Declaration of compliance

Declaration of compliance with the German Corporate Governance Code in accordance with Section 161 of the German Stock Corporation Act (AktG)

The German Corporate Governance Code contains recommendations and proposals for managing and monitoring German listed companies in relation to shareholders and the Annual General Meeting (AGM), the Executive Board and the Supervisory Board, transparency, accounting and auditing. The German Stock Corporation Act requires the Executive Board and the Supervisory Board of listed companies to disclose each year the recommendations of the German Corporate Governance Code which the company has not followed or is not following, and to explain the reasons for non-compliance (“comply or explain”).

The Executive Board and the Supervisory Board identify with the duty as outlined in the German Corporate Governance Code to uphold the principles of a social market economy and maintain the substance of the company as a going concern and its ability to generate value in a sustainable fashion (company interest) and to further promote responsible and transparent management and governance of the company.

In accordance with Section 161 AktG, the Executive Board and the Supervisory Board of Wacker Neuson SE hereby declare that:

  1. Since the submission of the most recent declaration of compliance dated December 12, 2019, the company has complied with the recommendations issued by the German Corporate Governance Code Commission published by the German Federal Ministry of Justice (BMJ) in the official section of the Federal Gazette as amended on February 7, 2017 (“DCGK 2017”) with the exceptions listed below:
     
    Section 3.8 (3) DCGK 2017: The company’s D&O liability insurance policy for its Supervisory Board has been concluded without a deductible. The company is of the opinion that a deductible would not improve the sense of motivation and responsibility with which the Supervisory Board members perform their duties. D&O insurance safeguards the company against substantial internal risks and – only as a secondary function – protects the assets of members of its bodies. Hence the company refrained from applying a deductible to Supervisory Board members.
     
    Section 4.2.2 (2) DCGK 2017: According to Section 4.2.2 (2) sent. 3 DCGK 2017, the Supervisory Board, when setting the overall remuneration payable to individual members of the Executive Board, shall also define Executive Board remuneration in relation to that of senior executives and general staff, also over time, whereby the Supervisory Board defines, for the purposes of comparison, how senior executives and general staff are to be delineated. The Supervisory Board has thus far not followed this recommendation.
     
    Section 4.2.3 (2) sent. 3 DCGK 2017: Remuneration components spanning in some cases several years which are not tied to the future performance have been and are agreed upon. The Supervisory Board was of the opinion that it was not necessary to tie all variable remuneration components to the future performance to narrow down an appropriate framework for Executive Board remuneration.
     
    Section 4.2.3 (6) DCGK 2017: The AGM was not informed separately about the main terms of and changes to the remuneration system for Executive Board members as this information is already disclosed in the Group Management Report, which is available to all shareholders.
     
    Sections 4.2.4, 4.2.5, 5.4.6 (3) and 7.1.3 DCGK 2017: The AGM has decided not to publish the income of each individual Executive Board member in the notes to the Annual and Consolidated Financial Statements. In line with this, the remuneration report and the declaration on corporate governance do not include an individualized report on Executive Board remuneration. Nor do they contain specific information about share-based incentive systems for the Executive Board (which the company does not apply anyway). For this reason, this information is not presented in the model tables recommended in Section 4.2.5 (3) DCGK 2017.
     
    Similarly, the remuneration of individual Supervisory Board members was not published. Remuneration is clearly regulated in the company’s Articles of Incorporation. The Executive Board and Supervisory Board are of the view that these Articles coupled with other mandatory legal disclosures provide investors and the public with sufficient information in this area.
     
    Section 5.3.3 DCGK 2017: The Supervisory Board has not formed a nomination committee. The size of the Supervisory Board (four shareholder representatives) and the shareholder structure do not warrant a dedicated committee for proposing the shareholders’ Supervisory Board candidates.
     
    Section 5.4.1 (1) to (4) sent. 1-3 DCGK 2017: When submitting its election proposals to the Annual General Meeting regarding the election of the shareholder representatives, the Supervisory Board took into account the statutory requirements and recommendations of the German Corporate Governance Code in relation to the suitability requirements to be met by Supervisory Board members.
     
    Here the focus was placed – irrespective of nationality and gender – on the specialist and personal skills of potential candidates in relation in particular to the company’s specific situation, and not on rounding out a given competency profile or pursuing a diversity concept. Within the scope of evaluating competence, the Supervisory Board also placed appropriate emphasis on the company’s international engagement, potential conflicts of interest, the number of independent members of the Supervisory Board, the age limit stipulated for members of the Supervisory Board and the principle of diversity and, for elected employee representatives, the special regulations set down in Germany’s co-determination acts (Mitbestimmungsgesetze). The Supervisory Board declined to set a limit on the term of office as it is of the view, given the business context of a family-run enterprise, that continuity is the main priority. Besides, provisions in place stipulating the maximum age effectively limit the term of office assuming members join the Board at the usual age.
     
    In the Supervisory Board’s view, it is not necessary to specify concrete targets for its composition or to develop a competency profile or a diversity concept for the governing body as a whole. Consequently, the declaration on corporate governance does not outline such profiles or concepts or the extent to which they have been implemented – with the exception of statements relating to compliance with legal requirements arising from the German law governing Equal Participation of Women and Men in Leadership Positions (“women’s quota”).
     
    Section 5.4.1 (5) sent. 2 DCGK 2017: The Supervisory Board is of the view that the information made available to the Annual General Meeting and published on the company’s website as standard practice to date is sufficient – even if it does not comply with the recommendation under the Code, and thus continues to refrain from complying with the Code’s recommendation to draft, publish and update detailed resumes for proposed and current members of the Supervisory Board.
     
    Sections 5.4.2, 5.4.1 (4) sent. 3 and 5.3.2 DCGK 2017: The following situation is noted, which is also described in the Group Management Report: A pool agreement is in place between some of the shareholders of the Wacker and Neunteufel families. The parties to this pool agreement collectively hold about 58 percent of the shares of Wacker Neuson SE and can thus jointly (but not individually, i.e., individual members of the pool agreement acting in isolation) control the company. In accordance with the provisions of the pool agreement, each party to the pool agreement must exercise its right to vote and submit proposals at the Annual General Meeting such that two Supervisory Board members nominated as shareholder representatives by the Wacker family and two by the Neunteufel family are always elected. The shareholder representatives thus elected are, however, not bound in any way to the directions of individual, several or all of the parties to the pool agreement and any and all decisions they make within the Supervisory Board are made exclusively in the company’s interests.
     
    Even though these shareholder representatives always enjoy the special trust of the parties to the pool agreement appointing them, they are not, in the Supervisory Board’s view, in any personal or business relationship with a controlling shareholder, which could lead to a fundamental conflict of interest. In the view of the Supervisory Board, the shareholder representatives in the Supervisory Board, including the Chairman of the Audit Committee, are therefore to be considered independent. It is therefore the Supervisory Board’s view that the Supervisory Board is composed of a sufficient number of independent members, in particular with regard to the ownership structure. Given the ongoing legal uncertainty surrounding interpretation of the term “independence”, the company nonetheless declares non-conformance as a precautionary measure.
     
    Given the independence of all shareholder representatives on the Supervisory Board and the detailed disclosures relating to their appointment made herein, the Supervisory Board refrains from providing explicit information about what it considers to be an appropriate number of members and their names again in the declaration on corporate governance.
     
    Section 5.4.3. sent. 3 DCGK 2017: So that the Supervisory Board can vote impartially for its chairperson, the proposed candidates are not announced in advance.
     
    Section 5.4.6 (2) sent. 2 DCGK 2017: Along with a fixed remuneration, the Supervisory Board members shall be paid a variable remuneration which depends exclusively on the success of the relevant fiscal year. The Executive Board and the Supervisory Board are of the view that the current remuneration regulation is appropriate and reflects the Supervisory Board’s tasks and functions.
     
  2. On December 16, 2019, the Government Commission on the German Corporate Governance Code issued a new version of the German Corporate Governance Code, which came into force upon its publication in the Federal Gazette on March 20, 2020 (“DCGK 2020”). Wacker Neuson SE complies with recommendations of DCGK 2020 as applicable to it and shall continue to comply with these in future with the exceptions listed below:

    Recommendation C.1 DCGK 2020: When submitting its election proposals to the Annual General Meeting regarding the election of the shareholder representatives, the Supervisory Board takes into account the statutory requirements and recommendations of the German Corporate Governance Code in relation to the suitability requirements to be met by Supervisory Board members.

    Here the focus is placed – irrespective of nationality and gender – on the specialist and personal skills of potential candidates in relation in particular to the company’s specific situation, and not on rounding out a given competency profile  or pursuing a diversity concept. Within the scope of evaluating competence, the Supervisory Board also places appropriate emphasis on the company’s international engagement, potential conflicts of interest, the number of independent members of the Supervisory Board, the age limit stipulated for members of the Supervisory Board and the principle of diversity and, for elected employee representatives, the special regulations set down in Germany’s co-determination acts (Mitbestimmungsgesetze).
     
    In the Supervisory Board’s view, it is not necessary to specify concrete targets for its composition or to develop a specific diversity-based competency profile for the governing body as a whole. Consequently, the declaration on corporate governance does not outline such profiles or concepts or the extent to which they have been implemented – with the exception of statements relating to compliance with legal requirements arising from the German law governing Equal Participation of Women and Men in Leadership Positions (“women’s quota”).
     
    Given the disclosures relating to the independence of Supervisory Board members made in this declaration of compliance, the Supervisory Board refrains from providing explicit information about what it considers to be an appropriate number of members and their names again in the declaration on corporate governance (which itself contains the text of this declaration of compliance).
     
    Recommendation C.14 DCGK 2020: The Supervisory Board is of the view that the information made available to the Annual General Meeting and published on the company’s website as standard practice to date is sufficient and thus continues to refrain from drafting, publishing and updating more detailed resumes for proposed and current members of the Supervisory Board.
     
    Recommendation D.1 DCGK 2020: To date, the Supervisory Board refrained from publishing its rules of procedure on the Internet as this was not previously recommended under DCGK 2017. The rules of procedure are currently being revised. Once they have been approved, the Supervisory Board intends to publish the updated version of its rules of procedure on the company’s corporate website.
     
    Recommendation D.5 DCGK 2020: The Supervisory Board has not formed a nomination committee. The size of the Supervisory Board (four shareholder representatives) does not warrant a dedicated committee for proposing the shareholders’ Supervisory Board candidates.
     
    Section G.I. DCGK 2020: Section G.I. of DCGK 2020 contains new and partially revised recommendations regarding remuneration for the Executive Board. The remuneration system used by the company for members of the Executive Board to date has not complied or not fully complied with the following of these recommendations: G.1 (determining the remuneration system), G.2 (determining the specific total remuneration), G.3 (vertical comparison), G.4 (horizontal comparison), G.6 (preponderance of long-term remuneration components), G.7 (determining variable remuneration components), G.10 (share-based remuneration), G.11 sent. 2 (retention option and recall of variable remuneration components). At the time of issuing this declaration of compliance, the Supervisory Board had not yet approved a new remuneration system for members of the Executive Board that complies with the regulations set out in the law governing implementation of the second shareholders’ rights directive (Gesetz zur Umsetzung der zweiten Aktionärsrechterichtlinie, ARUG II).
     
    However, the Supervisory Board will approve a remuneration system for the Executive Board in good time and submit this to the AGM in the first half of 2021. The new system will comply with legal requirements as well as all recommendations in Section G.I. DCGK 2020.
     
    As of October 2020, all new Executive Board contracts or contracts that are due for renewal will reflect the standards set out in this new remuneration system and – by extension – the recommendations of Section G.I. DCGK 2020 unless otherwise stated in the following.
     
    Recommendations G. 6, G.7 and G.10 DCGK 2020: The Supervisory Board has appointed Mr. Kurt Helletzgruber to the Executive Board effective December 1, 2020 for a period of seven months. As such, the Supervisory Board has opted for a different remuneration structure that reflects this special situation.
     
    Recommendation G.18 DCGK 2020: The previous remuneration system for the Supervisory Board contains a short-term remuneration component based on the company’s success. This model shall be retained as it is not intended to be a management incentive or bonus for the Supervisory Board linked to the company’s long-term development but rather as a mechanism that relieves remunerative pressure in less successful years.

 

Munich, December 22, 2020

Wacker Neuson SE
Executive Board and Supervisory Board

Martin Lehner         
CEO
Hans Neunteufel
Chairman of the Supervisory Board
                       

 


Declarations of Compliance for download

This declaration of compliance will be revised annually. Outdated declarations can be downloaded here.

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