As a listed German stock corporation, corporate governance at Funkwerk AG is dictated in the first instance by the German Stock Corporation Act (AktG), but also by the specifications of the German Corporate Governance Code as amended.
In compliance with the legal stipulations, Funkwerk is governed by the “dual management system”, which requires a strict separation between the Executive Board as the managing body and the Supervisory Board as the monitoring body. Executive Board and Supervisory Board work closely together in the interest of the company.
Since the retirement of the previous chairman, Dr. Hans Grundner, on 19 May 2011, the Executive Board of Funkwerk AG comprises two members, who manage the company on an equal footing. Details of theExecutive Board , including their areas of responsibility here.
The Executive Board is responsible for the corporate management and acts in the interest of the company with a view to increasing its value on a sustainable basis. For this purpose, it sets up an appropriate strategy which it agrees with the Supervisory Board and ensures its implementation. Its responsibilities further include effective opportunity and risk management and controlling, the preparation of annual financial statements for the company (AG) and the group and the interim and quarterly statements of account.
The collaboration within the Executive Board is governed by Rules of Internal Procedure, which were stipulated by the Supervisory Board most recently in August 2011. These also specify the areas of responsibility of board members, matters which concern the entire Executive Board, the majority required for resolutions, and a catalogue of transactions requiring approval.
The Supervisory Board of Funkwerk AG comprises three members. The work of the Supervisory Board is governed by Rules of Internal Procedure and its efficiency is regularly monitored. In terms of key responsibilities, the Supervisory Board advises and supervises the Executive Board in its management of the company. Where decisions of fundamental importance to the company are required, it is involved in the decision-making process from the very outset. The Supervisory Board also specifies the information and reporting requirements of the Executive Board vis-à-vis the Supervisory Board. The Executive Board regularly, promptly and comprehensively informs the Supervisory Board of all relevant issues related to corporate planning, business development, the risk situation and risk management. Deviations of the targets from the actual course of business are discussed. Based on the results of the auditor’s report, the Supervisory Board then reviews the annual financial statements of the company and the group. The interim and quarterly statements of account are also discussed with the Supervisory Board prior to their publication.
The Supervisory Board of Funkwerk is composed so as to ensure that the knowledge, ability and professional experience required to properly complete the tasks of the board are covered. All members of the Supervisory Board are proven experts in their field.
The Supervisory Board convenes on a regular basis, having held six ordinary meetings and one telephone conferencein 2011.
Cooperation of Executive Board and Supervisory Board
The Executive Board and the Supervisory Board of Funkwerk AG work together in close cooperation for the good of the company maintaining a basis of trust. The Executive Board agrees the strategic orientation with the Supervisory Board and regularly discusses with it the progress and stage reached in implementing the strategy. The Supervisory Board is also regularly, promptly and comprehensively informed of any key events and of the corporate planning, the trend of business and the risk situation. The information and reporting requirements of the Executive Board are stipulated in the Rules of Internal Procedure for the Executive Board. At Supervisory Board meetings, the Executive Board and the Supervisory Board discuss key strategic decisions and transactions requiring approval in great detail in an open dialogue while maintaining strict confidentiality. In addition to the ordinary meetings, the Executive Board and the Supervisory Board met regularly to deliberate on relevant topical issues.
Declaration of Compliance
Since issuing its last declaration of compliance on 18 March 2011 and its latest declaration of compliance issued on 21 March 2012, Funkwerk AG has complied with the recommendations of the “Government Commission on the German Corporate Governance Code” as amended on 26 May 2010 with the following restrictions:
1. The German Corporate Governance Code recommends that the company also assist the shareholders in the use of postal votes and proxies (item 2.3.3 of the Code). Funkwerk AG has already taken the precaution through the resolution passed at the shareholders’ meeting on 27 May 2010 of introducing a new clause in its Articles of Incorporation authorising the Executive Board to allow a postal vote in accordance with the option granted in Section 118 (2) AktG. We believe that postal votes have not to date been sufficiently tested. Against this background and in consideration of the administrative work involved in a postal vote and the option of instructing a representative appointed by the company to exercise shareholders’ voting rights, the Executive Board does not intend to utilise its authorisation to allow a postal vote at the annual shareholders’ meeting in 2012.
2. The German Corporate Governance Code recommends for D&O insurances for the Supervisory Board the agreement of an excess of at least 10 per cent of the damage up to at least 1.5 times the fixed annual remuneration (item 3.8 of the Code). The D&O insurance contract concluded for the Supervisory Board of Funkwerk AG does not provide for an excess. The Executive Board and the Supervisory Board of Funkwerk AG hold the view that the due diligence and sense of responsibility which the members of the Supervisory Board already exercise at all times in the performance of their duties could not be further optimised through agreement of an excess.
3. The German Corporate Governance Code recommends that the Supervisory Board set up qualified committees (item 5.3.1 of the Code), specifically an audit committee (item 5.3.2 of the Code) and a nomination committee (item 5.3.3 of the Code). Since the Supervisory Board does not comprise more than three members, the setup of committees is considered impractical. The duties assigned to the audit committee are performed jointly by the whole Supervisory Board.
4. The German Corporate Governance Code recommends that the Supervisory Board specify concrete objectives regarding its composition, which, whilst considering the specifics of the company, take into account the international activities of the company, potential conflicts of interest, an age limit to be specified for the members of the Supervisory Board and diversity, and stipulate an appropriate degree of female representation (item 5.4.1 of the Code). The Supervisory Board is of the opinion that decisions on Supervisory Board candidates should still be made on the basis of whether relevant candidates possess the knowledge, ability and expert experience required to properly complete the tasks of the Supervisory Board. The implementation of the concrete objectives recommended in item 5.4.1. para. 2 of the Code regarding specific criteria for recommendations of candidates for the Supervisory Board opposite other criteria will not be realised. The Supervisory Board intends to continue deciding on recommendations for its composition on a case-by-case basis based on the given specific situation.