Audi 2015 Annual Report Download - page 203

CORPORATE GOVERNANCE REPORT
CORPORATE GOVERNANCE
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In number 5.4.2, sentence 3, the Code recommends that no
more than two former members of the Board of Management
shall be members of the Supervisory Board. The Board of
Management and the Supervisory Board believe that, given the
current majorities in the Supervisory Board, having a larger
number of former members of the Board of Management on
the Supervisory Board would not result in the Board of
Management being improperly advised or supervised by the
Supervisory Board. Moreover, restricting access of former
members of the Board of Management to the Supervisory
Board purely based on numbers could lead to a loss of valuable
expertise. For those reasons, an exception is being declared.
Nonetheless, the Supervisory Board, in making election rec-
ommendations, will always be vigilant to ensure that the
number of former members of the Board of Management in
the Supervisory Board does not have any adverse effect on
the independent advice to and supervision of the Board of
Management.
The Board of Management and the Supervisory Board believe
that the current remuneration arrangements for Supervisory
Board members set forth in Section 16 of the Articles of Incorpo-
ration and Bylaws of AUDI AG provide for a performance-related
component that is also oriented toward sustainable growth of
the company. In view of the vagueness of the recommendation in
number 5.4.6, para. 2, sentence 2 of the Code, and considering
that the scope of a performance-related compensation compo-
nent aimed at a sustainable growth of the enterprise has not yet
been clarified, the Board of Management and the Supervisory
Board declare this exception merely as a precaution.
AUDI AG has complied with the recommendations of the
“Government Commission on the German Corporate Governance
Code“ as amended on May 5, 2015, and published by the
Federal Justice Ministry in the official part of the Bundesanzeiger
(Federal Gazette) on June 12, 2015, during the period since the
entry into force of the amended Code on June 12, 2015, with
the following exceptions:
>4.2.3, para. 2, sentence 6 (caps for the overall compensation
of members of the Board of Management and for the varia-
ble compensation components);
>5.1.2, para. 2, sentence 3, 5.4.1, para. 2, sentence 1 (age
limit for members of the Board of Management and of the
Supervisory Board, and regular limit in the length of time a
person can serve on the Supervisory Board);
>5.3.2, sentence 3 (independence of the Audit Committee
Chairman);
>5.3.3 (nominating committee);
>5.4.1, para. 5 (disclosures in making election recommenda-
tions);
>5.4.6, para. 2, sentence 2 (performance-related compensa-
tion of the Supervisory Board).
The reasons for the declared exceptions have already been
explained above. The exception from the recommendation to
limit the length of time a person can serve on the Supervisory
Board is declared for the first time. The ability to supervise the
Board of Management or the Supervisory Board in their man-
agement activities as required is not lost upon reaching a
certain length of service.
The response to the suggestions made in the Code is as follows:
AUDI AG fulfills all of the suggestions made in the Code.
/STOCK OPTION PLANS AND SIMILAR
SECURITIES-BASED INCENTIVE ARRANGEMENTS
AUDI AG does not offer any such plans or incentive arrange-
ments.
/DECLARATION RELATING TO THE CODE
ON THE INTERNET
The current joint declaration of the Board of Management and
the Supervisory Board of AUDI AG on the recommendations of
the German Corporate Governance Code has been available
on the Audi website www.audi.com/cgk-declaration since
December 3, 2015.
/GOALS FOR THE COMPOSITION OF THE
SUPERVISORY BOARD
Taking into account the specific situation of the Company, our
international activities and potential conflicts of interest, the
goal of the Supervisory Board uses the following two points of
reference with regard to its composition: Two seats on the
Supervisory Board are to be filled by persons who fulfill the
criteria of internationality to a particular extent. In addition,
one shareholder seat on the Supervisory Board is to be filled by
a person who is independent and 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.