Corporate Governance Declaration

Summarised corporate governance declaration in accordance with Section 315d of the German Commercial Code in conjunction with Section 289f of the German Commercial Code

As a listed European Company (SE) domiciled in Germany, the corporate governance of innogy SE (‘innogy’) is primarily determined by Regulation (EC) No. 2157/2001 of the Council of 8 October 2001 on the Statute for a European Company (SE) (‘SE Regulation’), the German Act on the Implementation of the SE Regulation, the Agreement on the Participation of Employees in innogy SE of 20 December 2016, the German Stock Corporation Act, and the Articles of Incorporation of innogy, as well as by the regulations of the most recent version of the German Corporate Governance Code.

Pursuant to Article 38 of the SE Regulation in connection with Article 6 of the Articles of Incorporation of innogy, innogy uses a so-called ‘two-tier management system’. This system is characterised by the strict separation of personnel between the Executive Board as the management organ and the Supervisory Board as the supervisory organ. The Executive Board and the Supervisory Board work closely in the interests of the company.

The Executive Board is responsible for managing the company with the goal of creating value over long term. The principle of collective responsibility is applied, meaning that the members of the Executive Board are jointly responsible for the management of the company as a whole. They formulate the corporate strategy and ensure its execution, in coordination with the Supervisory Board. The fundamental aspects of the Executive Board’s work are summarised in Rules of Procedure of the Executive Board. In particular, these Rules govern the responsibility of the individual members of the Board, the matters reserved for the Board as a whole, the passage of resolutions, necessary voting majorities and the rights and obligations of the Chair of the Executive Board. The Executive Board of innogy currently has five members. Additional information on the members of the Executive Board, in particular on the responsibilities of their positions can be found here.

The Executive Board notifies the Supervisory Board regularly, punctually and comprehensively in respect of all material aspects of the development of business, significant business events and the current earnings and risk situation as well as risk management of the innogy Group. Any deviations of business from previously prepared plans and targets are explained and justified. Furthermore, the Executive Board regularly reports on the subject of compliance, i.e. measures to comply with legal regulations and internal company directives, which is also a responsibility of the Executive Board.

The Supervisory Board advises the Executive Board in managing the company and monitors its activities. It appoints and dismisses the members of the Executive Board, decides on the compensation system for the Executive Board members, and determines their individual overall compensation. It is involved in all decisions which are of fundamental importance for innogy. The Supervisory Board of innogy has 20 members, who are appointed by the Annual General Meeting. Of the 20 members, ten members are appointed pursuant to the binding proposal of the employees. The fundamental aspects of the Supervisory Board’s work are governed by Rules of Procedure of the Supervisory Board. Amongst other things, these Rules provide for the formation of committees. The Supervisory Bord of innogy currently has five standing committees: the Executive Committee, the Personnel Affairs Committee, the Audit Committee, the Strategy Committee and the Nomination Committee. The responsibilities of the Committees and their composition are specified in Article 10 et seq. of the Rules of Procedure of the Supervisory Board. Information on the individual members of the committees can be found here. The chairs of the committees regularly inform the Supervisory Board on the work of the committees. Additional information on the specific work of the Supervisory Board and its committees can be found in the current version of the Supervisory Board Report.

Finally, the Articles of Incorporation of innogy (Article 10) and the Rules of Procedure of the Supervisory Board (Article 8) include a catalog of transactions, for which the Executive Board requires Supervisory Board approval.

innogy considers responsible, transparent corporate governance to be the foundation for the company’s long-term success. Our guiding principles are set out in the most recent version of the German Corporate Governance Code (GCGC), which was introduced in 2002. After an orderly audit, on 13 December 2017 the Executive Board and the Supervisory Board of innogy issued the following Declaration of Compliance pursuant to Section 161 of the German Stock Corporation Act:

Since the submission of the last statement of compliance on 16 December 2016, innogy SE has fully complied with the recommendations of the Government Commission of the German Corporate Governance Code in the 12 June 2015 version of the Code published by the German Federal Ministry of Justice in the official section of the German Federal Gazette. Furthermore, the company has fully complied with the recommendations of the Government Commission of the German Corporate Governance Code in the 24 April 2017 version of the Code published by the German Federal Ministry of Justice in the official section of the German Federal Gazette, and will continue to do so in the future.

Additional information on innogy’s corporate governance practices can be found in the current version of the Corporate Governance Report.

At the meeting of the Supervisory Board of 16 August 2016, innogy’s Supervisory Board set the target ratio for females for the Executive Board at one sixth, but at least one woman, for the first compliance period (until 30 June 2017) defined in the Law on the Equal Participation of Women and Men in Leadership Positions in the Private Sector and the Public Sector. With regard to the first and second management levels below the Executive Board, which are determined according to the reporting chains, the Executive Board set a target of 13% for the first management level and 10% for the second management level for the aforementioned compliance period. All of the targets were achieved.

On 21 June 2017 the Supervisory Board of innogy set a target of 25% for the female quota in the Executive Board starting from 1 July 2017. This target is to be reached by 30 June 2022. For the same period, starting from 28 June 2017 the Executive Board set a target of 25% for the first management level and 20% for the second management level below the Executive Board. The management levels are determined by reporting chains.

innogy’s Supervisory Board complies with the legal gender quota of at least 30%.

With regard to the members of the supervisory organ, on 16 August 2016 the Supervisory Board adopted a list of requirements (competency profile) in line with the recommendations of the GCGC, which is designed to ensure an orderly selection process using objective aptitude criteria for the selection and court appointment of new Supervisory Board members of the company. The list of requirements also includes targets for diversity in staffing the Supervisory Board (Diversity Strategy of the Supervisory Board). In this regard, the following aspects are especially relevant: 

  • Taking account of the company's specific situation, due regard should be paid to diversity when proposing candidates.
  • As stipulated by law and the GCGC, it must be ensured that the Supervisory Board provides professional monitoring and advice. The objective is that, for every aspect of Supervisory Board activity, there be at least one expert Supervisory Board member who is available as a contact so that, on the whole, the Supervisory Board possesses the know-how and experience required.
  • A balanced composition of the body is to be ensured by broad representation of the following specialised knowledge in particular:
    - adequate professional knowledge of the energy sector;
    - management experience from activities in the private sector or political sphere, in company management or as a member of a supervisory board or comparable body;
    - international experience, for example through supervisory board members of different nationalities or individuals who have worked abroad for a long period of time;
    - adequate professional knowledge in employee-related subjects, including issues of corporate co-determination.
  • At least one independent member of the Supervisory Board must have professional knowledge in the fields of accounting or auditing. The Chair of the Audit Committee should have specialised knowledge and experience in the application of accounting principles and internal controlling procedures.
  • Furthermore, when proposing candidates, care should be taken to ensure that a sufficient number of them do not serve on the Supervisory Board for more than 15 years. This does not affect the legal validity of the election of employee representatives. Furthermore, the Supervisory Board decided that candidates may also be nominated if their tenure has exceeded the limit in cases where this helps to safeguard valuable experience gained from working on the Supervisory Board of innogy or to achieve other diversity goals.
  • More than two former members of the Executive Board should not serve on the Supervisory Board.

The list of requirements is supplemented by Article 2, Paragraph 1 of the Rules of Procedure of the Supervisory Board, which stipulates that the tenure of Supervisory Board members may not extend beyond the end of the Annual General Meeting following their reaching the age of 72.

The selection of candidates for shareholder representatives on the Supervisory Board occurs with a vote by the Nomination Committee submitted to the Supervisory Board, which then presents a corresponding proposal to the Annual General Meeting or the court. In the course of selecting the employee representatives on the Supervisory Board, the responsible nominating bodies should also take the criteria into consideration.

The current composition of the Supervisory Board fulfills all of the diversity targets for this body. The Supervisory Board of innogy also complies with the legal gender quota of at least 30%.

The Supervisory Board has also adopted a list of requirements for members of the Executive Board, in which the criteria for the selection of new Executive Board members are described. Taking account of the company’s specific situation, due regard should also be paid to diversity when proposing candidates. Specifically, the following staffing targets are relevant in terms of diversity (Diversity Strategy of the Executive Board): 

  • As stipulated by law and the GCGC, qualified, responsible corporate management in the interests of the company with the goal of long-term value creation is to be ensured, taking into consideration the interests of the shareholders, the company’s employees and other groups interacting with the company (stakeholders). For every aspect of the Executive Board’s activities, the objective is that there be at least one Executive Board member with specialised competency, so that, on the whole, the Executive Board possesses the required know-how and experience.
  • Each member of the Executive Board should have the specialised and broad-based professional expertise which is necessary for the position the member holds and is important for the company’s business activities. In particular, this includes specialised knowledge of various fields and levels of energy policy.
  • Above and beyond this, another goal is to ensure the adequate representation of women (cf. target quota).
  • The international experience of the Executive Board should be continued and reinforced through the selection of individuals with many years of international work and Board members of different nationalities. 

A resolution of the Supervisory Board also stipulates that members of the Executive Board should not be appointed after the month in which they reach the age of 64.

New Executive Board members are appointed by a resolution of the Supervisory Board, based on the recommendation of the Personnel Affairs Committee.

The present composition of the Executive Board meets all of the current diversity goals. The 25% target ratio of females on the Executive Board is to be reached by 30 June 2022 (see above). Presently, one member of the Executive Board is a woman.

innogy is conscious of its role in society and its responsibility vis-à-vis customers and business partners, as well as its shareholders and employees. The innogy Code of Conduct sets out principles which are closely aligned with those of the Global Compact of the United Nations and forms the basis for responsible, law-abiding action by the company. The Code of Conduct is the foundation for innogy’s business activities and applies throughout the innogy Group, uniformly in all sectors and countries. Supported by its own groupwide compliance organisation, innogy works to ensure that its employees and bodies comply with its Code of Conduct and specific regulations: Uniform implementation of the groupwide principles set forth in the innogy Code of Conduct, particularly those related to the prevention of corruption, is promoted by Compliance Officers at all of innogy’s companies. Generally speaking, there is pooled responsibility for innogy’s subsidiaries in each country outside of Germany. One of the key responsibilities of the compliance organisation is to raise the awareness of employees and corporate bodies for compliance-related issues using face-to-face training and Web-based programmes, and to highlight relevant risk factors. This organisation is also responsible for compliance consulting and monitoring the processing of compliance violations. An external contact partner is also available to take reports of violation of the Code of Conduct from employees or external third parties.

 

Essen, February 2018

innogy SE

The Executive Board

Uwe Tigges

Chief Executive Officer

Dr. Bernhard Günther

Chief Financial Officer

Dr. Hans Bünting

Chief Operating Officer Renewables

Martin Herrmann

Chief Operating Officer Retail

Hildegard Müller

Chief Operating Officer Grid & Infrastructure