Business areas and organizational structure
Distinct capabilities, a lean organization and a management structure that permits fast and customer-oriented decisions – these factors contributed to the success of ThyssenKrupp in 2006/2007.
Capabilities
ThyssenKrupp's actions are driven by customers' wishes for innovative products and services. At our plants and branches in over 70 countries, more than 191,000 employees work in the areas Steel, Capital Goods and Services to find high-quality and economically sound solutions that meet the challenges of the constantly changing markets. Our five segments – Steel, Stainless, Technologies, Elevator and Services – are among the world's leading suppliers of products and services in their markets.
Oranizational structure
Our Group is run on a decentralized basis so that decisions are made as close to the market and customers as possible. The segments, each led by a segment holding company, enjoy wide-ranging independence for all market-facing activities, while corporate strategy, portfolio management, risk management and financing are tasks for the parent company ThyssenKrupp AG. In addition, the holding company is the Group's interface to the wider business environment, in particular the capital market and the stockholders.
Founded in 1999, ThyssenKrupp AG is a stock corporation under German law. Under its Articles of Association it is dual domiciled in Duisburg and Essen, though most of its head office functions are located in Düsseldorf. From 2009 the offices will be relocated to the ThyssenKrupp Quarter, the new headquarters currently being built in Essen. A progress report on the building work can be found in section Business management - goals and strategy. ThyssenKrupp has its own Group representative offices in Berlin, Brussels and 34 other locations throughout the world. With their knowledge of the local markets, they are important contacts for our customers and Group subsidiaries.
ThyssenKrupp AG owns, directly or indirectly, almost 900 companies and equity interests, which are listed in section Statement of share ownership. The Group has more than 2,400 production sites, offices and service bases, two thirds of them located outside Germany. The largest of our almost 1,300 locations is Duisburg, with over 18,000 employees.
Management resposibilities in the Group
In parallel with the portfolio optimization, we have further developed the Group's management structure in recent years. On the Executive Board of ThyssenKrupp AG, which is responsible for the management of the Group, members responsible for segments and corporate functions are represented on an equal footing. In addition, the Executive Board members are responsible for specific regions based on the principle that the chief executives of the segments which have the strongest commercial involvement in a region take responsibility for that region in addition to their responsibility for segment operations.
At all management levels our goal is to achieve a creative mix of internal and external, young and experienced, German and international managers. Young executives are systematically trained to take on senior roles. High potentials are given increased responsibility, which may involve switching between individual segments or between segments and corporate departments.
Compensation report
The Compesation Report is contained in the Corporate Governance Report and forms part of the management report on the Group.
Information required under takeover law
The following information is presented in accordance with Art. 315 par. 4 of the German Commercial Code (HGB).
Composition of capital stock
The capital stock of ThyssenKrupp AG remains unchanged at €1,317,091,952.64 and consists of 514,489,044 no-par value bearer shares. Each share carries the same rights and grants one vote at the Annual General Meeting.
Shareholdings exceeding 10% of the voting rights
There is one direct shareholding in the Company which exceeds 10% of the voting rights: In accordance with the statutory requirements, the Alfried Krupp von Bohlen und Halbach Foundation, Essen informed us on December 21, 2006 that at that date it held around 25.10% of the voting rights of ThyssenKrupp AG.
Appointment and dismissal of Executive Board members, amendments to the Articles of Association
The appointment and dismissal of members of the Executive Board of ThyssenKrupp AG is subject to Arts 84, 85 German Stock Corporation Act (AktG) and Art. 31 Codetermination Act (MitbestG) in conjunction with Art. 6 of the Articles of Association. Amendments to the Articles of Association are subject to the approval of the Annual General Meeting with a majority of at least three quarters of the capital stock represented; Arts 179 ff. AktG apply. Under Art. 11 par. 9 of the Articles of Association, the Supervisory Board is authorized to resolve amendments to the Articles of Association which relate only to their wording. The Supervisory Board is also authorized to amend Art. 5 of the Articles of Association (Capital Stock and Shares) depending on the use of authorized capital. If the authorized capital has not been used or has been only partly used by January 18, 2012, the Supervisory Board may also amend the wording of Art. 5.
Authorization of the Executive Board to issue shares
Under Art. 5 par. 5 of the Articles of Association, the Executive Board is authorized, with the approval of the Supervisory Board, to increase the Company's capital stock on one or more occasions on or before January 18, 2012 by up to €500 million by issuing up to 195,312,500 new no-par value bearer shares in exchange for cash and/or contributions in kind (authorized capital).
It may exclude stockholders' subscription rights with the approval of the Supervisory Board in the following cases:
- for fractional amounts occurring as a result of the subscription ratio;
- to grant subscription rights for new shares to the holders of conversion and/or option rights or conversion obligations outstanding at the time the authorized capital is utilized in respect of convertible bonds and/or options already issued or to be issued in future by the Company or its subsidiaries to the extent to which they would be eligible as stockholders after exercising the conversion and/or option rights or after fulfillment of the conversion obligations;
- if the issue price of the new shares is not significantly lower than the stock market price of shares already quoted on the stock market at the time the final issue price is determined and the shares issued do not exceed altogether 10% of the capital stock either at the time this authorization becomes effective or at the time it is exercised;
- in the event of capital increases in exchange for contributions in kind.
The sale of treasury stock shall be counted against the 10% capital limit insofar as it takes place during the term of this authorization to the exclusion of subscription rights pursuant to Art. 186 par. 3 sentence 4 AktG. Shares issued to service bonds with conversion and/or option rights and conversion obligations shall likewise be counted against the 10% capital limit insofar as the bonds are issued during the term of this authorization to the exclusion of subscription rights analogously applying Art. 186 par. 3 sentence 4 AktG. The Executive Board is authorized, with the approval of the Supervisory Board, to determine the further content of the share issue and the conditions of the share issue.
Authorization of the Executive Board to repurchase stock
By resolution of the Annual General Meeting of January 19, 2007 the Company was authorized until July 18, 2008 to repurchase treasury stock up to a total of 10% of the current capital stock of €1,317,091,952.64. The authorization may be exercised in whole or in installments, once or several times, in pursuit of one or several purposes by the Company or by third parties for the account of the Company. At the discretion of the Executive Board, the buy-back may be effected on the open market or by means of a fixed-price/Dutch auction tender offer. The countervalue per share paid by the Company (excluding incidental costs) may not be more than 5% higher or lower than the price determined on the day of trading by the opening auction in the Xetra trading system (or a comparable successor system).
If the shares are repurchased by means of a tender offer, the tender price or the limits of the price range per share (excluding incidental costs) may not be more than 10% higher or lower than the average closing price in the Xetra trading system (or a comparable successor system) on the three trading days before the date of the public announcement of the offer.
If, after announcement of a tender offer, the relevant price is subject to significant changes, the tender offer may be amended. In this case the price is based on the average price over the three days of trading before the public announcement of an amendment. The tender offer may specify further conditions. If the offer is over-subscribed or, in the case of a Dutch auction, not all of several equal tenders can be accepted, tenders must be accepted on a quota basis. Priority may be given to small lots of up to 100 shares per stockholder.
The Executive Board is authorized to use shares of the Company acquired on the basis of this authorization for all legally permissible purposes. In particular it may cancel the shares, sell them by means other than on the open market or by offer to stockholders or sell them in exchange for a contribution in kind and use them to discharge conversion rights in respect of convertible bonds issued by the Company or the Company's subsidiaries. In the latter three cases, the stockholders' subscription rights are excluded. The Supervisory Board may determine that measures of the Executive Board under this authorization are subject to its approval.
By resolution of the Annual General Meeting of January 23, 2004, the Executive Board was authorized up to January 22, 2009 to carry out the following measures with the approval of the Supervisory Board:
- to issue bearer bonds in the total par value of up to €500,000,000 and to grant the bond holders the right to convert the bonds into no-par value bearer shares of ThyssenKrupp AG (convertible bonds);
- to exclude the stockholders' subscription rights to convertible bonds if this is necessary (1) for fractional amounts occurring as a result of the subscription ratio, provided the issue price for the convertible bonds is not significantly lower than their theoretical fair value calculated according to recognized financial calculation methods and (2) to grant holders of conversion rights from previous bond issues subscription rights in the amount to which they would be entitled upon exercising their conversion rights. The conversion price for treasury stock must not be lower than 80% of the average closing price in the Xetra trading system over the three days of trading before the date of the public announcement of the offer or acceptance of a tender. The Executive Board determines the conditions for conversion bonds.
Key agreements subject to conditions
ThyssenKrupp AG is party to the following agreements that are subject to change of control provisions as a result of a takeover bid:
- The Company has concluded an agreement with a banking consortium on a committed credit facility in the amount of €2.5 billion. This agreement can be terminated with immediate effect if the Company becomes a subsidiary of another legal entity or natural person and termination is requested by a group of banks representing more than 50% of the credit facility.
- Further, the Company is party to a shareholders' agreement in respect of Atlas Elektronik GmbH (joint venture) under which the co-shareholder EADS Deutschland GmbH has a call option on specific assets and liabilities of the joint venture at fair value in the event that a competitor of the joint venture or of the co-shareholder directly or indirectly acquires a controlling interest in the Company. If the call option is exercised, ThyssenKrupp Technologies AG is entitled to purchase all the co-shareholder's shares in the joint venture at fair value plus 5% premium. If the call option is not exercised, the co-shareholder has a put option in respect of the shares in the joint venture at the specified purchase price conditions.