Germany
Entsprechenserklärung 2004 (EN)
Declaration of compliance by Kontron AG with the German Corporate Governance Code pur-suant to Article 161 of the German Stock Corporation Law [AktG]
The Management Board and Supervisory Board declare that since their last declaration, the recommendations by the Government Commission on the German Corporate Governance Code (in the version of May 21, 2003) published by the Federal Ministry of Justice in the offi-cial section of the electronic version of the Official Gazette of the Federal Republic have been and are being complied with, subject however to the following exceptions:
1. With regard to D&O insurance, the Company has currently agreed no self-insured deductible for members of the Supervisory Board. (Code Figure 3.8)
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 the Supervisory Board are of the opinion that given the low level of the remuneration scheme at Kontron AG, agreement on a self-insured deducti-ble for the Supervisory Board is not currently meaningful.
2. The remuneration paid to members of the Management Board does indeed in-clude both fixed and short-term variable components, but does not include vari-able components with a long-term incentive effect. (Code Figur 4.2.3, Sentence 1)
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 Figure 4.2.3, Para. 2, 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 Su-pervisory 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 Figure 5.5.3, Sentence 2)
In the view of the Management Board and Supervisory Board of Kontron AG, the Com-pany 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 con-tinuation of the said mandate is not in the hands of the Supervisory Board member con-cerned. 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 per-mit a flexible balance to be drawn between the conflicting interests which takes ade-quate 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 Figure 5.4.5, 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 individual-ized presentation in the event that the emoluments received by the Supervisory Board as a whole should exceed an overall limit of EUR 50,000 in one financial year.
Eching, December 2004
Management and Supervisory Board of Kontron AG