METRO Group
Hizmet menüsü:
Metro TürkiyeSatış MarkalarıŞirketlerPressYatırımcı İlişkileriİş ve KariyerSorumlulukHizmet
ŞirketCorporate Governance Report 2007Pursuant to the recommendation of subsection 3.10 of the German Corporate Governance Code, the Management Board and Supervisory Board of METRO AG deliver the following report on corporate governance at METRO Group:
We attach great importance to good corporate governance standards. The Management Board and Supervisory Board of METRO AG are firmly committed to the principles of transparent, responsible corporate governance and supervision.
Content overview - Corporate Governance Report
Division of duties and areas of responsibility between the Management Board
and the Supervisory Board
Declaration of compliance with the German Corporate Governance Code
Suggestions of the German Corporate Governance Code
Transparency and service
The annual general meeting
Share ownership by management board and supervisory board members
Risk management: a core element of corporate governance at METRO Group
Compliance: Adherence to legal stipulations and standards of conduct
Accounts audit
Implementation and application of the principles of corporate governance
Remuneration report
Share-based compensation for executives
Compensation of Management Board members
Compensation of the members of the Supervisory Board
The key component of corporate governance for German corporations is the clear division between corporate governance on the one hand and corporate supervision on the other. Duties and areas of responsibility are clearly divided between the Management Board and the Supervisory Board. The standards actively practised within METRO Group augment the fundamental structure specified by German Stock Corporation Law.
The Management Board of METRO AG has four members who are responsible for the following areas:
|
Dr. Eckhard Cordes |
Investor Relations
|
|
Zygmunt Mierdorf |
Human Resources and Social Affairs
|
|
Frans W. H. Muller: |
CEO of Metro Cash & Carry International GmbH
|
|
Thomas Unger: |
Corporate Finance
|
The Management Board is responsible for running METRO AG and the Group. The establishment and development of effective organisational structures, planning and controlling systems are key components of its management duties. The Management Board also sets METRO Group’s strategic direction, coordinates this with the Supervisory Board and ensures its implementation.
Pursuant to the German Codetermination Act, the METRO AG Supervisory Board is composed of 10 shareholder and 10 employee representatives.
|
Shareholder representatives Franz M. Haniel, Chairman
|
Employee representatives Klaus Bruns, Vice Chairman
|
The Management Board regularly provides the Supervisory Board with timely and detailed information on all matters of fundamental importance for the company concerning planning, business development, risk management and compliance.
The Supervisory Board of METRO AG advises the Management Board and monitors its corporate management including in terms of achieving long-term corporate and group objectives. The Supervisory Board is brought into the planning of METRO Group’s development by the Management Board to the same degree that it is included in decisions about important measures. Supervisory Board approval provisions for certain issues are specified in the Management Board by-laws and the Supervisory Board by-laws.
Committees support the Supervisory Board in its work, contributing greatly to the overall board’s efficiency. Instead of the previous four committees, the Supervisory Board of METRO AG now has five committees. In the financial year 2007, a Nominations Committee was newly established, which assumed duties previously held by the shareholder representatives in the Personnel Committee.
The Supervisory Board’s report provides details about the working relationship between METRO AG’s Management Board and Supervisory Board in the financial year 2007.
When necessary, the Presidential Committee is called on to prepare Supervisory Board meetings. In addition, it addresses the following:
The review of corporate governance principles and their application was assigned to the duties of the Accounting and Audit Committee in March 2008.
The by-laws of the Supervisory Board of METRO AG call for the Chairman of the Supervisory Board to head the Presidential Committee.
The duties of the Personnel Committee (formerly Personnel and Nominations Committee) include personnel matters of the Management Board members, including succession planning, with these primarily focusing on:
METRO AG Supervisory Board by-laws also call for the Chairman of the Supervisory Board to chair the Personnel Committee.
The Accounting and Audit Committee supports the Supervisory Board particularly in matters pertaining to accounting, corporate governance, dependency controlling as well as audit, compliance and risk management. The committee’s key duties include:
The chairman of the Accounting and Audit Committee is elected by its members. He or she must be impartial and possess professional knowledge in the areas of accounting and auditing as well as internal control measures ("financial expert"). The chairmanship of the Accounting and Audit Committee should not be assigned to a former member of the Management Board. In the interest of good corporate governance, the chairman of the Supervisory Board should also not serve as chairman or vice chairman of the Accounting and Audit Committee at the same time.
The shareholder representatives on the Supervisory Board of METRO AG are elected at the Annual General Meeting. The Supervisory Board submits proposals for election with the support of the Nominations Committee. It regularly selects for suitable candidates and makes recommendations to the Supervisory Board.
The Nominations Committee is comprised exclusively of shareholder representatives. It consists of the Supervisory Board chairman as well as two impartial shareholder representatives. With this appointment policy, the Supervisory Board of METRO AG underscored its commitment in the financial year 2007 to take advice from a committee tied to the interests of all shareholders when determining suitable candidates for Supervisory Board membership.
The German Codetermination Act (1976) prescribes establishing a mediation committee. The Mediation Committee submits personnel proposals to the Supervisory Board when the two-thirds majority required for appointing and removing Management Board members has not been achieved.
METRO AG Management and Supervisory Boards made the following declaration of compliance at the end of the financial year 2007 pursuant to § 161 of the German Stock Corporation Act. This can be accessed by shareholders on the website at any time.
"The Management and Supervisory Boards of METRO AG declare that the recommendations of the Government Commission on the German Corporate Governance Code in its version of 14 June 2007 published by the Federal Ministry of Justice in the official part of the electronic Federal Bulletin are complied with.
Further, the Management and Supervisory Boards declare that the recommendations made by the Government Commission on the German Corporate Governance Code in its applicable version have been fully complied with since the last declaration of compliance of December 2006."
The 
The declaration of compliance issued by the METRO AG’s Management Board and Supervisory Board, in accordance with the law’s guidelines, is directed only to the recommendations of the German Corporate Governance Code. In addition to the recommendations, the code contains suggestions that a company can, but does not have to address.
METRO AG follows the vast majority of the German Corporate Governance Code suggestions. In the past financial year, there were only four points that were not implemented or not fully implemented:
This website, available in German and English, serves as an important information source for METRO AG shareholders, the capital market and the general public. Aside from a host of information on METRO Group operating units and sales divisions, the site contains METRO AG financial reports as well as ad hoc statements and other publications pursuant to the German Securities Trading Act, among other things. Dates for the most important regular publications (trading statements, annual reports as well as quarterly and half-year reports, the annual business press conference, analysts’ meeting and Annual General Meeting) appear on the website in a financial calendar at regular intervals in a timely fashion. In addition, shareholders and the interested reader can access documentation on the annual business press conference as well as the analysts’ meeting and can subscribe to an electronic investor relations newsletter.
METRO AG’s Annual General Meeting gives its shareholders the opportunity to use their legal rights, that is, to exercise their right to vote as well as to address questions to the company’s Management Board in particular.
To help shareholders exercise their individual rights at the
The registration and legitimisation procedure for METRO AG’s Annual General Meeting is in line with German Stock Corporation Law and international standards. Each shareholder who would like to participate in a METRO AG Annual General Meeting and exercise his or her voting right there must register and supply proof of the right to participate and exercise voting rights. Written proof of share ownership in German or English from the institution maintaining the securities deposit account satisfies this requirement. Deposit of shares is not necessary. Proof of share ownership corresponds to the beginning of the 21st day before each Annual General Meeting. Like the registration for the Annual General Meeting, it must be submitted to METRO AG at the address specified in the invitation no later than the seventh day before the Annual General Meeting. Concrete registration and participation conditions are made public in the invitation for each Annual General Meeting.
Shareholders who do not wish to or are unable to attend the Annual General Meeting in person, e.g. a bank or a shareholder association, may exercise their voting rights through a proxy. The necessary voting-right authorisation can be issued in all forms allowed under Stock Corporation Law, in any case, in writing or by fax. Shareholders can also authorise company-appointed proxies to exercise their voting rights (known as "proxy voting"). In addition to voting-right authorisations to such institutions as banks or shareholders’ associations, this service allows voting rights and instructions on how to exercise these voting rights at the Annual General Meeting to be passed to proxies appointed by METRO AG. This can be done in writing or by fax. METRO AG proxies are also available for assignment of voting rights during the Annual General Meeting for those shareholders who initially participate in an Annual General Meeting but who want to leave early without forgoing the exercise of their voting rights; naturally, the right to appoint other proxies to exercise one’s voting rights is not affected by this. The details on proxy voting are listed in the invitation to each Annual General Meeting.
In the interest of our shareholders, the chairman of the Annual General Meeting, as a rule the Chairman of the Supervisory Board, works to ensure that the Annual General Meeting is conducted efficiently and effectively. In line with the German Corporate Governance Code, the objective is to complete a standard METRO AG Annual General Meeting after four to six hours at the latest.
In line with the recommendations of the German Corporate Governance Code, ownership of METRO AG shares or related financial instruments by members of the Management or Supervisory Boards is disclosed when it directly or indirectly exceeds 1 percent of the shares issued by METRO AG. If the total share ownership of all members of the Management and Supervisory Boards exceeds 1 percent of the shares issued by the company, the total ownership is stated separately for the Management Board and the Supervisory Board. The threshold values of 1 percent were not reached in the financial year 2007.
METRO Group is a high-growth company to which an international market presents many opportunities. Sustainable growth, however, is possible only when those responsible recognise and adequately consider both the opportunities as well as the risks of entrepreneurial activities. This is why effective risk management is a key component of responsible corporate management at METRO Group.
The Management and Supervisory Boards of METRO AG regularly discuss the risk management system and its ongoing development.
The activities of METRO Group are subject to manifold laws, regulations and self-imposed standards of conduct. In the financial year 2007, the existing measures to comply with these regulations were combined and added to a Group-wide compliance programme. The goal of the compliance programme is to support all METRO Group employees in complying with relevant laws, regulations and standards of conduct. For this purpose, clearly defined measures were established. Their implementation is organised and coordinated by the compliance officers of METRO Group.
The compliance programme focuses on conflicts of interests, unlawful acceptance and awarding of benefits, appropriate handling of corporate information, antitrust laws and prohibitions, anti-discrimination and respect for fair terms and conditions of employment as well as compliance with applicable laws and adherence to METRO Group guidelines. Key elements of the compliance programme include information events, training measures and written business principles that serve as practical guidelines for handling concrete business cases. Besides the compliance officers, METRO Group employees can anonymously turn to an ombudsman in cases of doubt.
In line with the suggestions of the German Corporate Governance Code, continued development of the compliance organisation is also monitored by the Supervisory Board’s Accounting and Audit Committee.
At the Annual General Meeting of METRO AG on 23 May 2007, KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft (KPMG) was elected to be the auditor for the financial year 2007. The Supervisory Board’s commissioning of the contract to carry out the accounts audit was prepared by the Accounting and Audit Committee and considered the suggestions listed in subsection 7.2 of the German Corporate Governance Code.
Throughout the audit, KPMG made no reports to the Supervisory Board regarding grounds for disqualification or conflicts. There was also no evidence that any existed. Furthermore, in the course of the accounts audit, there were no unexpected, substantial findings and events concerning Supervisory Board functions. As a result, an extraordinary report from the auditor to the Supervisory Board was not required. The auditor found no deviations from the Management and Supervisory Boards’ statement of compliance with the German Corporate Governance Code.
METRO AG Management and Supervisory Boards discuss at least once a year – most recently during the Supervisory Board meeting in December 2007, the corporate governance practised within METRO Group. The starting point of these discussions is implementing the German Corporate Governance Code suggestions. In addition, a METRO AG corporate governance officer supervises the company’s corporate governance practices. No deviations from the German Corporate Governance Code suggestions were found for the financial year 2007.
Continuing to develop METRO AG corporate governance practice will also be a focal point of the Management and Supervisory Boards activity in the financial year 2008.
METRO AG has been implementing share-based remuneration programme since 1999. The membersof the Management Board and other executives of METRO AG as well as managing directors andexecutives of the operative METRO Group companies are eligible.
In the past, the executives of METRO AG and the cross-divisional service companies received options from a stock option programme. The executives of the sales divisions received so-called stock appreciation rights that result in a cash payment when exercised.
Participation in the stock option programme gave participants the right to acquire METRO AG ordinary shares at a previously determined basis price for a set period of time. The exercise terms and conditions of the stock options granted stipulated that the company may grant the qualifying beneficiaries cash compensation in lieu of the delivery of new ordinary shares, which is equal to the difference between the basis price and the applicable closing price of Metro shares at the time the options are exercised. This option was used by all beneficiaries of the programme with regard to all subscription rights issued.
The stock options and stock appreciation rights held in the Group during the financial year 2007 changed as follows:
The rights with a maturity of approximately one year could be exercised following the end of a three-year blocking period. The rights could be exercised only if the share price of METRO AG exceeded the basis price by at least 30 percent (exercise hurdle) during the last 20 consecutive trading days before the options were exercised after the end of the blocking period.
The terms of the tranches existing in 2007 are listed in the following table:
In the reporting year, 27,950 stock options and 87,780 stock appreciation rights were exercised from the 2003 tranche. The average strike price per right was €54.33. A total of 2,980 stock options and 800 stock appreciation rights are forfeited. The contractual residual maturity of the rights from the 2003 tranche ended on 18 July 2007.
In the financial year 2004, a five-year share bonus programme was introduced to replace the stock option programme. In contrast to the previous granting of subscription rights, this programme provides the entitlement to share bonuses. The size of the cash bonus depends on the performance of the Metro share price and the parallel consideration of benchmark indices.
The share bonus programme is divided into a tranche for each year, with the target parameters being calculated separately for each tranche. The maturity of each tranche is three years. The last tranche will be granted in 2008.
The size of the bonus initially depends on the ratio of opening price and share price.
The opening price of each tranche corresponds to the arithmetic mean of the closing prices of the METRO AG ordinary share in Xetra trading of Deutsche Börse AG on the 20 last consecutive trading days before the closing date (eight weeks after the respective Annual General Meeting).
The target price, upon which the full bonus is granted, is calculated based on the opening price and assumes a share price increase of 15 percent over the course of three years. A determination about whether the target price has been reached is made by means of the arithmetic mean of the closing prices of the company’s ordinary share in Xetra trading at Deutsche Börse AG on the last 20 consecutive trading days before expiration of the relevant three-year period. The bonus increases or decreases proportionately when the share price exceeds or falls below the 15 percent price target.
The size of the respective bonus also depends on the performance of the Metro share compared with relevant share indices. When the Metro share has outperformed these indices, the share bonus is raised to 120 percent. When it underperforms, it is reduced to 80 percent. Outperformance or underperformance applies when the average performance of the Metro share exceeds or lags the performance of the relevant share indices by more than 10 percent. Outperformance or underperformance is determined analogous to the determination of whether the target price has been reached.
The share bonus is principally granted only if the terms of employment within METRO Group have not been ended unilaterally or a contract termination has not been reached by mutual consent at the time of maturity. In addition, the payment of share bonuses can be limited to the gross amount of the annual fixed salary. Any potential excess amounts are used to raise the share bonus during the following three years if the latter is lower than the individually agreed gross annual fixed salary.
The conditions of the tranches granted to executives so far are shown in the following table:
The target bonus values are based on the condition that the target prices are attained. The value of the share bonus paid in 2007 was €28.14 million at the time of payment and was calculated by independent experts using recognised financial-mathematical methods (Monte Carlo simulation).
Compensation for members of the Management Board is a component of an integrated compensation system for executives of METRO Group. It creates performance incentives for the long-term growth of the company’s value, and contains both fixed and variable elements. Total remuneration and the individual compensation components are geared appropriately to the responsibilities of each individual board member, his personal performance, the performance of the entire board and the economic situation of METRO AG.
The performance-based compensation for members of the Management Board is determined mainly by the development of Economic Value Added (EVA) and can also include the achievement of individually determined targets.
Positive EVA is achieved when the net operating profit exceeds the cost of capital needed to finance the capital employed. NOPAT (Net Operating Profit after Taxes) is defined as operating profit before financing costs, but after income taxes. The cost of capital represents the compensation of the investors for the capital they provide and for their investment risk. It is calculated by multiplying the capital employed by the weighted average cost of capital (WACC). In the financial year 2007, the weighted average cost of capital of METRO Group remained unchanged from the previous year at 6.5 percent.
Delta EVA, the difference between current EVA and prior-year EVA, plays the key role in the evaluation of corporate success. The development of delta EVA is therefore also the key basis of the EVA-based remuneration system for members of the Management Board. The EVA compensation system is based on a comparison of delta EVA with defined targets that were set by the Supervisory Board’s Personnel Committee under consideration of capital market expectations of value creation. If a target is achieved, an agreed-upon target bonus is paid in full (bonus factor 1.0).
Balanced remuneration systems consider not only the short-term, but also the medium- and long-term development of enterprise value. This is why the annual bonus entitlements from the EVA-based remuneration system are combined with a medium-term bonus bank. Even if the calculated bonus for any one year exceeds the target, it is only paid in full up to the target bonus. Any bonus amount in excess of the target bonus is initially credited to the bonus bank. Irrespective of the payment of the target bonus, a fixed percentage of the bonus bank balance is paid out each year, with the remaining amount being carried forward. A negative bonus results in a reduction of the bonus bank balance. The negative bonus bank balance is capped at a value of –1.0. If a bonus factor of more than +2.0 is generated in one or both of the two financial years following the capping, the remuneration share resulting from the bonus factor in excess of +2.0 is offset against the capped balance of the bonus bank. The bonus bank thus serves to balance bonus payments and to promote sustainable management decisions favouring long-term value creation.
The Personnel Committee of METRO AG’s Supervisory Board sets the conditions for EVA-based Management Board remuneration, in particular the targets for the development of delta EVA, the target bonuses and the bonus bank system. The concept of value-oriented remuneration and the concrete EVA calculations were verified by the consultancy company Stern Stewart & Co. The Personnel Committee monitors the systematic application to Management Board remuneration.
A stock option programme forms another variable component of Management Board remuneration. It is tied to the development of the METRO AG share price and the sustained success of METRO Group, and measures up to ambitious relevant benchmarks. The actual receipt of compensation from this programme is linked to the fulfilment of all preconditions.
The stock option programme was introduced in the financial year 2004 as a result of a decision by the Presidential Committee and the Personnel Committee of the Supervisory Board of METRO AG formembers of the Management Board. It corresponds to the previously mentioned stock option programme for executives of METRO Group. The target bonuses for members of the Management Board are set each year by the Personnel Committee. The payment of the bonus can be limited by a committee decision.
The relevant individual amounts for the members of the Management Board are as follows 1:
1 The target bonuses for the share bonus tranches existing during the financial year amounted to: €330,000 each from the 2004, 2005, 2006 and 2007 tranches for Mr. Mierdorf and Mr. Unger, respectively; €330,000 each from the 2006 and 2007 tranches for Mr. Muller, and €400,000 each from the 2004, 2005, 2006 and 2007 tranches for Dr. Körber. The company’s pro rata expenses for share-based remuneration with maturities in the financial year 2007 or later can be shown as follows: €1,666,000 for Mr. Mierdorf; €469,000 for Mr. Muller; €1,666,000 for Mr. Unger and €2,044,000 for Dr. Körber (until 31 October 2007).
The amount of the performance-based remuneration for the financial year 2007 results from EVA-based compensation entitlements and thus from the company’s performance during the current financial year. As a result of the bonus bank system, full payout for active members of the Management Board depends on EVA factors and thus on the company’s performance in future years.
Share-bonus entitlements with long-term incentives that were granted in the financial year 2007 are posted at their fair value at the time of granting (see the diagram above).
Due to the granting of a monetary target bonus, a number of subscription rights in accordance with §§ 285 Sentence 1 No. 9a, 314 Section 1 No. 6a of the German Commercial Code cannot be released.
The payment of the bonuses depends on the previously described conditions of the stock option plan.
Other remuneration includes non-cash benefits from the provision of company cars and benefits related to guidelines for promoting international mobility among executives of METRO Group.
The members of the Management Board did not hold any rights from the stock option programme in the financial year 2007.
In the financial year 2007, a total €0.65 million was used for remuneration of active members of the Management Board of METRO AG for services after the end of their employment. The previously listed amount also covers allocations to reserves for payments following the end of the employment contract of Mr. Mierdorf. These commitments materially provide for a one-time capital amount to be granted when he leaves the company. This will be determined on the basis of the average compensation from the past two calendar years, consisting of salary and performance-based compensation. It will amount to at least the annual salary and performance-based compensation on the basis of a one times EVA bonus.
Furthermore, this provision concerns provisions for pension commitments that will be paid out when Mr. Mierdorf turns 60 or if he were to become permanently incapacitated or his employment contract were to be terminated prematurely or not renewed. In the latter two cases, other income will be deducted from the pension commitments. The pension commitment for Mr. Mierdorf is adjusted annually to cover the increased cost of living. The commitment was made before his appointment to the Management Board.
Should the employment contract be cancelled prematurely as a result of changes in control and strategy, Mr. Mierdorf will retain the entitlements arising from the employment contract even if he terminates the contract himself. No such agreements have been reached with employees.
Former members of the Management Boards of METRO AG and the companies that were merged into METRO AG as well as their surviving dependents received €22.9 million. The cash value of commitments for current pensions and pension entitlements made for this group totalled €48.4 million.
Remuneration of members of the METRO AG Supervisory Board is regulated by § 13 of METRO AG’s Articles of Association.
In addition to reimbursement of cash expenses, the members of the Supervisory Board of METRO AG receive a fixed payment and a performance-based payment. Fixed compensation amounts to €35,000 per board member. The performance-related remuneration component is based on earnings before taxes and minorities (EBT) in the METRO AG financial statements. Each member of the Supervisory Board receives €600 per €25 million in EBT exceeding an EBT (before regular goodwill amortisation) of €100 million for the average of the financial year 2007 and the two preceding financial years. The sales tax payable on the fixed and performance-based compensation is reimbursed to the members of the Supervisory Board in accordance with § 13 Section 5 of the METRO AG Articles of Association.
The individual size of fixed and performance-based Supervisory Board remuneration takes into account the duties and responsibilities of the individual Supervisory Board members by consideration of special assignments. The compensation of the Chairman of the Supervisory Board is three times higher than that of an ordinary member of the Supervisory Board; that of the Vice Chairman and the Chairmen of the Committees is twice as high; and that of the other members of the committees one and a half times higher, respectively. A Supervisory Board member who holds several offices receives compensation for only one office; in the case of different levels of remuneration for the most highly paid office.
The total compensation of all members of the Supervisory Board amounted to €1.8 million in the financial year 2007. The fixed and the performance-based component accounted for €0.9 million each. The performance-based compensation will be payable after METRO AG’s Annual General Meeting on 16 May 2008.
The following individual totals applied in the financial year 2007:
In the financial year 2007, the members of the Supervisory Board of METRO AG received €0.1 million in compensation from the Group companies for Supervisory Board mandates (and in one case for an Advisory Board mandate) at Group companies. The amounts listed in the following table apply to the individual members of the METRO AG Supervisory Board. Beyond this, the members of the Supervisory Board were not granted any remuneration or benefits for work performed, in particular consulting and brokerage services, on behalf of companies of METRO Group in the sense of Subsection 5.4.7 of the German Corporate Governance Code.
Other intragroup compensation
The above amounts do not include the remuneration entitlements of one Supervisory Board member from intragroup Supervisory Board mandates of which the Supervisory Board member waived the payment.
* References to the Internet, as contained in the corporate governance report, have been adapted accordingly in this text.
Almanya
Strategy
Declaration of Compliance
Report
Sayfayı yazdır