Declaration of Conformity with the German Corporate Governance Code pursuant to § 161 of the German Stock Corporation Act (AktG)
The Board of Management and Supervisory Board of HORNBACH HOLDING Aktiengesellschaft hereby declare pursuant to § 161 of the German Stock Corporation Act (AktG) that the recommendations of the “German Corporate Governance Code” in the version dated May 15, 2012 and published in the electronic Federal Official Gazette on June 15, 2012 have basically been met since the previous Declaration of Conformity and are still met. Application was and is not made of the recommendations in Points 3.8 (3), 4.1.5, 4.2.3 (4) and (5), 5.2 (2) Sentence 2, 5.3.3, 5.4.1 (2) and (3), and 5.4.6 (3) Sentences 1 and 2.
These deviations from the recommendations were or are due to the following considerations:
a) Point 3.8 (3):
In Point 3.8, (3), the Code recommends agreeing a specified deductible in any D&O insurance policy taken out for supervisory board members. For supervisory board members as well, this should be based on the legal requirements for management board members arising due to the Act on the Appropriateness of Management Board Compensation (VorstAG) dated July 31, 2009. No such deductible has been agreed at the expense of Supervisory Board members. This would reduce the attractiveness of Supervisory Board activities, and thus also the company’s chances in the competition to attract qualified candidates. The recommendation made in Point 3.8 (3) has therefore not been and is not followed.
b) Point 4.2.3 (4) and (5):
No application has been or is made of the recommendations in Point 4.2.3 (4) and (5) of the Code (“severance pay cap”). The deviation to Point 4.2.3 (4) and (5) is due to competition-related factors. Apart from that, it still has to be definitively clarified whether and how the recommendations in Point 4.2.3 (4) are legally enforceable.
c) Point 5.2 (2) Sentence 2:
In Point 5.2 (2) Sentence 2, the Code recommends that the supervisory board chairman should not simultaneously chair the audit committee. We deviate from this recommendation. Given the outstanding expertise and industry experience of the Chairman and the fact that he also holds the same position in the Audit Committee of HORNBACHBaumarkt-Aktiengesellschaft, the largest subgroup, we deem this deviation appropriate.
d) Point 5.3.3:
In Point 5.3.3, the Code recommends that the supervisory board should form a nomination committee composed exclusively of shareholder representatives which proposes suitable candidates to the supervisory board for its election proposals to the Annual General Meeting. The company’s Supervisory Board has not formed such a committee. Based on our experience to date, the establishment of such a committee would not appear to be necessary.
e) Point 5.4.1 (2) and (3) and Point 4.1.5:
The company deviates from the recommendations made in Points 5.4.1 (2) and (3) and in Point 4.1.5. In the composition of its Board of Management and Supervisory Board, as well as of other management positions, HORNBACH HOLDING Aktiengesellschaft accords priority above all to the knowledge, ability and expert experience of the individual in question.
f) Point 5.4.6 (3) Sentence 1:
In Point 5.4.6 (3) Sentence 1, the Code recommends that the compensation of supervisory board members be reported in the notes to the financial statements or the management report on an individual basis and broken down into its constituent components. Given that the compensation of the Supervisory Board is governed by the Articles of Association, we see no necessity for the disclosure of individual compensation packages.
g) Point 5.4.6 (3) Sentence 2:
In Point 5.4.6 Paragraph 3 Sentence 2, the Code further recommends that compensation paid or benefits granted by the company to supervisory board members for services rendered personally, especially advisory and mediation services, are to be reported separately in the notes to the financial statements or the management report on an individual basis. HORNBACH HOLDING Aktiengesellschaft makes use in one case of the opportunity of drawing on the expertise of one Supervisory Board member in specific areas. This compensation is undertaken on the basis of symbolic compensation. Here, the Supervisory Board has adopted a resolution pursuant to § 114 of the German Stock Corporation Act (AktG). We see no need to provide individual disclosures in this respect.
Neustadt an der Weinstrasse, December 20, 2012
HORNBACH HOLDING Aktiengesellschaft
The Supervisory Board The Board of Management
Statement of Compliance
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