Corporate governance declaration

The corporate governance declaration pursuant to Sec. 289a Handelsgesetzbuch (HGB, German Commercial Code) is an integral component of the Group management report. It contains the declaration of compliance with the German Corporate Governance Code pursuant to Sec. 161 Aktiengesetz (AktG, German Stock Corporation Act), disclosures on corporate governance practice and a description of the working methods of the management board and supervisory board. Moreover, the corporate governance report is an integral component of the corporate governance declaration issued by the company. Consequently, all the key disclosures on corporate governance are condensed in one place.

Declaration pursuant to § 161 of the German Stock Corporation Law [Aktiengesetz]

In accordance with Sec. 161 of the German Stock Corporation Law, the Management Board and the Supervisory Board of the Celesio AG declare that since the last declaration of compliance from December 2008, the recommendations of the Government Commission German Corporate Governance Code – as amended on 6 June 2008 and subsequently as amended on 18 June 2009 – were and are being complied with the following exceptions:

  • The individualised disclosure of the remuneration of the management board members in the Compensation Report according to Code Sec. 4.2.4. and 4.2.5. is not implemented, as a decision to this effect was adopted by the General Meeting of Celesio AG on 27 April 2006 for a period of five years.
  • The individualised disclosure of the remuneration of the supervisory board members according to Code Sec. 5.4.6. (3) is not implemented, as it would not deliver additional benefit to the shareholders.

December 2009
The Management Board / The Supervisory Board

Disclosures on corporate governance practice

Management and control

The management board is responsible for the management of the Celesio Group based on legal requirements and the rules of procedure laid down by the supervisory board. The management board is advised and monitored in its management function by the supervisory board. The supervisory board is responsible for appointing members of the management board. Any major transactions carried out by the management board must be approved by the supervisory board.

Shareholders and annual general meeting

Our shareholders are the owners of the capital of Celesio AG and exercise their rights at the annual general meeting. The annual general meeting of Celesio AG is held each year in the first six months of a fiscal year. The fiscal year of Celesio begins on 1 January and ends on 31 December. In addition, extraordinary general meetings can be called for special reasons. The annual general meeting passes resolutions on all the tasks required of it by law. These include the distribution of profits in the form of a dividend, the exoneration of the supervisory board and the management board, the election of the auditor, the election of members of the supervisory board and decisions on any changes to the articles of association.

Transparency

We attach great importance to promptly providing comprehensive information to our shareholders, employees and other stakeholders. We report on the business situation and results of Celesio AG throughout the year in the annual report and the three interim reports as well as press releases, analyst conferences and telephone conferences. The latest information is published on an on-going basis by means of press releases and ad hoc announcements.

Directors’ dealings

Pursuant to Sec. 15a of the Wertpapierhandelsgesetz (WpHG, German Securities Trading Law) people who hold a management function at a publicly listed German company, or any legal or natural persons who are related to such a functionary, have a duty to report if they buy or sell shares or related financial instruments in the company of EUR 5,000 or more within one fiscal year (Directors’ Dealings).

Financial reporting and audit

The consolidated financial statements of Celesio were prepared pursuant to International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB), London, as adopted by the European Union. In addition, the provisions of German commercial law were applied pursuant to Sec. 315a (1) HGB. The annual general meeting elects the auditor for the financial statements of the company and of the Group as well as for the review of the interim financial reporting. Before awarding the engagement, the supervisory board confirms that existing relationships between the auditor and the company or its boards did not give any grounds to doubt the independence of the auditor. The duties of the auditor include informing the supervisory board of all findings and results of the audit of the financial statements which are relevant for the board’s work. The auditor must report any independence issues immediately.

Compliance

In its corporate governance, Celesio is committed to compliance, i.e. observation of laws, contractual obligations and internal company policies, which is of utmost priority for the company. To this end, we set up an effective compliance management system, which contains appropriate mechanisms for analysis and review. We examine our compliance system on a regular basis and adjust it as necessary. Some years ago, we established an internal code of conduct according to which our employees are bound to act based on high legal and ethical standards.

Operating principles of the Management Board and Supervisory Board

Good corporate governance requires open dialogue between the management board and the supervisory board. The working relationship between the supervisory board and the management board of Celesio AG is characterised by mutual trust.

Management Board

The management board is responsible for managing the company with the aim of raising the value of the company in the long term, among other things. It acts in the interest of the company, taking into account the needs and concerns of the stakeholders. The management board represents the company, develops its strategy and is responsible for compliance, corporate governance and an effective risk management system.

Currently, the management board of Celesio AG consists of three members. The total remuneration of the members of the Management Board comprises both performance-related and non-performance-related components.

Supervisory Board

The Supervisory Board’s duty is to advise and monitor the Management Board in its management of the company at regular intervals. It appoints and dismisses members of the Management Board and works with management for long-term successor planning. The Supervisory Board has a close and trusting working relationship with the Management Board and is involved in all fundamental business decisions. The committees set up by the Supervisory Board (general, audit, arbitration and nomination committees) support the members of the Supervisory Board in fulfilling their duties on time and in full. The Supervisory Board regularly reviews the effectiveness of its activities in line with the requirements of the German Corporate Governance Code (No. 5.6).

The Supervisory Board of Celesio AG is currently composed of twelve members – six of whom represent the shareholders and six the employees. The chairman of the Supervisory Board is elected from the members of the Supervisory Board. Each year the Supervisory Board convenes at four ordinary meetings and, if needed, at additional extraordinary meetings.

In the corporate governance report contained in the annual report, the Management Board and the Supervisory Board report on corporate governance within the company. Moreover, Celesio has published its German corporate governance code compliance declarations for past years on its website.