Declaration on Corporate Governance 2013
(Sect. 289a HGB)
The Declaration on Corporate Governance pursuant to Sect. 289a HGB includes the Declaration of Conformity in accordance with Sect. 161 of the German Stock Corporation Act (AktG), relevant information concerning company management practices and a description of the working methods of the Management Board and the Supervisory Board.
This declaration forms part of the Management Report of YOC AG and Group Management Report of YOC Group for the financial year 2013. According to Sect. 317 Para. 2 Sent. 3 HGB, the information pursuant to Sect. 289a HGB is not among the information that is subject to an auditor’s scrutiny.
Declaration by the Management Board and Supervisory Board of YOC AG, pursuant to Sect. 161 of the German Stock Corporation Act (AktG), of compliance with the German Corporate Governance Code in the version of 13 May 2013 (2013 Declaration of Conformity)
According to Sect.161 AktG, the Management Board and the Supervisory Board of a listed company must annually declare that the recommendations of the “Government Commission on the German Corporate Governance Code” in the official part of the electronic Federal Gazette published by the German Federal Ministry of Justice were or are compiled with, or which recommendations for valid reasons were or are not applied. The declaration must be made publicly available on the company’s website.
The German Corporate Governance Code (DCGK) contains provisions, not all of which are equally binding. Aside from descriptions of current company law, it contains recommendations which companies may disregard, in which case, however, they must disclose that they have done so. According to Sect. 161 AktG, departures from the recommendations of the DCGK must be justified. Furthermore, the DCGK contains suggestions which companies may disregard without disclosing that they have done so. The following declaration concerns the period since the last Declaration of Conformity, that of December 2012, and refers to the requirements of the DCGK in its current version of 13 May 2013.
The Management Board and the Supervisory Board of YOC AG declare that the recommendations made by the “Government Commission on the German Corporate Governance Code” are and were fundamentally complied with in the past. The Management Board and the Supervisory Board also intend to comply with it in the future. Only the following recommendations of the German Corporate Governance Code were and are not applied:
- Item 3.8 Para. 3 DCGK: The company is of the opinion that the motivation and responsibility with which the members of the Supervisory Board carry out their duties will not be improved by an insurance 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. The D&O insurance for the Supervisory Board was therefore taken out without an excess.
- Item 4.1.5 DCGK: When filling managerial positions within the company, the Management Board considers both company-specific realities and an appropriate level of diversity. In our opinion, however, the guidelines of the DCGK inappropriately restrict the Management Board in its choice of suitable candidates for managerial positions which need to be filled.
- Item 4.2.1 DCGK: According to item 4.2.1 of the DCGK, the Management Board is to consist of several persons and have a chairman or spokesman. Mr Dirk Freytag resigned from his office as chairman on 30 September 2013 for reasons of health. Since then, the Management Board of YOC AG has consisted of only one person.
- Item 4.2.2 Para. 2 Sent. 3 DCGK: The Supervisory Board is to consider the relationship between the remuneration of the Management Board and that of senior management and of the staff overall, particularly in terms of its development over time. For this comparison the Supervisory Board must determine how senior management and the relevant staff are to be differentiated. Item 4.2.2 Para. 2 Sent. 3 DCGK was newly added to the German Corporate Governance Code in the version of 13 May 2013. No remuneration amounts for Management Board members were reset by the Supervisory Board before this Declaration of Conformity was issued. The relationship between the remuneration of the Management Board and that of senior management and of the staff overall, particularly in terms of its development over time, was not explicitly considered when the Management Board’s remuneration was set.
- Item 4.2.3 Para. 2 Sent. 6 DCGK: The amount of remuneration paid to the Management Board is to be capped, both overall and for the variable pay components. Item 4.2.3 Para. 2 Sent. 6 DCGK was newly added to the German Corporate Governance Code in the version of 13 May 2013. No remuneration amounts for Management Board members were reset by the Supervisory Board before this Declaration of Conformity was issued. The existing contracts with Management Board members cap the variable pay components at amounts that may not fully comply with the Code’s new recommendation. Item 4.2.3 Para. 5 DCGK: notwithstanding the recommendation of the DCGK, payments in the event of a change of control are not generally limited to 150% of the severance payment cap. Such a limit could impair 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 profit from the rise in the share price, so that the interests of the Management Board and the shareholders coincide in this regard.
- Item 5.1.2 Para. 1 along with Item 5.4.1 Para. 2 and 3 DCGK: A guideline for the composition of the Management Board as called for in Item 5.1.2 Para. 1 DCGK inappropriately restricts the Supervisory Board in its choice of suitable Management Board members. The same applies to an objective for the composition structure of the Supervisory Board as set forth in Item 5.4.1 Para. 2 and 3 DCGK. We are fundamentally of the opinion that this constitutes an excessively severe limitation in the selection of suitable candidates for the Supervisory Board on an individual-case basis. Moreover, such an objective also encroaches upon the right of our shareholders to elect the members of the Supervisory Board.
- Item 5.1.2 Para. 2 Sent. 3 DCGK: 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 mainly on individual ability and performance.
- Items 5.3.1, 5.3.2 and 5.3.3 DCGK: As the Supervisory Board of YOC AG has only three members, it would be neither practical nor in accordance with best practice standards to set up committees, particularly an audit committee or nomination committee. The purpose of setting up an audit committee as proposed by the DCGK 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 have to sit on the nomination committee, which would not bring any improvement in the preparation of Supervisory Board recommendations regarding candidates proposed by the shareholders.
- Item 5.4.1 Para. 2 Sent. 1 DCGK: No age limit has been set for Supervisory Board members. A candidate’s ability to monitor and act as a coequal contact for the Management Board depends mainly on individual capabilities.
- Item 5.4.3 Sent. 2 DCGK: According to Item 5.4.3 Sent. 2 DCGK, the next General Meeting is to be set as the deadline for an application for judicial appointment of a Supervisory Board member. To ensure continuity and efficient and productive work in the Supervisory Board, no deadline was set for the application for judicial appointment of the present Supervisory Board members.
- Item 5.4.6 para. 1 sent. 3 DCGK: The company complies with the recommendations of the Code regarding remuneration of the chairman of the Supervisory Board and the deputy chairman, with the exception that the chair and the members of committees receive no special consideration for lack of committees formed.Item 7.1.2 Sent. 4 DCGK: The company will endeavour to comply with the recommendation that the consolidated financial statements be made available to the public within 90 days after the end of the financial year and the interim reports within 45 days after the end of the reporting period, but cannot guarantee that it will do so owing to the large scope of consolidation.
Berlin, March 2014
The Management Board
The Supervisory Board
The declaration has been made permanently available to the public on YOC AG’s website (www.yoc.com) under “Investor Relations”. Earlier versions of the Declaration of Conformity can also be found there.
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. Therefore, German law is the basis for the scope of corporate governance, particularly the stock corporate law and the law on capital markets as well as the Articles of Association.
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. of the 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 companies. 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 aim of this system 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 discussed and further developed at Management Board and Supervisory Board level.
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 Supervisory Board
As a German stock corporation, YOC AG is governed by the German Stock Corporation Act. Therefore, a two-tier management system is legally prescribed. The Management Board and 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 bear joint responsibility for corporate governance, work together cooperatively, and keep each other regularly informed about important actions and events in their business areas. Notwithstanding the overall responsibility of all members of the Management Board, members bear individual responsibility for their own business area – aside from those matters requiring the decision of the Management Board in plenum. Management conduct is further regulated by the Rules of Procedure enacted by the Management Board in consultation with the Supervisory Board. 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 Freytag was appointed Chairman of the YOC AG Management Board effective 1 December 2012.
The Management Board reports to the Supervisory Board regularly, promptly and completely on issues relating to the Group’s business development, strategy and planning, risk situation and compliance. It 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 and auditing within the meaning of Sect. 100 Para. 5 Stock Corporation Act (AktG).
The way the Supervisory Board works is set out formally in 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 held 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. The first in-person meeting of the year to be held after the preparation and auditing of the annual financial statements (the so-called “balance sheet meeting”) is also attended by the company’s auditors, who 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 recorded 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, April 2013
The Management Board
The Supervisory Board