Declaration of corporate management 2019 of the EnBW Group and EnBW AG including the corporate governance report 2019 TRANSFORMATION TRANSFORMATION TRANSFORMATION
The “T” on the title page of our financial publications stands for “Transformation”. We have embarked on the path to transform ourselves from a conventional energy company into a strong partner for energy and infra- structure. We have made renewable energies one of the main pillars of the company along the way. A lot has changed in the process: the way we work, the requirements of our customers and the conditions on the market. This is why the title of the EnBW financial publications this year is dedicated to the transformation in the area of renewable energies. All financial publications for the 2019 financial year can be found at www.enbw.com/report2019-downloads.
Integrated Annual Report 2019 of EnBW – Extended Version The declaration of corporate managment » Table of contents 1 Declaration of corporate management including the corporate governance report Board of Management and Supervisory Board ............... 2 Diversity ........................................................................... 7 Shareholders and Annual General Meeting .................... 7 Compliance ..................................................................... 8 Remuneration of the Board of Management and the Supervisory Board ........................................................... 8 Transparency ................................................................... 8 Financial reporting and the audit .................................... 9 Declaration of compliance .............................................. 10 Statement on the suggestions of the German Corporate Governance Code ............................................................ 10
Integrated Annual Report 2019 of EnBW – Extended Version 2 The declaration of corporate managment Good corporate governance is an essential part of the corporate culture at EnBW Energie Baden-Württemberg AG (EnBW). We are convinced that responsible and transparent corporate governance strengthens the trust and con- fidence that customers, capital providers, employees and the general public place in the company, thereby contri- buting to its long-term success. The Board of Management and Supervisory Board have the responsibility of mana- ging and supervising the company above and beyond merely fulfilling statutory requirements, but to do it in accordance with recognised benchmarks for good corporate governance and in harmony with the principles of a social market economy, guaranteeing the continued existence of the company and ensuring a sustainable increase in its added value. As the member of the Board of Management responsible for corporate governance, Dr. Bernhard Beck monitored up to the end of his term of office on 30 June 2019 compliance with the German Corporate Governance Code (DCGK) at EnBW and reported extensively to the Board of Management and Supervisory Board on all current the- mes pertaining to corporate governance. Since 30 June 2019 Colette Rückert-Hennen has been carrying out these duties. Both boards acknowledged the report from Colette Rückert-Hennen and subsequently approved the com- pany’s declaration of compliance, which is reproduced in full at the end of this report. In this declaration of corporate management, the Supervisory Board and Board of Management report on the corporate governance of the company (corporate governance report) above and beyond the legal requirements according to sections 289 f (2) and 315 d HGB. The corporate governance report is based on the version of the DCGK from 7 February 2017 and not the version submitted for examination and publication by the Government Commission for the DCGK to the Federal Ministry of Justice and Consumer Protection on 23 January 2020. This is because the version of the DCGK from 7 February 2017 was the basis for the declaration of compliance issued on 4 December 2019 and the new version of the DCGK will only come into force after the end of the reporting period. Therefore, references in this report to the DCGK refer to the version from 7 February 2017. Board of Management and Supervisory Board Close and trusting cooperation for the good of the company is considered an integral part of the EnBW culture by the Board of Management and Supervisory Board. The Board of Management jointly manages the company on its own responsibility. In the reporting period up to 31 December 2019, the Board of Management temporarily had five members – from the appointment of Colette Rückert-Hennen on 1 March 2019 until the end of the term of office of Dr. Bernhard Beck on 30 June 2019. After the conclusion of Dr. Beck's term of office it comprised as usual four members, of which one held the position of chair- man. The Board of Management is tasked with defining the company goals and developing the strategic orientation of the EnBW Group, agreeing this with the Supervisory Board and implementing it accordingly. In addition, it ensures Group-wide compliance with statutory regulations and internal guidelines, as well as appropriate risk management and risk controlling. Important aspects of cooperation within the Board of Management are defined in its rules of procedure. These regulate, amongst other things, the frequency at which the meetings of the Board of Management led by the Chair- man are held multiple times a month and stipulates that all important questions relating to the management of the Group and any cross-departmental issues will be addressed at these meetings. Furthermore, the rules of pro- cedure include a rule that resolutions will be taken by the Board of Management on a majority vote basis, whereby the Chairman has the casting vote in the event of a tie. The Chairman of the Board of Management in the reporting period was and also currently is Dr. Frank Mastiaux. Further details on the members of the Board of Management and the division of responsibilities can be found in the information provided on p. 18 to 21 of the Integrated Annual Report 2019 and in the section “Corporate gover- nance” under “Management and supervision” on p. 48 and 49 of the Integrated Annual Report 2019. The standard retirement age set for members of the Board of Management at EnBW is 63 years old. In the reporting period and also currently, the members of the Board of Management did not and do not hold more than three positions on supervisory boards at non-Group listed companies or on supervisory bodies at non-Group companies that have comparable requirements. As in the past, there were also no known conflicts of interests for the members of the Board of Management in the 2019 financial year. EnBW did not enter into any significant transactions with individuals or companies that are related to a member of the Board of Management in the reporting period.
Integrated Annual Report 2019 of EnBW – Extended Version The declaration of corporate managment 3 In the reporting period, the Board of Management discussed the Six-Monthly Financial Report and the quarterly statements with the audit committee of the Supervisory Board before publication. The Supervisory Board of EnBW is comprised of 20 members, half of which are representatives elected by the shareholders and half by employees. The Chairman of the Supervisory Board is Lutz Feldmann. The elected employee and shareholder representatives began their term of office at the conclusion of the Annual General Meeting of EnBW on 10 May 2016. The defined term of office for the elected members of the Supervisory Board ends at the conclusion of the Annual General Meeting in 2021. There were no changes to the composition of the Supervisory Board in the reporting period. With effect from 31 December 2018, and as already reported last year, the members of the Supervisory Board Silke Krebs (shareholder representative) and Sebastian Maier (employee representative) stepped down from their positions for professional reasons and the members of the Supervisory Board Heinz Seiffert (shareholder representative) and Arnold Messner (employee representative) stepped down from their positions due to retirement. Marika Lulay and Harald Sievers, District Administrator of the Ravensburg district, were appointed by the court as members of the Supervisory Board with effect from 1 January 2019 to replace the former members of the Supervisory Board Silke Krebs and Heinz Seiffert. The appointments of Marika Lulay and Harald Sievers were confirmed with separate votes at the Annual General Meeting on 8 May 2019 with effect until the end of the regular election period. As of 1 January 2019, Achim Binder, Deputy Chairman of the Group works council for the EnBW Group, Chairman of the central works council “grids sector” of EnBW and Chairman of the regional service works council of Netze BW GmbH, and Jürgen Schäfer, member of the Group works council for the EnBW Group and Deputy Chairman of the works council of TransnetBW GmbH, also became members of the Supervisory Board as elected replacements for Arnold Messner and Sebastian Maier. Further details on the Supervisory Board and its composition can be found in the information provided on p. 132, 133, 135 and 136 of the Integrated Annual Report 2019 and in the section “Corporate governance” under “Manage- ment and supervision” on p. 48 and 49 of the Integrated Annual Report 2019. The key task of the Supervisory Board is to advise and supervise the Board of Management on its management of the company. In general, all members of the Supervisory Board have the same rights and obligations and are not bound by orders or instructions. Important aspects of the cooperation within the Supervisory Board are defined in its rules of procedure. These rules require the Supervisory Board to meet regularly for ordinary meetings, as well as for extraordinary meetings as necessary, that are chaired by the chairman. The members of the Board of Management generally participate in the meetings, although the Supervisory Board can also convene without the Board of Management if necessary. The Board of Management regularly, comprehensively and promptly informs the Supervisory Board in accordance with the rules of procedure for the Supervisory Board about, in particular, all of the issues listed in section 90 German Stock Corporations Act (AktG), all important financial and non-financial performance indicators and the risks faced by the company and the Group and their development, strategy, plan- ning, the accounting process, the effectiveness of the internal control system, risk management and the internal auditing system, compliance and other important matters. Between the meetings of the Supervisory Board, there is ongoing communication between the Chairman of the Supervisory Board and the Board of Management, particularly with the Chairman of the Board of Management, in order to discuss issues relating to the strategy, planning, business performance, risk situation, risk management and compliance within the company. He is immediately informed about important events that are material for the assessment of the situation, development and management of the company by the Chairman of the Board of Management. If necessary, the Chairman of the Supervisory Board then reports to the Supervisory Board and may also convene an extraordinary meeting. In addition, the rules of procedure for the Supervisory Board also define business activities and measures that may only be carried out by the Board of Management with the approval of the Supervisory Board. Furthermore, reso- lutions are also passed by the Supervisory Board on a majority vote basis, whereby the Chairman of the Supervisory Board has the casting vote in the event of a tie in accordance with the Articles of Association of EnBW. If ordered by the Chairman of the Supervisory Board, resolutions can also be passed outside of meetings, if this is not oppo- sed by a majority of the members of the Supervisory Board. The Supervisory Board provided detailed information on its main activities and the contents of its discussions in the 2019 financial year in its report to the Annual General Meeting, which is accessible to the general public at www.enbw.com/report2019. The rules of procedure for the Supervisory Board are not published on the Internet.
Integrated Annual Report 2019 of EnBW – Extended Version 4 The declaration of corporate managment Another important task of the Supervisory Board is to appoint and, if necessary, dismiss the members of the Board of Management. In this context, the Supervisory Board works together with the Board of Management to ensure appropriate long-term succession planning for the Board of Management. This is the task of the personnel com- mittee. It consults regularly and in close communication with the Chairman of the Board of Management on issues relating to the up-to-dateness and further development of the Board of Management structure, the division of responsibilities and ensuring the Board of Management remits can be filled after the end of the term of office, taking into account the current terms of office. In advance of any decision to appoint a new member of the Board of Management, a requirement profile is developed in good time as necessary and a comprehensive selection process is usually carried out with the aid of specialist support. In the reporting period, Colette Rückert-Hennen took up office as a member of the Board of Management on 1 March 2019 and from this date on took over responsibility for personnel and executive management and health management from Dr. Bernhard Beck. Until the end of his term of office on 30 June 2019, Dr. Bernhard Beck was still temporarily responsible for the areas of law, auditing, compliance and regulation, boards, shareholder relati- onships and equity investment management. Since 1 July 2019, the responsibility for these remits – with the excep- tion of equity investment management which was transferred to Thomas Kusterer on 1 July 2019 – has also been held by Colette Rückert-Hennen. The Supervisory Board observed the recommendation in the DCGK that the first-time appointment of a member of the Board of Management should at most be for three years; this is the case for Colette Rückert-Hennen. In addition, the Chief Financial Officer, Thomas Kusterer, was reappointed for a further term of office of five years following a resolution passed by the Supervisory Board on 7 May 2018. In accordance with the regulations under stock corporation law, this reappointment was not made prior to one year before the end of the term of office and simultaneously terminated the current appointment. In order to improve the efficiency of its work and to handle complex issues, the Supervisory Board has formed specialist committees: ›Nomination committee: Dr. Dietrich Birk, Lutz Feldmann (Chairman), Dr. Wolf-Rüdiger Michel, Gunda Röstel, Edith Sitzmann, Lothar Wölfle ›Audit committee: Stefanie Bürkle, Volker Hüsgen, Marianne Kugler-Wendt, Thomas Landsbek, Dr. Hubert Lien- hard, Dr. Wolf-Rüdiger Michel, Gunda Röstel (Chairwoman), Ulrike Weindel ›Personnel committee: Achim Binder, Stefan Paul Hamm, Dietrich Herd, Lutz Feldmann (Chairman), Edith Sitz- mann, Lothar Wölfle ›Finance and investment committee: Achim Binder, Dr. Dietrich Birk, Lutz Feldmann (Chairman), Stefan Paul Hamm, Dietrich Herd, Edith Sitzmann, Lothar Wölfle, Dr. Bernd-Michael Zinow ›Mediation committee (pursuant to section 27 (3) German Co-determination Act (MitbestG)): Lutz Feldmann (Chairman), Dietrich Herd, Thomas Landsbek, Edith Sitzmann ›Digitalisation committee (since 1 January 2019): Michaela Kräutter, Dr. Hubert Lienhard (Chairman), Marika Lulay, Jürgen Schäfer, Harald Sievers, Ulrike Weindel ›Ad hoc committee: Dietrich Herd, Gunda Röstel, Harald Sievers, Dr. Bernd-Michael Zinow (Chairman) In accordance with the DCGK, the nomination committee is exclusively comprised of shareholder representatives and proposes suitable candidates to the Supervisory Board for election as members of the Supervisory Board at the Annual General Meeting. The audit committee is responsible, in particular, for monitoring accounting, the accounting process, the effecti- veness of the internal control system, the risk management system, the internal auditing system, the audit and compliance. It presents a justified recommendation for the appointment of the auditor to the Supervisory Board, which includes at least two candidates if the company intends to issue an invitation to tender for the audit man- date. The audit committee monitors the independence of the auditor and is also responsible for supervising the additional services provided by the auditor, the award of the audit mandate to the auditor, the definition of areas of focus for the audit and negotiating the auditor’s fees with the auditor. The chairwoman of the audit committee, Gunda Röstel, is independent and is not a former member of the Board of Management of EnBW. As the long-standing Commercial Director of Stadtentwässerung Dresden GmbH and Authorised Officer of Gelsenwasser AG, she possesses special expertise and experience in the application of accoun- ting principles and internal control processes. She has gained even more experience in her position as the Chair- woman of the audit committee over the last few years, and is familiar with the audit process. The roles of the other committees of the Supervisory Board and their specific activities in the past financial year are described in the Report of the Supervisory Board for the 2019 financial year.
Integrated Annual Report 2019 of EnBW – Extended Version The declaration of corporate managment 5 The chairpersons of the committees report on the work carried out in their committees at the latest at the next plenary meeting of the Supervisory Board. No separate rules of procedure exist for the Supervisory Board commit- tees; they are subject to the rules of procedure for the Supervisory Board and all relevant procedural rules cont- ained therein. The Supervisory Board has set specific objectives for its composition that take into account the company’s situation and has developed a competency profile for the entire Supervisory Board, whereby the special rules defined in the German Co-determination Act were and are taken into account for employee representatives. The primary aim is to guarantee that the members collectively possess the knowledge, skills and specialist experience required to properly perform their functions. The objectives for the composition of the Supervisory Board that are currently valid and were valid during the entire reporting period appropriately take into account the international activities of the company, potential con- flicts of interest, an appropriate number of independent members in the estimation of the Supervisory Board, age limits for members of the Supervisory Board, a maximum time limit for the period of service on the Supervisory Board and diversity, whereby the special rules defined in the German Co-determination Act were and are taken into account for employee representatives. In the past reporting year, the Supervisory Board also examined the independence criteria defined in the German Stock Corporation Act and the DCGK. The Supervisory Board came to the conclusion that these criteria have – as in the past – been satisfied and that it comprised and still comprises a sufficient number of independent members and reflects the shareholder structure, whereby it is of the opinion that all shareholder representatives on the Supervisory Board are independent in the sense of the DCGK and this proportion of members is appropriate. Refer to the overview on p. 132 of the Integrated Annual Report 2019 for the names of the members of the Supervisory Board elected by the shareholders. Alongside the successfully achieved objective of continuing to ensure a majority of independent members, the Supervisory Board will also take care to avoid any conflicts of interest in future. The Supervisory Board does not believe that it is necessary to define quantitative objectives with respect to inter- nationality due to the structure and business activities of the company. The rules of procedure for the Supervisory Board stipulate that candidates proposed to the Annual General Meeting for the election of shareholder representatives as members on the Supervisory Board should generally not be older than 70 at the time of the election. The general age limit was not exceeded in the reporting period and has not currently been exceeded by any member of the Supervisory Board. As the Supervisory Board is aware that excep- tions may be desirable because long-term members of the Supervisory Board bring long-standing knowledge and experience to the board, it has ultimately defined a maximum time limit for the period of service on the Supervi- sory Board to three full election periods, which was not reached or exceeded during the reporting period or cur- rently by any member of the Supervisory Board. The Supervisory Board has not defined any further diversity targets beyond the legal regulations that apply to the com- pany for the minimum proportion of women and men and the previously described objectives for its composition. The competency profile of the Supervisory Board stipulates that the following eight fields of competency must be covered to an appropriate extent by the members of the Supervisory Board in its entirety: Competency profile of the Supervisory Board Sustainability and environment Finances and accounting Regulation and politics Strategy and innovation Supervisory Board Board of Management and HR issues Law, corporate governance and compliance Business fields Communication
Integrated Annual Report 2019 of EnBW – Extended Version 6 The declaration of corporate managment The Supervisory Board possesses the knowledge and skills required to perform its functions. The objectives for its composition were fully taken into account by the Supervisory Board during the reporting period with respect to its composition and the coverage of its competency profile. In its future proposals to the Annual General Meeting for the election of members, the Supervisory Board will continue to take into account the objectives for its com- position and will strive to ensure that the competency profile continues to be covered by the Supervisory Board in its entirety. The curricula vitae for all members of the Supervisory Board have been published on the company website at www.enbw.com/supervisory-board and provide information on the relevant knowledge, skills and experience of the members and have been supplemented by an overview of their main activities in addition to their position on the Supervisory Board. These curricula vitae are updated on an annual basis for all members of the Supervisory Board. The members of the Supervisory Board are all able to dedicate the expected amount of time required for their activities on the Supervisory Board. The Supervisory Board will also ensure for its future proposals to the Annual General Meeting for the election of new members of the Supervisory Board that all candidates are able to dedicate the expected amount of time required for their activities on the Supervisory Board. In the 2019 financial year, all members of the Supervisory Board participated in more than half of the meetings of the Supervisory Board and of the committees on which the member serves; this was also noted in the Report of the Supervisory Board to the Annual General Meeting. Participation via telephone and video conference is also valid, although this form of participation was not a normal occurrence for any member of the Supervisory Board in accordance with the sug- gestion in the DCGK. In its proposals made to the Annual General Meeting for the forthcoming re-election of members, the Supervisory Board will also disclose the personal and business relationships of each candidate with the company, the company’s corporate bodies and with shareholders holding a major interest in the company, whereby this information will be limited to information that the Supervisory Board considers material in order for a shareholder to cast their vote objectively. No former members of the Board of Management of EnBW were members of the Supervisory Board during the reporting period nor are they currently members. The members of the Supervisory Board also did not perform any advisory or board functions for important competitors of EnBW during the reporting period nor do they currently. Every member of the Supervisory Board is bound to act in the interests of the company. In making decisions, members may not pursue personal interests or take advantage of business opportunities intended for the company. Conflicts of interest, particularly those that could arise due to advisory or board functions for customers, suppliers, lenders or other third parties, must be disclosed to the Supervisory Board. In such cases, the Supervisory Board will disclose any conflicts of interest that have arisen and how they were handled in its report to the Annual General Meeting. Any material conflict of interest relating to a member of the Supervisory Board that is not merely of a temporary nature will result in the termination of their position. Advisory and other service agreements and con- tracts for work between a member of the Supervisory Board and EnBW require the approval of the Supervisory Board. In the reporting period, there were no conflicts of interest involving members of the Supervisory Board. The Supervisory Board regularly assesses how effectively the Supervisory Board as a whole and its committees are performing their duties (efficiency review). In the reporting period, the Supervisory Board carried out an efficiency review at its meeting on 7 November 2019. To prepare for the review, the members of the Supervisory Board com- pleted a comprehensive questionnaire on content-related and organisational themes as in previous years and discussed, amongst other things, the results of the questionnaires in detail. In addition, the implementation of the findings drawn from the efficiency review from the previous year were examined. The members of the Supervisory Board are responsible for participating in any necessary basic and further training measures required for their tasks and are supported appropriately by the company in this area. This not only inclu- des providing them with regular information on themes and developments related to the current situation of the company with respect to legal issues, the energy industry, financial industry or other relevant aspects, as well as other subjects relevant to the work on the Supervisory Board, but also comprises corresponding on-site appoint- ments and events. In 2019, these included a new e-learning platform from an external service provider designed for supervisory boards, information on the expected legal changes due to the law for the implementation of the second shareholder rights directive (“ARUG II”) coming into force and the reform of the DCGK, a visit to the trading floor of the trading department – accompanied by a specialist tour – and there was an event to introduce the energy market in the Czech Republic including a presentation and analysis as part of a meeting held at the site of
Integrated Annual Report 2019 of EnBW – Extended Version The declaration of corporate managment 7 the subsidiary Pražská energetika a.s. (PRE) based in the Czech Republic. New members also received documenta- tion on all of the important rules relating to the work of the Supervisory Board that are relevant to them. In accordance with the suggestion in the DCGK, the Chairman of the Supervisory Board is prepared to enter into discussions with investors on specific issues relating to the Supervisory Board. Discussions of this type were not held in the reporting period. The actions of the Board of Management and the Supervisory Board are governed by statutory regulations and internal Group guidelines (compliance). The Board of Management also reported continuously on compliance issues in the 2019 financial year and discussed them in detail with the Supervisory Board and the audit committee of the Supervisory Board. More detailed information on this area will be provided in the “Compliance” section. Information on the relevant corporate governance practices that go above and beyond the legal requirements and the recommendations and suggestions in the DCGK will also be given there. Further information on the procedures of the Board of Management and Supervisory Board and their committees can be found in the section “Corporate governance” under “Management and supervision” on p. 48 and 49 of the Integrated Annual Report 2019, in the section “Report of the Supervisory Board” on p. 24 to 26 of the Integrated Annual Report 2019 and in articles 7 to 13 and 19 of the Articles of Association, which are generally accessible on the EnBW website at www.enbw.com/corporate-governance. Diversity The Supervisory Board has decided that all of the statutory and self-defined regulations for its composition (objec- tives for the composition, competency profile, legal targets for the proportion of women, age limit, maximum time limit for the period of service, see here the information above in the section “Board of Management and the Super- visory Board” on p. 2 to 7) will form the diversity concept in the sense of section 289 f (2) No. 6 HGB. The primary goal of this concept is to ensure that the Supervisory Board can properly perform its tasks and is helped in this process by the diversity of its composition. This concept is implemented through the election of shareholder representatives by the Annual General Meeting. In the 2019 financial year, the objectives defined in the concept were achieved. The proportion of women on the Supervisory Board in its entirety continuously stood at 35%. This figure is calcu- lated from the proportion of women amongst the shareholder representatives of 40% and the proportion of women amongst the employee representatives 30%. The proportion of women on the Supervisory Board of EnBW in its entirety of 35% is above the minimum statutory requirement of 30%. The shareholder and employee repre- sentatives resolved before the last election of members to the Supervisory Board to veto the overall fulfilment of this statutory minimum proportion by the shareholder and employee representatives combined in accordance with section 96 (2) sentence 3 AktG for the length of the current election period, so that the minimum proportion in accordance with the legal requirements must be fulfilled by both sides. This should make it possible to better plan the composition of the Supervisory Board. In terms of the composition of the Board of Management, the Supervisory Board also takes diversity into account when appointing new members of the Board of Management, while acknowledging the limited number of mem- bers of the Board of Management. Therefore, it has resolved that the standard age limit for the Board of Manage- ment defined by the Supervisory Board together with the target for the proportion of women will form the diver- sity concept in the sense of section 289 f (2) no. 6 HGB. The primary goal of this concept is to ensure that the Board of Management can properly perform its tasks and is strengthened here by the diversity of its composition. This concept is implemented through the appointment of members of the Board of Management by the Supervisory Board. In the 2019 financial year, the objectives defined in the concept were achieved. For the period from 1 July 2017 to 30 June 2022, the Supervisory Board set the target of one woman on the Board of Management that should be achieved at least by the end of this defined time period. This target has been met since the start of the term of office of Colette Rückert-Hennen on 1 March 2019. The Board of Management has set the goal of further increasing the proportion of women in both management levels below the Board of Management in the period from 1 January 2017 to 31 December 2020. At both the first level (top management) and second level (upper management), the proportion of women should increase to at least 20%. Despite a great deal of effort, these targets were not yet achieved in 2019 (as of 31 December 2019).
Integrated Annual Report 2019 of EnBW – Extended Version 8 The declaration of corporate managment Shareholders and Annual General Meeting The shareholders of EnBW exercise their rights at the Annual General Meeting including their right to vote. Prior to the Annual General Meeting, EnBW publishes the agenda and all of the relevant reports and documents that shareholders may require to evaluate it. These include the current annual report for the last completed financial year, which is available in an easily accessible format on the Internet at http://hv.enbw.com. Any counter motions to items on the agenda of the Annual General Meeting received by the specified deadline are also made publicly available on the website. Our shareholders have the opportunity to use a proxy appointed by the company if they are not able to personally attend the Annual General Meeting. The Annual General Meeting was broadcast live on the Internet in the last few years until the end of the speech by the Chairman of the Board of Management. Compliance Compliance as an expression of all measures required for the observance of statutory regulations and internal gui- delines is regarded as an essential management and supervisory task at EnBW. Since 2009, the compliance depart- ment has established a Group-wide compliance organisation and defined the necessary rules and processes. The compliance department is responsible for the prevention, detection and sanctioning of corruption, the prevention of violations against competition and antitrust laws, the prevention of money laundering and data protection. The regular face-to-face training events cover the latest compliance issues. One of the main focuses of the compli- ance activities is conveying a compliance culture. In addition, assessing the need for controls to ensure compliance with the rules and their implementation also forms part of the compliance activities. The selective internationali- sation of EnBW is being accompanied by the compliance and data protection departments. The most important compliance functions for the Group are represented on the compliance committee. The com- pliance department uses this body to coordinate the Group-wide compliance activities. Implementation of the centrally defined compliance measures in the decentralised units is controlled through the compliance forum, which is comprised of compliance officers from the most important Group companies and business units. Preventative compliance measures are defined using a Group-wide compliance risk assessment on an annual basis in the compliance and data protection programme. It covers communication and training measures, the introduc- tion and development of rules and processes, central management of guidelines and business partner auditing. The compliance culture is an aspect taken into account in all of the compliance activities. For example, training measures for the development of a compliance culture will in turn make a contribution towards the avoidance of compliance breaches. Internal and external whistleblowers can report compliance breaches and suspected cases to the compliance department or an ombudsman for EnBW as an external contact. The ombudsman can guarantee whistleblowers absolute confidentiality and anonymity with respect to EnBW. Reported compliance breaches and suspected cases are then handled by the compliance committee task force using a standardised process. The Head of Compliance reports on the status of the implementation of measures and on current compliance breaches to the Board of Management and audit committee of the Supervisory Board every quarter. An annual report is prepared for the Supervisory Board. The compliance management system (CMS) is continuously updated and examined. Remuneration of the Board of Management and the Supervisory Board The remuneration of the Board of Management and the Supervisory Board is each presented in a detailed remun- eration report, which, in accordance with section 4.2.5 of the DCGK, was included as an independent section of the management report in the Integrated Annual Report 2019 on p. 110 to 118 and to which we refer you at this point. The new system of variable remuneration for the Board of Management that was resolved by the Supervisory Board in 2017 and approved by the Annual General Meeting on 8 May 2018 is described in detail in the remuneration report for the Board of Management.
Integrated Annual Report 2019 of EnBW – Extended Version The declaration of corporate managment 9 Transparency EnBW ensures the transparency stipulated in the DCGK at all times by keeping shareholders, the capital market, financial analysts, shareholder associations and the interested public up-to-date on material business changes at the company. In order to provide consistent information in good time to all interested groups, the company mainly relies on the Internet. In particular, EnBW provides information on its business situation in the Integrated Annual Report, the interim financial information, the press conference on the annual results, telephone conferences to accompany the publi- cation of quarterly and annual results and at events held with analysts. The corresponding documents are made available to the general public on the EnBW website. The financial calendar also published on our website www.enbw.com/financial-calender provides adequate notice of the publication dates for the Integrated Annual Reports and interim financial information, as well as the date of the Annual General Meeting, the press conference for the annual results and the conference for analysts. If specific information on a matter relating to EnBW or the shares and bonds issued by EnBW which is not public knowledge should become available outside the regular reporting framework that could significantly influence the stock prices of these securities, we announce this insider information in the form of ad hoc announcements. There were no ad hoc announcements published in the 2019 financial year. In the 2019 financial year, EnBW did not receive any notices about transactions involving EnBW shares or EnBW bonds or related financial instruments concerning persons in managerial positions or those persons closely related to them. There were also no securities subject to disclosure requirements held by any members of the Board of Management or the Supervisory Board. Financial reporting and the audit Financial reporting at EnBW is carried out in accordance with the International Financial Reporting Standards (IFRS). The Annual General Meeting on 8 May 2019 elected Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart, as auditor of the financial statements and the consolidated financial statements for the 2019 financial year and as auditor for the review of the condensed financial statements and interim management report cont- ained in the Six-Monthly Financial Report, as well as for all reviews of additional interim financial information in the sense of section 115 (7) German Securities Trading Act (WpHG) in the 2019 financial year. At the same time, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft was elected as the auditor for the review of all additional interim financial information in the sense of section 115 (7) WpHG in the 2020 financial year, insofar as such a review is carried out before the next Annual General Meeting. The Board of Management discussed the interim financial information with the audit committee before its publi- cation. The consolidated financial statements for the 2019 financial year were made available to the public within 90 days of the end of the financial year and the Quarterly Statements and the Six-Monthly Financial Report for the 2019 financial year were made available within 45 days after the end of the relevant reporting period. Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft was commissioned by the audit committee and its chair- man to perform the audit. The audit committee ensured in advance of the Annual General Meeting that there was no doubt concerning the independence of the auditing firm to be commissioned and received a declaration of independence before submitting the proposal for the appointment of the auditor. This declaration also included the scope to which other services, especially in the consultancy sector, were provided to EnBW in the past financial year or have been contractually agreed for the following financial year. The agreement with the auditor stipulates that the auditing committee must be immediately informed about any grounds for exclusion or conflicts of inte- rest that arise during the audit unless such grounds could be immediately eliminated. In addition, it was also agreed that the auditor would immediately inform the audit committee on all facts and events significant to the tasks of the Supervisory Board which come to the attention of the auditor during the performance of the audit and that the auditor would inform the Supervisory Board or make a corresponding note in the audit report if facts were uncovered during the performance of the audit that demonstrate that the declaration of compliance issued by the Board of Management and Supervisory Board in accordance with section 161 AktG is incorrect. The audit committee and its chairman also commissioned Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft to audit the non-financial declaration published for the reporting period.
Integrated Annual Report 2019 of EnBW – Extended Version 10 The declaration of corporate managment EnBW did not have any share option programmes or similar securities-based incentive systems for the company in the reporting period nor does it currently have such programmes or systems. Declaration of compliance In accordance with section 161 AktG, the Board of Management and the Supervisory Board of EnBW Energie Baden-Württemberg AG declared on 4 December 2019 that: “EnBW Energie Baden-Württemberg AG complied in full with the recommendations of the Government Commis- sion for the German Corporate Governance Code published in the German Federal Gazette since the last declara- tion of compliance on 5 December 2018 in its currently valid version and will also continue to comply in full with the version valid from 7 February 2017.” The declaration was also published separately at www.enbw.com/german-corporate-governance-code. All of the declarations of compliance published since 2002 are also accessible there. Statement on the suggestions of the German Corporate Governance Code In accordance with section 3.10, sentence 2 DCGK, the Board of Management and the Supervisory Board declare that EnBW also complied with the suggestions of the DCGK in the past financial year with the exception of: Section 2.3.4 of the Code: coverage of the Annual General Meeting using modern communication media EnBW broadcasts the Annual General Meeting on the Internet until the end of the report by the Chairman of the Board of Management in line with common practice. The small proportion of EnBW shares in free float and the normally high attendance by shareholders at the EnBW Annual General Meetings would not justify the additional expense of broadcasting the entire Annual General Meeting. Karlsruhe, 4 March 2020 EnBW Energie Baden-Württemberg AG On behalf of the Board of Management On behalf of the Supervisory Board Colette Rückert-Hennen Lutz Feldmann