Audi 2007 Annual Report Download - page 137

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In 2007, the German Federal Ministry of Justice amended the German Corporate Governance
Code and promulgated the version dated June 14, 2007. The Board of Management and
Supervisory Board of AUDI AG discussed the amendments at length during the past fiscal
year and passed the appropriate resolutions.
The recommendations in the Code, as amended June 12, 2006, had been largely complied
with until the announcement of the new version on July 20, 2007.
Since this announcement, the recommendations in the Code, as amended June 14, 2007,
have been conformed to with three exceptions.
The Supervisory Board has not formed a nominating committee (Section 5.3.3 of the
Code). The tasks of the Supervisory Board’s Presiding Committee, which has four members,
include proposing suitable candidates to the Supervisory Board, which the latter can in turn
propose to the Annual General Meeting. The Company takes the view that an additional
nominating committee would not improve the work of the Supervisory Board. Furthermore,
the restriction applies that the elections to the Supervisory Board do not take the form of
elections of individuals (Section 5.4.3, Sentence 1, of the Code). Elections by list are com-
mon practice in democratic elections. AUDI AG does not disclose the remuneration of mem-
bers of the Supervisory Board individually, broken down by components (Section 5.4.7,
Para. 3, Sentence 1, of the Code), in order not to infringe on privacy rights.
In addition, five departures are made from the suggestions in the Code: The Annual Gen-
eral Meeting will not be broadcast on the Internet (Section 2.3.4 of the Code) in order not to
infringe on the privacy rights of individual stockholders. For this reason, the provision for
absent stockholders to even be able to contact the Company’s proxy exercising voting rights
(Section 2.3.3, Sentence 3, 2nd half of sentence of the Code) during the Annual General
Meeting is superfluous. Furthermore, the suggestion made by the Code to cap compensa-
tion paid to Board of Management members who leave office prematurely without cause
(Section 4.2.3, Sentences 9 and 10, of the Code) and following a change of control (Section
4.2.3, Sentence 11, of the Code) has not been implemented. There are doubts in professional
circles as to the validity of such contractual clauses, which restrict the Supervisory Board’s
scope of action without creating significant benefits under current law. The Code’s sugges-
tion of taking long-term performance into consideration in the remuneration paid to mem-
bers of the Supervisory Board (Section 5.4.7, Para. 2, Sentence 2, of the Code) and taking
non-recurring variable components linked to business success into consideration in the
remuneration paid to members of the Board of Management (Section 4.2.3, Para. 2, Sen-
tence 2, of the Code) is not currently being implemented by AUDI AG, as the discussions in
professional circles as to the specific form to be taken have not yet been concluded. The
outcome of these discussions will be awaited before a decision is made.
No reportable acquisition or sales transactions were conducted during the past fiscal year.
AUDI AG does not offer any such plans or incentive arrangements.
The basic principles of the remuneration system for the members of the Board of Manage-
ment are detailed in the Notes to this Annual Report, under “Details of the Supervisory
Board and Board of Management.” This information is also available on the Company’s web-
site (www.audi.com/notes).
The joint declaration of the Board of Management and the Supervisory Board of AUDI AG
relating to the recommendations of the German Corporate Governance Code was posted on
the Audi website (www.audi.com/cgk-declaration) on December 5, 2007.
Corporate Governance
Code amended in 2007
Implementation of the
recommendations and
suggestions
Particulars pursuant to
Section 6.6 of the Code
Stock option plans and
similar securities-based
incentive arrangements
System of remuneration
Declaration relating to the
Code on the Internet