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 Report
The remuneration report is based on the recommendations of the German Corporate Governance Code (the "Code") and meets the requirements in accordance with the provisions under Sections 289a (2), 314 (1) no. 6a and b, 315a (2) HGB. In this remuneration report, PVA TePla AG discloses both the remuneration of the Management Board and that of the Supervisory Board separately.
Members of the Management Board
- Alfred Schopf (Chief Executive Officer), member of the Management Board since 2017, appointed until 2021
- Oliver Höfer (Chief Operating Officer), member of the Management Board since 2013, appointed until 2021
- Dr. Andreas Mühe (Chief Technology Officer), member of the Management Board since 2020, appointed until 2023
- Jalin Ketter (Chief Financial Officer), member of the Management Board since 2020, appointed until 2023
Manfred Bender was appointed as Chief Executive Officer in January 2021.
Basics of the Remuneration System for the Management Board
The Management Board remuneration system at PVA TePla AG aims to incentivize long-term and sustainable company management. The remuneration of the Management Board members consists of a basic salary not based on performance, other benefits (mainly non-cash benefits from the use of a company car, subsidized contributions to health insurance and contributions to a pension fund) and performance-based, variable remuneration components in the form of bonus payments. The performance-based, variable remuneration component is different for each Management Board member and the amounts are subject to limits. The Supervisory Board is responsible for determining Management Board remuneration. The entire Supervisory Board determines and reviews the Management Board remuneration system on a regular basis and decides on all contracts for the members of the Management Board. The following bonus regulations apply to members of the Management Board:
- A short-term bonus payment which is calculated as a percentage of consolidated EBIT and which is limited in terms of amount.
- A long-term bonus component calculated in line with PVA TePla AG's market capitalization and limited in terms of amount.
For Alfred Schopf, in addition to the fixed salary, a variable salary component based on the consolidated operating result (EBIT) is agreed for fiscal year 2020 et seq., which amounts to a maximum of 1.58 times the annual fixed salary.
For the remaining members of the Management Board, Oliver Höfer, Dr. Andreas Mühe and Jalin Ketter, a variable salary component based on the consolidated operating result (EBIT) for fiscal year 2020 et seq. has been agreed, which amounts to a maximum of the annual fixed salary. In addition, there is a variable salary component based on a multi-year assessment basis based on the share price of the PVA TePla AG, which amounts to a maximum of EUR 250 thousand. The contracts for the members of the Management Board foresees settlement payments in the event of the premature termination of activities as member of the Management Board, the amount of which depending on contract of employment is limited up to two years' salary (settlement cap). In the event of change of control and a subsequent premature termination of Management Board activities, the members receive remuneration which should not exceed 150% of the settlement cap.
Remuneration of the Management Board
The total remuneration of members of the Management Board in the 2020 fiscal year amounted to EUR 1,893 thousand (previous year: EUR 1,323 thousand).
On this basis, members of the Management Board received the following remuneration in fiscal year 2020:
performance-related compnent [EUR`000] fixed compensation variable compensationl** of which long term* Other benefits Total 2020 Total 2019 Schopf 260 493 0 33 786 825 Höfer 202 330 88 15 547 498 Ketter 87 173 88 13 273 0 Mühe 95 181 88 11 287 0 Total 644 1,177 264 72 1,893 1,323
*) Payment of long-term compensation is made after a period of commitment linked to the contract period, taking into account market capitalization.
**) In the 2020 financial year, the long-term component of the years 2017 to 2020 was paid out to two members of the Executive Board in the amount of TEUR 750.
The values presented above for the performance-based component include amounts granted in 2020 for fiscal year 2019 less the amounts recognized and reported as provisions in fiscal year 2019.
Provisions established in 2020 for fiscal year 2020 are also included. With the exception of the long-term per-formance-based remuneration components, the amounts above are payable over the short term. Employer contributions to pension insurance are not paid. There are no pension commitments for any current Management Board members. No real share options were granted to members of the Management Board in fiscal year 2019 or in fiscal year 2020.
In fiscal year 2020, EUR 133 thousand was paid to former members of the Management Board as pensions (previous year: EUR 119 thousand). As of the balance sheet date December 31, 2020, there was a provision of EUR 2,360 thousand in the consolidated financial statements for these pension obligations (previous year: EUR 2,403 thousand). As shown in PVA TePla AG's annual financial statements, in fiscal year 2020, EUR 133 thousand was paid to former members of the Management Board as pensions (previous year: EUR 119 thousand). As of the balance sheet date December 31, 2020, there was a provision of EUR 1,979 thousand in the financial statements for these pension obligations (previous year: EUR 1,953 thousand).
Members of the Supervisory Board
• Alexander von Witzleben, Weimar, Chairman, Member of the Supervisory Board since 2004, appointed until 2023
Arbonia AG, Arbon/Switzerland (President of the Board of Directors and CEO)
Member of the following other supervisory bodies:
- VERBIO Vereinigte BioEnergie AG, Leipzig (Chairman of the Supervisory Board)
- KAEFER Isoliertechnik GmbH & Co. KG, Bremen (Member of the Advisory Board)
- Siegwerk Druckfarben AG & Co. KGaA, Siegburg (Member of the Supervisory Board)
- Feintool International Holding AG, Lyss (President of the Administration Board)
- Artemis Holding AG, Aarburg/Switzerland (Member of the Advisory Board)
• Prof. Dr. Gernot Hebestreit, Leverkusen, Deputy Chairman, Member of the Supervisory Board since 2008, appointed until 2023
Warth & Klein Grant Thornton AG Wirtschaftsprüfungsgesellschaft, Düsseldorf (Partner, member of the Board of Directors)
Member of the following other supervisory bodies:
- Comvis AG, Essen (Deputy Chairman of the Supervisory Board)
• Prof. Dr. Markus H. Thoma, Schöffengrund, Member of the Supervisory Board since 2014, appointed until 2023
Professor of Plasma and Astronautics at the University of Giessen
Member of the following other supervisory bodies:
- Nationales Zentrum für Plasmamedizin e.V. (member of the Board of Trustees)
Basics of the Remuneration System for the Supervisory Board
The remuneration of the members of the Supervisory Board is regulated in Section 14 of PVA TePla AG's Articles of Association. Members of the Supervisory Board receive total fixed annual remuneration of EUR 25 thousand (plus any VAT owed), which is payable after the end of the respective fiscal year. The Chairman of the Supervisory Board receives twice the existing fixed remuneration and the Deputy Chairman of the Supervisory Board receives 1 time the existing fixed remuneration. Members of the Supervisory Board who did not sit on the Board for the entire fiscal year receive remuneration on a pro rata basis. The remuneration of the Supervisory Board does not include any performance-related components.
- Company management declaration as per Section 289a of the Compliance Declaration of the German Commercial Code 2020
- Risk and opportunity strategy
The PVA TePla Group’s policy on risks and opportunities reflects the Group’s commitment to achieving sustainable growth and increasing shareholder value while simultaneously managing appropriate risks and opportunities and avoiding inappropriate risks. Risk management is an integral part of planning and implementing the business strategy.
The divisions of the PVA TePla Group are exposed to an array of risks that are inextricably linked to corporate activities. Risk is understood to be the possibility of the PVA TePla Group’s events or activities jeopardizing the ability of the Group or one of its divisions to reach its targets. At the same time, it is also important for the PVA TePla Group to identify opportunities for the company, take advantage of these opportunities and reinforce the Group's competitive position. Risks and opportunities are not offset against one another. The main risks and opportunities are described below.
Risk and Opportunity Management
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.
Other risks that are not linked to core or support processes, on the other hand, are avoided where possible. To ensure this, managing directors and employees have access to a “risk manual” that sets out procedures for proper, forward-looking risk management. The manual covers specific risk management processes. It is aimed at all risk-related activities and measures, i.e. identifying, measuring, managing, reporting and monitoring risks. As part of this, risks facing the divisions, the operating units and central areas are identified using defined risk categories and assessed in terms of how likely they are to occur and their potential damage.
Risk and Opportunity Management
The scope of risk management includes the same companies as those included in the PVA TePla Group. 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 early recognition of risks is a key element of the risk management system and is intended to regularly provide Management Board members with up to date information on the current risk situation within the PVA TePla Group. The duties of those in charge include developing and, where necessary, installing measures to prevent, mitigate and hedge against risks. Those responsible regularly monitor the main risks and the countermeasures implemented. 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. Public reporting is done on a quarterly basis, but the ad-hoc reports can also be used in addition to the regular reporting process if necessary to address relevant topics in a timely manner.
The risk management system also includes an annual risk inventory, in which all of the risks relevant to the PVA TePla Group are reported and their relevance and possible effects are assessed. Measures to reduce identified risks are defined and their implementation is monitored. The risk management system which also includes the compliance 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 Management Board level and adjusted where necessary. The Management Board and the Supervisory Board regularly determine the areas where the PVA TePla Group is to be subject to an internal audit. Where necessary, external companies are engaged for these audits.
Opportunity management is also an integral part of Group management. The strategy process identifies and assesses the individual areas for opportunity. Just like risks, opportunities are reported and managed locally. Frequent reporting is carried out in order to identify at an early stage whether the market or the competition has developed in such a way or whether there have been occurrences within the Group that make reassessment necessary. As for risks, public reporting for opportunity management is also done on a quarterly basis, but the ad-hoc reports can also be used in addition to the regular reporting process if necessary to make relevant topics public in a timely manner.
Accounting-Related Internal Control and Risk Management System
The objective of the methods and measures 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. The adequate separation of functions is ensured and appropriate spans of control have been implemented. Furthermore, it is ensured that responsibilities do not overlap and that tasks, expertise and responsibilities are pooled. Controls have also been integrated 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 IT systems, spot checks of employees at all levels by the respective superior, and control over the structural and process organization including the key operational company processes within the scope of the 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, if applicable, the internal audit department. In this case, 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 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 ICS 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 2020 were audited by the auditing firm “Ebner Stolz GmbH & Co. KG, Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Frankfurt am Main”. The financial statements received unqualified audit opinions.