Our Corporate Governance Code is based on internationally and nationally recognized standards of sound and responsible company management. These also include the highest possible degree of transparency. We therefore invite you to read the section below for information about our guidelines, our risk report, as well as our company management report.
Transparency in the Capital market
Maintaining transparency in business decisions is a top priority of the Management and Supervisory Boards of PVA TePla AG. The timely dialogue with the company’s shareholders, the capital market, and interested members of the general public aims to deliver a complete picture of our company. All relevant documents, in particular the quarterly and annual reports, documents for the Annual General Meeting, ad-hoc disclosures, press releases, financial calendars, disclosures in accordance with the Securities Trading, Act and information about our divisions, is published on a regular and timely basis and is available to the public on our website (www.pvatepla.com).
Furthermore, analysts and institutional investors are given an opportunity to access in-depth information about the market positioning, strategy and prospects of our company as part of roadshows, conferences, the analysts’ meeting and press conference to comment on the past fiscal year, regular conference calls, and individual consultations. Interested parties can also view the relevant presentations on the PVA TePla website.
Our shareholders exercise their rights at the Annual General Meeting. They are entitled to exercise their voting rights in person or by proxy in accordance with their instructions. The proxies are appointed by the Management Board and announced in the invitation to the Annual General Meeting. We publish the invitation documents on our website.
Remuneration of the Management Board
In addition to agreeing upon a fixed remuneration, the Management Board contract concluded for Mr. Henning Döring in 2017 contains a variable salary component for fiscal year 2017 that is geared towards consolidated EBIT but shall not exceed the amount of the annual fixed remuneration. As of fiscal year 2018, a variable salary component that is geared towards consolidated EBIT but shall not exceed the amount of the annual fixed remuneration is agreed upon in addition to the fixed remuneration. Furthermore, there is a variable salary component geared towards the share price of PVA TePla AG based on a multi-year assessment, which shall not exceed EUR 500 thousand.
In the Management Board contract concluded for Mr. Oliver Höfer in 2016, a variable salary component geared towards consolidated EBIT is agreed upon as of fiscal year 2017 and is limited to the amount of the annual fixed remuneration.
Remuneration of the Supervisory Board
The remuneration of the members of the Supervisory Board is regulated in Section 14 of the company’s articles of association. In accordance with this provision, the remuneration of the Supervisory Board in the past fiscal year 2014 amounted to EUR 100 thousand. Members of the Management Board and of the Supervisory Board did not receive share options during fiscal year 2014.
Company management declaration as per Section 289a of the Compliance Declaration of the German Commercial Code 2018
In accordance with Section 76 Paragraph 4 of the German Stock Corporation Act (AktG), the Management Board of companies sets targets for the share of women at both management levels below the Management Board.
Management Board resolution: The Management Board has been and will continue to be guided by the objective of making the best possible and objectively justifiable choice among candidates in the best interests of the company when filling managerial positions at the enterprise. At PVA TePla AG—solely a management and functional holding company of small and medium-sized subsidiaries in the specialist mechanical engineering sector—there is only one management level below the Management Board level. At present (June 30, 2015), the share of women is 11%. The existing percentage is regarded as a target for the future share of women at the management level by June 30, 2017.
In accordance with Section 111 Paragraph 5 of the German Stock Corporation Act (AktG), the Supervisory Board of listed companies or companies that incorporate employee participation sets targets for the share of women on the Supervisory Board and on the Management Board.
Supervisory Board resolution a): When making recommendations to the Annual General Meeting regarding the election of new Supervisory Board members, the Supervisory Board shall ensure not only that the appointed persons have the personal and professional skills and experience required to hold the office, but also seek to ensure that the members of the Supervisory Board possess a diversity of opinions and experience. Insofar as the Supervisory Board, which currently includes no women, comprises only a few (three) members, a target for a specific quota of women by June 30, 2017 cannot be set at the present time. Nevertheless, the Supervisory Board is of the opinion that special consideration should be given to women when making proposals to the Annual General Meeting regarding the election of new Supervisory Board members, in view of the fact that women should be appropriately represented on the Supervisory Board.
Supervisory Board resolution a): When making recommendations to the Annual General Meeting regarding the election of new Supervisory Board members, the Supervisory Board shall ensure not only that the appointed persons have the personal and professional skills and experience required to hold the office, but also seek to ensure that the members of the Supervisory Board possess a diversity of opinions and experience. Insofar as the Management Board, which currently (July 2015) includes no women, comprises only a few (three) members, a target for a specific quota of women by June 30, 2017 cannot be set at the present time. Nevertheless, the Supervisory Board is of the opinion that special consideration should be given to women during the selection of candidates, in view of the fact that women are to be appropriately represented on management boards.
Statutory Targets for the Share of Women in Senior Executive Positions
The “Act on Equal Participation of Women and Men regarding Leadership Positions within the Sectors of Private Economy and Public Service” obligates PVA TePla AG to specify targets for the share of women on the Supervisory Board, on the Management Board, as well as at the next management level, which are to be fulfilled by June 30, 2017.
Women on the Supervisory Board
Due to size of the company, the statutory quota does not apply to the Supervisory Board of PVA TePla AG. The Supervisory Board comprises three members. It does not currently include any women. At the present time, the Supervisory Board has not set a target for upholding flexibility with reference to professional expertise and personality for new appointments. Special consideration will be given to women when proposals are made to the Annual General Meeting regarding the election of new Supervisory Board members, in view of the fact that women should be appropriately represented on the Supervisory Board.
Women on the Management Board
Due to size of the company, the statutory quota does not apply to the Management Board of PVA TePla AG. The Management Board currently comprises three members, which will be reduced to two in the future. It does not currently include any women. At the present time, the Supervisory Board has not set a target for the Management Board to uphold flexibility with reference to professional expertise and personality for new appointments. In view of the fact that women should be appropriately represented on the Supervisory Board, special consideration will be given to women during the selection of candidates.
Women at the First Executive Level
At PVA TePla AG—which is purely a management and functional holding company of small and medium-sized subsidiaries in the specialist mechanical engineering sector—there is only one management level below the Management Board level. The target set under the terms of the act on the share of women at the first management level by mid-2017 was 11%. At present (June 30, 2017), the share of women is 43%. A target of between 30% and 50% for the future share of women at management level below the Management Board by December 31, 2021 is being pursued.
Risk and opportunity strategy
The risk and opportunity strategy is embedded in the corporate strategy and is designed to secure the continuation of the company as a going concern and guarantee its further development. The resulting strategy assesses the risks and opportunities of business activities. In the core activities of the company/the Group, we make a conscious decision to enter into limited and containable risks, if they make appropriate compensation likely or are inevitable. In some cases, we allocate the risks to other parties. This mainly includes concluding suitable insurance policies. This process is conducted in close cooperation with an experienced and specialized insurance broker. It is regularly reviewed for efficiency and optimized where necessary.
Conversely, other risks that are not related to core and support processes are avoided as far as possible. A “Risk Manual” has been made available to the members of the Management Board and employees. This instructions on processes and a catalog of measures to safeguard appropriate and sustainable risk management. The manual details the specific processes involved in risk management. It aims at the completeness of all risk-related activities and measures, i.e. the identification, assessment, controlling, reporting, and monitoring of risks. Based on defined risk categories, risks at divisions, operating units, and central units are identified and assessed according to their likelihood and potential damage.
Due to the organizational structure, risk management is carried out locally in the PVA TePla AG, in the subsidiaries and business processes. The Management Board members and Managing Directors are therefore responsible for central processes of the risk management system. The main objective of the risk management system is the early recognition of risks, in order to regularly provide the Management Board with up to date information on the current risk situation within PVA TePla. The Management determines the limits for the reporting structure. The duties of those in charge include developing and where necessary installing measures to prevent, mitigate, and hedge against risks. The main risks as well as the implemented measures are regularly monitored. The risk reports are regularly compiled and analyzed by central risk management and checked and discussed by the Management Board and Supervisory Board. In addition to regular reporting, a reporting system has been installed within the Group to immediately report the occurrence of unexpected risks. The system also includes an annual risk inventory in which all of the risks relevant to the Group are reported, and their relevance and possible effects are assessed. Measures to reduce identified risk are defined, and their implementation is monitored.
The risk management system enables the Management Board to identify material risks at an early stage and to implement countermeasures. The key features of the risk management system described above are applied throughout the Group. As far as processes in financial disclosure are concerned, this means that identified risks are reviewed and assessed, particularly for their potential impact on disclosures in the respective financial reports. The idea is to provide important information at an early stage about potential changes in the fair value of assets and liabilities, possible impairments, and important information to assess the necessity of forming and reversing provisions.
The adequacy and efficiency of the risk management system is reviewed on a regular basis at the Management Board level and adjusted where necessary.
In 2007, an internal audit system was also established. An auditing firm was commissioned to set this up. The Management and Supervisory Boards agreed to a medium-term plan, according to which all divisions of the PVA TePla Group will be systematically audited.
Internal control and risk management system for the group financial disclosure process: The objective of the methods and measures we have put in place is to secure the assets of the company and enhance operating efficiency. The internal control system that has been implemented is intended to ensure the reliability of accounting and reporting and to ensure compliance with internal rules as well as legal regulations and the Articles of Association. We assure the adequate separation of functions and have also implemented appropriate spans of control. Furthermore, we make sure that responsibilities do not overlap and that tasks, expertise, and responsibilities are pooled. We have also integrated controls into the workflows. Key components of these structures and controls include strict compliance with the system of checks and balances for all essential accounting processes, effective and precisely defined access rights for our IT systems, spot checks of employees at all levels by the respective superior, the use of uniform Group-wide reporting and forms, and control over the structural and process organization including the key operational company processes within the scope of our certified quality management system. The essential features of the internal control system described above apply to all functional areas. In the accounting process, the implementation of the structural and process organization controls within the internal control system assures data integrity for the information that flows into financial reporting.
In addition to these controls implemented in the organization, the individual functional areas are also monitored by superiors and the internal audit department. The internal audit department is responsible for reviewing the functioning and effectiveness of the internal control system. In order to conduct the audit, the internal audit department has comprehensive information and review rights.
Consolidation and the Group accounting process are based on the decentralized preparation of financial statements by each of the Group companies. These financial statements are prepared and submitted according to uniform Group-wide standards and data formats. The central accounting system is connected with the ERP system through numerous interfaces.
The financial statements are consolidated in cooperation with an appropriately qualified external service provider (auditor). The entire process is controlled and verified by the central Group Accounting and Controlling department. Here, the data is also verified with regard to form and content. All of the employees involved in the process receive training at regular intervals. The parts of the internal control system relevant to financial reporting are reviewed in terms of effectiveness by the auditor as part of a risk-oriented approach.
In conclusion, we would like to point out that neither an internal control system nor a risk management system can ensure with absolute certainty that the related objectives will be achieved. Like all discretionary decisions, resolutions to implement suitable systems can also be incorrect in principle. Controls may not be adequate on a case-by-case basis due to simple errors or mistakes, or changes to environment variables may be recognized too late in spite of corresponding monitoring.
The consolidated financial statements of PVA TePla AG are prepared in accordance with the International Financial Reporting Standards (IFRS). The separate financial statements of PVA TePla AG comply with the German commercial law regulations. The auditors are selected in accordance with the statutory provisions at the Annual General Meeting. The Supervisory Board obtains a declaration of independence from the auditor in accordance with Item 7.2.1. of the German Corporate Governance Code.
The financial statements for fiscal year 2014 were audited by the auditing firm “Ebner Stolz Mönning Bachem GmbH & Co. KG, Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Frankfurt am Main”. The financial statements received unqualified audit opinions.
Articles of Incorporation