Porsche 2006 Annual Report Download - page 29

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For the period until July 20, 2007 the declaration
below refers to the version of the Code amended
June 12, 2006 and for the period since July 21, 2007
to the version of the Code amended June 14, 2007.
Declaration of Conformity by Porsche AG
The Executive Board and Supervisory Board of
Dr. Ing. h.c. F. Porsche AG declare in accordance with
§161 German Stock Corporation Act (AktG) that the com-
pany has essentially complied and does comply with
the recommendations of the Government Commission
of the German Corporate Governance Code announced
by the Federal Ministry of Justice in the official part of
the electronic Federal Gazette. However, it has not and
does not comply with the following recommendations,
primarily as a result of company-specific factors.
“If the company takes out a D&O (directors and
officers’ liability insurance) policy for the executive
board and supervisory board, a suitable deductible
should be agreed.” (No. 3.8 German Corporate
Governance Code).
This recommendation is not complied with. Porsche
insures the D&O risk under its general asset and
liability insurance and does not include a specific
deductible in the total premium payable. A large
deductible, which would have to be a standard sum
in order to comply with the principle of equality,
would have widely differing consequences for
members of the Executive and Supervisory Boards
depending on their individual circumstances in
respect of private income and assets. In the worst
case, a less wealthy member of the Supervisory
Board might find himself/herself in serious financial
difficulties which, in view of the fact that all members
have the same duties and obligations, is not fair.
“The supervisory board should establish an audit
committee which, in particular, deals with issues of
accounting and risk management and compliance,
the necessary independence required of the auditor,
issue the audit mandate to the auditor, determi-
nation of audit priorities and agreed fee. The chair
of the audit committee should possess specific
knowledge of and experience with the application
of accounting principles and internal auditing pro-
cedures.” (No. 5.3.2 German Corporate Governance
Code).
“The supervisory board is required to form a nomi-
nation committee composed exclusively of share-
holder representatives and which proposes to the
supervisory board suitable candidates for its elec-
tion nominations to the annual general meeting.”
(No. 5.3.3 German Corporate Governance Code).
Porsche has a highly quality and dedicated Super-
visory Board with just twelve members. It has always
been characteristic Porsche practice that the entire
Supervisory Board should be given very detailed
information, especially on strategy issues, accounting
and risk management, and should hold in-depth dis-
cussions on the financial statements with the auditor.
The Supervisory Board also deals in depth with the
resolutions proposed to the annual general meeting
including election nominations for Supervisory Board
members. Neither an audit committee nor a nomi-
nation committee would therefore concur with the
way the Supervisory Board works nor improve it.
“Beyond the statutory obligation to report and dis-
close dealings in shares of the company without
delay, the ownership of shares in the company or
related financial instruments by executive board