Supervisory Board report

Transcription

1 8 Supervisory Board The Supervisory Board of LEONI AG in fiscal 2015 again dealt in depth with the situation and performance of the group of companies. It conscientiously and very diligently fulfilled its duties in accordance with statutory requirements, the provisions of the Company s Articles of Association, the German Code and its rules of procedure, at all times standing at the Management Board s side, providing advice as well as assisting and monitoring its work. Dr Werner Rupp Constructive consultation between the Management Board and the Supervisory Board The collaboration between the Management Board and the Supervisory Board was at all times constructive, open and defined by mutual trust. The Management Board informed the Supervisory Board regularly, immediately and comprehensively about all matters pertinent to LEONI involving strategy and planning as well as the Group s operating performance and status including its risk situation, risk management and compliance. Deviation in business performance from the prepared planning and targets was explained in detail. The Management Board also involved the Supervisory Board in decisions of material importance. The Supervisory Board was provided with detailed written Management Board s in advance of its meetings. All topics, especially transactions requiring consent, were discussed in detail during the Supervisory Board s meetings. The Management Board and Supervisory Board also at all times kept in close touch outside their scheduled meetings. Among other activity, the chairmen of the two boards consulted on matters requiring agreement at short notice, both regularly on a fixed day every month and also as warranted by events. The entire Supervisory Board was informed in detail of the content of these discussions during its next meeting at the latest. There were no conflicts of interest involving Supervisory Board members in relation to the exercise of their office during the period under. Changes in Management Board membership The composition of the Management Board changed during the year under : Dr Klaus Probst retired from the Management Board of LEONI AG at his own request upon close of the Annual General Meeting on 7 May The Supervisory Board expressed its resounding and sincere thanks to Dr Probst for the exceptional contribution he made to LEONI in his 25 years of service. It appointed Dieter Bellé as the new Chairman of the Management Board. Mr Bellé was appointed to the Management Board of LEONI AG in 2000 and has in the past 15 years made a key contribution to the Company s successful growth. Mr Bellé exercises the office of President & CEO in addition to his positions as Chief Financial Officer and Labour Director. On 9 November 2015, Dr Andreas Brand, member of the Management Board since 2012 and in charge of the Wiring Systems Division, resigned from his post by mutual agreement. The Supervisory Board thanks Dr Brand for his work at LEONI.

2 Company information Supervisory Board 9 On 10 December 2015, the Supervisory Board decided, in accordance with the proposals made by the Personnel Committee, to assign responsibility for the Wiring Systems Division to Dr Frank Hiller, previously responsible for the Wire & Cable Solutions Division, from 1 January A further decision was made that Dieter Bellé will in future focus on his role as Management Board Chairman and that a new Chief Financial Officer will be appointed. The Management Board is thus due to be enlarged to four members The search for two new Management Board members was started in December 2015, with external advisors also involved in the process. In an extraordinary meeting on 29 January 2016, the Supervisory Board appointed Bruno Fankhauser as the new Management Board member for the Wire & Cable Systems Division effective 1 February Bruno Fankhauser took over management of the Swiss cables company Studer in 2004 and joined the LEONI Group via its takeover of Studer. Since 2008 he has, as member of the senior executive at the level of the Wire & Cable Solutions Division, been in charge of a Business Group that specialises in the development, production and sale of cables and cable systems for various industries. The Supervisory Board appointed him mainly on account of his strategic vision and proven experience in the cables industry. These factors are essential to the further growth of the wire and cables business. His Management Board mandate initially expires on 31 December A decision on the new Chief Financial Officer is still pending. Dieter Bellé will continue to act as CFO until an appointment has been made. Changes in Supervisory Board membership At the Annual General Meeting on 7 May 2015, shareholders elected Dr Ulrike Friese-Dormann to represent them on the Supervisory Board. She took over from Axel Markus, who had been substitute member since 2012 and member of the Supervisory Board of LEONI AG since 1 January 2015 and who resigned his office with effect from the end of the Annual General Meeting. The Supervisory Board thanks Mr Markus sincerely for his work on the Supervisory Board. Dr Bernd Rödl, member of the Supervisory Board of LEONI AG since 2009, died on 9 November In Dr Bernd Rödl LEONI has lost a valuable advisor whose well-founded, independent and always pertinent assessments were of great help to the Supervisory Board and the Company. Dr Bernd Rödl was Chairman of the Audit Committee and member of the Nomination and Strategy Committees. On 10 December 2015, the shareholder representatives adopted the Nomination Committee s proposal resolved to propose Prof Dr Christian Rödl for judicial appointment. The Nuremberg local court appointed Prof Dr Christian Rödl as a member of the Supervisory Board on 22 December His appointment expires at the close of the Annual General Meeting of LEONI on 4 May After the judicial appointment Prof Dr Christian Rödl is to be proposed for election at the Annual General Meeting scheduled for 4 May Prof Dr Christian Rödl was appointed as member and Chairman of the Audit Committee. Dr Werner Lang was appointed as the successor of Dr Bernd Rödl in the Nominating Committee and Ingrid Hofmann as his successor in the Strategy Committee.

3 10 Main topics of discussion by the Supervisory Board The Supervisory Board held five regular and three extraordinary meetings during the 2015 financial year. The regular meetings took place on 16 March, 7 May, 30 July, 17 September and 10 December. On 17 September 2015 the Supervisory Board meeting was held in Frankfurt am Main. On this occasion we visited the International Motor Show (IAA) and LEONI AG s booth at the Show to gain an impression of how LEONI and its customers present themselves. On 10 December 2015 the shareholder representatives additionally held a separate meeting. The employee representatives held a preliminary discussion prior to each Supervisory Board meeting. The Supervisory Board had a quorum on each occasion. One member excused his/her absence from one meeting. All members of the Management Board attended each of the meetings so far as these did not cover topics requiring that they absent themselves. This included the deliberations on the changes in the Management Board s membership and Management Board contract and compensation matters. The topics that were discussed during the regular meetings included financial, capital investment and human resource planning, the operating targets, the effectiveness of risk management as well as current trends in the economy and the business. At its first regular meeting during the period under on 16 March 2015 the Supervisory Board discussed the regular topics but also dealt in depth with the annual financial statements of LEONI AG and the Group for fiscal Both sets of statements were approved without any objection after detailed deliberation. Furthermore, it decided the agenda for the Annual General Meeting on 7 May One focal point of the meeting on 7 May 2015 was the promotion of equal rights at LEONI. Legislation requires listed companies and/or companies subject to co-determination to set a specific target for the quota of women on the Supervisory Board, Management Board and the two management levels below. According to Article 96 (2) of the German Companies Act (AktG), the Supervisory Board must have a quota of at least 30 percent women and men each as of 1 January Prior to this stipulation coming into effect, the Supervisory Board had set a target for its composition that at least one third of its members should be women. The employee and shareholder representatives have decided to meet this quota separately. Accordingly, two women must be represented on the Supervisory Board on both sides. At present, the quota is fulfilled by the shareholder side on the Supervisory Board because it includes two women. The employee side is currently represented by only one woman because the terms of office of the employee representatives elected before the gender quota came into effect have not yet expired and there has therefore been no opportunity to appoint another woman. At the level of LEONI AG itself the Supervisory Board has set a target quota of 15 percent for the Management Board. The Management Board has set the targeted women s quota at the two management levels below at 8 percent for the top management level and at 14 percent for the second management level. These target quotas were agreed with the Supervisory Board at its meeting on 30 July The provides regular updates on the progress made in reaching these quotas.

4 Company information Supervisory Board 11 Furthermore, at the meeting on 30 July 2015 the Supervisory Board was informed of the business situation of the Group and of the current status of the Factory of the Future project in Roth, as well as on risk management in the event of terrorist attacks in risk countries with LEONI facilities. The new version of the German Code and the necessary adjustments at LEONI were also discussed. In addition, the Supervisory Board decided to have the efficiency of its work fully reviewed by an external consultant for the first time. The includes further details on this topic. During their meeting on 17 September 2015 the Supervisory Board s members discussed, among other things, the review of the Management Board compensation for 2014 and the projection for 2015, which is commensurate with that paid by other MDAX companies. The Management Board also presented the realignment of compliance at LEONI. Further information on this topic can be found in the Corporate Governance. Moreover, it approved the conclusion of contracts between LEONI AG and Supervisory Board members in accordance with Article 114 of the German Companies Act. The main topic of the Supervisory Board meeting on 17 September 2015 was the current business situation in the operating divisions, particularly in the Wiring Systems Division. The performance in the first half of the fiscal year seemed solid, reinforced in terms of sales by positive currency translation effects. This performance was based on the persistently high level of demand from the global automotive industry and from most of LEONI s other major customer industries. Only the infrastructure and petrochemicals businesses showed weaknesses. The large number of new projects starting up in the Wiring Systems Division also developed according to schedule in the first half of the year. At the end of the third quarter some projects of the Wiring Systems Division surprisingly experienced considerable strain, resulting in considerably higher expenses and significantly reduced efficiency, which compromised earnings substantially. This prompted an ad hoc profit warning on 12 October The Supervisory Board immediately dealt with this issue in depth. It called an extraordinary Supervisory Board meeting on 19 October 2015 and was informed by the Management Board about the causes of the deterioration in earnings, and considered the countermeasures to be applied. Two additional extraordinary meetings of the Supervisory Board were convened on this topic after the meeting on 19 October 2015: one on 4 November and one on 9 November The Supervisory Board meetings were at times held without any presence of Management Board members. The Supervisory Board requested additional information, especially on the implementation of the newly introduced matrix organisation, and regular updates on ongoing projects, and intensified its collaboration with the Management Board. In order to step up its efforts to analyse and remedy the problems thoroughly and rapidly, the Company involved outside consultants in the examinations. The Supervisory Board consequently accepted Dr Brand s decision to resign his Management Board mandate effective 9 November 2015 in order thereby to take responsibility for the problems that arose in the Wiring Systems Division. Regardless of this development, the Supervisory Board remains closely involved in addressing the problems.

5 12 The fifth extraordinary meeting of the Supervisory Board on 10 December 2015 once again deliberated extensively on the situation in the Wiring Systems Division, the business planning for 2016 and the medium-term planning presented by the Management Board. The Supervisory Board approved the planning following detailed discussion. Other agenda items included the presentation of the findings of the efficiency review of the Supervisory Board s work and an update of the declaration pertaining to the Code pursuant to Article 161 of the German Companies Act. To comply with the recent changes to the Code, a provision on limiting the length of service was added to the rules of procedure for the Supervisory Board. Further details are contained in the. Work of the committees The Supervisory Board of LEONI AG formed an Audit Committee, a Personnel Committee, a Nomination Committee and a Strategy Committee. In addition there is the Arbitration Committee in compliance with Article 27 (3) of Germany s Co-determination Act. These governance bodies prepare the topics to be addressed by the entire Supervisory Board and the resolutions on which the Board is to vote during its meetings. The Audit Committee met a total of four times during the past financial year. It dealt in detail with the 2014 financial statements and consolidated financial statements, the management s and the Auditor s. In addition, it prepared for nomination of the auditors for the 2015 financial year and dealt in depth with the upcoming quarterly s as well as the half-year. Other major topics involved the collaboration with the auditor during the audit of the annual financial statements, the effectiveness of risk management and of the internal control system, particularly in connection with the deteriorating earnings performance of the Wiring Systems Division, and internal auditing, the restructuring of compliance and the changes to the ing to the Supervisory Board. The committee members also sought information on the status of the ongoing audit and on information security. The Audit Committee further discussed the sharp rise in requirements that affect the committee and that result from the EU reform of the statutory audit of annual financial statements, which are due to be adopted into national law by 17 June The Personnel Committee held six meetings during the period under. Its deliberations focused on the changes on the Management Board, the changes to Management Board contracts and the Management Board compensation. The preparation of the resolution on setting a women s quota for the Management Board was also on the agenda. Following the departure of Dr Andreas Brand, the committee furthermore drafted proposals for the future assignment of Management Board responsibilities and initiated the search for suitable candidates to fill the vacant Management Board positions. The Nomination Committee met on two occasions in At the first meeting, it prepared the nomination of Dr Ulrike Friese-Dormann as a new Supervisory Board member; as a result of this appointment the shareholder side complied early with the recommendations of the Code and the announced legislation on the women s quota. The second meeting deliberated the judicial appointment of Prof Dr Christian Rödl as member of the Supervisory Board.

6 Company information Supervisory Board 13 The Strategy Committee met twice in 2015, on both occasions together with the Management Board. It dealt in depth with the strategy of the Company s two divisions and with the Group s IT as well as personnel strategy. Convening of the Arbitration Committee pursuant to Article 27 (3) of Germany s Co-determination Act was not required in the past financial year. and Declaration of Conformity Again in fiscal 2015, the Supervisory Board dealt in detail with at LEONI, taking the German Code as its guide. The Declaration of Conformity pursuant to Article 161 of the German Companies Act was updated in December With one exception in each case, LEONI fulfilled all the recommendations of the Code in its current version. Further details can be found in the current version of the Declaration of Conformity and the. Audit of the annual financial statements The Annual General Meeting of LEONI AG s shareholders on 7 May 2015 appointed Ernst & Young GmbH auditing company of Stuttgart as auditors for the 2015 financial year. Ernst & Young audited and granted an unqualified certificate for the 2015 financial statements and the management of LEONI AG prepared in accordance with the German Commercial Code as well as the consolidated financial statements prepared in accordance with the IFRS and the Group management. The auditors responsible pursuant to Article 319a (1) Sentence 4 of the German Commercial Code (HGB) were Udo Schuberth and Gero Schütz. The auditors stated that the management s described the situation of LEONI AG and of the Group as well as the future risks and rewards in an appropriate manner and also gave the quality of the risk management system a favourable verdict. Declaration of Conformity page 37 The annual financial statements of the Company and of the Group, the management s and the audit s were available to all members of the Supervisory Board in good time. The Audit Committee pre-examined these documents during its meeting on 15 March These financial statements and s were comprehensively discussed during the regular meeting of the Supervisory Board on 22 March The auditing company s representatives took part in both meetings, ed on the findings of their audits and were available to provide additional information. With respect to the accounting process, they confirmed the effectiveness of the risk management and internal control systems to the Supervisory Board. The auditors gave written assurance, furthermore, that they did not perform any significant services other than to audit the financial statements for LEONI AG during the year under and that there are no circumstances that might compromise their independence. The final audits of the annual financial statements and the management s of LEONI AG and the Group by the Supervisory Board did not give rise to any objections. The members of the Supervisory Board approved the annual financial statements of LEONI AG and the consolidated financial statements for fiscal 2015 as prepared by the Management Board. The financial statements of LEONI AG have

7 14 thus been duly adopted. The Supervisory Board supports the Management Board s proposal to pay out a dividend of EUR 1.00 per share for fiscal Thanks to the Management Board and staff The Supervisory Board thanks all members of the Management Board as well as staff for their good work in the past financial year, which was affected by exceptional, adverse factors. We are convinced that they will together do everything to resolve the identified problems. We are aware that this entails particular challenges. The Supervisory Board wishes the Management Board and staff every success with the related tasks in It is confident that they will continue to confront these challenges with full commitment in order to help LEONI back to sustained profitability. The Supervisory Board will also continue to do everything to justify your confidence and will oversee LEONI closely as the Company addresses the tasks for the next financial year. Nuremberg, 22 March 2016 Dr Werner Rupp Chairman of the Supervisory Board