Declaration of Conformity 2010 by the Executive Board and the Supervisory Board of Wacker Chemie AG
1. General Declaration Pursuant to § 161 German Stock Corporation Act
In December 2009, the Executive Board and the Supervisory Board of Wacker Chemie AG issued their last declaration of conformity pursuant to § 161 German Stock Corporation Act (AktG). Since that time, Wacker Chemie AG has complied with the recommendations of the German Corporate Governance Code (Code) in the version dated 18 June 2009 with the following exceptions and will comply with the recommendations of the Code in the version dated 26 May 2010 except as follows:
a) D&O Insurance - Deductible
The law and the articles of association set clear limits in regards to the Supervisory Board’s ability to exert influence on the business activities of a stock corporation. Pursuant to § 76 para. 1 of the German Stock Corporation Act, the Executive Board is responsible for independently managing the corporation. The Supervisory Board is instrumental in defining the main features of the corporate strategy. However, beyond this contribution, the Supervisory Board’s abilities are limited in terms of influencing the implementation of the corporate strategy or the operative business. The same applies to measures taken to avert damage or loss to the company. Since the Supervisory Board members receive a relatively low representation allowance when compared to the Executive Board members’ compensation, we do not deem the agreement of a deductible reasonable for members of the Supervisory Board.
b) Severance pay cap
With regard to new appointments to the Executive Board as well as the reappointment of Executive Board members, we will comply with this recommendation.
c) Appropriate consideration of women for the appointment to the Executive Board
Wacker Chemie AG attaches great importance to the issue of diversity, also in regards to the composition of the Executive Board. Decisive criteria for composing the Executive Board, however, are competence, including international competence and qualification. In our view, it is not expedient to give higher priority to the issue „striving for appropriate consideration of women“ than to competence and quality.
d) Formation of a Nomination Committee within the Supervisory Board
The Supervisory Board is to establish a Nomination Committee which is exclusively composed of shareholder representatives and whose task it is to make recommendations to the Supervisory Board with regard to suitable candidates for proposal to the Annual Shareholder Meeting.
We do not comply with this recommendation because, in view of our shareholder structure, it is our opinion that the formation of such committee is not appropriate. Due to the majority situation, nominations to the Supervisory Board must be agreed with the majority shareholder in any case, so that an additional nomination committee would not contribute to an increase in efficiency.
e) Announcement of Proposed Candidates for the Chair of the Supervisory Board to the Shareholders
According to this recommendation, shareholders shall be informed of any candidates for the Supervisory Board chair, even though as a rule, the Supervisory Board has not yet been appointed. Under German law, the Supervisory Board chair must be elected by, and from among, the Supervisory Board members. There is no legal requirement to announce the candidates for the chair from among a group of not yet appointed Supervisory Board members. Furthermore, this would, above all, result in a de facto predetermination which is also not provided for under German law. For these reasons, we do not comply with this recommendation.
f) Performance-Oriented Compensation for Supervisory Board Members
The members of the Supervisory Board do not receive performance-oriented compensation to ensure that they maintain a high level of independence. On the one hand, the Supervisory Board has only limited potential for impacting the operative business. On the other hand, both work load and the risk of liability for Supervisory Board members generally do not progress parallel to the company’s business success. Particularly in difficult times, when variable compensation might be decreased, it can be essential for the Supervisory Board members to thoroughly fulfill their monitoring and advisory functions.
Munich, December 9, 2010 / May 25, 2011