Audi 2010 Annual Report Download - page 246

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Code amended in 2010
On July 2, 2010, the Federal Ministry of Justice announced a new version of the German Corporate
Governance Code dated on May 26, 2010. The Board of Management and Supervisory Board of
AUDI AG discussed the amendments at length during the past fiscal year and passed the appro-
priate resolutions.
Implementation of the recommendations and suggestions
The recommendations of the Code in the version of June 18, 2009 were generally adhered to
during the period until the announcement of the new version on July 2, 2010. However, the
Supervisory Board did not form a nominating committee (Section 5.3.3 of the Code) and the
elections to the Supervisory Board were not held as elections of individuals (Section 5.4.3,
Sentence 1 of the Code). Since November 23, 2009 a cap on severance payments has been
agreed when entering into new contracts with members of the Board of Management, in
compliance with Section 4.2.3 of the Code.
Contracts that were signed prior to this date remain unaffected by the new rules due to the pro-
tection of vested rights. With effect from January 1, 2010 the D&O insurance arrangements have
made provision for an excess in accordance with the recommendation set out in Section 3.8 of
the Code, ensuring compliance with this recommendation. The new remuneration system adopted
for members of the Board of Management with effect from February 22, 2010, as approved by
the Annual General Meeting on May 20, 2010 in accordance with Section 120, Para. 4 of the
German Stock Corporation Act (AktG), also ensures compliance with the recommendations of
Section 4.2.3 of the Code (challenging, appropriate comparison parameters for variable remu-
neration and no subsequent change of performance targets or of comparison parameters).
Since the announcement of the new version dated July 2, 2010, the recommendations in the
Code have been met with the following exceptions:
The Supervisory Board has not formed a nominating committee (Section 5.3.3 of the Code). In
the opinion of the Board, such a committee would merely increase the number of committees
without noticeably improving the work done by the Supervisory Board. 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 common practice in democratic elections. The recommendations
of Section 5.4.1 of the Code have been newly created. Following consultation, the Supervisory
Board has set out specific goals in relation to its composition, thereby meeting the recommen-
dations of Section 5.4.1 of the Code since November 29, 2010. In accordance with the Company’s
own specific situation, the Supervisory Board has named the following objectives for its compo-
sition, which are also to be taken into account in the proposals for election which it makes to the
Annual General Meeting:
– Two seats on the Supervisory Board are to be filled with persons who fulfill the criteria of
internationality to a particular extent.
– One seat on the Supervisory Board is to be filled with a person who has no business or personal
ties with AUDI AG or its Board of Management and performs no advisory or executive functions
at customers, suppliers, lenders or other business partners of the Audi Group.
– At least two non-executive directorships are to be held by women, at least one of whom is to
be a stockholder representative.
– An age limit for the members of the Supervisory Board was already specified in its rules of
procedure. According to these rules, normally only persons who have not yet reached the age
of 70 at the time of the election are to be proposed for election as members of the Supervisory
Board. The Supervisory Board has confirmed this age limit.
Corporate Governance