Wording of the declaration of conformity as of September 16, 2016 Please note: Only the German version is valid and applicable

Transcription

1 Wording of the declaration of conformity as of September 16, 2016 Please note: Only the German version is valid and applicable The Management Board and Supervisory Board declare that the company has complied and will comply with the recommendations of the German Corporate Governance Code ("DCGK") in the version of 5 May 2015 (as published in the German Federal Gazette of 12 June 2015) with the following exceptions: The following numbers refer to the version of the DCGK mentioned above. 3 Cooperation of Management Board and Supervisory Board In section 3.8, para. 3, the DCGK recommends that, if a company takes out a directors' and officers' liability (D&O) insurance for its supervisory board, a deductible should be agreed for the supervisory board. The D&O insurance for the Supervisory Board of MOLOGEN AG does not contain a deductible. The company does not believe that the care and responsibility which the members of the Supervisory Board bring to their duties would be improved by a deductible in the D&O insurance. 4.2 Management Board Composition and remuneration Pursuant to section 4.2.3, para. 2, sentence 6 of the DCGK, the amount of remuneration must be capped both overall and for individual remuneration elements. Members of the Management Board are included in a stock option program for employees of the Company. After a set period, the stock options give the right to subscribe to shares in the Company at a set price. Whereas the number of shares to be allocated is limited from the outset, no limit is set for the upside potential during the exercise period for the shares. The Supervisory Board is of the view that limiting the increase in value of the share-price-related remuneration would contradict the fundamental aim of this type of compensation and would diminish its main attraction, which is to work towards increasing the enterprise value. In addition, the Supervisory Board regards the view that the MOLOGEN AG Fabeckstr Berlin Germany I PHONE I FAX I info@mologen.com I REGISTERED OFFICE Berlin Germany I REGISTER OF COMPANIES HRB 65633B Amtsgericht Berlin-Charlottenburg Germany I TAX NO. 29 / 446 / VAT REG. NO. DE I BANK DETAILS Berliner Sparkasse / LBB AG BLZ ACCOUNT NO BIC BELADEBEXXX IBAN DE I EXECUTIVE BOARD Dr. Mariola Söhngen (Chairwoman) Walter Miller - CHAIRMAN OF THE SUPERVISORY BOARD Oliver Krautscheid

2 Management Board should benefit less than the remaining shareholders from any increase in share price as unconvincing. Since there is no total amount limit applied to all the variable remuneration elements, there is therefore also no cap on the amount of remuneration for members of the Management Board. This represents a deviation from section 4.2.3, para. 2, sentence 6 of the DCGK. Pursuant to section 4.2.3, para. 4 and 5 of the DCGK, when concluding Management Board contracts, it is important to bear in mind that payments made to a member of the Management Board on premature termination of his or her contract, including fringe benefits, should not exceed the value of two years' remuneration and should not compensate more than the remaining term of the employment contract. Furthermore, the DCGK recommends that payments promised in the event of a premature termination of an Management Board member's contract resulting from a change of control should not exceed 150% of the severance payment cap. When concluding current Management Board member contracts, the Supervisory Board has ensured that the amount of payments promised in the event of a premature termination of a contract is capped, even in the event of a change of control. The caps agreed in the contracts of Management Board members made in the past were above the figures recommended by the DCGK and are listed in the Compensation Report. In this respect there was therefore a deviation from the appropriate recommendations of the DCGK in the past. On the other hand, the contracts concluded with the two current members of the Management Board correspond to guidelines of the DCGK, so that the company no longer deviates from the current and future recommendations in section 4.2.3, para. 4 and 5 of the DCGK. Section 4.2.3, para. 6 of the DCGK recommends that the Chairman of the Supervisory Board should inform the General Meeting once of the salient points of the remuneration system and then of any changes thereto. The main points of the remuneration system for the Management Board and any changes are outlined in the Management Report and in the Annual Report. It has not been the custom in the past to inform the General Meeting again separately of the remuneration system and any changes nor are there any plans to do so in future, since the relevant information is included in the Annual Report, as mentioned above, and is therefore available to shareholders. Pursuant to section 4.2.5, para. 3 of the DCGK, the remuneration report for the fiscal years beginning after 31 December 2013 shall include for each member of the Management Board: (i) the benefit granted for the year under review including fringe benefits, and including the maximum - 2 -

3 and minimum achievable remuneration in the case of variable remuneration elements, (ii) the allocation of fixed remuneration, short-term variable remuneration and long-term variable remuneration in/for the year under review, broken down into the relevant reference years, and (iii) in relation to pension provisions and other benefits, the service cost in/for the year under review. The model tables provided by the DCGK as an appendix shall be used to present this information. The Company currently deviates from section 4.2.5, para. 3 of the DCGK. The remuneration of the Management Board is disclosed in a transparent manner in the remuneration report in accordance with legal requirements. Disclosure to the extent recommended in the DCGK does not seem necessary to satisfy the justified information interests of shareholders and investors. In this context, the Company has also taken into account the fact that, so far, the model tables throw up a large number of questions and their practical application is sometimes unclear. The Company therefore believes that, for the time being, it makes sense to wait and see how a market standard develops in the handling of the model tables after which their application will be reviewed again. 5.1 Supervisory Board Tasks and responsibilities Section 5.1.2, para. 1, sentence 1 of the DCGK recommends respecting diversity in the composition of the Board. In the view of the Supervisory Board, the choice of board members should not depend on criteria such as individual orientation or race, but above all on their personality and expertise. Consequently, the Company will continue not to follow this recommendation. In addition, the DCGK recommends setting an age limit for board members under section 5.1.2, para. 2, sentence 3. The current service contracts of members of the Company's Supervisory Board have a time limit and are not extended automatically. As in the past, the Supervisory Board will factor in the age of a candidate when considering a new contract of employment for board members, and if necessary, will adjust the duration of the contract accordingly. However, no age limit was set in the past, there are therefore no plans to do so in future. 5.2 Supervisory Board Tasks and authorities of the Chairman of the Supervisory Board - 3 -

4 5.3 Supervisory Board Formation of Committees The DCGK recommends in section to section the formation of duly qualified committees by the Supervisory Board, depending on the specific circumstances and the number of its members. In addition, in section 5.2, para. 2 and section 5.3.2, the DCGK makes recommendations regarding the chairman of the respective committees. For example, the chairman of the Supervisory Board shall also be the chairman of the committees which handle Management Board contracts, but should not be chairman of the Audit Committee. The Supervisory Board of MOLOGEN AG, which consists of three members, has so far not formed any committees because of a small number of members. Specifically, no Audit Committee or Nomination Committee was formed. So long as the number of members of the Supervisory Board remains that small, no committee will be formed in future either. So far, therefore, the recommendations of the DCGK regarding the formation of committees and the appointment of a chairman to such committees as outlined in sections 5.2 and 5.3 and sub-points have not been met, nor will they be in future. 5.4 Supervisory Board Composition and compensation Pursuant to section of the DCGK, the Supervisory Board is required to give concrete objectives regarding its composition, which whilst considering the specifics of the company, will take into account its international activities, potential conflicts of interest, the number of independent Supervisory Board members within the meaning of number of the DCGK, an age limit and a length of membership to be specified for Supervisory Board members as well as diversity. Recommendations by the Supervisory Board to the competent election bodies shall take these objectives into account. The objectives of the Supervisory Board and the status of their implementation shall be published in the Corporate Governance Report. In relation to the recommendations contained in section 5.4.1, para. 2 and para. 3 of the DCGK, a deviation is declared. The Supervisory Board has not set itself any concrete objectives for its composition so that no report can be given on the matter in the Corporate Governance Report. Although the Supervisory Board takes issues of diversity into account, if possible. However, the Supervisory Board believes it is appropriate to make recommendations for future supervisory board members dependent not on criteria such as individual orientation or race, for example, but rather on their personality and expertise. There are no plans to set an age limit or time limit for membership of the Supervisory Board, since the Company is fundamentally dependent on the - 4 -

5 expertise of experienced supervisory board members being available. In the view of the Supervisory Board, it does not make sense to exclude a potential member on the grounds of age alone or to set a time limit on the term of office from the outset, especially since the respective term of office for supervisory boards set out in the legislation and in the articles of association gives a clear timeframe for appointments. If members of the Supervisory Board have been appointed through a judicial appointment as a result of an application, then the DCGK recommends under section that the period of office of the members in question shall be limited until the next General Meeting. In the past, the Company has not followed this recommendation, most recently in the case of Supervisory Board member, Mr ten Doornkaat, whose appointment was a judicial one. The sudden departure of his predecessor just a few weeks before the Ordinary General Meeting in 2013 would have called for an addendum to the agenda to include the election of a successor and this have been very difficult to organise and might even have meant that that General Meeting had to be postponed. The Management Board and Supervisory Board were therefore of the view that maintaining the appointment until the end of the General Meeting which would pass the resolution on the Declaration of Compliance for 2013 would be a pragmatic compromise. The Company plans to meet this Code recommendation in full in the event of any future judicial appointments. Section 5.4.6, para. 1 of the DCGK recommends that the remuneration of the Supervisory Board members shall consider the chairmanship and deputy chairmanship of the Supervisory Board as well as the chairmanship of and the membership in Supervisory Board committees. The Supervisory Board remuneration set out in the current articles of association merely considers the chairmanship of the Supervisory Board. Hence, the recommendation was neither followed in the past nor does the Company comply with it to date. However, the Management Board and Supervisory Board do not deem the existing remuneration provisions appropriate given the stricter requirements on the role of the Deputy Chairman of the Supervisory Board and the increased amount of work involved. Therefore, on August 11, 2016 it was proposed to the Annual General Meeting to amend the articles of association with respect to the remuneration of the Deputy Chairman of the Supervisory Board. However, the Annual General Meeting did not approve of the proposed shareholders resolution so that the Company continues to deviate from section 5.4.6, para. 1 of the DCGK for the time being. Pursuant to section 5.4.7, sentence 2, participation in the meetings of the supervisory board by telephone link or video conference should not be the rule. At any rate, the Company's - 5 -

6 Supervisory Board is of the view that, in principle, the use of modern means of communication in the event of a Supervisory Board consisting only of three members allows an efficient and effective working of the Supervisory Board. The Supervisory Board will therefore decide on a case-by-case basis whether the actual physical presence of members is required or whether a resolution passed using modern means of communication is adequate in the interests of the company. It is therefore necessary to explain a deviation from the recommendations of the Code. Berlin, September 2016 MOLOGEN AG The Management Board Dr. Mariola Söhngen (Chairman) Walter Miller (Member) The Supervisory Board Oliver Krautscheid (Chairman) - 6 -