Germany
Entsprechenserklärung 03/2006 (EN)
Declaration of compliance by Kontron AG with the German Corporate Governance Code pursuant to Article 161 of the German Stock Corporation Law [AktG]
The Management Board and Supervisory Board of Kontron AG hereby declare pursuant to § 161 of the German Stock Corporation Law [AktG]
- that the recommendations of the Government Commission on the German Code of Corporate Governance as amended on June 2, 2005 as amended on June 2, 2005 – published in the electronic version of the Federal Official Gazette [Bundesanzeiger] on July 20, 2005 and corrected on July 21, 2005 – are in principle complied with. The following recommendations have not been applied:
1.With regard to D&O insurance, the Company has currently agreed no self-insured deductible for members of the Supervisory Board. ( Code Section 3.8, Sentence 3 )
Whereas the Company has agreed appropriate self-insured deductibles through the medium of individual contracts with members of the Management Board, no such agreement has currently been entered into with members of the Supervisory Board.
The Management Board and Supervisory Board of Kontron AG are of the opinion that given the low level of the remuneration scheme at Kontron AG, agreement on a self-insured deductible for the Supervisory Board is not currently meaningful.
2.The remuneration paid to members of the Management Board does indeed include both fixed and short-term variable components, but does not include variable components with a long-term incentive effect. Code Section 4.2.3, Paragraph 1, Sentence 2).
The Management Board and Supervisory Board are of the opinion that the members of the Management Board of Kontron AG do not require remuneration components with a long-term incentive effect, as they already have a substantial stake in Kontron AG through their holdings of shares or options. This guarantees that the Board members are oriented toward the long-term success of Kontron AG. Moreover, the incentive effect is tied to the overall success of the Kontron Group rather than simply being linked to individual remuneration-related performance parameters. The fact that the Board members are themselves shareholders safeguards the synchronization of interests between the management and the remaining stockholders which remuneration components with a long-term incentive effect would otherwise be intended to achieve. There is no further need for any additional incentive effect.
3.The fundamentals of the Management Board remuneration system include no statement of the value of share options. ( Code Section 4.2.3, Para. 3, Sentence 2 )
The Management Board and Supervisory Board are of the opinion that a statement of the unit numbers granted is adequate. A statement of the value of options is considered by the Management Board and Supervisory Board to be dispensable.
4.Significant and not merely temporary conflicts of interest in the person of a Supervisory Board member do not cause that member's mandate to be terminated provided that the Supervisory Board votes unanimously for a continuation of the said mandate. ( Code Section 5.5.3, Sentence 2 )
In the view of the Management Board and Supervisory Board of Kontron AG, the Company and its shareholders are adequately protected even in the event of enduring and significant conflicts of interest in the person of individual Supervisory Board members provided that the Supervisory Board has knowledge of the situation, the shareholders are made aware of the relevant conflicts of interest at the General Meeting and the continuation of the said mandate is not in the hands of the Supervisory Board member concerned. In contrast to the compulsory termination of the member's mandate proposed by the Code, the decision-making and preventive powers afforded to the Supervisory Board as a whole by the rules of procedure for the Kontron AG Supervisory Board permit a flexible balance to be drawn between the conflicting interests which takes adequate account of the consequences of a resignation.
5.Information regarding the remuneration paid to Supervisory Board members is not presented on an individualized basis. ( Code Section 5.4.7, Para. 3 )
The Management Board and Supervisory Board are of the opinion that an individual statement of the emoluments received by individual members of the Supervisory Board offers no discernible advantage. However, consideration is being given to an individualized presentation in the event that the emoluments received by the Supervisory Board as a whole should exceed an overall limit of EUR 150,000 in one financial year.
6.The consolidated financial statements are not publicly available within 90 days of the end of the financial year.
According to the recommendations contained in the German Corporate Governance Code, the consolidated financial statements should be publicly available within 90 days of the end of the financial year; interim reports should be available within 45 days of the end of the respective reporting period (Section 7.1.2). The Frankfurt Stock Exchange rules in the Prime Standard foresee a period of four months for the publication of consolidated financial statements, and a period of two months in each case for the publication of interim reports. The Company intends to avail itself of these periods and in thus far deviates from the time limits contained in Section 7.1.2..
- that the recommendations of the Government Commission on the German Code of Corporate Governance as amended on May 21, 2003 – published in the electronic version of the Federal Official Gazette [Bundesanzeiger] on July 04, 2003 – have in principle been complied with since the last declaration made in December 2004. The recommendations contained in Sections 3.8, Sentence 3, 4.2.3 Para.1, Sentence 2, 4.2.3 Para. 3, Sentence 2, 5.5.3 Sentence 2 and 5.4.5 Para. 3 were not applied.
Eching, March 2006
The Management Board and Supervisory Board of Kontron AG