Audi 2014 Annual Report Download - page 204

CORPORATE GOVERNANCE REPORT
CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE
/ GERMAN CORPORATE GOVERNANCE CODE IN 2014
On September 30, 2014, the Federal Ministry of Justice an-
nounced a new version of the German Corporate Governance
Code dated June 24, 2014 in the official section of the German
Federal Gazette. The Board of Management and Supervisory
Board of AUDI AG also discussed at length the recommenda-
tions and suggestions in the Code during the past fiscal year
and passed the appropriate resolutions.
/ IMPLEMENTATION OF THE RECOMMENDATIONS
AND SUGGESTIONS
The recommendations of the Code in the version dated May 13,
2013 and the identically worded recommendations in the ver-
sion dated June 24, 2014 were and continue to be largely ad-
hered to. The Supervisory Board and Board of Management
declared deviations to Sections 4.2.3, Para. 2, Sentence 6 of the
Code (caps on overall remuneration of the Board of Manage-
ment and in respect of their variable remuneration compo-
nents), Section 5.1.2, Para. 2, Sentence 3 of the Code, 5.4.1,
Para. 2, Sentence 1 of the Code (age limit for Board of Man-
agement and Supervisory Board members), 5.3.2, Sentence 3
of the Code (independence of the Audit Committee Chairman),
Section 5.3.3 of the Code (nominating committee), Section 5.4.1,
Paras. 4 to 6 of the Code (disclosures in proposals for elections),
Section 5.4.2, Sentence 3 of the Code (no more than two for-
mer Board of Management members to sit on the Supervisory
Board) and Section 5.4.6, Para. 2, Sentence 2 of the Code
(performance bases for Supervisory Board remuneration).
The remuneration structure for the members of the Board of
Management does not involve any caps either overall or with
regard to its variable components (Section 4.2.3, Para. 2,
Sentence 6 of the Code). The Supervisory Board believes that
the recommended upper limits for the remuneration of the
Board of Management are, in principle, reasonable both overall
and with regard to the variable components, and will calculate
and apply them accordingly. A deviation is declared until such
time as the limits are in place.
There is no age limit applicable to members of the Compa-
ny’s corporate bodies (Section 5.1.2, Para. 2, Sentence 3 of
the Code; Section 5.4.1, Para. 2, Sentence 1 of the Code). The
ability to manage a company successfully or to monitor the
actions of the Board of Management in the capacity of a
Supervisory Board member in the requisite form does not
cease to exist upon reaching a certain age. Furthermore,
imposing an age limit could constitute a form of discrimina-
tion.
In accordance with one of the Code’s recommendations, the
Chairman of the Audit Committee should be independent
(Section 5.3.2, Sentence 3 of the Code). It is possible that the
fact that the Chairman of the Audit Committee sits on the
Board of Management of Volkswagen AG, Wolfsburg, and of
Porsche Automobil Holding SE, Stuttgart, could result in this
independence not being guaranteed. It is the view of the Board
of Management and Supervisory Board that these activities do
not represent a conflict of interest and do not impair the work
of the Chairman of the Audit Committee. Due to the lack of any
clear definition of the concept of independence within the Code,
this deviation is explained here for purely precautionary reasons.
The Supervisory Board has not formed a nominating commit-
tee (Section 5.3.3 of the Code). It is the Supervisory Board’s
view that such a committee would merely increase the number
of committees without having any tangible benefit with regard
to the Supervisory Board’s work.
In terms of the recommendations on the disclosure of certain
circumstances in relation to the nominations proposed by the
Supervisory Board to the Annual General Meeting (Section 5.4.1,
Paras. 4 to 6 of the Code), the requirements set out in the
Code are vague and not clearly defined. Any deviation is
therefore declared here purely as a precautionary measure,
although the Supervisory Board will strive to adhere to the
Code’s recommendation.
CORPORATE GOVERNANCE REPORT