Declaration on Corporate Governance 2011
Declaration by the Management Board and Supervisory Board of YOC AG in accordance with Sect. 161 Stock Corporation Act (AktG) on the German Corporate Governance Code (hereinafter also referred to as «Code» or «DCGK») in the version of 26 May 2010 (Declaration of Conformity 2011)
Pursuant to Sect. 161 Stock Corporation Act (AktG), the Management Board and the Supervisory Board of a listed stock company shall annually declare that the recommendations of the «Government Commission of the German Corporate Governance Code» in the official part of the electronic Federal Gazette published by the Federal Ministry of Justice were or are complied with or which recommendations were or are not applied including the respective reasons. The declaration shall be made publicly accessible on the website of the company.
The German Corporate Governance Code (DCGK) contains regulations with different binding effects. Aside representations of the applicable corporation law, it contains recommendations from which companies may deviate; however, in this case they are obliged to disclose their deviations annually. In accordance with Sect. 161 Stock Corporation Act (AktG), deviations from the recommendations of the DCGK shall also be justified. Furthermore, the DCGK contains suggestions from which companies may deviate without disclosure. The following declaration concerns the period of time since the last Declaration of Conformity of December 2010 and refers to the requirements of the DCGK in its current version of 26 May 2010.
The Management Board and the Supervisory Board of YOC AG declare that the recommendations made by the «Government Commission of the German Corporate Governance Code» are and were principally complied with in the past. The Management Board and the Supervisory Board also intend to remain compliant in the future. Only the following recommendations of the German Corporate Governance Code were and are not applied:
- Sect. 2.3.2 of the Code: The company regards the announcement of the invitation to attend the General Meeting in the electronic Federal Gazette as sufficient.
- Sect. 3.8 Para. 3 of the Code: The company believes that the motivation and responsibility with which the members of the Supervisory Board carry out their duties will not be improved by an excess. The D&O liability insurance serves to safeguard against the company’s material own risks and at most serves as a second-line defence of the assets of the members of those bodies. Therefore, the D&O insurance for the Supervisory Board was concluded without excess.
- Sect. 4.1.5 of the Code: When filling their managerial positions within the company, the Management Board considers company-specific realities as well as an appropriate level of diversity. In our opinion, however, the guidelines of the DCGK inappropriately restrict the Management Board in its selection of suitable candidates for managerial positions which need to be filled.
- Sect. 4.2.3 Para. 2 Sent. 2 of the Code: The remuneration structure of the Management Board members focuses on a sustainable corporate development. In case of a temporary appointment of a Management Board member for a period of less than one year, however, the granting of variable remuneration components was renounced as these did not appear reasonable in the same way as a multi-annual assessment basis to be agreed in this individual case.
- Sect. 4.2.3 Para. 5 of the Code: In deviation from the recommendation of the German Corporate Governance Code, payments in the event of a change of control are not generally limited to 150% of the severance cap. Such a limit could affect the ability to attract highly qualified employees. According to the Management Board remuneration structure, a change of control case could also have the effect of increasing the YOC share price when Management Board members participate in the share option programme of the company. In addition to the beneficiaries of the share option programme, however, the shareholders also profit from the rise in the share price, so that the interests of the Management Board and the shareholders coincide in this respect.
- Sect. 5.1.2 Para. 1 as well as Sect. 5.4.1 Para. 2 and Para. 3 of the Code: A guideline for the structure of the Management Board as stipulated in Sect. 5.1.2, Para 1 of the Code inappropriately restricts the Supervisory Board in its selection of suitable members of the Management Board. The same applies to an objective for the composition structure of the Supervisory Board as stated in Sect. 5.4.1, Para. 2 and 3 of the Code. We are fundamentally of the opinion that this constitutes a too extensive limitation in the selection of suitable candidates for the Supervisory Board on an individual case basis. Moreover, such an objective also compromises the right of our shareholders to elect the members of the Supervisory Board.
- Sect. 5.1.2 Para. 2 Sent. 3 of the Code: The Supervisory Board has not set an age limit for members of the Management Board. The members of the Supervisory Board believe that suitability for a company management position depends first and foremost on individual ability and performance.
- Sect. 5.3.1, 5.3.2 and 5.3.3 of the Code: As the Supervisory Board of YOC AG has only three members, it would not be practical to set up committees, and especially not an audit committee or a nomination committee. The purpose of the audit committee as proposed by the Code is to increase the efficiency of auditing. This aim would not be achieved at YOC AG as nearly all members of the plenum would have to sit on the audit committee. Similarly, nearly all plenum members would sit on the nomination committee, which would not bring any improvement in the preparation of Supervisory Board recommendations regarding candidates proposed by the shareholders.
- Sect. 5.4.1 Para. 2 Sent. 1 of the Code: No age limit has been set for Supervisory Board members. A candidate’s ability to monitor and act as a fit contact for the Management Board depends first and foremost on individual capabilities.
- Sect. 5.4.3 Sent. 3 of the Code: The recommendation that proposed candidates for the chairmanship of the Supervisory Board be announced to shareholders has not been adopted. Pursuant to Sect. 11 Para. 1 of the company’s Articles of Association, the Supervisory Board elects its chair from amongst its members. According to the Supervisory Board’s Rules of Procedure, the selection of a chairperson takes place during the first meeting after the selection of the Supervisory Board without having to specially call for a meeting. With that said, the announcement of proposed candidates is not practical.
- Sect. 5.4.6 Para. 1 Sent. 3 of the Code: The company meets the recommendations of the Code regarding the remuneration of the chair and deputy chair of the Supervisory Board with the exception of the provisions on committees; chairmanship and membership of committees are not considered separately for lack of formed committees.
- Sect. 5.4.6 Para. 2 of the Code: The remuneration of the Supervisory Board consists of a fixed payment. Any variable remuneration to be granted beyond this is unnecessary for a motivation of the Supervisory Board and would not lead to any additional incentive or motivational boost.
- Sect. 7.1.2 Sent. 4 of the Code: The Company will endeavour to comply with the recommendation that the consolidated financial statements are to be made available to the public within 90 days of the end of the financial year and the interim reports within 45 days of the end of the reporting period, but cannot guarantee this due to the large scope of consolidation.
Berlin, December 2011
The Management Board
The Supervisory Board
The declaration has been made permanently available to the public on the YOC AG’s website (www.yoc.com) under «Investor Relations».
Information concerning company management practices
Sustainable economic, ecological and social actions form a defining element of the company culture at YOC AG. This also includes integrity in the treatment of employees, investors, customers, suppliers, authorities, interest groups and other stakeholders as well as the public.
YOC AG is a stock corporation with its registered office in Germany. Thus, German law is the basis for the scope of corporate governance, particularly the stock corporation law and the law on capital markets as well as the Articles of Association of YOC AG.
As a service company, YOC AG is compelled to win and maintain the trust of its customers and business partners through exemplary behaviour. The objective is to act in a credible, trustworthy and reliable manner and to convey a corresponding image.
A uniform, comprehensive and prompt information policy in relation to employees, investors, customers, suppliers, authorities, interest groups and other stakeholders is of high importance to YOC AG. All those mentioned above are provided with information by YOC AG on a uniform, comprehensive, prompt and simultaneous basis. Reporting on the business situation and results of YOC AG and YOC Group takes place through the annual report, the mid-year report and interim reports. Furthermore, information is passed on through ad-hoc communications, where legally necessary, and through the company’s websites. All messages, presentations and notices as well as the current financial calendar can be viewed on the company’s website (www.yoc.com) under «Investor Relations».
Changes in the make-up of the shareholder structure which have to be reported (Announcements of Voting Rights, Sect. 21 et seq. Securities Trading Act (WpHG)) and the purchase and sale of shares of individuals holding management positions within YOC AG (Directors‘ Dealings according to Sect. 15a of the Securities Trading Act (WpHG)) are also published by the Management Board.
YOC AG also holds the stipulated insider registers in accordance with Sect. 15b of the Securities Trading Act (WpHG). The individuals this relates to were and are informed of the legal duties and sanctions.
YOC Group is one of the world’s leading providers of mobile technology and media and is as such exposed to many of the opportunities and risks specific to the sector and the company. YOC AG has an established, comprehensive and effective system which allows the company to detect, assess, report on and deal with opportunities and risks involving all functions and business processes at an early stage. The underlying principles and guidelines have been summarised in a risk management guide that applies throughout the Group. The aim of this guide and all the systems concerned is to systematically detect risks at the earliest possible time, assess the likelihood of them occurring, estimate the potential qualitative and quantitative impact and initiate effective countermeasures. Risk management is regularly debated at Management Board and Supervisory Board level, then further developed and discussed with the company’s auditors.
Further information on the company’s risk management, the particular risks to which the company is exposed and the accounts-related internal control and risk management system can be found in the Risk Report that forms part of the company’s Group Management Report.
Description of the working methods of the Management Board and the Supervisory Board
As a German stock corporation, YOC AG is governed by the German Stock Corporation Act. Thus, a two-tier management system is legally prescribed. The Management Board and the Supervisory Board have autonomous powers and collaborate closely and in confidence concerning the fulfilment of their statutory tasks.
The Management Board has sole responsibility for the management of the company. It has a duty to act in the interests of the company and is committed to the sustainable development of the company. The tasks of the Management Board encompass the determination of the company’s strategic focus in consultation with the Supervisory Board and the exercise of the company management. The Management Board manages the company in accordance with the relevant laws, the Articles of Association and its Rules of Procedure. The members of the Management Board are appointed by the Supervisory Board. The periods in office of the members of the Management Board may last up to a maximum of five years, but a member may serve for several periods. The Supervisory Board can nominate a member of the Management Board to be the chairperson of the Management Board. Mr Dirk Kraus has been appointed Chairman of the YOC AG Management Board.
The Management Board reports to the Supervisory Board regularly, promptly and completely on important issues relating to the business development, strategy and planning, the risk situation of the Group as well as on compliance and also consults the Supervisory Board prior to all important strategic decisions. Management Board meetings are normally held every two weeks for joint votes. In addition to this, the Management Board regularly consults the members of the company’s second level of management. The Management Board did not form any committees.
The Supervisory Board has to advise and supervise the Management Board. It is involved in the strategy and planning as well as all issues which are of fundamental importance for the company. Its approval has to be obtained for major decisions to be taken by the Management Board. This includes the corporate planning for the year ahead prepared by the company once a year (the budget), which is submitted to the Supervisory Board by the Management Board, discussed with the Supervisory Board and adapted where necessary. The Supervisory Board also assigns the audit mandate to the auditor appointed by the General Meeting. The Supervisory Board holds at least four meetings per year.
The YOC AG Supervisory Board consists of three members, none of whom were previously on the company’s Management Board. The Supervisory Board is elected by the General Meeting. The Supervisory Board did not form any committees. With Mr Oliver Borrmann, the Supervisory Board has an independent member fulfilling the requirements as to independence and expertise in the fields of financial reporting or auditing within the meaning of Sect. 100 Para. 5 Stock Corporation Act (AktG).
The way the Supervisory Board works is set out formally the Rules of Procedure. Resolutions of the Supervisory Board are normally passed in meetings with the physical presence of its members; furthermore, meetings and resolutions in writing, via telephone, telex or other means of telecommunication are also possible. The company’s Management Board attends the meetings regularly and other members of the extended company management are also invited to attend if required. At the first meeting each year which demands the physical presence of the members of the Supervisory Board after the preparation and auditing of the annual financial statements (in the so-called «balance sheet meeting»), the company’s auditors are in attendance and present their report of the recent audit to the Supervisory Board.
The agenda and applications for resolution for the Supervisory Board meetings are communicated to all participants in writing before the respective meetings, allowing for sufficient notice. When decisions are needed at short notice, they may be dealt with through a written circulation procedure. All meetings of the Supervisory Board are minuted in writing.
The chairman of the Supervisory Board explains the activities of the Supervisory Board at the General Meeting each year as well as in his report to the shareholders, which is printed in the company’s Annual Report.
Berlin, March 2011
The Management Board