Corporate Governance Declaration
The corporate governance declaration which must be issued pursuant to Section 289 a of the German Commercial Code includes relevant statements by Jungheinrich AG on corporate governance practices, a description of the manner in which the company's major bodies work and the declaration of compliance in accordance with Section 161 of the German Stock Corporation Act.
The Board of Management and the Supervisory Board promote transparent, good and responsible corporate management and control, oriented towards increasing the company's value over the long term. The exercise of corporate management and control by the Board of Management and the Supervisory Board are described herein below.
Board of Management
Jungheinrich AG is run by a four-member Board of Management, consisting of the Chairman of the Board of Management, Hans-Georg Frey, and the three members of the Board of Management, Dr. Volker Hues, Dr. Helmut Limberg and Dr. Klaus-Dieter Rosenbach.
The Board of Management runs the company independently. It manages business transactions in compliance with statutory regulations, the Articles of Association of Jungheinrich AG, the Bylaws of the Board of Management, the resolutions passed by the Supervisory Board and the Annual General Meeting, the German Corporate Governance Code (with the exception of points on which a decision has been made to deviate from its recommendations) and its employment contracts. As a rule, the Board of Management passes resolutions by simple majority. In the event of a tie vote, the vote cast by the Chairman of the Board of Management is the deciding vote. The Bylaws of the Board of Management define certain transactions requiring Supervisory Board approval.
The Board of Management regularly coordinates and agrees on Jungheinrich AG's strategic orientation with the Supervisory Board and implements it independently. In so doing, the Board of Management sees to it that the management tools used within the company are effective and efficient. The budgeting, control and risk management systems used to run the company thus play an important role in corporate governance.
The Board of Management informs the Supervisory Board of all material matters concerning the budget, the business trend, risk exposure, risk management and compliance regularly, in a timely manner and comprehensively. Deviations from the budget and established goals are reported likewise to the Supervisory Board along with a commentary.
The Supervisory Board appoints the members of the Board of Management and monitors the work of the Board of Management. The Supervisory Board performs this activity in adherence with applicable laws, the Articles of Association of Jungheinrich AG, the Bylaws of the Supervisory Board and the Board of Management, the German Corporate Governance Code (with the exception of points on which a decision has been made to deviate from its recommendations) and resolutions passed by the Supervisory Board and the Annual General Meeting. The Supervisory Board and the Board of Management cooperate trustingly the for the benefit of the company. The Supervisory Board generally convenes at least twice every calendar year, if necessary without the entire Board of Management or individual members of the Board of Management.
Pursuant to the German 1976 Co-Determination Act, the Supervisory Board of Jungheinrich AG consists of twelve Supervisory Board members. Six of them represent the shareholders, and six represent the employees. The members of the Supervisory Board are listed in the annual report by name. The Chairman of the Supervisory Board and his deputy are elected from within the Supervisory Board.
The Supervisory Board makes its decisions by resolution. Resolutions are passed by a simple majority of the votes cast unless other majorities are mandated by law. The voting procedure is as follows: In the event of a tie vote and if a second round of votes cast on the same subject matter results in another tie vote, the Chairman receives two votes for the second round of votes.
The Chairman of the Supervisory Board works very closely and trustingly with the Chairman of the Board of Management and regularly holds debates on current issues with the Board of Management between meetings of the Supervisory Board and its committees as well.
The Supervisory Board was in session four times in 2012.
The Supervisory Board has formed the three following committees from its members, which prepare and supplement its work:
- The Joint Committee (in accordance with Section 27, Paragraph 3 of the German Co-Determination Act)
- The Finance and Audit Committee
- The Personnel Committee
- The Corporate Headquarters New Build Committee
The committee chairmen principally report to the entire Supervisory Board on the material results of their committee meetings at the following Supervisory Board meeting.
The Joint Committee is composed of the following members: Jürgen Peddinghaus (Chairman), Detlev Böger (Deputy Chairman), Birgit von Garrel and Franz Günter Wolf.
The Joint Committee did not convene in 2012.
Finance and Audit Committee
The Finance and Audit Committee is composed of the following members: Dr. Peter Schäfer (Chairman), Hubertus Freiherr von der Recke (Deputy Chairman) and Steffen Schwarz.
The Finance and Audit Committee prepares the decisions taken by the Supervisory Board on the adoption of the parent company's financial statements and the endorsement of the consolidated financial statements, among other things. It concerns itself with monitoring the audit process, the effectiveness of the internal control system, the risk management system, the internal audit system and the compliance system as well as the audit of the financial statements, which primarily entails monitoring the proposal for the selection of the independent auditor, the award of the audit assignment to the independent auditor, the autonomy of the independent auditor, the determination of focal points of the audit, and agreements reached on fees as well as additional services rendered by the independent auditor. Moreover, it assists the Supervisory Board in preparing and performing the efficiency audit of the Supervisory Board and overseeing the transactions conducted by the Board of Management and sees to it that the risk and opportunity management system is complied with. In addition, the committee discusses the quarterly and half-year financial statements with the Board of Management. It prepares the passage of resolutions by the Supervisory Board in accordance with Section 161 of the German Stock Corporation Act.
The Finance and Audit Committee held five sessions in 2012.
The Personnel Committee is composed of the following members: Jürgen Peddinghaus (Chairman), Detlev Böger (Deputy Chairman), Franz Günter Wolf, Wolff Lange and Markus Haase. The Personnel Committee prepares the Supervisory Board's personnel-related decisions, in particular the appointment, re-appointment, non-renewal of the appointment and dismissal of members of the Board of Management along with the nomination of the Chairman of the Board of Management as well as the compensation structure and the determination and review of the total remuneration of each member of the Board of Management. The Personnel Committee decides on certain transactions instead of the Supervisory Board in compliance with statutory regulations and the provisions of the Supervisory Board's Bylaws.
The Personnel Committee held four sessions in 2012.
Corporate Headquarters New Build Committee
The Corporate Headquarters New Build Committee is composed of the following members: Wolff Lange (Chairman), Franz Günter Wolf and Rolf Uwe Haschke. This committee is discussing the construction of a new head office with the Board of Management.
The Corporate Headquarters New Build Committee held three sessions in 2012.
Accounting and Audit of the Financial Statements
The Jungheinrich Group has been applying international accounting rules, the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS) as required in the European Union since 2005. The audit of the financial statements of the parent company and the Group is handled by an independent auditor, who is appointed by the Annual General Meeting. As proposed by the Supervisory Board, the 2012 Ordinary General Meeting elected Deloitte & Touche GmbH, Wirtschaftsprüfungsgesellschaft auditor of the financial statements of the parent company and the Group for fiscal 2012.
An agreement was reached with the independent auditor pursuant to which it is obligated to immediately report on findings and events evidenced by the audit that are material to the tasks of the Supervisory Board and to report to the Supervisory Board and/or document in the audit report any findings evidenced by the audit of the financial statements proving that statements made by the Board of Management and the Supervisory Board are incorrect.
Jungheinrich AG accords substantial importance to consistent, comprehensive and timely information. Jungheinrich AG reports on its business situation and earnings in its annual report, at the balance sheet press conference and in its interim reports (quarterly and half-year financial reports).
Scheduled dates of major recurrent events and publications-such as the Annual General Meeting, the annual report and the interim reports-are listed in a financial calendar. The calendar is published and made permanently available on Jungheinrich AG's website sufficiently in advance.
In addition, information is communicated via press releases and/or ad-hoc notices as required by law. All notices and releases can be viewed on the Internet at www.jungheinrich.com.
Declaration according to Section 161 of the German Stock Corporation Act
The Board of Management and the Supervisory Board of Jungheinrich AG declare that Jungheinrich AG will comply with the recommendations of the German Corporate Governance Code Government Commission in the May 15, 2012 version of the Code and has done so in the past, on the basis of this declaration.
The deviations follow and are commented below:
1. The company's D&O insurance policy does not include a deductible for the members of the Supervisory Board (Item 3.8 of the Code).
The D&O insurance policy is a group insurance policy for the company's board members (Board of Management and Supervisory Board) as well as for a large number of the Group's employees in Germany and abroad. Differentiating between employees and board members in principle was deemed improper in the past. However, in view of the German law on the appropriateness of management board compensation, the company's insurance policy was supplemented by a deductible for the members of the Board of Management in line with the sum specified by the law and the Code. However, the legislator expressly renounced mandating the introduction of a corresponding deductible for Supervisory Board members. Only the Code includes a recommendation to this effect. Therefore, the Supervisory Board still does not see any reason to deviate from its current practice. The Supervisory Board's deliberations in this connection are based on the conviction that the prime objective is to recruit to the Supervisory Board suitable individuals whose experience is beneficial to the Supervisory Board's work in the company's interest. These goals would be counteracted if the recruited Supervisory Board members satisfying these requirements merely had limited insurance coverage for their activity.
2. The Supervisory Board pays attention to diversity with respect to the composition of the Board of Management. However, appropriate female representation does not take centre stage in the Supervisory Board's deliberations (Item 5.1.2 of the Code). Naturally, female candidates are given consideration equal to male candidates by the Supervisory Board when staffing positions on the Board of Management. However, the individual's professional and personal suitability with respect to the position on the Board of Management in question are the focal point. The Supervisory Board does not believe that a female quota irrespective of each candidate's suitability would lead to the desired results or comply with the asset management duties which the Supervisory Board, among others, is obliged to fulfil.
3. The compensation of the members of the Board of Management and Supervisory Board is not published in itemized or individualized form (Items 4.2.4 and 5.4.6 of the Code).
The company is still not implementing the Code's recommendation to present the emoluments of the members of the Board of Management or Supervisory Board in itemized or individualized form in the notes or the management report. These corporate bodies are boards, which makes disclosure by board member irrelevant in principle. Furthermore, the company believes that the benefits of such disclosure for the public and investors are not significant enough to disregard the associated disadvantages-also as regards each of the board members' right to privacy. After all, per its resolution dated June 15, 2011, the Annual General Meeting again waived the obligation of the members of the Board of Management to provide individualized disclosure over a period of five years.
4. A nomination committee for proposing suitable Supervisory Board candidates to the Annual General Meeting has not been established (Item 5.3.3 of the Code).
In light of the nature of a family-owned company, the Supervisory Board believes that such a committee is dispensable. Two Supervisory Board members are seconded by the registered shareholders. The candidates for the four remaining shareholder representatives, which are proposed to the Annual General Meeting, are chosen in close coordination with the holders of ordinary shares
5. The Supervisory Board has not yet stated any specific goals with respect to its composition (Item 5.4.1 of the Code).
Over the course of 2012, the Supervisory Board debated whether the Code's recommendation can be followed appropriately given the company's background. This debate resulted in the resolution to consider this issue and possibly a determination of specific goals again in good time before the next Supervisory Board elections in 2016.
6. The company renounces the determination of an age limit for Supervisory Board members (Item 5.4.1 of the Code).
An age limit can lead to rigid rules, which may counteract the company's goal of recruiting extremely experienced individuals to work on the Supervisory Board. Therefore, increased flexibility when making decisions on a case-by-case basis has been given preference over a rigid limit.
7. The Supervisory Board's composition may not meet the criteria set forth in Item 5.4.2 of the Code regarding the number of independent Supervisory Board members.
The Supervisory Board of Jungheinrich AG consists of a total of twelve members, six of whom are elected by the employees. Two shareholder representatives are seconded to the Supervisory Board by the ordinary shareholders who own registered shares. The four remaining shareholder representatives are elected by the Annual General Meeting. The candidates for these four remaining shareholder representatives, which are proposed to the Annual General Meeting, are already being chosen in close coordination with the holders of ordinary shares. In turn, only the ordinary shareholders are entitled to cast votes at the Annual General Meeting. The system for staffing the shareholder representative positions reflects the fact that the nature of the company is that of a family-owned business.
Hamburg, December 2012