Corporate Governance Declaration
The corporate governance declaration pursuant to Sec. 289 a of the German Commercial Code which must be issued for the first time 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 Sec. 161 of the German Stock Corporation Act.
The Board of Management and the Supervisory Board promote transparent, good and responsible corporate management and oversight, oriented towards increasing the company's value over the long term. The exercise of corporate management and oversight 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 conducts business in compliance with statutory regulations, the German Corporate Governance Code, the Articles of Association of Jungheinrich AG, the Bylaws of the Board of Management, resolutions passed by the Supervisory Board and the Annual General Meeting, and its employment contracts. As a rule, the Board of Management passes resolutions by simple majority. If, for example, a meeting is only attended by two members of the Board of Management, or if a member of the Board of Management abstains from voting, resulting in a tie vote, the vote cast by the Chairman of the Board of Management shall be 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, oversight 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 and risk management regularly, in a timely manner and comprehensively. Deviations from the budget and established goals are reported to the Supervisory Board along with a commentary likewise.
Supervisory Board
The Supervisory Board appoints the members of the Board of Management and monitors the work of the Board of Management. It carries out this activity in compliance with the law, the German Corporate Governance Code, the Articles of Association of Jungheinrich AG, the Bylaws of the Supervisory Board, and any resolutions passed by the Supervisory Board. The Supervisory Board and the Board of Management cooperate trustingly the for the benefit of the company. The Supervisory Board generally convenes at least four times a 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 annex 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.
Committees
The Supervisory Board has formed the five following committees from its members, which prepare and supplement its work:
- The Joint Committee (in accordance with Sec. 27, Para. 3 of the German Co-Determination Act)
- The Finance and Audit Committee
- The Personnel Committee
- The Corporate Headquarters New Build Committee
- The USA Committee
The committee chairmen regularly report to the Supervisory Board on the material results of their committee meetings, i.e. no later than at the following Supervisory Board meeting.
Joint Committee
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 2009.
Finance and Audit Committee
The Finance and Audit Committee is composed of the following members: Dr. Peter Schäfer (Chairman), Dr. Albrecht Leuschner (Deputy Chairman) and Wolfgang Erdmann.
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. It concerns itself with monitoring the audit process, the effectiveness of the internal control system, the risk management system and the internal audit system as well as the audit of the financial statements, which primarily entails monitoring 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 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, it concerns itself with reviewing the compliance system.
The Finance and Audit Committee held seven sessions in 2009.
Personnel Committee
The Personnel Committee is composed of the following members: Jürgen Peddinghaus (Chairman), Detlev Böger (Deputy Chairman), Franz Günter Wolf, Wolff Lange and Klaus-Peter Butterweck The Personnel Committee prepares the Supervisory Board's personnel-related decisions, in particular 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 six sessions in 2009.
Corporate Headquarters New Build Committee
The Corporate Headquarters New Build Committee is composed of the following members: Franz Günter Wolf (Chairman), Wolff Lange (Deputy Chairman) and Wolfgang Erdmann. This committee discusses the options concerning the planned new headquarters in Hamburg-Wandsbek as well as its design with the Board of Management.
The Corporate Headquarters New Build Committee held three sessions in 2009.
USA Committee
The USA Committee is composed of the following Supervisory Board members: Dr. Peter Schäfer (Chairman), Wolff Lange, Jürgen Peddinghaus, Klaus-Peter Butterweck and Reinhard Skibbe. The USA Committee concerns itself with the strategic orientation of the North American business and oversees its implementation.
The USA Committee convened once in 2009.
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) in the manner 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 2009 Ordinary General Meeting elected Deloitte & Touche GmbH, Wirtschaftsprüfungsgesellschaft auditor of the financial statements of the parent company and the Group for fiscal 2009.
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. In addition, it has been agreed with the independent auditor that it shall 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.
Transparency
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 insofar as this 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, in line with this declaration, Jungheinrich AG is complying with the June 18, 2009, version of the recommendations of the "German Corporate Governance Code Government Commission" at present, and complied with those of the June 6, 2008, version in the past.
The deviations follow and are commented below:
1. The company's D&O insurance policy will include an appropriate deductible for the members of the Board of Management at the point in time prescribed by law. The Supervisory Board will decide on the introduction of a deductible for its members at a later point in time (Item 3.8 of the Code).
The D&O insurance policy is a group insurance policy for a large number of the Group's employees in Germany and abroad. Differentiating between employees and board members was deemed improper in the past. In view of the mandatory provisions of the German law on the appropriateness of management board compensation that entered into force on August 5, 2009, the insurance policy will be supplemented by a deductible for the members of the Board of Management by the point in time set forth in said law. The Supervisory Board has not decided to introduce an identical deductible for its members yet, opting instead to postpone the decision as it does not yet have the overview of the insurance market it needs to secure the deductible.
2. Jungheinrich AG's compensation system for members of its Board of Management is being reviewed, and the compensation components required by law are to be introduced in 2010, based on a basis of assessment of several years. The decision to adjust the compensation model for the members of the Supervisory Board will be reached as soon as the new compensation system for the Board of Management has been adopted (Item 4.2.3 of the Code).
In the past, the company decided to adopt a compensation system for its boards consisting of fixed and variable components. The variable components were linked to the company's performance. Due to new statutory regulations, the variable compensation elements of service agreements newly entered into with members of the Board of Management must be supplemented by components with a longer-term orientation. This is uncharted territory, which requires a thorough analysis. A decision concerning the members of the Supervisory Board will be reached as soon as the new rule has been adopted for the Board of Management in 2010.
3. The compensation of the members of the Board of Management and Supervisory Board is not itemized or broken down by member in the compensation report, which is part of the corporate governance report, or in the notes to the consolidated financial statements (Items 4.2.4 and 5.4.6 of the Code).
The company is 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. These corporate bodies are boards, which makes disclosure by board member irrelevant. Furthermore, the company believes that the correlation between the disadvantages associated with such disclosure and the benefits this may have for investors is unreasonable—also as regards each of the board members' right to privacy. After all, per its resolution dated June 13, 2006, the Annual General Meeting 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 5.2.3 of the Code).
In light of the nature of a family-owned company, the company believes that such a committee is dispensable. Two Supervisory Board members are seconded by the registered shareholders, and 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 company renounces the determination of an age limit for Supervisory Board members (Item 5.4.1 of the Code).
The introduction of an age limit would lead to rigid rules, which may counteract the company's goal of staffing the Supervisory Board with extremely experienced individuals. Therefore, increased flexibility when making decisions on a case-by-case basis has been given preference.
6. The consolidated financial statements are not yet available to the public within the recommended 90-day time limit after the end of the fiscal year (Item 7.1.2 of the Code).
Whereas the recommended time limit of 45 days from the end of each reporting period is adhered to, it is impossible to do so for the consolidated financial statements using current systems, owing to the large number of individual foreign-company financial statements that have to be prepared.
Hamburg, December 2009.