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SGL CARBON SE — Governance Information 2022
Mar 23, 2022
389_cgr_2022-03-22_fce04709-5a10-4020-85eb-ba0473a944b6.pdf
Governance Information
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SGL Carbon Annual Report 2021
Corporate Governance Declaration, Corporate Governance and Compliance Report (unaudited)
Corporate Governance Declaration, Corporate Governance and Compliance Report (unaudited)
Declaration of conformity with the German Corporate Governance Code
The Board of Management and the Supervisory Board of a listed European corporation (Societas Europaea) with its registered office in Germany are required by Art. 9 (1) (c) (ii) SE Regulation in conjunction with Section 161 German Stock Corporation Act to declare at least once a year whether the German Corporate Governance Code (GCGC) has been and is being complied with. In addition, reasons must be specified as to which recommendations of the code have not been or are not being applied. Since 2002, the Board of Management and Supervisory Board of SGL Carbon SE have regularly issued and published declarations of conformity. Each declaration of conformity will be made available to the public on the company's website (www.sglcarbon.com, under "Company/Corporate Governance") for a period of five years. The most recent declaration of conformity was issued and published in November 2021:
"The Board of Management and Supervisory Board of SGL Carbon SE declare:
SGL Carbon SE has been and will continue to be in full compliance with the recommendations of the "Government Commission on the German Corporate Governance Code" ("Regierungskommission Deutscher Corporate Governance Kodex") in the version dated December 16, 2019 (published on March 20, 2020) as published by the Federal Ministry of Justice and Consumer Protection in the official notice section of the German Federal Gazette since the execution of its last Declaration of Compliance in November 2020 except for the following deviations:
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With regard to recommendation B.3 of the Code, according to which first-time appointments of Management Board members shall be for a period of not more than three years. As part of its Management Board realignment in 2020, the Company appointed two new Board of Management members for a term of five years each. These decisions were made in the interest of a stable management structure with continuity for the future challenges and are also considered appropriate by the Supervisory Board in view of the qualifications of the candidates.
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With regard to recommendation C. 10 of the Code, according to which the Chair of the Supervisory Board and the Chair of the committee that addresses Management Board remuneration issues, shall be independent of the Company and the Management Board. Ms. Klatten, who is an indirect significant shareholder of the Company, currently holds both these positions. The current composition of the Supervisory Board and Personnel Committee Chair of the Company is considered appropriate by the Company. Ms. Klatten is viewed as particularly able for both positions and, in addition, the Company believes that the existing majority of independent members of the Supervisory Board members from the group of shareholder representatives ensure a sufficient balance in the relevant bodies.
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With regard to recommendation D.8 of the Code, according to which the report of the Supervisory Board should note how many meetings of the Supervisory Board and its committees the individual members attended in each case. In recent years, the participation rate in the meetings of the Supervisory Board and its committees, as shown in the respective report of the Supervisory Board, has been over 90%, so that the Company, at least insofar as the participation rate is not significantly reduced in the future, holds a consolidated presentation of the participation rates for being sufficiently adequate.
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With regard to recommendation G.13 sentence 2 of the Code, according to which, in the event of a post-contractual non-competition clause, the severance payment should be offset against the compensation for the non-competition clause. The service contract of Dr. Majerus, existing at the time such recommendation took effect, did not provide for an offsetting with respect to its non-competition clause, which is why Dr. Majerus, starting with his departure as of December 2020 and limited until May 31, 2021 will receive a compensation for the non-competition clause without being offset with the severance payment. The new remuneration system for the Management Board and the service contracts of the current members of the Management Board provide for a setting-off as provided in recommendation G.13 sentence 2 of the Code, though.
The Corporate Governance Principles of SGL Carbon SE furthermore satisfy a majority of the non-obligatory suggestions of the German Corporate Governance Code.
Wiesbaden, November 25, 2021
Susanne Klatten (Chair of the Supervisory Board of SGL Carbon SE), signatory for the Supervisory Board
Dr. Torsten Derr (Chair of the Board of Management of SGL Carbon SE), signatory for the Board of Management"
Composition and procedures of the Board of Management
The governance of SGL Carbon SE as a listed European company (SE) with its registered office in Germany is largely determined by Council Regulation EC No. 2157/2001 of October 8, 2001 on the Statute of a European Company (SE Regulation), Germany's SE Implementation Act, the Agreement on the Involvement of Employees in SGL Carbon SE as well as the German Stock Corporation Act (AktG), the suggestions and recommendations of the German Corporate Governance Code, and the Articles of Association of SGL Carbon SE.
SGL Carbon SE is subject to the dualistic system as per Art. 38 of the SE Regulation in conjunction with Section 5 of SGL Carbon SE's Articles of Association. The dualistic system is characterized by a separation of personnel between the management body (Board of Management) as the executive and management body and the supervisory body (Supervisory Board) as the monitoring body. The Board of Management and Supervisory Board of SGL Carbon SE work closely together for the benefit of the Company. Their shared goal is the sustained growth of the value of the company.
The Articles of Association specify that the Board of Management of SGL Carbon SE consists of several members; the number of which is determined by the Supervisory Board. As of December 31, 2021, the Board of Management consisted of two members and therefore no Board of Management committees were formed.
The Board of Management is responsible for managing SGL Carbon SE and the SGL Carbon Group in the interest of the company. The principle of overall responsibility applies, that is, the members of the Board of Management bear joint responsibility for management of the business; however, each member of the Board of Management is assigned responsibility for specific areas. More detailed information on the individual members of the Board of Management and their areas of responsibility can be found on the company's website (at www.sglcarbon.com under "Company/About us/Board of Management"). Certain matters determined by the full Board of Management shall both be dealt with by the full Board of Management and require its approval. The Chairperson of the Board of Management coordinates the work of the members of the Board of Management.
The Board of Management develops the corporate and Group strategy and ensures its implementation in consultation with the Supervisory Board. Its duties also include management and monitoring of operating activities and establishment and supervision of an appropriate and efficient control and risk management system. The Board of Management ensures compliance with legal provisions, official regulations and internal policies, and it works to ensure that these rules and regulations are also complied with by Group companies. The Board of Management prepares the company's interim financial reports, the financial statements of SGL Carbon SE, the consolidated financial statements, the management reports of SGL Carbon SE and the SGL Carbon Group and the separate non-financial report for the SGL Carbon Group.
The Board of Management informs the Supervisory Board regularly, promptly and comprehensively in regard to all issues relevant to the company and the Group, particularly including strategy, planning, business development, the risk situation, risk management and compliance. In this context, the Board of Management addresses instances in which the business situation deviates from the established plans and targets. When important events of material significance for the company occur, the Board of Management shall inform the Chairperson of the Supervisory Board without delay, and the Chairperson of the Supervisory Board shall subsequently inform the Supervisory Board and convene a Supervisory Board meeting if required.
The composition and procedures of the Supervisory Board and its committees
Supervisory Board
According to Section 8 (1) of the Articles of Association, the Supervisory Board of SGL Carbon SE consists of eight members, with half of them being shareholder representatives and the other half employee representatives. The shareholder members are appointed by the Annual General Meeting of SGL Carbon SE, and the employee representatives are appointed by the SE Works Council in accordance with the Agreement on the Involvement of Employees in SGL Carbon SE. The Supervisory Board elects a Chairperson of the Supervisory Board from among its members and a Vice-Chairperson from among the shareholder representatives and employee representatives. If resolutions are to be adopted by a simple majority, the Chairperson of the Supervisory Board will cast the tie-breaking vote in the event of a tie, and if the Chairperson does not participate in the adoption of the resolution, the Vice-Chairperson who has been appointed to the Supervisory Board as a shareholder representative will cast the tie-breaking vote. In addition, the Chairperson of the Supervisory Board coordinates the work of the Supervisory Board and represents the interests of the Supervisory Board to the outside world.
The Supervisory Board advises and monitors the Management Board in managing the company. The Supervisory Board appoints and dismisses the members of the company's Board of Management, makes decisions regarding the remuneration
SGL Carbon Annual Report 2021
Corporate Governance Declaration, Corporate Governance and Compliance Report (unaudited)
system for Board of Management members and sets the individual remuneration for each member of the Board of Management. The remuneration system for the Board of Management and its approval by the Annual General Meeting is available on the company's website (www.sglcarbon.com, and available there under "Company/Corporate Governance"). At regular intervals, the Supervisory Board obtains reports from the Board of Management on the strategy, corporate planning, sales performance, profitability, business development and the situation of the company, as well as on the internal control system, the risk management system and the compliance management system. It is directly involved in decisions that are of fundamental importance to SGL Carbon SE and the Group; these include the launch of new sectors or the discontinuation of existing ones and the issuance of bonds. Section 11 of the Articles of Association of SGL Carbon SE contains a catalog of transactions for which the Board of Management requires the approval of the Supervisory Board (the Articles of Association of SGL Carbon SE are available on the company's website (www.sglcarbon.com, under "Company/Corporate Governance")). Furthermore, under certain circumstances it is required under law that the Supervisory Board or the Audit Committee approve transactions with related parties in advance. Finally, the Supervisory Board is responsible for auditing the annual financial statements and management report of SGL Carbon SE, the consolidated financial statements and management report, and the proposal for appropriation of unappropriated profits. The activities of the Supervisory Board in the 2021 fiscal year are explained in the "Report of the Supervisory Board" (see page 7).
The Supervisory Board has adopted rules of procedure which govern in particular the convening and preparation of the Supervisory Board's meetings and the passing of resolutions in addition to its duties and responsibilities. The Rules of Procedure are available on the company's website (www.sglcarbon.com, under "Company/Corporate Governance").
Targets of the Supervisory Board regarding its composition
In accordance with the requirements of the German Corporate Governance Code, the Supervisory Board adopted targets for its composition and drafted a skill set profile for the body as a whole. In accordance with the targets it has set for itself, the Supervisory Board is to have a composition that ensures that its membership as a whole possesses the knowledge, skills and professional experience required to properly perform the duties of the Supervisory Board. The age limit for members of the Supervisory Board is 72. As a rule, a member of the Supervisory Board shall also no longer be proposed as a candidate for the Supervisory Board once they have completed their third term of office on the Supervisory Board. This rule does not apply to terms of office based on a court appointment to the Supervisory Board. If a Supervisory Board member holds a material stake in the company within the meaning of the German Corporate Governance Code, controls such a material shareholder of the company, or acts as a representative of such a material shareholder, there is a fundamental exception to the above-mentioned rule and no time restriction applies in this case. Each member of the Supervisory Board also ensures that they have sufficient time to perform their duties.
All members of the Supervisory Board must be able to properly perform their duties. To properly perform the duties in the context of the company's accounting, at least two members of the Supervisory Board should have special knowledge and experience in the areas of accounting and auditing (as financial experts); this is currently the case with Ms. Neumann and Mr. Denoke, as demonstrated by their training and education as well as their professional experience – amongst other things is Ms. Neumann public accountant by training and was Mr. Denoke CFO of a large listed company for many years. In addition, at least one member of the Supervisory Board must have considerable professional experience and industrial expertise in the SGL Carbon Group's sectors or key customer industries. Furthermore, each of the following areas should have at least one member who has extensive professional experience in the specified area: corporate management and corporate strategy, compliance and risk management, innovation expertise (including digitalization), executive development and human resources. Overall, the Supervisory Board should have a balanced number of members with experience in the technical fields (particularly in chemistry and engineering) and members with a background in business. The composition of the Supervisory Board should also reflect the international activities of the company; at least one member of the Supervisory Board should have special international knowledge and experience due to their national origin, education or professional activity.
The Supervisory Board shall always include a sufficient number of independent members. That is why at least half of the members of the Supervisory Board on the shareholder side should be independent; this is currently the case, as the Supervisory Board considers Ms. Neumann, Mr. Denoke and Mr. Eichler to be independent representatives, meaning that more than half of the shareholder representatives are independent.
With regard to appropriate participation of women on the Supervisory Board of the company, the "German Act on Equal Participation of Men and Women in Executive Positions in the Public and Private Sectors" of April 24, 2015, which is relevant for SGL Carbon SE, also requires that the Supervisory Board of the company be composed of at least 30% women and at least 30% men.
The aforementioned targets of the Supervisory Board with regard to its composition and the skill set profile for the entire body are taken into account in proposals for the appointment of new Supervisory Board members, and efforts are made to fill gaps in the skill set profile. In its current composition, the positions on the Supervisory Board are appropriately filled in terms of the members' expertise, diversity and independence according to the targets and skill set profile of the Supervisory Board.
More detailed information on the individual members of the Supervisory Board, including the length of their membership on the board, can be found on the company's website
(www.sglcarbon.com, under "Company/About us/Supervisory Board").
Rules in the event of possible conflicts of interest
It is necessary for Supervisory Board members to disclose conflicts of interest to the Chairperson of the Supervisory Board. This includes both specific conflicts of interest that arise as well as potential conflicts of interest that are sufficiently probable. If a Supervisory Board member has conflicts of interest that are material and not merely temporary, this will lead to termination of the mandate. The Supervisory Board or the Audit Committee approves transactions with related parties in accordance with the statutory requirements. In addition, the Audit Committee examines whether there were any indications of improper influence in transactions between SGL Carbon Group companies and Supervisory Board members, persons or companies related to them, or shareholders with a stake in SGL Carbon SE of more than 5% of the voting rights. In the reporting period, no conflicts of interest were reported by members of the Supervisory Board or Board of Management that would be necessary to disclose to the Supervisory Board without delay. In the reporting period, there were also no consultancy or other service agreements between the members of the Supervisory Board and the company. Relationships to related parties are presented in Note 26 to the consolidated financial statements.
Committees of the Supervisory Board
The Supervisory Board has a total of three standing committees, which operate in accordance with the requirements of the German Corporate Governance Code, the German Stock Corporation Act, the company's Articles of Association and the Rules of Procedure for the Supervisory Board. These committees are:
Personnel Committee
The Personnel Committee, chaired by Ms. Klatten, advises the Supervisory Board primarily on the arrangements that regulate the legal relationship between the company and its current and former Board of Management members. It reviews the remuneration of the Board of Management members and submits proposals to the full Supervisory Board for a final decision. The committee also prepares personnel decisions by the Supervisory Board by drafting proposals for the appointment of new and the dismissal of incumbent members of the Board of Management. Other members of the committee are Ms. Neumann and Mr. Jodl.
Nomination Committee
The task of the Nomination Committee is to prepare proposals for the election of shareholder representatives to the Supervisory Board by the Annual General Meeting. The committee chaired by Ms. Klatten includes all shareholder representatives of the Supervisory Board, that is, in addition to Ms. Klatten, Ms. Neumann, Mr. Denoke and Mr. Eichler.
Audit Committee
The Audit Committee consists of four members. The Chairperson of the Audit Committee is Mr. Denoke. The other members are Ms. Neumann, Mr. Stettberger and Mr. Züllighofen. The committee deals with matters that include audit of the accounting, monitoring of the accounting process, risk management, compliance, the company's internal control and audit system, as well as audit of the Group's transactions with related parties. In particular, it is responsible for the preliminary audit of the annual financial statements of SGL Carbon SE and SGL Carbon Group, the management report and Group management report (including the separate non-financial report) and the proposal for the appropriation of earnings.
Another of the committee's areas of responsibility is the company's relationship with the auditor. In this context, the committee primarily prepares the Supervisory Board's proposal to the Annual General Meeting on the election of the auditor. It is of key importance here to ensure that the auditor is both qualified and independent. The committee also determines audit priorities, agrees the audit fee, prepares the issuance of the audit engagement and reviews in advance the commissioning of non-audit services to be performed by the auditor.
In addition to these three permanent committees, the Supervisory Board may form temporary project-related committees as needed.
Efficiency review of the Supervisory Board
The Supervisory Board regularly assesses the effectiveness and efficiency of its work and the work of its committees. The Supervisory Board conducted this self-assessment for the last time at the end of 2019. In an extensive questionnaire, the members of the Supervisory Board were able to provide their assessment of current practice and suggestions for optimization in regard to a variety of topics such as cooperation on the Supervisory Board and with the Board of Management, as well as on the work in the committees. The results were evaluated by a notary, processed anonymously and then discussed by the Supervisory Board. The members of the Supervisory Board rated the cooperation within the Supervisory Board as positive overall. The next regular efficiency review is expected to take place in 2022.
Governance practices
SGL Carbon Code of Conduct
The SGL Carbon Code of Conduct underscores the commitment of SGL Carbon and its employees to responsible, lawful conduct and reflects the Group's shared values, its corporate culture and the type of behavior it aspires to in its business. A key factor in SGL Carbon's lasting success as a company is its responsible and appropriate treatment of all parties with whom the company has business relationships, including employees, customers, shareholders, governmental authorities and the public. The Code of Conduct is intended to play a key role in building and maintaining trust among all stakeholders. It underscores the
SGL Carbon Annual Report 2021
Corporate Governance Declaration, Corporate Governance and Compliance Report (unaudited)
commitment of the company and its employees to compliance with applicable laws and providing employees with guidelines for responsible conduct. The SGL Carbon Code of Conduct is available on the company's website (www.sglcarbon.com, under "Company/Compliance/Code of Conduct").
SGL Carbon Corporate Governance Principles
The SGL Carbon Corporate Governance Principles summarize the relevant statutory provisions and the company's Articles of Association, as well as supplementary practices of SGL Carbon 5E and the Group that were drafted and developed over the years. This statement of principles is intended to ensure responsible and transparent governance and control as well as to foster the trust of stakeholders, business partners and employees, as well as that of the public over the long term. The principles are reviewed at least once a year and updated to take changes in the law, recommendations and market opportunities into account. In addition to the Rules of Procedure for the Board of Management and Supervisory Board and the organizational principles of the SGL Carbon Group, the SGL Carbon Corporate Governance Principles also include the essential corporate guidelines relating to Group-wide corporate governance and compliance.
The above-mentioned SGL Carbon Code of Conduct, which underscores the commitment of the Group and its employees to compliance with the law and internal guidelines and which sets standards for lawful and ethical behavior, is fundamental to all of these documents. Using the Code of Conduct as a starting point, the company has also developed detailed corporate guidelines which apply in equal measure to SGL Carbon 5E and the Group, and which also form part of the SGL Carbon Corporate Governance Principles. These guidelines include:
- a guideline on compliance with antitrust regulations
- a guideline on compliance with capital market regulations
- a whistleblower guideline for reporting particularly serious compliance incidents
- principles for granting and accepting gifts and other benefits and dealings with business partners and public officials
- a guideline on the security of information and the underlying infrastructure of the company
- a guideline for defining the process structures for identifying and monitoring the core risks of the company and its business units and functions
Compliance as part of the management and corporate culture
At SGL Carbon, compliance is a key management task of the Board of Management. Management does not tolerate any violation of the Code of Conduct. The senior executives also foster a corporate culture in which issues relating to integrity can be openly addressed with one's supervisor, the compliance officers and the Group Compliance department. Each employee bears personal responsibility for ensuring that their actions comply with SGL Carbon's Code of Conduct and the rules applicable in their area of work. Compliance must be present in the minds of managers and employees and form an integral part of daily business. Then
compliance will also sustainably support the success of the company.
SGL Carbon has been rolling out and implementing a Compliance program throughout the Group for many years. The Board of Management has commissioned the Group Compliance department with managing this program worldwide. The department's task is to manage the necessary overarching organizational, communication and control structures across all locations, to review them on a regular basis and to adjust them as required. The aim is for compliance to go beyond adherence to legal requirements and structures and for it to be enshrined in the organization as part of value-based corporate management. Over the past fiscal year, the external certification of SGL Carbon 5E's compliance management system was subjected to a regular surveillance audit (see the separate non-financial Group report/CSR report on page 30).
As part of their responsibilities for personnel and leadership, the management and senior executives of SGL Carbon assume an important role-model function here. For this reason, the topic of compliance regularly occupies a fixed place on the agenda of the annual Global Leadership Conference (GLC), at which awareness for the issue of compliance is repeatedly raised among executives at the highest levels of management. At the most recent GLC, compliance was dealt with as part of the ESG strategy workshop (see the separate non-financial Group report/ESG strategy and ambition and targets on page 12).
In addition to the compliance representatives of the business units and corporate functions (see separate non-financial Group report/CSR report, page 31), the SGL Carbon compliance organization includes a network of regional and local compliance officers. All members of the network receive appropriate introductory training when they first assume their role. In addition, the Compliance Manual, which is available as a managed document in the Guidelines directory of SharePoint, describes the essential elements of the Compliance program and the role and responsibility of the Compliance Network. All relevant documents are also available to members on a dedicated SharePoint page. The compliance representatives of the business units and the corporate functions are members of the Compliance Committee, which meets twice a year. The Compliance Committee discusses and approves strategic compliance issues as well as changes to the existing Compliance program. An average of two to three conference calls are held each year to ensure that knowledge is transferred between the Compliance Network and Group Compliance. There are also face-to-face events every two years in the form of regional Compliance conferences in Europe, Asia and North America. The conference calls are used for ongoing exchange of information on the Compliance program as well as discussion of current issues. The Compliance conferences serve the purpose in particular of further development of the Compliance program, taking into account location-specific needs, and are also used to train local representatives of the Compliance function. Due to the pandemic, three Compliance conferences for the regions of Europe, North America and Asia were held virtually for the first time in May and June 2021. The agenda for the participating Local Compliance Representatives (LCRs) included
new legal developments, Compliance refresher training and drafting a concept together for the human rights training program (see the separate non-financial Group report/CSR report on page 31).
The local managers are the contact persons for employees at the locations for all matters relating to compliance and support for the Group Compliance department in the local implementation of the Compliance program.
The overriding goal in Compliance is to ensure that all employees are aware of and follow the applicable policies in order to reduce the risk of legal violations and prevent any resulting damage to SGL Carbon. For this reason, the Compliance guidelines are an integral part of the documents that are provided to each new employee. The local Compliance representatives report twice a year to Group Compliance in order to confirm that this process has been properly implemented. An acknowledgment of receipt shall also be placed in each employee's personnel file, documenting in writing that the employee has taken note of the rules contained in the Code of Conduct. This process is also part of an internal check within the framework of the internal control system. The Code of Conduct, the Guideline on Gifts and Hospitality, the Guideline on Compliance with Antitrust Regulations and the Whistleblower Guideline for Reporting Particularly Serious Compliance Incidents are available in a total of nine local languages. The guidelines are available for employees to download on SharePoint and the intranet. The intranet also provides employees with crucial information and modules of the SGL Compliance program, which can be accessed with just a few clicks.
Employees also take part in mandatory compliance training, which is conducted as classroom or e-learning training. Initial training is usually provided as online training (see separate non-financial Group report/CSR report on page 31).
SGL Carbon launched a comprehensive global antitrust compliance program back in 2001. A fundamental component of this program is mandatory training courses held on a regular basis, with the courses offered in the form of classroom as well as e-learning training. The target group for this mandatory training is all senior executives at the top three management levels in the Group, along with all employees in the areas of Purchasing, Sales and Marketing, employees in Human Resources and the Legal and Compliance department, and members of the Compliance Network. All new employees in this target group receive the SGL Carbon Guideline on Compliance with Antitrust Regulations with their hiring documents or when they change functions, and they then need to participate in the mandatory online basic training. In 2021, a new online basic antitrust training was created to replace the previous training. Refresher training is regularly provided to all employees in the target group in both classroom and online formats.
Preventive measures in the area of anti-corruption are also an essential part of the Compliance program (see separate non-financial Group report/CSR report "Anti-corruption and bribery," page 31).
In 2015, SGL Carbon rolled out a Code of Conduct for suppliers and subcontractors (the Supplier Code of Conduct), according to which they must commit themselves to lawful, ethical and sustainable behavior (see separate non-financial Group report/CSR report "Responsibility in the Supply Chain," page 32). Over the past fiscal year, the Guideline on Conflict Minerals was revised.
SGL Carbon strives to create an environment in which all concerns relating to Compliance can be openly discussed. All employees are encouraged to raise all integrity issues and questions with their supervisors, the Compliance department or a member of the Compliance Network. In addition to the existing communication and reporting channels, SGL Carbon has a whistleblower system in the form of the "Compliance Helpdesk." This system makes it possible for employees to confidentially report information on potential compliance violations in accordance with the Whistleblower Guideline. The Whistleblower Guideline also regulates mandatory protection of the reporting person. Third parties can also contact whistleblower system by email via the SGL Carbon homepage.
Group Compliance reviews reported Compliance-relevant incidents as in the context of an internal Compliance investigation. The department's task is to ensure that misconduct and violations are prevented and identified in due time, that Company activities comply with applicable law and statutory provisions, and that potential for improvement with regard to internal business activities is identified.
In the reporting period, SGL Carbon recorded all indications of potential violations in regard to antitrust law, anti-corruption law, export controls and customs, protection of trade secrets, anti-fraud law and human rights law (such as discrimination and harassment) that could result in financial or reputational damage. All such indications were processed so that specific measures could be derived and implemented where necessary. SGL Carbon is convinced that the compliance management components and monitoring processes described are suitable for creating the best possible basis for ensuring that future conduct will be in compliance with the law in all areas of the SGL Carbon Group.
Additional compliance measures relate to capital market law and adherence to the corresponding Group guideline, which provides guidance on matters such as trading in securities of SGL Carbon SE for board members and employees as well as proper handling of potential insider information. The Ad Hoc Committee has been in place for years, with members who represent various functions in the evaluation of relevant matters for their ad hoc relevance. The objective of the committee is to ensure that potential insider information is handled in compliance with the law.
The existing Compliance program on export controls and customs ensures that goods and technologies are exchanged and that services are used according to the relevant internal and external requirements (see separate non-financial Group report/CSR report "Responsibility in the supply chain," page 32).
SGL Carbon Annual Report 2021
Corporate Governance Declaration, Corporate Governance and Compliance Report (unaudited)
Within the scope of its regular audits in 2021, the Group Internal Audit department again reviewed the implementation of anti-corruption and anti-fraud management at individual subsidiaries. The focus here was on obtaining audit certainty as to whether the defined Compliance rules are being adhered to locally at the companies. The task also involved recognizing and uncovering individual rule violations. If the audits find that work processes need to be optimized or control measures need to be intensified, the relevant processes are updated.
An effective compliance management system includes regular risk assessments, which were carried out in 2021 on a top-down basis with all members of the management committees of the business units by way of structured risk assessment interviews (see separate non-financial Group report/CSR report on "Governance," page 30).
At its March meeting, the Audit Committee of the Supervisory Board dealt in detail with the Compliance Annual Report 2020.
Systematic risk management system
The SGL Carbon Group developed a risk management system at an early stage to address risks and opportunities in a responsible manner as part of good corporate governance. Further explanations in regard to the risk management system, is available in the opportunities and risks report on pages 73-79.
Disclosures in accordance with the Act on Equal Participation of Men and Women in Executive Positions and disclosures on minimum percentages on the Supervisory Board
In accordance with the German Act on Equal Participation of Men and Women in Executive Positions in the Public and Private Sectors, the company has set targets for the percentage of women on the Board of Management and subsequent management levels and their implementation period. In December 2019, the Supervisory Board set a target of 0% for the percentage of women on the Board of Management of SGL Carbon SE by December 31, 2022, particularly in view of the size of the Board of Management with only two members (percentage of women at the time of the resolution: 0%). The percentage of female members on the company's Board of Management as of December 31, 2021, was 0%, which was in line with the target figure. The Board of Management has in turn resolved a target for the percentage of women at the management level of SGL Carbon SE below the Board of Management of at least 20.83% by December 31, 2022 (percentage of women at the time of the resolution: 20.83%). As of December 31, 2021, the percentage of women at this management level was 29.41% (5 women). It was not possible to set a quota for women for a second management level below the Board of Management at the company. This is due to the fact that there is only one relevant management level (with relevant personnel and management expertise) below the Board of Management at SGL Carbon SE, which is purely a Group parent company with a flat hierarchical structure.
In addition, the Act on Equal Participation of Men and Women in Executive Positions requires that the Supervisory Board of SGL Carbon SE include at least 30% women and at least 30% men. The company fulfills these requirements with regard to the composition of the Supervisory Board, which had three female members (37.5%) and five male members (62.5%) in the reporting year.
Diversity concepts for company management
According to the company's Corporate Governance Principles, diversity must be taken into account in the composition of the Board of Management. This first refers to professional diversity, which is manifested in the existing structure of the company in that at least one of the members of the Board of Management has extensive experience in the operating business of the Company, in strategic governance, and in the financial, controlling and reporting processes. Another crucial factor is that SGL Carbon's international nature is also reflected in its extensive professional experience in and with foreign countries. With regard to gender distribution, in view of the size of the company's Board of Management, which regularly consists of just two members, a far-reaching quota was neither deemed appropriate nor defined (see "Disclosures in accordance with the Act on Equal Participation of Men and Women in Executive Positions and Disclosures on minimum percentages on the Supervisory Board" above). With regard to the age structure, we intend for the limit for Board of Management members to be 65 years (age limit). When appointing new members, the Supervisory Board takes its bearings from this requirements profile, ensuring that the best candidate for a vacant position can be appointed in each case in the interest of the company. The current composition of the Board of Management meets the company's targets for appropriate appointments.
The Company is looking to develop suitable candidates from within the ranks of the Group in order to fill any Board of Management vacancies that arise. This does not preclude the Supervisory Board from drawing on external candidates exclusively or additionally in the selection process, depending on the specific situation. To identify and develop employees with appropriate leadership potential in order to fill top management roles, the company has a systematic approach to management development that includes the following key elements: (i) early identification of suitable candidates from a variety of different disciplines, nationalities and genders; (ii) systematic development of senior executives through the assignment of tasks with increasing responsibility, preferably in a variety of different
businesses and functions; (iii) regular and systematic review of individual suitability requirements for the target levels under consideration (relevant skill sets, professional experience and role-model function in terms of corporate culture). Using the skill set profile developed by the Supervisory Board as a benchmark, the company will identify candidates who may be included in the Supervisory Board's selection process. This is intended to make it possible for the Supervisory Board to ensure sufficient diversity in terms of professional training and experience, cultural background and diversity in the appointment of members to the Board of Management. Regardless of these criteria, the company is convinced that in the final analysis, only a holistic assessment of each individual can be the decisive factor for appointment to the Board of Management. When external candidates are involved, the company will regularly make an appropriate selection on the basis of the skill sets required for the Board of Management position by drawing on the assistance of qualified personnel consulting firms.
With regard to its own composition, the Supervisory Board of the company has defined a skill set profile and set detailed targets for itself in order to reflect various perspectives and backgrounds of experience on the Supervisory Board. The details of this diversity concept are described in this report above under "The composition and procedures of the Supervisory Board and its committees/Targets of the Supervisory Board regarding its composition." These targets are taken into account when new Supervisory Board members are proposed for appointment. In the current composition of the Supervisory Board, a Supervisory Board composition that is appropriate according to the above-mentioned targets is achieved.
Additional disclosures
Shareholders and the Annual General Meeting
The shareholders of SGL Carbon SE exercise their rights at the company's Annual General Meeting. At the Annual General Meeting, the shareholder representatives elect the Supervisory Board in particular, while also electing the auditor and passing the resolution on discharge of the Board of Management and the Supervisory Board. They also decide on the appropriation of unappropriated profits, on capital measures and on the approval of affiliation agreements, as well as on the remuneration of the Supervisory Board and on amendments to the company's Articles of Association. The Annual General Meeting is convened once per year. Each share is granted one vote. Shareholders may regularly exercise their voting rights at the Annual General Meeting either in person or through a proxy of their choice or through a company-nominated proxy acting on their behalf. In accordance with the rules, voting instructions may be issued to the company's proxy both before and during the Annual General Meeting until the end of general debate. Shareholders also have the opportunity to cast their votes in writing by postal vote without authorizing a proxy.
Active and transparent communication for the shareholders of SGL Carbon SE
The primary objective of the Board of Management is to comprehensively report to all target groups and in particular to the shareholders while providing the same information at the same time to all of these parties. Regularly recurring events (such as the Annual General Meeting, [telephone] conferences with analysts and investors) and reports or announcements (such as the Annual Report, interim reports, presentations at the Annual General Meeting, press releases and ad hoc announcements) are published on the company's website.
Remuneration system and remuneration report as per Section 162 of the German Stock Corporation Act (AktG)
The remuneration report on the most recent fiscal year as well as the auditor's report as per Section 162 AktG, the applicable remuneration system for the Board of Management and the Supervisory Board as per Section 87a (1 and 2) (1) AktG and Section 113 AktG, and the respective remuneration resolutions are made publicly available on the company's website at www.sglcarbon.com (available there under "Company/Corporate Governance"; www.sglcarbon.com/unternehmen/corporate-governance).
Disclosures on the auditor
The Frankfurt branch of KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, has been the auditor for SGL Carbon SE and the SGL Carbon SE Group since the 2017 fiscal year (January 1, 2017, to December 31, 2017). Mr. Janz has been signing as the responsible auditor since the 2017 fiscal year. The appointment was preceded by a tender and selection process for the audit as per Art. 16 (3) of Regulation (EU) No. 537/2014 of the European Parliament and of the Council of April 16, 2014 (Audit Regulation).
Information on auditor's fees can be found in the Annual Report on page 163.
Based on the recommendation of its Audit Committee, the Supervisory Board will propose to the Annual General Meeting 2022 to appoint KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, as auditors of the company and the Group for the 2022 fiscal year (and also for audit services required for any review of financial information during the year).
Deductible for D&O insurance
The company has taken out a directors' and officers' liability insurance (D&O insurance) policy for members of the Board of Management and Supervisory Board with a deductible of 10% of the loss up to the amount of one and a half times the fixed annual remuneration of the member concerned.
Share transactions by the Board of Management and Supervisory Board
SGL Carbon Annual Report 2021
Corporate Governance Declaration, Corporate Governance and Compliance Report (unaudited)
The members of the Board of Management and the Supervisory Board, as well as persons closely related to them, are required by the relevant capital market regulations to disclose proprietary transactions involving shares, debt instruments or certain other related financial instruments of SGL Carbon SE if the total value of these transactions exceeds a threshold value within a calendar year. Notifications are published on the company's website (www.sglcarbon.com, under "Company/Investor Relations/Share/Managers' Transactions").
SGL Carbon SE
The Board of Management of SGL
Carbon SE
Dr. Torsten Derr
Thomas Dippold
Wiesbaden, March 23, 2022