Handelsgesetzbuch (German Commercial Code)
A. Declaration of Compliance
At the end of December 2011, the Executive Board and Supervisory Board issued the Declaration of Compliance with the recommendations of the Code for fiscal year 2011 in accordance with § 161 AktG. Beiersdorf AG fulfills all the recommendations made in the Code with one exception, as well as a large number of the suggestions.
The Declaration of Compliance was also made permanently accessible to the public on the Company’s website at www.Beiersdorf.com/Declaration_of_Compliance.
Declaration by the Executive Board and the Supervisory Board of Beiersdorf Aktiengesellschaft on the Recommendations of the “Government Commission on the German Corporate Governance Code,” in accordance with § 161 of the AktG
Declaration by the Executive Board and the Supervisory Board
of Beiersdorf Aktiengesellschaft
on the Recommendations of the
“Government Commission on the German Corporate Governance Code”,
in accordance with § 161 of the German Stock Corporation Act (AktG)
In fiscal year 2011, Beiersdorf Aktiengesellschaft complied with, and continues to comply with, all recommendations of the “Government Commission on the German Corporate Governance Code” in the version dated May 26, 2010 with the following exception:
In accordance with section 4.2.3 (4), in concluding Executive Board contracts, care shall be taken to ensure that payments made to an Executive Board member on premature termination of his contract without serious cause, including fringe benefits, do not exceed the value of two years’ compensation (severance payment cap) and compensate no more than the remaining term of the contract.
This recommendation was complied with in concluding employment contracts with new Executive Board Members since fiscal year 2009. Thus all employment contracts with Executive Board Members contain a severance payment cap except the employment contract of the Chief Executive Officer who is an Executive Board Member since 1999 already. The Chief Executive Officer will resign from the Executive Board with the conclusion of the Annual General Meeting 2012; thus no severance payment cap was included in his employment contract, however, his employment contract contains another lump-sum restriction of the compensation for the time after resignation.
Hamburg, December 2011
|
For the Supervisory Board |
For the Executive Board |
|
|
Prof. Dr. Reinhard Pöllath |
Thomas-B. Quaas |
Dr. Ulrich Schmidt |
|
Chairman of the Supervisory Board |
Chairman of the Executive Board |
Member of the Executive Board |
B. Corporate Governance Practices
Beiersdorf Aktiengesellschaft pursues the following key corporate governance practices:
Compliance
For Beiersdorf, compliance with the law and internal guidelines is an essential prerequisite for successful and sustainable business. The Executive Board has issued Compliance Principles, which can be found at www.Beiersdorf.com/Compliance_Principles. In addition, an extensive antitrust compliance program, among other things, was set up in recent years. The employees concerned are given in-depth training, and numerous internal guidelines on how to comply with antitrust law have been issued. Preventing corruption is another focus of our activities.
The Compliance Management function is responsible for managing the compliance management system. This function is designed to support managers in ensuring compliance, issuing and enforcing suitable internal guidelines, and training employees.
Code of Conduct
Beiersdorf’s success is based on the trust placed in us by consumers, customers, investors, and employees. That is why high standards are set when it comes to responsibility – both for the Company and for each individual. Beiersdorf’s Code of Conduct lays down these standards in a binding set of guidelines that are to be used worldwide. Its objective is to help employees implement the key corporate principles in their everyday working life and to show how to handle potential issues or difficult situations that affect our business practices or our dealings with each other.
The Code of Conduct is available on the website at www.Beiersdorf.com/Code_of_Conduct.
Sustainability
Sustainability involves managing social and environmental risks and leveraging new market opportunities in such a way that value is generated for the Company – not just in the short term, but also and above all in the medium and long term. Owing to its relevance, this topic falls within the Chairman of the Executive Board’s area of responsibility. Beiersdorf recognized at an early stage the importance of taking responsibility and continuously improving on what it has already achieved. Because of this, our new sustainability strategy builds systematically on our previous work. In fiscal year 2011, we again made significant progress in making products and production processes more sustainable and in meeting stakeholders’ expectations. In order to ensure that we concentrate on issues that are of importance for our stakeholders and that contribute to the Company’s success, our sustainability strategy is based on three fields of activity: ”Products”, “Planet”, and “People”.
Please find further information in the Annual Report’s chapter „Sustainability“.
Human Resources Policy
Beiersdorf’s human resources activities are based on the “Focus on Skin Care. Closer to Markets.” strategy that was resolved in 2010. This provided the foundation for the outlook for the period up to 2015 developed by Human Resources. The key goal is to establish Beiersdorf as one of the most attractive employers in the consumer goods industry. This involves making the best use of employees’ skills and potential to meet workplace demands, promoting motivation, and fostering a performance-driven culture.
Since highly qualified, motivated employees are key to a company’s success, talent management made up an even greater part of our human resources activities in fiscal year 2011. This is a key strategic business process that aims to establish a high-performance culture at all levels worldwide. It involves both identifying and developing a wide range of talents. By doing this, Beiersdorf contributes to the Company’s sustained success by ensuring that all key positions within the Company can always be filled with the right people for the job. Beiersdorf’s talent management activities are based on a standard international definition of performance and potential.
Beiersdorf’s understanding of leadership and the expectations placed on all employees worldwide are based on its eight core competencies. These interlinking, complementary skills are subdivided into “Business” and “People”.
Please find more information in the chapter „Employees“of the Annual Report.
Risk Management
Risk management is an integral part of central and local planning, management, and control processes, and conforms to consistent standards across the Group. Our open communications policy, the risk inventory carried out at regular intervals, and the planning and management system ensure that our risk situation is presented transparently.
Please find more information in the “Risk Report” of the Annual Report.
C. Description of the working practices of the Executive Board and the Supervisory Board as well as the composition and the working practices of their committees
I. General Information on Beiersdorf’s Management Structure
As an international stock corporation domiciled in Hamburg, Germany, Beiersdorf AG is governed by the provisions of German stock corporation, capital market, and codetermination law, as well as by its Articles of Association, among other things. The Company has a dual management and supervisory structure consisting of two bodies, the Executive Board and the Supervisory Board, as is customary in Germany. The Annual General Meeting acts as the decision-making body for shareholders in respect of fundamental decisions by the Company. These three bodies are all dedicated in equal measure to the interests of the shareholders and the good of the Company.
II. The Supervisory Board
Beiersdorf AG’s Supervisory Board consists of twelve members. Six of these are elected by the Annual General Meeting in accordance with the provisions of the AktG and six by the employees in accordance with the provisions of the Mitbestimmungsgesetz (German Co-Determination Act, MitbestG); all members are elected for a period of five years. The term of the office of the current Supervisory Board ends at the end of the Annual General Meeting resolving on the approval of their activities for the fiscal year 2013. However, the term of the office of one court-appointed member ends at the end of the 2012 Ordinary Annual General Meeting.
The Supervisory Board appoints the Executive Board, advises it on the management of the Company, and supervises its conduct of the Company’s business as laid down by the law, the Articles of Association, and the bylaws. The Supervisory Board works closely with the Executive Board for the good of the Company and with the common goal of achieving sustainable value added, and is involved in decisions of fundamental importance. Certain decisions require its approval in accordance with the law and the bylaws of the Supervisory Board.
The Supervisory Board makes decisions at regular meetings – and in individual cases outside meetings – on the basis of detailed documents. It is informed by the Executive Board in a regular, timely, and comprehensive manner of all relevant matters. The Executive Board’s reporting obligations to the Supervisory Board are set out in detail in the bylaws for the Executive Board. In addition, the Chairman of the Executive Board informs the Chairman of the Supervisory Board regularly and in a timely manner on important transactions and liaises with him on important decisions.
The Supervisory Board evaluates its work on a regular basis. The results are discussed by the full Board and any measures for improvement resolved. The most recent Supervisory Board efficiency review was performed in fall 2010 together with external consultants.
The Company has also taken out a D&O insurance policy for the members of the Supervisory Board. This includes a deductible corresponding to the statutory requirements for Executive Board member deductibles. The deductible amounts to 10% of any damage incurred, up to one-and-a-half times the fixed annual remuneration of the respective Supervisory Board member.
The work of the Supervisory Board is performed within and outside the meetings of the full Board as well as in the committees. The Supervisory Board has formed the following five committees:
The Executive Committee prepares the Supervisory Board meetings and the Supervisory Board’s human resources decisions and resolves – subject to the resolution of the full Supervisory Board specifying the total remuneration – instead of the Supervisory Board on the contracts of service and pension agreements for members of the Executive Board and on other issues involving the Executive Board. It regularly reviews the efficiency of the Supervisory Board’s activities. In addition, it regularly discusses long-term succession planning for the Executive Board. Finally, the Executive Committee can make decisions on transactions requiring Supervisory Board approval in those cases in which the Supervisory Board cannot pass a resolution in time.
The Audit Committee prepares the decisions of the Supervisory Board on the approval of the annual and consolidated financial statements, the proposal to the Annual General Meeting on the election of the auditors, and the agreement with the auditors (in particluar with regard to issuing the audit engagement, stipulating the areas of emphasis of the audit, and agreeing the fee). In addition, the Audit Committee verifies the auditors’ independence and approves additional services that they provide. Finally, the Audit Committee advises and supervises the Executive Board on questions relating to accounting, and discusses the interim reports with the Executive Board before they are published.
The Finance Committee advises and supervises the Executive Board on questions relating to risk management, the internal control system, compliance, and internal auditing. In addition, it monitores corporate policy in the areas of finance, financial control, tax, and insurance. It decides in place of the Supervisory Board on raising and granting loans, on the assumption of liability for third-party liabilities, and on investment transactions.
The Mediation Committee formed in accordance with the provisions of the MitbestG makes proposals to the Supervisory Board on the appointment of Executive Board members if the requisite two-thirds majority is not reached during the first ballot.
The Nomination Committee is composed of shareholder representatives. It suggests suitable candidates to the Supervisory Board for proposal for election to the Annual General Meeting.
The composition of the Supervisory Board and its committees can be found on our website at www.Beiersdorf.com/Boards.
III. The Executive Board
The Executive Board manages the Company enterprise-wide on its own responsibility and conducts the Company’s business. It is obliged to act in the Company’s best interests and to increase its sustainable enterprise value. It performs its management duties as a collegiate body with collective responsibility for the Company’s business.
The members of the Executive Board are appointed by the Supervisory Board. The Company’s Executive Board, as a rule, consists of six members. The duties of the Executive Board are broken down by functions and regions (three members have functional and three regional areas of responsibility). The allocation of Board areas to the individual Executive Board members results from a Schedule of Responsibilities, and is published on the Company’s website at www.Beiersdorf.com/Executive_Board.
The Executive Board develops the corporate goals and the Group’s strategy, agrees them with the Supervisory Board, ensures their implementation, and regularly discusses their implementation status with the Supervisory Board. It is responsible for managing and monitoring the Group, for corporate planning including the annual and multi-year planning, and for preparing the quarterly, annual, and consolidated financial statement as well as for Group financing. The Executive Board is also responsible for ensuring adequate risk management and risk control, and for ensuring that all statutory provisions and applicable internal corporate guidelines are observed, and works to ensure that Group Companies also abide by them (compliance). It provides the Supervisory Board with regular, timely, and comprehensive reports on all questions that are of relevance for the Company, including explanations and reasons for discrepancies between the actual course of business and the planning and targets. Certain Executive Board measures and transactions that have material significance for the Company require the approval of the Supervisory Board.
The Executive Board passes resolutions in regularly held meetings that are chaired by the Chairman of the Executive Board. The members of the Executive Board work together in a collegial manner and inform one another on an ongoing basis about important measures and events in their areas of responsibility.
Executive Board members disclose potential conflicts of interest to the Supervisory Board without delay and inform their colleagues on the Executive Board of them. Material transactions between the Company and members of the Executive Board and their related parties require the approval of the Supervisory Board; such transactions must comply with the standards customary in the sector. Sideline activities also require the approval of the Supervisory Board.
The Company has taken out a D&O insurance policy for the members of the Executive Board that provides for a deductible in the amount of 10% of any damage incurred, up to one-and-a-half times the fixed annual remuneration of the Executive Board member.
