The corporate governance of Salzgitter AG (SZAG) is geared to ensuring the sustainable development and long-term success of the company in harmony with the principles of a social market economy and in observance of its corporate responsibility for people and the environment. This is based on the provisions set out under German stock corporation law and the recommendations laid down in German Corporate Governance Code (www.dcgk.de/en/home.html). It is therefore both intrinsically important and an obligation to ensure that the prevailing laws are complied with at all times, that generally accepted basic values in dealing with people and companies are observed, and that nature is preserved in a sustainable manner in conducting the company’s business.
The Executive Board and Supervisory Board submitted the following declaration in respect of the recommendations of the German Corporate Governance Code, pursuant to Section 161 of the German Stock Corporation Act (AktG) on December 7, 2017:
“In 2017, Salzgitter Aktiengesellschaft conformed – and currently continues to conform – to all of the recommendations of the Government Commission on the German Corporate Governance Code published by the Federal Ministry of Justice and for Consumer Protection in the official section of the electronic Federal Gazette, with the exception of the new recommendation in 2017 that the multiple year assessment basis of the variable component of management board remuneration should essentially be forward looking (Code item 4.2.3 (2) sentence 3 GCGC).
In its meeting on December 7, 2017, the Supervisory Board decided that the multiple year assessment that has so far been based on the success of the last five financial years be switched to a profit plan based on the next four years respectively in new employment contracts or renewals of existing employment contracts.”
Beyond the statutory requirements placed on managing companies and the recommendations of the German Corporate Governance Code, we have developed a mission statement by the name of “YOUNITED” for our Group. In this process, employees from all Group companies across all hierarchical levels defined a shared system of values, among other things. This system includes values such as reliability, fairness and sustainability. You will find our mission statement on our website at www.salzgitter-ag.com/en/company/mission-statement-younited.
Moreover, the Executive Board has defined a set of clear rules regulating conduct for all the Group’s employees in the form of a Code of Conduct that they are to follow in carrying out their activities. This Code of Conduct also includes compliance with the law, commitment to fair competition and the rejection of corruption of any kind. In addition, these rules enable the trustful cooperation of the employees among themselves and honest dealings with one another and with business partners. The Code of Conduct can also be accessed on our website at www.salzgitter-ag.com/en/corporate-responsibility.
The shareholders principally exercise their rights at general meetings of shareholders. Each shareholder of SZAG is entitled to participate in the General Meeting of Shareholders, which takes place at least once a year, and to address the Meeting about items on the agenda, to ask pertinent questions and submit relevant motions and to exercise their voting rights. Fundamental decisions affecting the company, such as changes to the Articles of Incorporation, the appropriation of annual profit, the election of shareholder representatives to the Supervisory Board, the raising or lowering of capital, or the selection of the annual independent auditor are reserved for the General Meeting of Shareholders. It also decides on the remuneration of the Supervisory Board. We facilitate the process of shareholders exercising their voting rights without having to personally take part in the General Meeting of Shareholders: They can appoint a proxy of the company and instruct this person on how they wish to exercise their voting rights.
The results of the 2017 General Meeting of Shareholders are available on our website at: www.salzgitter-ag.com/en/investor-relations/shareholders-meeting.
The Executive Board manages the company under its own responsibility in accordance with the German Stock Corporation Act. It determines the strategic direction and the future development of the company together with the Supervisory Board. In carrying out these activities, the Executive Board is bound by the interests of the company. It strives to achieve the highest possible return on capital employed within the scope of the corporate purpose. The Supervisory Board has determined that certain business transactions may only be carried out with Supervisory Board approval.
The Executive Board currently comprises three members consisting of the Chief Executive Officer, the Chief Financial Officer and the Chief Personnel Officer. The Supervisory Board has assigned each Executive Board member a portfolio of responsibilities for specific organization units and has specified the decisions for which all Executive Board members are jointly responsible. The management of the five business units is the joint responsibility of all the members. A Group Management Board is at hand to assist them. Members of this board are the three Executive Board members and one manager from each of the five business units who coordinates the activities of his respective business unit (business unit manager).
The members of the Executive Board are liable to the company for any dereliction of duty. The company’s D&O insurance provides for an appropriate deductible that accords with statutory requirements.
In appointing Executive Board members, the Supervisory Board gives consideration to the following:
Along with suitability in terms of personal competence, skills and expertise for the individual Executive Board member portfolio, and while taking account of company-specific requirements, the concept applied to the composition of the Executive Board is aimed at contributing through the greatest possible diversity to a professional and responsible performance of the management duties of the entire Executive Board.
The Supervisory Board realizes the concept of diversity in the composition of the Executive Board by taking account within the greatest scope possible of the aspects of diversity under this concept when selecting members to be appointed to the Executive Board. The search for suitable persons is incumbent upon the Supervisory Board’s Presiding Committee that uses various tools to assist it in this task.
The diversity concept for the composition of the Executive Board is implemented to the highest degree possible.
The Executive Board holds regular meetings and telephone conferences for the purpose of discussion and decision-making. It has not currently formed any standing committees.
In its management and control of the subsidiaries and affiliates, the Executive Board deploys the following instruments, while also consulting with the Group Management Board:
The core tasks of the Supervisory Board are to appoint members of the Executive Board and advise and supervise the Executive Board in its management of the company. In accordance with the law, certain fundamental decisions may only be made with its approval. It has determined that, in addition, certain types of transactions require its approval. The members of the Supervisory Board are liable to the company for any dereliction of duty. The company’s D&O insurance provides for a suitable deductible in accordance with the recommendation of the German Corporate Governance Code.
The Supervisory Board comprises 21 members, specifically ten shareholder and ten employee representatives, plus one other member. This composition has been laid down under the provisions of the Co-Determination Amendment Act applicable to the company, in conjunction with Article 7 of the company’s Articles of Incorporation.
The Supervisory Board considers at least six independent shareholder representatives on the Supervisory Board to be an appropriate number. In the opinion of the Supervisory Board, the following shareholder representatives at minimum can be considered independent within the meaning of the German Corporate Governance Code: Dr. rer. pol. Thea Dückert, Karl Ehlerding, Roland Flach, Prof. Dr. Jürgen Hesselbach, Dr. Dieter Köster, Prof. Dr. Joachim Schindler, Prof. Dr. phil. Dr.-Ing. Birgit Spanner-Ulmer and Heinz-Gerhard Wente. In addition, the Supervisory Board also assesses Supervisory Board member Dr. Werner Tegtmeier – a further member of the Supervisory Board pursuant to the German Co-Determination Amendment Act – as independent.
The Supervisory Board has defined the objectives set out below as further important goals for its composition and competence profile: Along with all statutory requirements placed on the individual supervisory board members, they should possess the necessary expertise and personal competence anchored in expert knowledge, capabilities and experience, as well as in their personal suitability for assuming the tasks incumbent on them. As a whole, they must be familiar with the sectors of steel and mechanical/plant engineering. Among the members there should be persons with technical expertise, experience in managing companies and in developing corporate strategies, with knowledge of financial instruments and preferably international experience. At least one member must be specially qualified in matters of accounting and the auditing of financial statements. Similarly, at least one member must have special knowledge and experience in applying accounting standards and in internal control procedures. In the Supervisory Board’s opinion, the objectives and the competence profile are fulfilled through the current composition of the Supervisory Board.
In selecting candidates for its proposals for the election of Supervisory Board members to be put forward to the General Meeting of Shareholders, the Supervisory Board gives consideration to the following:
In terms of the composition of the Supervisory Board, and while taking account of the company-specific requirements, the diversity concept is aimed at contributing to the professional and responsible performing of the duties of the entire Supervisory Board through the greatest possible diversity of the personal competences, skills and expertise represented on the Board, the educational and professional backgrounds, as well as different assessment aspects based on age and gender.
The Supervisory Board endeavors to implement the diversity concept applied to its composition by taking the aspects of this concept into account as far as possible in the election of Supervisory Board members, along with other aspects to be considered when selecting appropriate candidates for its proposals for the election of Supervisory Board members. The search for suitable candidates and their pre-selection is incumbent on the Supervisory Board’s Nomination Committee that uses various tools to assist it in this task. The ultimate decision on the composition of the Supervisory Board is the province of SZAG’s shareholders in the General Meeting of Shareholders.
The diversity concept applied to the composition of the Supervisory Board is implemented to the greatest extent possible.
The Supervisory Board meets a minimum of four times a year, has the Executive Board report in detail, and discusses the development of business and the situation of the company with the Executive Board. It takes receipt of written reports submitted by the Executive Board at regular intervals on the course of business and the performance of the company.
The Supervisory Board deploys the following instruments in particular in performing its advisory and supervisory function:
In order to prepare its meetings and decisions the Supervisory Board has currently formed four standing committees:
The Presiding Committee undertakes the preparatory work in connection with the appointing of Executive Board members and, in place of the Supervisory Board plenum, makes decisions on business measures requiring urgent approval.
The Audit Committee deals with the following above all:
The Audit Committee meets at least four times a year and has the Executive Board report in writing and verbally on the individual issues to be discussed, as well as having representatives of the independent auditor explain the report on their audit of the financial statements at company and at Group level.
The Strategy Committee consults in depth with the Executive Board on the corporate strategy whenever necessary.
The Nomination Committee, which is exclusively comprised of representatives of the shareholders, proposes suitable candidates to the Supervisory Board that, in turn, presents its proposals to the General Meeting of Shareholders for the election of shareholder representatives to the Supervisory Board.
The names of the members of the committees are listed in the section in the Group Management Report on “Management and Control/Committees of the Supervisory Board”.
The Executive Board is responsible for compliance with the relevant statutory requirements and company guidelines and acts, among other things deploying the following measures, through the Group companies with the aim of ensuring compliance (Compliance Management System):
In 2017, the Executive Board defined a target of 13 % for the proportion of women in the first management level under the Board and 20 % for women at the second management level under the Board. These quotas are to have been achieved by June 30, 2022.
During the first period for the achieving of these goals up until June 30, 2017, the Executive Board determined a target of 19 % for the first management level and 17 % for the second management level. On June 30, 2017, the proportion of women managers on the first management level and on the second management level stood at 13 % and at 20 % respectively. Falling short of the goal for the first management level is attributable to reporting date-related vacancies and to internal reporting channels that have meanwhile changed and the resulting allocation to management levels. The target for the second management level was exceeded.
In 2017, the Supervisory Board decided, in the event of an Executive Board member having to be replaced by June 30, 2022, to strive for a target of 30 % in respect of the proportion of women represented on the Executive Board that currently consists of three male persons. The envisaged proportion of women on the Executive Board was not achievable by June 30, 2017, as no successor was required.
The statutory minimum requirement in respect of the Supervisory Board was adhered to during the financial year.
SZAG publishes an annual report once a year and provides a summary of the development of business on a quarterly basis as the year progresses. This ensures that our shareholders are kept informed about the situation of the company in a timely manner. The dates of publication are announced in the financial calendar sufficiently in advance for the coming financial year and posted on the company’s website at: www.salzgitter-ag.com/en/investor-relations/financial-calendar. Furthermore, the Executive Board explains the results of each financial year elapsed at an annual results press conference, reported on by the media, that takes place directly after the meeting of the Supervisory Board when the financial statements are adopted.
In addition to this, we organize regular analysts’ conferences for analysts and institutional investors in Frankfurt am Main and London. Finally, the Executive Board reports to the general public on significant events by way of press releases and ad-hoc announcements. All reports and statements are available on the company’s website at www.salzgitter-ag.com in both German and English.
Salzgitter, March 15, 2018