Corporate Governance Declaration in Accordance with Section 289a
The corporate governance of Analytik Jena as an exchange-listed German corporation is governed by the German Public Companies Act as well as the guidelines of the German Corporate Governance Code in its current version.
1. Declaration of Conformity in Accordance with Section 161 AktG
On December 19, 2014, the Executive Board and Supervisory Board of Analytik Jena GmbH+Co. KG issued the following joint declaration on conformity with the recommendations of the German Corporate Governance Code (DCGK) in accordance with section 161 AktG:
Joint declaration by the Executive Board and the Supervisory Board of Analytik Jena GmbH+Co. KG on conformity with the recommendations of the German Corporate Governance Code (GCGC) in accordance with section 161 of the Aktiengesetz (AktG – German Public Companies Act):
1. Analytik Jena GmbH+Co. KG has complied with the recommendations of the Government Commission of the German Corporate Governance Code (GCGC) as amended on May 13, 2013 and June 24, 2014 since the last declaration of conformity on December 18, 2013, with the exception of the following specified and reasonable deviations. It will also comply with the recommendations in the future, with the exception of these deviations:
Section 3.8 of the Code:
Section 3.8 of the GCGC recommends a D&O insurance policy for the Supervisory Board with a deductible equivalent to at least 10.0 % of damages up to at least 1.5 times the fixed annual remuneration of the Supervisory Board member. Despite this recommendation, the D&O insurance contract for the Supervisory Board of Analytik Jena GmbH+Co. KG does not provide for a deductible. The Executive Board and Supervisory Board of Analytik Jena GmbH+Co. KG believe that the attitude toward work or the sense of responsibility of members of the Supervisory Board, who by virtue of their office already conduct themselves in a responsible manner and in the interest of the Company, would not be improved by such a deductible.
Section 4.2.2 of the Code:
In view of the conservative remuneration policy of Analytik Jena GmbH+Co. KG, the Executive Board and Supervisory Board regard as unnecessary compliance with the recommendation in section 4.2.2 (2)(3) that the Supervisory Board, in setting the remuneration of the Executive Board, shall take into account the ratio of the Executive Board’s remuneration to the remuneration of the senior executives and the overall staff, also over time. In the process, the Supervisory Board itself shall establish the delimiting criteria for the senior executives and the relevant overall staff.
Section 4.2.3 of the Code:
According to 4.2.3 (2)(4) of the Code, both the possible positive and the possible negative development of the Company must be taken into account when defining variable remuneration components. The design of the variable, performance-related components of Executive Board remuneration at Analytik Jena GmbH+Co. KG takes the negative development of the Company into account insofar as the right to receive a bonus payment only exists if a specified positive result is achieved. If the result is below the agreed level, there is no right to a variable bonus payment. The Executive Board and the Supervisory Board consider this arrangement to be sufficient given the conservative remuneration policy for the Executive Board at Analytik Jena GmbH+Co. KG.
In accordance with section 4.2.3 (2)(6) of the GCGC, the remuneration of Executive Board members shall be limited in amount both in sum and with respect to their variable remuneration components. Both the employment contracts that ended on March 30, 2014 and those that took effect on April 1, 2014 for the respective incumbent Executive Board members stipulated/stipulate an upper limit for the variable remuneration component with the calculation based on EBIT or EBITDA. However, they did/do not include any explicit upper limits on total remuneration. Executive Board and Supervisory Board assume that the existing remuneration rules are sufficiently clear with respect to variable remuneration to comply with this recommendation of the Code. Since the upper limit of the variable remuneration portion can be estimated precisely and the amount of the fixed remuneration portion is set, Executive Board and Supervisory Board regard an explicit stipulation of the upper limit of remuneration as unnecessary.
In accordance with section 4.2.3 (3)(3) of the GCGC, any retroactive amendments to the performance goals or comparison parameters shall be prohibited. The possibility of such retroactive amendments is neither explicitly prohibited nor expressly permitted in the Executive Board contracts. The Executive and Supervisory Boards proceed on the assumption that the contractually stipulated success parameters should not be amended retroactively.
In accordance with section 4.2.3 (4)(1) of the Code, in the case of premature termination of the Executive Board contracts, the severance payments including fringe benefits shall not exceed two years’ remuneration and remuneration shall not exceed the remaining term of the employment contract. The Executive Board contracts of Analytik Jena GmbH+Co. KG do not include a limitation of the severance payment to the remaining term of the relevant employment contract, but do not necessarily make full use of the highest level of severance payment of two years’ remuneration. In view of the fact that the remuneration of the Executive Board of Analytik Jena GmbH+Co. KG is at a conservative level and the period used to calculate severance payments is in part shorter than that stipulated by the Code, a further limitation of the severance payment to the remaining term of the contract is not deemed appropriate.
For the period since the new Executive Board employment contracts took effect on April 1, 2014, Analytik Jena GmbH+Co. KG also declares as a precautionary measure deviation from section 4.2.3 (5) of the GCGC. Accordingly, payments promised in the event of premature termination of Executive Board duties as a result of a change of control should not exceed 150.0 % of the severance cap. The new Executive Board employment contracts establish payments of a maximum of 200.0 % of the severance cap. However, this represents only one year’s remuneration and therefore does not make full use of the upper limit of two year’s remuneration as stipulated in section 4.2.3 (4)(1). For this reason, Executive Board and Supervisory Board regard the change-of-control rule effective since April 1, 2014 as appropriate and consistent with the purpose of this standard of the Code.
Section 5.3 of the Code:
Section 5.3 of the Code recommends that the Supervisory Board establishes technically qualified committees for various tasks of the Supervisory Board. Due to the fact that the Supervisory Board consists of only three members, the formation of professionally qualified committees as recommended in the Code is not feasible for Analytik Jena GmbH+Co. KG. The members of the Supervisory Board shall jointly dedicate their energies to all topics which according to the Code shall be transferred to special committees, and thereby comply with the objectives of the Code.
Section 5.4.1 (2) and (3) of the Code:
In accordance with section 5.4.1 (2) and (3) of the Code, the Supervisory Board shall specify goals for its composition. Within the framework of the given situation of the company, these goals shall take into account the international activities of the company, potential conflicts of interest, the number of independent Supervisory Board members as defined in section 5.4.2, setting an age limit for Supervisory Board members, and diversity. In particular, these specific goals should provide for appropriate participation by women. Proposals by the Supervisory Board to the responsible election bodies should take these goals into account. Due to the small number of Supervisory Board members, Analytik Jena GmbH+Co. KG believes that technical competence should remain the overriding consideration for the composition of the Supervisory Board, irrespective of gender. Therefore, Analytik Jena GmbH+Co. KG does not regard setting an absolute number of female Supervisory Board members as expedient.
2. Corporate Governance Practices
The conduct of the Executive Board and the Supervisory Board is governed by the principles and rules of responsible corporate governance. In the process, values like sustainability and integrity form the basis of Analytik Jena's corporate governance and at the same time are key characteristics of its corporate culture, which determines the Company's conduct toward customers, business partners, employees, and shareholders. Compliance with law and legislation is given the highest priority for corporate governance by the management and managing bodies. The provisions and recommendations of the German Corporate Governance Code form the basis for all decision-making and control processes in the Executive Board and the Supervisory Board. The provisions of the German Public Companies Act and the Articles of Association of Analytik Jena GmbH+Co. KG represent rules for the Executive Board and its supervision that are consistent with the requirements of the Code. Corporate governance practices that exceed the legal guidelines are not carried out.
3. Working Practices of the Executive Board and Supervisory Board
The management structure of Analytik Jena GmbH+Co. KG is subject to the dual management system, which features the separation of management and control bodies, in accordance with the fundamental principles of German public corporate law. The cooperation of the Executive Board and the Supervisory Board is designed to promote the well-being of the Company through steady value creation and is characterized by trust, transparency, and direct communication and reporting paths. Section 7 of the Notes to the Consolidated Financial Statements and the Company's Corporate Governance Report provide an overview of the membership and individualized remuneration of the Executive Board and the Supervisory Board.
As the management body, the Executive Board is responsible for conducting the Company's operational business according to valid legal provisions and the Company's Articles of Association with the goal of increasing the Company's value continuously and sustainably. Together with the Supervisory Board, it coordinates the development of the strategic framework and establishes short, medium, and long-term goals as well as guidelines and principles for the corporate policies derived from them. It is furthermore responsible for planning as regards capital expenditure, finance, resources, and personnel, as well as risk management and the Company's overall portfolio and business units.
According to the Articles of Association, the Executive Board of the Company must consist of at least two members, who are appointed by the Supervisory Board. Currently, the Executive Board consists of three members, who are jointly responsible for the corporate governance of the Company in accordance with the principle of comprehensive responsibility. Nevertheless, the members of the Executive Board are individually responsible for the business units assigned to them by the rules of procedure. Details about the allocation of business assignments are stipulated in the rules of procedure, which govern matters reserved for the entire Executive Board, individual areas of responsibility, the majority required for resolutions - the resolutions of the Executive Board are as a rule passed by a simple majority - as well as transactions requiring approval.
Independent of their individual areas of responsibility, all of the members of the Executive Board continually follow all information that is important to the course of business so that at any time they can work toward averting looming threats, convene the entire Executive Board to make desirable improvements or suitable changes, notify the Chairman, or take other appropriate action. Thus, the Executive Board as a whole decides on all issues of fundamental and material importance. The entire Executive Board also decides on all matters that could be of particular significance or import to the Company or its subsidiaries and associated companies.
Meetings of the Executive Board are held regularly. They are convened by the Chairman of the Executive Board, but upon request can be convened by any other member of the Executive Board. The Chairman of the Executive Board chairs the meetings of the Executive Board and coordinates the areas of responsibility. In particular, the Chairman is responsible for managing and coordinating the Group's Executive Board, representing the Company to third parties, and the administration of the Company. The Chairman represents the Executive Board to the Supervisory Board and obtains its approval in cases stipulated by law, the Articles of Association, or resolution of the Supervisory Board. The Executive Board informs the Supervisory Board regularly and in a comprehensive, timely manner about all relevant matters and circumstances involving strategic orientation, planning, business development, risk situation, compliance, and significant transactions, such as deviations from the planned course of business.
The Supervisory Board exercises a control function. It monitors and advises the Executive Board in the management of business and the Company. It is directly involved in decisions of fundamental importance to the Company. Accordingly, for example, corporate acquisitions and sales, major capital expenditure, and financial measures require its approval. Similarly, it coordinates the Company's strategic orientation with the Executive Board and receives regular updates about its implementation. It appoints and dismisses the members of the Executive Board and decides on their remuneration. Furthermore, it is responsible for approving the separate annual financial statements and the consolidated annual financial statements. It conducts its activities according to the provisions of the law, the Articles of Association, and the Company rules of procedure as well as the German Corporate Governance Code. The annual report of the Supervisory Board provides an overview of its work.
According to the Articles of Association, the Supervisory Board consists of three members. The regular term is five years and comes to an end at that Ordinary General Meeting which will decide on their discharge for the fourth financial year after the commencement of the period of office. The Supervisory Board elects from among its members a Chairperson, who convenes and chairs the Supervisory Board meetings, and represents the Supervisory Board both externally and before the Executive Board.
Resolutions of the Supervisory Board are generally adopted at meetings. Outside of meetings, resolutions can be adopted in writing, by telex (also by telefax), by telegraph, by telephone, or by way of electronic data transmission (by email). As a rule, the Supervisory Board meets four times per year. Additional meetings may be convened at the request of a Supervisory Board member or the Executive Board. In its regular meetings, the Supervisory Board deals not only with the financial results awaiting publication, but also with all issues arising in the course of business. If necessary, the Supervisory Board convenes for extraordinary meetings in order to deliberate and decide on currently pending, extraordinary, or unexpected events or transactions. Resolutions of the Supervisory Board are adopted by a majority of the votes cast. In case of a tie, the Chairman of the Supervisory Board shall cast the deciding vote. Resolutions shall be recorded in the minutes of the meeting.
Due to the fact that the Supervisory Board consists of only three members, the formation of professionally qualified committees as recommended in the German Corporate Governance Code is not feasible for Analytik Jena. The members of the Supervisory Board shall jointly dedicate their energies to all topics which according to the Code should be transferred to special committees, thereby complying with the objectives of the Code.
An insurance policy for property loss/liability (D&O insurance) has been taken out for all members of the Executive Board and the Supervisory Board. The D&O insurance policy currently in existence provides a deductible for Executive Board members equivalent to 1.5 times the respective fixed annual remuneration, in accordance with section 93(2) sentence 3 AktG, and no deductible for the Supervisory Board.
Furthermore, section 15a of the German Securities Trading Act (WpHG) makes it mandatory for the members of the Executive Board and the Supervisory Board of Analytik Jena GmbH+Co. KG to report the acquisition or sale of Analytik Jena shares to the Company and to the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht). In addition to purchase and sale transactions of Analytik Jena shares, security transactions related to the Analytik Jena stock (e.g. the acquisition or sale of options) must also be reported. The acquisition or granting of options on an employment contract basis or as a component of remuneration and the exercising of such options are not subject to the duty to report. Security transactions by individual or legal persons who are in a close relationship with the persons described are also subject to the duty to report. Since the introduction of the duty to report, Analytik Jena has been voluntarily publishing all transactions, even beyond the legally prescribed period of one month.
Analytik Jena GmbH+Co. KG
Jena, December 19, 2014
For the Executive Board For the Supervisory Board
Klaus Berka Andreas Krey