shareholders and potential investors can find out about the latest developments in the Group at any time on our website, where all press releases and stock exchange (ad hoc) announcements of ThyssenKrupp AG are published in German and English. The Company's Articles of Association and the rules of procedure for the Executive Board, Supervisory Board and the Audit Committee can also be viewed on the website, as can the consolidated financial statements, interim reports and information on implementation of the recommendations and suggestions of the German Corporate Governance Code. All interested parties can subscribe to an electronic newsletter on the website which reports news from the Group.
Our investor relations work keeps us in close touch with our shareholders and potential investors. For example we hold regular meetings with analysts and institutional investors. The venues and dates of roadshows and investors' conferences are posted on our website. An intensive dialogue also takes place at analysts' and investors' conferences and in regular and ad hoc conference calls. All presentations for these events are freely accessible on the website, which also offers video or audio recordings of the main events. We provide information on recurring dates, such as the date of the Annual General Meeting or the publication dates of interim reports, in a financial calendar published in the annual report, the interim reports and on the Company's website.
Accounting and financial statement auditing by KPMG
In line with European Union requirements, the consolidated financial statements and interim reports of ThyssenKrupp are prepared in accordance with the International Financial Reporting Standards (IFRS). The statutory parent-company financial statements of ThyssenKrupp AG, on which the dividend payment is based, are drawn up in accordance with German GAAP (HGB). For the reporting period we again agreed with the financial-statement auditors, KPMG AG 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 or 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 that conflict with the Declaration of Conformity issued.
Corporate governance declaration
The corporate governance declaration in accordance with § 289a German GAAP (HGB) is presented on our website at www.thyssenkrupp.com/en/investor/unternehmensfuehrung.html. It contains a description of how the Executive Board and Supervisory Board operate, the declaration of conformity in accordance with § 161 Stock Corporation Act (AktG), and details of key governance practices.
Source: Annual Report 2010/2011, p. 29-33
