Corporate declaration in accordance with Sections 289a and 315 (5) of the German Commercial Code (HGB) as of May 30, 2017
The following declaration on corporate governance pursuant to Sections 289a and 315 (5) HGB reproduces the current statement of compliance of MEDION’s Management Board and Supervisory Board pursuant to Section 161 AktG, and contains a description of the workings of the Management Board and Supervisory Board, as well as the composition and workings of the committees of the Supervisory Board. Furthermore, the declaration on corporate governance contains information concerning significant corporate governance practices and on the commitments regarding the promotion of the equal representation of women and men in management positions and the minimum proportion of women and men on the Supervisory Board. Additional information on MEDION’s corporate governance can be found in the chapter entitled “Corporate Governance Report”.
The management of MEDION, a listed German corporation, is primarily governed by the German Stock Corporation Act (AktG) and also by the rules set forth in the latest version of the German Corporate Governance Code. At MEDION, good corporate governance is a standard we extend to all areas of the Company. Enhancing corporate governance and compliance at MEDION serves to justify the trust that our shareholders, business partners, employees, and the public have placed in us. We have therefore taken all organizational measures needed to not only comply with the legal requirements but also to ensure a responsible and transparent corporate management that is committed to sustained growth.
A significant element of corporate governance within German public limited companies (Aktiengesellschaften) is the separation of corporate management and control. In accordance with legal provisions, MEDION is subject to a dual management system. This is characterized by a strict personnel division between the Management Board as a management body and the Supervisory Board as a supervisory body. The Management Board and the Supervisory Board work closely together in the interests of the Company.
The Management Board manages the Company, aiming to create lasting added value, for which it assumes responsibility. In this regard, the principle of overall responsibility applies, i.e. the members of the Management Board share the overall responsibility for managing the Company. The Management Board manages MEDION AG and the Group, for which it assumes responsibility. The primary management responsibilities of the Management Board include establishing corporate targets and the strategic direction of the Group, its control and monitoring, and corporate planning. In addition, the Management Board safeguards the availability of investment resources, takes decisions concerning their allocation within the Group, and is responsible for attracting and nurturing well-qualified executive personnel. The principles of the MEDION Management Board's cooperation have been summarized in the rules of procedure for the Management Board. In particular, they establish the areas for which the individual Management Board members are responsible, the matters reserved for the consent of the Supervisory Board, the required majorities for passing resolutions, and the rights and duties of the Chairman of the Management Board. The Management Board of MEDION has consisted of two members for many years.
The specific requirements of MEDION AG's business model continue to take into account the Company's existing Management Board and Supervisory Board structure, both since the founding of the Company, its IPO, and especially since it was taken over by Lenovo. Both members of the Management Board are responsible for the operational divisions, which include the significant business processes of procurement, logistics, financial planning and controlling, and the direct management of significant corporate functions such as IT, distribution, personnel and strategy. The top management level in the Company is directly responsible to the Management Board by way of targets and reporting duties.
On October 25, 2011, MEDION AG and Lenovo Germany Holding GmbH, as the controlling company, signed a domination and profit and loss transfer agreement. Through this agreement, MEDION AG subordinates the management of its company to Lenovo Germany Holding GmbH and as of April 1, 2012, agrees to transfer its entire profit to Lenovo Germany Holding GmbH.
The Management Board regularly, promptly and comprehensively informs the Supervisory Board concerning all issues related to business performance that are material to the MEDION Group, major transactions, as well as the current earnings situation, along with the Company's risk position and risk management. Deviations in the business trend from preceding forecasts and targets are commented on and justified in detail. Furthermore, the Management Board regularly reports on compliance, i.e. actions taken to adhere to statutory regulations and internal Company policies, an issue for which the Management Board is also responsible.
Functional control systems are a significant component of the business processes at MEDION. This includes a Group-wide risk management system the covers functions, processes, potential charges against earnings, and Company-specific risks.
The Supervisory Board advises the Management Board in managing the Company and monitors its activity. It appoints and dismisses the members of the Management Board, determines the compensation system for Management Board members, and establishes the total compensation for each of them. It is involved in all decisions that are of fundamental importance to MEDION. The Supervisory Board of MEDION consists of three members. The principles of the MEDION Supervisory Board's cooperation have been summarized in the rules of procedure for the Supervisory Board.
Finally, the Company’s Articles of Incorporation and the rules of procedure of the Supervisory Board contain a catalog of transactions for which the Management Board needs the consent of the Supervisory Board. No consulting contracts or other contracts for work and services existed between members of the Supervisory Board and the Company during the year under review. No conflicts of interest occurred with respect to any member of Management Board or Supervisory Board. Any such conflicts of interest must be disclosed to the Supervisory Board immediately. No member of the Supervisory Board of MEDION AG has been a former member of the Company’s Management Board.
The changes made to the Corporate Governance Code in 2015, which were adopted on May 5, 2015 and published in the Federal Gazette (Bundesanzeiger) on June 12, 2015, necessitated changes in the previous year to the former corporate governance declaration of MEDION AG (No. 5.4.1 “Term of Office on the Supervisory Board”).
After the deliberations of the Management Board and Supervisory Board in their joint meeting on November 25, 2016, an updated declaration of compliance pursuant to Section 161 of the German Stock Corporation Act (AktG) was adopted and announced on the website of the Company on November 25, 2016. The exception from the Code that committees cannot be formed due to the Supervisory Board’s size has not changed from previous years. The Supervisory Board did not specify a standard limit for length of membership on the Supervisory Board either, and is convinced that the qualification for performing Supervisory Board duties depends mainly on the Company's specific needs and the individual abilities of the Supervisory Board members. The Board therefore does not believe that it makes sense to set a limit on terms of office for Supervisory Board members since the intention is for MEDION AG to have the special knowledge, skills, and professional experience of its Supervisory Board members at its disposal.
Earlier declarations of compliance issued by MEDION that are no longer valid are available on the Company's website. Further details concerning MEDION's corporate governance practice are provided in the latest Corporate Governance Report, which also forms part of this Declaration on Corporate Governance and is included in this annual report.
Commitments promoting the equal representation of women and men in management positions
In accordance with Sections 76 (4) and 111 (5) of the German Stock Corporation Act (AktG), the Supervisory Board and Management Board fixed targets during calendar year 2015 concerning the proportion of women represented in management positions, as well as the deadline for achieving such targets. As an exchange-traded company, MEDION AG is thus required to specify minimum targets for the proportion of women on the Supervisory Board, Management Board and the two management levels below the Management Board, and to define deadlines for achieving these minimum targets. The deadline to be specified for achieving the first target figure may not exceed June 30, 2017. MEDION AG announced that due to the particular structure of the Company, no women would be represented on the Management Board or Supervisory Board until June 30, 2017, and that the proportion of women on the first and second levels of management below the Management Board would be 23% and 29%, respectively. During fiscal year 2016/17, these targets were achieved.
Essen, May 30, 2017
(Chairman of the Management Board)
(Deputy Chairman of the Management Board)