Declaration on Corporate Governance

The Declaration on Corporate Governance (Section 289a German Commercial Code) comprises the declaration of compliance, information on corporate governance practices and a description of the Board of Management and Supervisory Board procedures. Our aim is to present Dürr’s corporate governance principles as clearly and concisely as possible.

Declaration of compliance

The first draft of the German Corporate Governance Code was presented in February 2002. Since then the codex has been updated annually. The control committee German Corporate Governance, is responsible for formulating and further developing the code (www.corporate-governance-code.de).

The code is based on legal guidelines, above all from the German Stock Corporation Act (Aktiengesetz). It contains extensive recommendations for the cooperation of the Board of Management and Supervisory Board, for transparent communication with the capital market and for protecting the interests of shareholders.

The structures for the management and supervision of Dürr AG are as follows:

Shareholders and general meeting

Our shareholders exercise their rights at the general meeting. Dürr’s annual general meeting is held within the first five months of the fiscal year. The general meeting is presided over by the Chairman of the Supervisory Board. The general meeting resolves on all matters that are reserved for it by law (amendments to the articles of incorporation, the appropriation of net profit, capital measures, etc.).


Supervisory Board

The primary function of the Supervisory Board is to advise and supervise the Board of Management. Dürr AG´s Supervisory Board has equal employee and shareholder representation and currently consists of 12 members. Six members were elected by the shareholders at the general meeting and four members were elected by the employees. Two members were appointed by the IG-Metall trade union.

In case of a tie in the voting the Chairman of the Supervisory Board has the casting vote.

► Compensation system for the Supervisory Board

 

Board of Management

The Board of Management, as the executive body of Dürr AG, manages the company’s affairs and under the requirements of stock corporation law is committed to Dürr's interests and bound by the principles of company policy. It reports regularly, promptly and comprehensively to the Supervisory Board about all essential issues of business development and corporate strategy, and about potential risks.

The compensation for the members of the Board of Management comprises performance-related and non-performance-related components.

► Compensation system for the Board of Management

 

Directors’ interests

Members of the Board of Management and the Supervisory Board (w/o Dürr familiy) hold less than 1% shares in Dürr AG. Details of the latest shareholder structure can be found here.


Transparency

Dürr AG places great value on providing information uniformly, comprehensively and promptly. It reports on the company’s business situation and results in the annual report, at press conferences and conference calls, in the quarterly reports and in the six-month report.

Information is also published through press releases and ad-hoc announcements. All announcements, presentations and notices are available on our website under Investors/Media. Dürr AG has to draw up a insider list if needed according to the market abuse regulation. The persons concerned will be informed about the statutory duties and penalties.


Accounting and audit

The consolidated financial statements have been prepared in accordance with IFRS standards since the 2003 fiscal year. After preparation by the Board of Management the consolidated financial statements are audited by the external auditor and are adopted by the Supervisory Board. The consolidated financial statements are published within 90 days after the end of the fiscal year.

It has been agreed with the external auditor that the Chairman of the Supervisory Board or the Chairman of the Audit Committee will be informed without delay about any grounds for exclusion or exemption and any inaccuracies in the declaration of compliance arising in the course of the audit. The external auditor reports to the Chairman of the Supervisory Board without delay about all issues and events arising in the course of the audit relevant for the Supervisory Board’s duties.


Performance indicators and control system

In connection with the “Dürr 2020” strategy program Dürr has defined value-oriented performance targets to back up its strategic goals. EBIT, operating cash flow, free cash flow and ROCE are the key performance benchmarks for the company and the divisions.

To identify opportunities and risks for the company early on and to respond to them proactively and suitably Dürr AG has implemented a risk management system, which is integrated in the company’s internal processes, and a multi-tiered internal control system. Dürr AG’s Internal Auditing Department verifies the proper functioning of the systems on the basis of a risk-oriented audit strategy.

Within the divisions the regular control function is performed primarily by the Controlling departments and by the appointed risk managers. Our risk management process consists of nine steps. The most important step is the so-called risk inventory, for which the management of the respective operating units is responsible. Here, the individual risks are identified, are assigned to the 15 defined risk fields, and are evaluated. A risk is evaluated according to standard criteria with the aid of so-called risk structure spreadsheets. Factors assessed are the maximum possible loss, the probability of occurrence, and the effectiveness of possible counter measures. The end result of this review is the so-called net risk or actual risk potential. The aggregate of all the individual risk potentials represents the overall risk situation for the Group. This can then be segmented according to specific risks in the five divisions and according to aggregate risks at Group level.


Diversity

The satisfaction of our employees is a top priority for us, and every employee has the right to be treated fairly, politely and respectfully. We do not tolerate discrimination or harassment at any of our locations. This applies in particular to disadvantage suffered, for example, on grounds of disability, gender or age. We ensure diversity when hiring staff at any level within the Group. We aim to give adequate consideration to women, including those in managerial positions. As an international group, having a broad-minded and multifaceted perspective is a key factor to our economic success. We therefore promote collaboration – across national boundaries, between different generations, and by providing equal opportunities for men and women.

Diversity is one of the five basic values of our leadership model. These values are used to measure and assess the leadership behavior of all our managers.

At the Dürr Group we offer a number of different training courses and seminars with a focus on intercultural diversity. In addition, many international training events support our open-minded approach to diversity. As part of our 'social budget', we provide funds for the continuous improvement of working conditions. The employee representatives and the Board of Management discuss this on a regular basis. We promote equal opportunities through various working time models, which meet the individual needs of our employees. In addition, we promote internal communication through presentations and workshops on topics such as equal opportunities, religion, zeitgeist and lifestyle, which are also the subject of controversial debate in our society.

The Supervisory Board supports the Group's diversity strategy. When selecting members for the Board of Management, criteria such as technical and social skills, international experience and character traits are of prime importance. Gender, on the other hand, is less important. Emphasis is also placed on a balanced age structure, bearing in mind that the age limit is 63. The minimum educational requirement is a university degree or equivalent qualification. The members of the Board of Management should have long-term experience in comparable positions and sectors relevant to Dürr. The Supervisory Board believes that the members appointed to the Board of Management in 2017 meet the criteria described above.


Act on Equal Participation of Women and Men in Executive Positions

On May 1, 2015, the Act on Equal Participation of Women and Men in Executive Positions came into force in Germany. Its most important provisions are also reflected in the Corporate Governance Code. Companies that are listed on the stock exchange or are subject to co-determination are required to set themselves targets for women's quotas on their management boards and their two most senior management levels below management board level, and to publish these independently defined targets along with a deadline for their achievement.

We have fulfilled these legal requirements as detailed below:

  • Since the 2016 elections, the Supervisory Board of Dürr AG has had four female members. This corresponds to a women's quota of 33 %, which fulfills the 30 % minimum quota required by law.
  • The percentage of women on Dürr AG's Board of Management is 0 %; an increase is not planned until June 30, 2022.
  • At the most senior management level of Dürr AG, the women’s quota is 0 %; at the second most senior management level it was 33 % (June 30, 2017). The targets have been set at 0 % for the first management level and at 20 % for the second level. The date by which both targets must be achieved is June 30, 2022.

 

Declarations on corporate governance by other Group companies pursuant to Section 289a (4) of the German Commercial Code (HGB)

Apart from Dürr AG, Dürr Systems AG is also obliged to set targets for the women's quota and deadlines for their achievement, according to Sections 76 (4) and 111 (5) of the German Stock Corporation Act (AktG).

Declaration by Dürr Systems AG pursuant to Section 289a (4) of the German Commercial Code

  • The Supervisory Board of Dürr Systems AG does not have any female members; the target has been set at 0 %.
  • The percentage of women on the Board of Management of Dürr Systems AG is 0 %; this quota is not set to be increased.
  • At the two most senior management levels of Dürr Systems AG, the women’s quota is 3.1 % at the first management level and 6.1 % at the second management level (May 31, 2017). The targets are 3.1 % for level 1 and 6.1 % for level 2. The date by which both targets must be achieved is June 30, 2022.

► Risk management

Board of Management and Supervisory Board procedures

The Chairman of Dürr's Board of Management conducts the operating business, together with another member of the Board of Management. The functions allocated to the Chief Financial Officer are defined in the schedule of responsibilities and include finance, taxation, legal affairs and investor relations.

The heads of the five divisions report to the Board of Management and have global responsibility for the results of their respective division. At the divisional level, steering functions are performed by the Dürr Management Board. This board consists of the Board of Management, the heads of the respective divisions and their controllers. At Group level, the Senior Executive Group and the broader Senior Management Group constitute the international management teams.

Pursuant to Article 6 of Dürr AG’s Articles of Incorporation the Supervisory Board appoints the members of the Board of Management. The Supervisory Board determines the number of members of the Board of Management (at least two according to the Articles of Incorporation) and whether it has a chairman, appoints them and resolves whether deputy members or a deputy chairman are appointed. The Supervisory Board pays attention on diversity and aims in particular the adequate representation of women. The Supervisory Board issues rules of procedure for the Board of Management which includes a list of business matters requiring its approval and a division-of-responsibilities plan. The Supervisory Board Chairman decides whether the members of the Board of Management are to be present at Supervisory Board meetings. Finally, the Supervisory Board issues own rules of procedure.

Since 2017 the Board of Management has consisted of three members. Responsibilities are allocated to these members based on the schedule of responsibilities. As a general rule, the Board of Management attends all Supervisory Board meetings; the Board of Management reports on the agenda items and proposed resolutions, and answers questions raised by individual Supervisory Board Members.

The members of the Supervisory Board receive a written invitation and an overview of all items on the agenda, two weeks before each meeting. A week before the meeting the Supervisory Board finally receives reports and information on the individual items as well as detailed written documentation to the motions on which resolutions are to be passed. Before the Supervisory Board’s plenary meeting, preliminary talks are held separately with the employee representatives and the shareholder representatives, at which the members of the Board of Management explain the details and answer questions.

The possibility of passing resolutions by written circulatory vote is used comparatively seldom and only in cases of particular urgency.

Each year the Supervisory Board Chairman explains the activities of the Supervisory Board and its committees in its report to the shareholders and at the annual general meeting.

The Supervisory Board Chairman meets regularly with the Board of Management and discusses current issues with it. Between these meetings the Board of Management keeps the Supervisory Board Chairman informed of current developments orally and in writing.

Dürr’s Supervisory Board has formed four committees which handle the preparations for certain types of business and the resolutions thereon, and supervise their implementation.

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