As a listed stock corporation and parent company, we are required to submit a Statement of Corporate Governance pursuant to Sections 289f and 315d HGB. This statement contains the Declaration of Conformity pursuant to Section 161 AktG, disclosures on corporate management practices and a description of the working practices of the Board of Directors and the Supervisory Board.
The corporate management and monitoring structures of GRENKE AG (the "Company") and the GRENKE Consolidated Group are described in the following. The descriptions are a part of the latest Annual Report (Corporate Governance Statement, dated February 6,2019).
SHAREHOLDERS AND THE ANNUAL GENERAL MEETING
The Annual General Meeting decides on all matters assigned to it by law. This includes, in particular, the election of shareholder representatives to the Supervisory Board, the discharge of the Board of Directors and the Supervisory Board, amendments to the Articles of Association, the appropriation of profits and capital measures.
The Supervisory Board advises and monitors the Board of Directors. The Supervisory Board consists of six highly qualified members who are elected by the Annual General Meeting and represent the shareholders of GRENKE AG.
BOARD OF DIRECTORS
The Board of Directors is the Company’s management body. It manages the business in accordance with the provisions of the German Stock Corporation Act and the Articles of Association resolved by the shareholders. As such, it is bound by the interests of the Company and the principles of its business policy.
The following aspects of diversity are taken into account in composing the Board of Directors:
The composition of the Board of Directors in terms of its age structure should provide enough of a balance so as to ensure the Board’s ability to act at any time.
The composition of the Board of Directors should comply with the requirements of the "Law for the Equal Participation of Women and Men in Leadership Positions in the Private and the Public Sectors".
The education and employment experience of the members of the Board of Directors must meet the requirement of the proper management of the business in accordance with the law, Articles of Association and Rules of Procedure. In addition, Board members should have the following background:
Based on this profile of skills and experience, we pursue the following objectives:
A balanced composition of the Board of Directors in terms of age structure allows for the longest possible contribution of professional expertise and life experience of the appointed members of the Board of Directors and, secondly, a diverse composition. This reflects our understanding of consistency and sustainability, as well as of the innovation and momentum necessary for the Company's continued success.
By taking gender diversity into account when composing the Board of Directors, the Supervisory Board meets not only the legal requirements but also honours the legislator’s intention to increase the proportion of women in management positions.
The Supervisory Board complies also with the law, Articles of Association and Rules of Procedure with respect to the consideration of various career and educational backgrounds when composing the Board of Directors so as to ensure that the duties and obligations of this body can be properly fulfilled. Doing so also ensures that the Board of Directors gains different perspectives when it comes to changes in the business environment – which broadly occur in an international context – and when analysing and evaluating the effects of cultural, demographic and societal change in everyday business.
Meeting the objectives for the composition of the Board of Directors is achieved through a close and permanent exchange of views between the Supervisory Board and the Board of Directors on all key matters concerning the Company's development and future. As part of this exchange, the Supervisory Board regularly checks whether the skills of the individual members of the Board of Directors meet the requirements of their position. This includes examining whether the number of members of the Board of Directors and their responsibilities is suffi-cient for the Company's growth and complexity. The Supervisory Board chooses the Board of Directors' members, is responsible for succes-sion planning and the distribution of responsibility on the Board of Directors.
The following aspects of diversity are taken into account in composing the Supervisory Board:
The composition of the Supervisory Board should comply with the requirements of the "Law for the Equal Participation of Women and Men in Leadership Positions in the Private and the Public Sectors".
Supervisory Board members should be able to fulfil the legal obligations associated with their role in terms of educational and professional backgrounds and have the available time necessary to perform their duties. In addition to the high character requirements with respect to personal skills, other skills required of Supervisory Board members include professional and economic expertise together with the ability to judge objectively. In addition, the skills profile required of members of the Supervisory Board largely includes a background in the following:
Therefore, the objectives related to diversity that are taken into account in composing the Supervisory Board are as follows:
In order to fulfil its duty as a supervisory and controlling body, the Supervisory Board should be in a position to make an accurate assessment of the Company's current development and future direction. Therefore, the objective is that the Supervisory Board is composed in such a way as to ensure qualified control and advice, as required by the German Stock Corporation Act and the German Corporate Governance Code (GCGC).
The Declaration of Conformity submitted by the Board of Directors and Supervisory Board regarding the GCGC in accordance with Section 161 AktG ensures the fulfilment of the aforementioned objectives. In the 2018 fiscal year, the Supervisory Board was composed in such a way that the necessary knowledge and experience was fully embodied by the entirety of Supervisory Board members. The Supervisory Board was therefore able to competently deal with the facts relevant to the content and evaluate them. It was also able to make its decisions to ensure effective monitoring and control from an objective point of view.
With respect to the "Law for the Equal Participation of Women and Men in Leadership Positions in the Private and the Public Sectors", the Supervisory Board and Board of Directors have adopted the target of 33 percent female representation on the Supervisory Board and at least 20 percent representation on the Board of Directors. These targets have both been met.
The curriculum vitae detailing the experience and skills of all members of the Supervisory Board and Board of Directors are published on the Company's website and updated annually.
The diversity concept is taken into account when the Supervisory Board makes election proposals to the Annual General Meeting and when the Supervisory Board appoints members to the Board of Directors.
The Board of Directors has specified a target for women at the two levels below the Board of Directors: In terms of the equal participation of women and men in management positions, we again met our target of 25 percent in each of the second and third levels of management in the 2018 fiscal year. We also intend to maintain the quotas achieved until at least December 31, 2021.
Furthermore, the Board of Directors informs the Supervisory Board once every fiscal year on the progress of family-friendly benefits (financial support, help with childcare, flexible work hours, remote workplace models) and on the consideration of gender diversity when filling management positions.
The GRENKE Consolidated Group reports on its operating situation and financial results in the Annual Report, the interim financial reports and the quarterly statements. Information is also published in ad hoc publications and press releases. All publications and reports are available on the Company's website at at www.grenke.de/grenke-group/investor-relations.
GRENKE AG has created the mandatory insider register in accordance with Article 18 of the Market Abuse Regulation (MAR). The persons concerned have been advised of their statutory duties and penalties in the case of any violations. In accordance with Article 19 MAR, we provide information on the transactions of managers and persons closely related to them on our website.
ACCOUNTING AND AUDIT OF FINANCIAL STATEMENTS
The GRENKE Consolidated Group prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as applicable in the European Union. GRENKE AG prepares its separate financial statements under the provisions of the German Commercial Code (HGB). After examination by the Supervisory Board, the approved (consolidated) financial statements are published within four months of the end of the fiscal year. The Annual General Meeting elected KPMG AG Wirtschaftsprüfungsgesellschaft, Frankfurt am Main, Germany, as the auditor for the 2018 fiscal year. KPMG AG Wirtschaftsprüfungsgesellschaft will also carry out the audit review for the interim financial reports as applicable.
WORKING PRACTICES OF THE BOARD OF DIRECTORS AND THE SUPERVISORY BOARD
The Board of Directors and the Supervisory Board work closely together for the benefit of the Company.
The Board of Directors informs the Supervisory Board regularly, promptly and comprehensively on all issues related to the implementation of the corporate strategy, planning, business development, the financial position, results of operations and specific business risks and opportunities relevant to the Company as a whole. Major decisions require the approval of the Supervisory Board. The Board of Directors is appointed and dismissed by the Supervisory Board in accordance with the Articles of Association of GRENKE AG.
The central task of the Supervisory Board is to advise and monitor the Board of Directors and formulate the strategy together with the Board of Directors. The Supervisory Board of GRENKE AG meets once a quarter and the chair of the Supervisory Board meets with individual members of the Board of Directors on a monthly basis. Extraordinary meetings and conference calls are also held when necessary. The Supervisory Board has set up an Audit Committee, a Personnel Committee and a Strategy Committee.
The Audit Committee helps the Supervisory Board to fulfil its monitoring duties with respect to the accuracy of the financial and consolidated financial statements of GRENKE AG, compliance with legal and statutory provisions within the GRENKE Consolidated Group, the qualification and performance of the external auditor and the internal control functions. The Audit Committee coordinates the tender process for the election of the auditor by the Annual General Meeting and determines the audit's focus. The Audit Committee also reviews the fee agreement with the auditor. In the 2018 fiscal year, the Audit Committee consisted of Mr Gerhard E. Witt (Chair until May 3, 2018), Ms Tanja Dreilich (Chair since May 3, 2018), Mr Wolfgang Grenke (since May 3, 2018) and Prof Dr Ernst-Moritz Lipp. All members have extensive expertise in accounting, corporate planning, risk management and compliance.
The Personnel Committee is responsible for the preparation and annual review of the Board of Directors' remuneration system prior to its final approval. The Committee also oversees the search for suitable candidates for the Board of Directors and submits candidate proposals to the Supervisory Board. The Personnel Committee prepares the Board of Directors' employment agreements, specifically with respect to their remuneration, and submits them to the Supervisory Board for approval. In the 2018 fiscal year, the members of the Personnel Committee were Prof Dr Ernst-Moritz Lipp (Chair), Mr Gerhard E. Witt (until May 3, 2018), Mr Wolfgang Grenke (since May 3, 2018) and Mr Erwin Staudt.
The Strategy Committee deals with fundamental issues of business alignment and strategy. Since May 3, 2018, the members of the Strategy Committee have been Mr Wolfgang Grenke and Prof Dr Ernst-Moritz Lipp.
Baden-Baden, February 2019