DIC Asset Aktiengesellschaft · Real estate company

Corporate Governance Report

The Management Board files a report – on behalf of the Supervisory Board as well – on the company's corporate governance in accordance with clause 3.10 of the German Corporate Governance Code and, at the same time, reports on corporate governance in accordance with § 289a HGB. The section also contains the Remuneration Report.

• Information on corporate government practices
  DIC Asset AG attaches great value to corporate governance. The Management Board and Supervisory Board consider they have an obligation to ensure the company's continued existence and the generation of sustained value added through responsible corporate governance that is focused on the long-term. Good corporate governance also includes dealing with risks in a responsible manner. The Management Board makes sure that risks are adequately managed and controlled in the company (see too also the comments in the Risk Report) and ensures that the company complies with the law as well as the recommendations of the German Corporate Governance Code in accordance with the annual Declaration of Conformity. The Management Board regularly informs the Supervisory Board of existing risks and their development. The company's internal control, reporting and compliance structures are continuously revised, enhanced and adjusted to changes in framework conditions
  
  In our opinion, more sophisticated corporate governance tools, such as in-house corporate governance principles or compliance guidelines, are not required at present because of the company specific circumstances. Should the implementation of additional tools become necessary, the Management Board and Supervisory Board will respond without delay.
• Modus operandi and composition of the Management Board and Supervisory Board
  
  
  • Dual management structure
    As required under Germany company law, the dual management structure of DIC Asset AG, as a listed public limited company, consists of a Management Board and a Supervisory Board. There is rigid separation of the two boards – both in terms of personnel and function – allowing each of them to perform their different duties independently. The duty of the Management Board is to manage the company autonomously, with the duty of the Supervisory Board is being to monitor this management.
  • Close cooperation between the Management Board and the Supervisory Board
    The Management Board and the Supervisory Board work closely together in the interests of the company. This ensures that optimal use is made of the professional expertise of the Board members and speeds up decision-making processes. The Management Board keeps the Supervisory Board regularly, promptly and comprehensively informed of strategy, planning, risk exposure and risk management, as well as current business developments.
    
    The Management Board performs its management role as a collegiate body. It puts forward strategic proposals and targets, discusses them with the Supervisory Board and ensures that they are implemented. In the process, it is bound to the company's interests and committed to the sustained increased in its value; it is also as well as committed to the needs of shareholders, customers, employees and other groups associated with the company. The members of the Management Board are jointly responsible for managing the entire business. Notwithstanding their overall responsibility, the individual Board members run the departments allocated to them by resolution of the Management Board autonomously. The allocation of duties between the members of the Board is clear from the business allocation schedule. The Management Board has a quorum if at least the majority of its members participate in the resolution and adopt its resolutions by a simple majority. In the event that the Management Board consists of more than two members, the Chairman/Spokesman, will have the casting vote if the votes are equal.
    
    The Supervisory Board appoints and dismisses members of the Management Board and works with the Management Board to ensure long-term succession plans are in place. In the case of certain defined measures of material significance - such as major capital investments – the rules of procedure for the Management Board stipulate that the approval of the Supervisory Board is necessary. The Supervisory Board has also adopted rules of procedure. The Chairman of the Supervisory Board coordinates the work of the Supervisory Board, chairs its meetings and protects its interests externally. A summary of the Supervisory Board's activities during the 2011 financial year is given in the Board's report.
  • Composition of the boards
    When filling the Management Board and the Supervisory Board as well as management functions in the Group, attention is focused, as a matter of priority, on the perception of the knowledge, skills and professional experience needed for the tasks to be performed. Considerations regarding gender are of subordinate significance here.
    
    The Management Board of DIC Asset AG consists of two members with Ulrich Höller as Chairman (CEO) and with Markus Koch (CFO) who is responsible for Finance and Controlling as Deputy Chairman.
    
    The Supervisory Board of DIC Asset AG consists of six members, who are all elected by the General Shareholders' Meeting. The Supervisory Board has elected a Chairman and a Deputy Chairman. Members of the Supervisory Board are elected for a term of office until the end of the General Shareholders' Meeting that ratifies the actions of the Supervisory Board for the fourth financial year from the start of the term of office. The financial year in which the term of office starts is not included in this calculation. The current terms in office end at different times due to differences in the appointment dates. The terms in office of three members of the Supervisory Board (Prof. Dr. Gerhard Schmidt, Klaus-Jürgen Sontowski and Michael Bock) will end on conclusion of the General Shareholders' Meeting which will resolve to approve their actions for financial year 2011. The Supervisory Board will submit its proposal for a new election to the ordinary General Shareholders' General Meeting in 2012.
    
    The specific composition of the Supervisory Board in terms of personnel and the disclosures pursuant to § 285 No. 10 HGB are contained in the Group Notes on page 108.
  • Aims of the Supervisory Board with regard to its composition
    The Supervisory Board already set targets for its composition in financial year 2010. The most important objective relates to eligibility: the Supervisory Board is to be filled in such a way that competent monitoring of and advice to the Management Board is guaranteed. As a whole, the Supervisory Board should have the requisite knowledge, skills and experience to perform its tasks. In the process, the individual qualifications of individual members may complement each other in achieving this objective. Independence and the avoidance of conflicts of interest are also important objectives: a sufficient number of independent members should belong to the Supervisory Board. The recommendations of the German Corporate Governance Code are complied with in respect of independence and conflicts of interest. Finally, the Supervisory Board considers the age limits specified in its rules of procedure. Only persons, who are not yet 70 years old, should be proposed for election to the Supervisory Board. Thereafter, persons may be members of the Supervisory Board if they are particularly qualified for international requirements. However, in view of DIC Asset AG's focus on the German property market, the decision was made not to stipulate the aspect of internationality as an objective.
    
    These targets were considered in relation to the Supervisory Board's proposal to the General Shareholders' Meeting on 5 July 2011 to elect Dr. Michael Peter Solf to the Supervisory Board. The current membership of the Supervisory Board therefore continues to comply with the statutory objectives. All members are professionally and personally qualified; they include an independent financial expert and a member with an international background. The Board includes an adequate number of independent members. Former members of the Management Board of DIC Asset AG are not represented in the Supervisory Board.
  • Disclosure of conflicts of interest
    Each member of the Management Board and the Supervisory Board discloses any possible conflicts of interest to the Supervisory Board.
    
    Consultancy agreements were in force in the reporting year between the company and the law firm Weil, Gotshal & Manges LLP, of which the Chairman of the Supervisory Board Prof. Dr. Gerhard Schmidt is a partner. Where the firm provided legal advice to the company in 2011, the Supervisory Board approved the instruction. The member of the Supervisory Board concerned did not participate in the decision.
  • Effectiveness of the Supervisory Board's work
    The Supervisory Board regularly examines its own effectiveness. This examination takes the form of a company-specific questionnaire, which is evaluated without delay. The results are discussed and the findings are then incorporated into the Board's future operations.
  • Establishment of the Audit Committee
    The Supervisory Board has established an Audit Committee which supports the Board in the performance of its duties and regularly reports to it. In particular, the Audit Committee deals with issues relating to the monitoring of the financial reporting process, the effectiveness of the internal control system, the risk management system and compliance. It assesses and monitors the independence of the auditors and determines the focus of the audit in consultation with them. The Audit Committee meets primarily when events merit this.
    
    The Audit Committee has the following three members:
    – Michael Bock (Chairman of the Audit Committee)
    – Prof. Dr. Gerhard Schmidt
    – Dr. Michael Peter Solf (elected to the Committee in 2011 as the successor to Hellmar Hedder)
    
    The Chairman of the Audit Committee is an independent financial expert and has particular knowledge and experience in the areas of financial reporting and the auditing of financial statements from his many years of professional experience working as the CFO of Provinzial Rheinland Versicherung AG.
  • D&O insurance policy
    There is a Directors & Officers insurance policy for members of the Management Board and the Supervisory Board (D& O insurance policy). It provides insurance for claims for damages by the company, shareholders or third parties, which may be asserted on the basis of breaches of the duty of care by the Boards. DIC Asset AG bears the costs of the insurance policy. The members of the Management Board and Supervisory Board have to pay a deductible in the event of a claim.