Corporate Governance / Our Guiding Principles

The Management Board of PVA TePla AG defines the corporate goals, the strategic orientation, the corporate policy, as well as the Group organization. In particular, this includes control over the Group including its financial resources, the coordination and monitoring of the divisions, personnel planning, as well as the company’s profile with respect to capital markets and public. The Management Board informs the Supervisory Board promptly and comprehensively about all relevant plans affecting the company. Transactions and measures that require approval of the Supervisory Board shall be presented to it in a timely manner.

The Management Board manages the company on its own responsibility with the aim of increasing the Company’s value in the long term and achieving the specified corporate goals. It manages the business activities in accordance with the statutory regulations, the Articles of Association and the Rules of Procedure for the Management Board, and works together with the Company’s other executive bodies in a trusting relationship.

The Management Board specifies the long-term goals as well as the strategies for the Group, and lays down the regulations and principles for the corporate policy developed on the basis of said goals and strategies. It coordinates and controls the important activities. It specifies the portfolio, develops and deploys managers, distributes the resources and decides on the Group’s financial control and reporting activities.

The Management Board members bear collective responsibility for the entire management. Notwithstanding the overall responsibility borne by all Management Board members, the individual members manage the divisions assigned to them in accordance with Management Board resolutions on their own responsibility. The distribution of tasks among the three members of the Management Board is laid down in writing in a schedule defining the distribution of responsibilities.

Together with the managing directors of the subsidiaries, the Management Board as a whole decides on all matters of fundamental, major significance, both in cases stipulated by law and in other cases specified as binding. The Management Board’s Rules of Procedure lay down a catalog of measures that require treatment and decision making by the entire Management Board. There is also a catalog of business transactions that require the approval of the Supervisory Board.

Management Board meetings, which the managing directors of the subsidiaries also attend, take place on a regular basis. These meetings are convened by the Chairman of the Management Board. In addition, any member can demand that a meeting be convened. If a unanimous vote is not required by law, the Management Board reaches a resolution with a simple majority of the votes cast. In the event of an equal division of votes, the vote of the Chairman of the Management Board is decisive. Minutes are kept of the meetings; the Chairman of the Supervisory Board receives a copy of the minutes for each meeting.

Pursuant to the Management Board’s Rules of Procedure and the schedule defining the distribution of responsibilities, the Chairman of the Management Board is in charge of managing and coordinating the Group Management Board in particular. He represents the Company and Group in dealings with third parties and the personnel on matters which affect more than just parts of the Company or Group. He also bears particular responsibility for specific task areas pursuant to the schedule defining the distribution of responsibilities as well as for the strategic further development of the Company. In light of the low number of Management Board members, no Management Board committees have been established.

In accordance with the statutory regulations, the Supervisory Board monitors the Management Board in exercising its activities and managing the Company. In particular, the Supervisory Board monitors the Management Board in its critical discussion of fundamental questions relating to the Company’s focus. This involves, in particular, the annual Company planning and the preparation of the financial statements, as well as fundamental topics relating to the strategic alignment and further development of the Company.

The Supervisory Board of PVA TePla AG comprises three members, who are informed in detail of the economic situation and development of the business at four ordinary meetings per year. In light of the number of members, no committees have been formed. Organization of the Supervisory Board’s work has been laid down in writing in Rules of Procedure for the Supervisory Board. Dr. Hebestreit meets the statutory requirements of impartiality and expert knowledge in the fields of accounting or auditing of financial statements; at least one member of the Supervisory Board must meet these requirements.

Regular reports by the Management Board detailing key financial and performance figures of the Company enable the Supervisory Board to monitor development of the business situation. In addition to the meetings and reports, the Chairman of the Supervisory Board obtains information during regular discussions with the Management Board.

The Goals of the Supervisory Board Regarding Its Composition

The Supervisory Board should be composed in a way that ensures it can provide qualified oversight and advice to the Management Board. Overall, its members should possess the knowledge, capabilities and professional experience required for the orderly performance of the tasks of a Supervisory Board in a capital-market-oriented, international company operating in the field of high-technology system engineering.

Against this background and taking account of the recommendations and suggestions of the German Corporate Governance Code, the Supervisory Board decides on the following goals for its composition:

1. Requirements regarding the composition of the overall board
   a. Expertise profile
   The Supervisory Board as a whole should possess the competencies that are considered relevant in view of the activities of the PVA TePla Group. In particular, this includes in-depth experience and knowledge of: the management of medium-sized international enterprises, system engineering and especially the project business involving some leading global companies; R&D and especially the technologies of relevance to the company as well as contiguous or related industries; production, sales, executive development; the key markets in which the PVA TePla Group is active; bookkeeping and accounting; controlling/risk management, and the field of governance/compliance. At least one member of the Supervisory Board must have expertise in the areas of accounting or financial statements, and the Supervisory Board members must collectively be familiar with the relevant markets in which the Group is active.
   b. Independence and potential conflicts of interest
   More than half of the Supervisory Board members should be independent as defined in Item 5.4.2 of the German Corporate Governance Code. Presently, all members of the Supervisory Board are independent. All Supervisory Board members should be free of potential conflicts of interest, especially those that can arise due to a consulting or board function with customers, suppliers, creditors, or other third parties. The Supervisory Board should not include more than one former member of the Management Board.
   c. Age and regular limits and diversity
   The Rules of Procedure of the Supervisory Board set an age limit of 70 years for members of the Supervisory Board, but not a regular limit of length of membership. The Supervisory Board does not feel that a predefined limit for the maximum length of membership of the Supervisory Board is appropriate due to the associated loss of experience, expertise and efficiency, particularly as the respective term of office for Supervisory Board members stipulated by the Act specifies a clear time frame for the mandate. Regarding the issue of equality of men and women, when making proposals to the Annual General Meeting regarding the election of new Supervisory Board members, the Supervisory Board is guided in particular by the professional and personal skills of the candidates. In the event of equally suitable candidates, the Supervisory Board shall take diversity into account, with due consideration of the share of women.
2. Requirements pertaining to individual Supervisory Board members
   a. General requirement profile
   Supervisory Board members should possess commercial and operational experience and general knowledge in the area of specialist engineering. Based on their knowledge, abilities, and professional experience, they should be capable of fulfilling the tasks of a Supervisory Board member in an international company. Generally speaking, Supervisory Board members should abide by the limits of Supervisory Board mandates recommended by the German Corporate Governance Code under Item 5.4.5.
   b. Availability
   Every Supervisory Board member shall ensure that he or she can devote the expected expenditure of time for the orderly execution of the Supervisory Board mandate. In this context, it should be noted that at least four ordinary Supervisory Board meetings will be held annually, each of which requires appropriate preparation, and that adequate time must be set aside to review the annual and consolidated financial statements and the (Group) management report. Furthermore, additional extraordinary meetings of the Supervisory Board may be necessary to deal with special issues. The Supervisory Board should take these goals into consideration when submitting nominations for election at the Annual General Meeting. At the same time, it should focusing on completing the expertise profile of the board as a whole, particularly with regard to the personality, integrity, commitment, professionalism, and independence of the candidates.

The Supervisory Board examines the efficiency of its own work as part of a structured self-evaluation at least once a year.