SUPERVISORY BOARD REPORT

Transcription

1 8 RWE Annual Report 2016 SUPERVISORY BOARD REPORT Thanks to its reorganisation, RWE has the opportunity to chart a new strategic course. This is a great challenge for the Supervisory Board as well was undoubtedly one of the most important years in the almost 120-year history of RWE. In the autumn, we successfully listed our new subsidiary innogy SE on the stock market. Prior to this, the business areas renewables, networks and supply were bundled together in innogy, whereas conventional power generation and the trading business remained under the direct control of RWE AG. We discussed the motivating factors behind this reorganisation in the 2015 Annual Report. The Supervisory Board was closely involved in the establishment of the new company and its IPO. RWE is now represented on the energy market through two strong corporate groups. With its mix of renewable energy, smart grids and innovative retail offerings, innogy has extremely bright prospects as well as the resources to be a driving force in ensuring the success of the transformation of the energy system. As a listed company, it also has direct access to the capital market, opening up the entire range of options in terms of external financing for growth projects. RWE AG itself also profits from the new Group structure: as the majority shareholder of innogy, it will benefit directly from increases in its value. Moreover, it has gained additional financial flexibility thanks to the sale of own shares in innogy during the IPO. It can now use this flexibility to meet its obligations under the new legal framework for nuclear waste disposal. Thanks to its reorganisation, RWE has the opportunity to chart a new strategic course. This is a great challenge for the Supervisory Board as well. Against this backdrop, we formed a new Supervisory Board committee last year, focusing on the future strategy of the company. And now, let me present some general information on the work done by the Supervisory Board during the past year. In 2016, we fulfilled all of the duties imposed on us by German law and the company s Articles of Incorporation. We advised the Executive Board on running the company and monitored its activities. At the same time, we were consulted on all fundamental decisions. The Executive Board informed us of material aspects of business developments both verbally and in writing. This was done regularly, extensively and in a timely fashion. We were also kept abreast of the earnings situation, risks and risk management in an equally thorough manner. During the last year, the Supervisory Board of RWE AG met a total of six times: four ordinary meetings, one extraordinary meeting and one inaugural meeting. The table on the following page provides an overview of attendance.

2 To our investors > Supervisory Board report 9 Attendance at meetings in fiscal by Supervisory Board member Supervisory Board Executive Audit Personnel Affairs Nomination Strategy NewCo IPO Dr. Werner Brandt, Chairman 6/6 1/1 1/1 3/3 4/4 1/1 2/2 Dr. Manfred Schneider, former Chairman (until 20 April) 2/2 1/1 1/1 Frank Bsirske, Deputy Chairman 5/6 2/2 3/4 1/1 2/2 Reiner Böhle 6/6 1/1 4/4 Sandra Bossemeyer (since 20 April) 4/4 1/1 2/2 Dieter Faust (until 20 April) 2/2 1/1 1/1 Roger Graef (until 20 April) 2/2 Arno Hahn 6/6 5/5 1/1 Andreas Henrich (since 20 April) 4/4 Maria van der Hoeven (20 April to 14 October) 3/3 Manfred Holz (until 20 April) 2/2 1/1 Prof. Dr. Hans-Peter Keitel 5/6 0/1 1/1 4/4 1/1 2/2 Dr. h. c. Monika Kircher (since 15 October) 1/1 Martina Koederitz (since 20 April) 3/4 Monika Krebber (since 20 April) 4/4 1/1 2/2 Frithjof Kühn (until 20 April) 2/2 1/1 Hans Peter Lafos (until 20 April) 2/2 Harald Louis (since 20 April) 4/4 3/3 Christine Merkamp (until 20 April) 2/2 Dagmar Mühlenfeld 6/6 2/2 1/2 Peter Ottmann (since 20 April) 4/4 3/3 4/4 Günther Schartz (since 20 April) 4/4 1/1 Dr. Erhard Schipporeit (since 20 April) 4/4 4/4 2/2 Dagmar Schmeer (until 20 April) 1/2 Prof. Dr.-Ing. Ekkehard D. Schulz (until 20 April) 1/2 0/1 0/1 Dr. Wolfgang Schüssel 6/6 2/2 4/4 3/3 2/2 Ullrich Sierau 6/6 4/5 Ralf Sikorski 6/6 4/5 1/1 Marion Weckes (since 20 April) 4/4 4/4 Dr. Dieter Zetsche (until 20 April) 2/2 Leonhard Zubrowski 6/6 2/2 2/2 1 Attendance is indicated by the number of meetings attended by the Supervisory Board member to the total number of meetings during the member s term as a member of the Board in question. Decisions were taken on the basis of comprehensive reports and draft resolutions submitted by the Executive Board. The Supervisory Board had ample opportunity to concern itself with the Executive Board s reports and draft resolutions in its plenary sessions and in the Supervisory Board committees. We were also informed by the Executive Board of projects and transactions of special importance or urgency between meetings. We passed the resolutions required of us by law or the Articles of Incorporation. Where necessary, we also did so by circular resolution. As the Chairman of the Supervisory Board, I was in continuous contact with the Chairman of the Executive Board, as was my predecessor in this office. We were therefore able to discuss events of material significance to the Group s situation and development without any delay.

3 10 RWE Annual Report 2016 Main points of debate. In the past fiscal year, the reorganisation of the RWE Group, the initial public listing of innogy SE, the formulation of the legal relationship between RWE AG and its new subsidiary and the future strategic direction of RWE AG following the IPO of innogy were the main topics of our discussions. We were informed about these issues at each meeting of the Supervisory Board and passed the necessary resolutions. Some decisions which had to be made quickly were delegated to the NewCo IPO, which we formed in 2015 for this purpose. The crisis in conventional power generation was also the subject of intensive discussions at our meetings. We also addressed energy policy issues, in particular the landmark decisions in relation to the disposal of nuclear waste. We carefully followed the work of the Commission to Review the Financing for the Phase-out of Nuclear Energy and the implementation of their proposals for the law on the restructuring of responsibilities for nuclear waste disposal, and supported the Executive Board in an advisory role. We also focused intensively on measures intended to strengthen the earnings and financial power of RWE. Among other things, we concentrated on the question of how the company s competitiveness can be further improved. We repeatedly discussed the future strategic orientation of the company with the Executive Board, in particular at the Strategy Meeting of the Supervisory Board on 14 December Other subjects discussed during the year included the difficult conditions in the UK retail business, innovation projects, and personnel and social issues. The Executive Board regularly reported to us on the Group s financial situation and ongoing legal cases. Furthermore, it informed us about the economic environment on the energy market, focusing in particular on developments in wholesale electricity prices and generation margins. At our session on 15 December 2016, we concerned ourselves in depth with the Executive Board s planning for fiscal 2017 and the forecasts for the two following years, and subsequently approved them. The agenda for this meeting also included the resolution on adjusting the system of compensation for the Executive Board, with a particular focus on the long-term compensation components. Conflicts of interest. The members of the Supervisory Board are obliged to immediately disclose any conflicts of interest. No such notifications were made in Corporate governance. During the last year, the Supervisory Board also discussed implementation of the recommendations of the German Corporate Governance Code. These remained unchanged in The Executive and Supervisory Boards prepared a corporate governance report, which was published on the internet at /corporate-governance. The statement of compliance issued on 15 December 2016 is available at the same address. RWE fully complies with the recommendations of the version of the Code dated 5 May s. In 2016, the Supervisory Board had six standing committees and the project-related NewCo IPO committee, which was created at the end of 2015 and accompanied the public listing of innogy SE. These committees are charged with preparing topics and resolutions for Supervisory Board meetings. In certain cases, they exercise decision-making powers conferred on them by the Supervisory Board. The committee chairs regularly informed the Supervisory Board of their work. Individual attendance at the meetings of the committees can be seen in the table on page 9. The Executive held two meetings last year. Among other things, it did preparatory work for the Supervisory Board debates regarding the planning for the 2016 and 2017 financial years and forecasts through to The Audit convened five times. It monitored the quality of the audit. It focused intensively on the interim and annual financial statements of RWE AG and the Group, together with the combined review of operations. The discussed the financial statements with the Executive Board before they were published. The independent auditor participated in the debates at all of the committee meetings and reported on his audit and /or his audit-like review. In addition, the Audit submitted a recommendation for the proposal made by the Supervisory Board to the Annual General Meeting regarding the election of the independent auditors for fiscal 2016 and prepared the grant of the audit award to the independent auditor including the details of the fee agreement. It also set the priorities of the audit. Special attention was paid to the Group s risk management and accounting-related internal control system, as well as the new internal controlling system in the retail business. Furthermore, the committee dealt with compliance issues and with the

4 To our investors > Supervisory Board report 11 schedule and results of the internal audit. During the year under review, the s agenda included numerous other topics such as the risk situation of the RWE Group in the wake of the Corporate Control and Transparency Act (KonTraG), the new law reforming audit activities and the ensuing requirements, further development of the internal controlling system at RWE Supply & Trading, data protection, cyber security and the financial position of the RWE pension fund, as well as tax and legal issues. Individual topics were discussed with the responsible management personnel present. The Personnel Affairs held four meetings. It prepared the personnel decisions of the Supervisory Board. In 2016, one of this s focal points was the adjustment and simplification of the Executive Board compensation system. It was supported in this work by an independent compensation expert. The Nomination also convened on four occasions in the year under review, discussing the replacement of members of the Supervisory Board. The Mediation, pursuant to Sec. 27, Para. 3 of the German Co-Determination Act, did not meet in the period under review. The Strategy was established in April Its task is to explore issues of strategic significance for RWE. The main focus was on the company s long-term perspectives, direction and development. This met once in 2016, concentrating on the process of renewing RWE AG s strategy and preparing for the Strategy Meeting of the Supervisory Board in December The NewCo IPO met twice, to discuss the details of the public listing of innogy SE and pass the resolutions for which it was responsible. These included decisions on the number, allocation and placement price of the shares issued. Financial statements for fiscal PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (formerly PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft) scrutinised and issued an unqualified auditor s opinion on the 2016 financial statements of RWE AG, which were prepared by the Executive Board in compliance with the German Commercial Code, the financial statements of the Group, which were prepared in compliance with International Financial Reporting Standards (IFRS) pursuant to Section 315a of the German Commercial Code, the combined review of operations for RWE AG and the Group, and the accounts. In addition, PricewaterhouseCoopers found that the Executive Board had established an appropriate early risk detection system. The company was elected independent auditor by the Annual General Meeting on 20 April 2016 and commissioned by the Supervisory Board to audit the financial statements of RWE AG and the Group. Documents supporting the annual financial statements, the annual report and the audit reports were submitted to the members of the Supervisory Board in good time. Furthermore, the Executive Board commented on the documents at the Supervisory Board s balance sheet meeting of 8 March The independent auditors reported at this meeting on the material results of the audit and were available to provide supplementary information. The Audit had previously concerned itself in depth with the financial statements of RWE AG and the Group, as well as audit reports, during its meeting on 7 March 2017, with the auditors present. It had recommended that the Supervisory Board approve the financial statements as well as the appropriation of profits proposed by the Executive Board. At its meeting on 8 March 2017, the Supervisory Board reviewed the financial statements of RWE AG and the Group, the combined review of operations for RWE AG and the Group, and the Executive Board s proposal regarding the appropriation of distributable profit. No objections were raised as a result of this review. As recommended by the Audit, the Supervisory Board approved the results of the audits of the financial statements of RWE AG and the consolidated financial statements, and adopted both. The 2016 annual financial statements are thus adopted. The Supervisory Board concurs with the Executive Board s proposal regarding the appropriation of profits, which envisages paying a dividend of 0.13 per preferred share. No dividend will be paid on common shares.

5 12 RWE Annual Report 2016 Personnel changes in the Supervisory Board and Executive Board. Upon completion of the Annual General Meeting on 20 April 2016, the terms of the members of the Supervisory Board came to an end. Dr. Werner Brandt, Prof. Dr. Hans-Peter Keitel, Dagmar Mühlenfeld, Dr. Wolfgang Schüssel and Ullrich Sierau were once again elected to the Supervisory Board as shareholder representatives. Roger Graef, Frithjof Kühn, Dr. Manfred Schneider, Prof. Dr. Ekkehard Schulz and Dr. Dieter Zetsche left the Board. Maria van der Hoeven, Martina Koederitz, Peter Ottmann, Günther Schartz and Dr. Erhard Schipporeit were elected as their successors. However, Ms. van der Hoeven resigned from the Board on 14 October 2016, after accepting a mandate on the Supervisory Board of innogy. The Essen District Court appointed Mag. Dr. h. c. Monika Kircher to the Supervisory Board as her replacement. On the same grounds, Ms. Koederitz will also resign prior to the next Annual General Meeting at the latest and thus leave the Supervisory Board early. Reiner Böhle, Frank Bsirske, Arno Hahn, Ralf Sikorski and Leonhard Zubrowski were once again elected as employee representatives. Dieter Faust, Manfred Holz, Hans Peter Lafos, Christine Merkamp and Dagmar Schmeer left the Board. They were replaced by Sandra Bossemeyer, Andreas Henrich, Monika Krebber, Harald Louis and Marion Weckes. At its inaugural meeting on 20 April 2016, the Supervisory Board elected myself as the Chairman and Frank Bsirske as the Deputy Chairman. New members were also appointed to the committees. Pursuant to the Stock Corporation Act, Dr. Erhard Schipporeit was appointed as the independent finance expert of the Supervisory Board and the Audit. On behalf of the Supervisory Board, I would like to thank all of the former members for their dedication in steering the company. At its meeting on 3 March 2016, the Supervisory Board made an important personnel decision in relation to the future management of RWE AG by appointing Dr. Rolf Martin Schmitz as a member of the Executive Board until the end of June Peter Terium and Dr. Bernhard Günther, who were still the Chairman of the Board and Chief Financial Officer of the company at that time, left the Executive Board of RWE AG shortly after the public listing of innogy. They left the Executive Board effective from 14 October 2016, to dedicate themselves fully to their work at innogy. Uwe Tigges, who is currently still the Chief HR Officer, will remain with RWE AG until 30 April 2017, after which he will also only be active for innogy. At the meeting of 16 September 2016, the Supervisory Board appointed Dr. Markus Krebber as member of the Executive Board of RWE AG, effective from 1 October As of 15 October 2016, Rolf Martin Schmitz became Chairman of the Executive Board of RWE AG and Markus Krebber took over the post of Chief Financial Officer. Thanks to our employees was truly a milestone year for RWE. By bundling renewable energy, grids and retail in the new company innogy SE and successfully listing this company on the stock market, the Group is now well positioned to master the challenges stemming from the transformation of the energy system. At this juncture, I would like to express my gratitude to all who have participated in this. I would also like to thank all of the employees, whose motivation and competence drive the success of RWE every day, creating a foundation for the company to thrive, despite the difficult conditions we face. On behalf of the Supervisory Board Dr. Werner Brandt Chairman Essen, 8 March 2017