ElringKlinger AG
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Corporate Governance code declaration

Declaration of Conformity with the German Corporate Governance Code, issued by the Supervisory Board and Management Board in accordance with Section 161 of the German Stock Corporation Act

Pursuant to Section 161 of the German Stock Corporation Act (Aktiengesetz – AktG), the supervisory board and management board of exchange-listed stock corporations are obliged to issue an annual declaration stating that the recommendations of the "Code of the Government Commission on German Corporate Governance" have been and will continue to be complied with and, if applicable, specifying which recommendations have not been or will not be applied. Any departures from the recommendations must be explained.

The Management Board and Supervisory Board of ElringKlinger AG hereby issue a Declaration of Conformity pursuant to Section 161 AktG, stating that the Company has complied with, currently complies with and will in future comply with the recommendations of the "Government Commission German Corporate Governance Code" in the version dated May 26th, 2010, with the following exceptions.

  • Section 2.3.2: As in the past, in 2012 the invitation to the Annual General Meeting of Shareholders will again be dispatched by mail.
    At present, for organizational reasons the company does not comply with the Code's recommendation on the electronic dispatch of the invitation to the General Meeting of Shareholders. As the company generally has no records of the e-mail addresses of its shareholders, from the company's perspective any additional dispatch would be associated with disproportionate time and effort without actually offering any substantive benefits for shareholders. Within this context, it should also be noted that the invitation to the General Meeting of Shareholders has been and will continue to be available for download from the company's website.
     
  • Section 2.3.3: The Company does not provide shareholders’ acclamation by postal vote.
    The articles of association of a corporation can stipulate that shareholders may cast their vote by postal vote. The articles of association of the company do not provide such a possibility.
     
  • Section 3.8: The deductibles agreed as part of the company's D&O insurance are the same for the Supervisory Board and the Management Board; based on the current employment contracts, these deductibles differ from those outlined in Section 3.8 of the Code.
    As regards the D&O insurance policy for the Management Board, the company made use of statutory provisions whereby existing agreements with the Management Board concerning a deductible do not have to be adjusted in line with legal requirements during the applicable transitional period. Correspondingly, the company will not adjust the D&O insurance deductible for the Supervisory Board. The company is of the opinion that inconsistency in the treatment of the Management Board and the Supervisory Board would be inappropriate.
     
  • Section 4.1.5: When filling managerial positions in the enterprise, suitability and qualification of the candidates were taken into consideration by the management board primarily.
    When filling managerial positions the management board orients itself by requirements of the corresponding position and looks for the best possible individual, fulfilling these requirements. If there are more candidates with similar qualifications, the management board takes diversity into consideration and aims for an appropriate consideration of women without making these criteria a principal of priority. From the point of view of the company such regulation would be counterproductive, especially in view of the comparatively small number of managerial positions to be filled.
     
  • Section 4.2.5: The compensation report, within the context of the management report, outlines the basic system of compensation. Rather than being presented in the compensation report, details of Management Board remuneration are disclosed in the notes to the financial statements.
    The company presents data relating to Management Board compensation in an itemized format, i.e. separately for each member. Contrary to the recommendation, the components of compensation are disclosed in the notes to the financial statements. From the company's perspective, there is no need for additional disclosure, and thus presentation of duplicate information, in the compensation report.
     
  • Section 5.1.2: When appointing the Management Board, the Supervisory Board orients itself by suitability and qualification. No age limit has been set for members of the Management Board.
    The members shall be selected prior to their suitability and qualification. In the company’s view, the special weighting of further criteria given by the Code would limit the selection of potential candidates for the Management Board. Thereby, it has to be considered that the Management Board temporarily exists of only 3 members.

    There is no general age limit for Management Board members. The main focus for ElringKlinger is on the qualifications as well as the experience required by candidates to be appointed to the board. Given the provisions set out in the German General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz – AGG), which does not apply directly to this case but at the very least provides a basis for analogous application, the company is of the opinion that the approach of specifying an age limit is inappropriate.
     
  • Section 5.3.3: At present there is no Nomination Committee to propose possible candidates for the election of shareholder representatives to the Supervisory Board.
    Given the current size of the company's Supervisory Board, both the Management Board and the Supervisory Board are of the opinion that there is no need to form a Nomination Committee.
     
  • Section 5.4.1: Regarding the composition of the Supervisory Board, concrete objectives will not be predefined and according to this not published in the Corporate Governance Report. No age limit has been set for members of the Supervisory Board.
    Relevant selection criteria for the appointment of the Supervisory Board are also suitability, experience and qualification. A commitment to specifications concerning prospective appointments constricts flexibility without ulterior advantage for the company. This applies all the more as the representatives of the shareholders can temporarily only elect six members of the Supervisory Board with codetermination. Within this context, the specifications mentioned in the Code’s recommendation are per se further important criteria for the constitution of the Supervisory Board. So because of the mentioned reasons there is no need of a predefinition of concrete objectives.

    No general age limit has been set for members of the Supervisory Board, as the expertise of the individual members is considered an overriding priority. Within this context, experience in particular is seen as an integral element. Given the provisions set out in the German General Equal Treatment Act, which does not apply directly to this case but at the very least provides a basis for analogous application, the company is of the opinion that the approach of specifying an age limit is inappropriate.
     
  • Section 5.4.3: Proposals regarding candidates for the Chair of the Supervisory Board are not disclosed to shareholders.
    The election of the Chairperson of the Supervisory Board is the sole responsibility of the Supervisory Board, as it is best placed to assess the suitability of the candidates. Against this background, the company is of the opinion that prior disclosure of the names of candidates for the Chair of the Supervisory Board would not be appropriate.
     
  • Section 5.4.6: The compensation report, within the context of the management report, outlines the basic system of compensation. Rather than being presented in the compensation report, details of Supervisory Board remuneration are disclosed in the notes to the financial statements.
    The company presents data relating to Supervisory Board compensation in an itemized format, i.e. separately for each member. Contrary to the recommendation, the components of compensation are disclosed in the notes to the financial statements. From the company's perspective, there is no need for additional disclosure, and thus presentation of duplicate information, in a compensation report.
     
  • Section 6.6: No reports of the kind specified in Section 6.6 of the Code are made beyond the statutory disclosure requirements.
    The company is of the opinion that transparent corporate communication is essential, particularly in order to maintain shareholder confidence. All relevant information is disclosed by the company in accordance with statutory requirements, which have been extended significantly in recent years. This information can also be accessed from the company's website. From the company's perspective, the other details recommended for disclosure under Section 6.6 of the Code are of no additional value to investors. The company believes that transparency is not dependent on the volume of information disclosed but rather on the quality and relevance of such information. Against this background, the company has chosen not to apply the Code's recommendations beyond those specified as required by law.
     
  • Section 7.1.3: Details relating to stock option programs and securities-based incentive systems as elements of Management Board compensation are presented in the notes to the financial statements rather than in the corporate governance report.
    Management Board compensation has to be disclosed in the notes to the financial statements. Explanations concerning the compensation system are given in the compensation report as a section within the management report, insofar as the compensation system contains elements relating to the recommendation outlined in Section 7.1.3. In the company's opinion, it would be inappropriate to present duplicate information in the corporate governance report.

Dettingen/Erms, December 4th, 2011

On behalf of the Supervisory Board:

Dr. Lerchner

On behalf of the Management Board:

Dr. Wolf,
Becker,
Schmauder