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- Annual General Meeting 2017
- Corporate Governance
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The current term of office of the members of the Supervisory Board ends with the closure of the Annual General Meeting in 2018. The shareholder representatives are elected individually at the election to the Supervisory Board at the Annual General Meeting. The Supervisory Board’s Nomination Committee prepares for the election of shareholder representatives by the Annual General Meeting. When proposing candidates to the Supervisory Board, it takes into account not only the requirements set out in the German Stock Corporation Act (AktG), the German Corporate Governance Code and the Supervisory Board’s procedural rules, but also the targets set by the Supervisory Board in terms of its composition, giving due consideration to the skills profile for the Board as a whole set out therein, including the targets for international expertise and impartiality, as well as requirements and targets relating to diversity and, in particular, to the inclusion of women in the Supervisory Board. New members are provided with comprehensive induction documents and information upon their appointment to the Supervisory Board. The members of the Supervisory Board and the Supervisory Board committees complete the training or professional development measures necessary for the performance of their duties on their own initiative. Also during their meetings and at specialist lectures conducted by internal and external experts that are organised specifically for the Supervisory Board, they take an in-depth look at issues that are of fundamental significance to the company. In 2017, these issues included, by way of example, the changes in legal requirements due to the German Act to Strengthen the Non-Financial Reporting of Companies in their Management Reports and Consolidated Management Reports (CSR Directive Implementation Act), as well as developments and their strategic impact on key markets in the Healthcare sector and in the electronic gases business.
The Supervisory Board appoints the Executive Board and monitors and advises the Executive Board in the running of its business operations. Executive Board decisions that are of fundamental importance to the Group require the approval of the Supervisory Board. The Supervisory Board regularly meets to discuss Executive Board and Supervisory Board matters without the Executive Board.
The Chairman of the Supervisory Board coordinates the work of the plenary Supervisory Board and chairs its meetings. He is responsible for ensuring that resolutions passed by the Supervisory Board and its committees are duly executed and he is authorised to issue the statements on behalf of the Supervisory Board required to implement the resolutions of the Supervisory Board and its committees. He is prepared to talk to investors, to an appropriate extent, about Supervisory Board-specific topics. The Chairman of the Supervisory Board maintains close contact with the Executive Board and the Chairman of the Executive Board in particular throughout the year, sharing information and ideas.
In its procedural rules, the Supervisory Board has set out regulations governing regular reviews to determine the efficiency of its activities. In accordance with the procedural rules, the last review was conducted at the end of 2015. Based on the outcome of this efficiency review, suggestions regarding, in particular, future personnel changes and additional topics to be addressed by the Supervisory Board were implemented on an ongoing basis as of 2016.
All Supervisory Board members must ensure that they have sufficient time to perform those duties. When submitting proposals to the Annual General Meeting regarding the election of new Supervisory Board members, the Supervisory Board checks that the candidates are able to invest the time likely to be required.
At present, one member of the Supervisory Board, Dr Thomas Enders, is a member of the executive board of a listed company. Dr Thomas Enders currently has another mandate outside of the Group. This means that he complies with the limits on Supervisory Board mandates set out in the German Corporate Governance Code. Information about the members of the Supervisory Board and their memberships of other legally prescribed German supervisory boards and/or comparable German or foreign boards of business entities is given here. The CVs of Supervisory Board members are available here. These also include an overview of the main activities in addition to the Supervisory Board mandate at the company.
Skills profile, targets of the Supervisory Board regarding its composition and diversity concept for the Board as a whole
The composition of the Supervisory Board is to be balanced to ensure that its members collectively possess the knowledge, skills and professional experience necessary to enable them to discharge their duties in a group with global operations in a fit and proper manner. All in all, the Supervisory Board should have the skills that are deemed important given the global activities of The Linde Group as a capital market-oriented gases and engineering company. The Supervisory Board should also, in particular, include individuals with leadership experience in a major industrial company with international operations. In addition, the Supervisory Board should have knowledge and experience relating to Linde’s key business areas. All of the members of the Supervisory Board should be familiar with the sector in which the company operates. The Supervisory Board should have sufficient international experience. The Chairman of the Audit Committee should be impartial and have particular knowledge and experience in the application of accounting principles and internal control procedures. One member of the Audit Committee must always be impartial and have specialist expertise in accounting or auditing. The Supervisory Board has defined the following specific targets for its composition in accordance with clause 5.4.1 of the German Corporate Governance Code. These take into account the particular situation of the Group, the Group’s international reach, potential conflicts of interest, the number of independent Supervisory Board members, an age limit for Supervisory Board members, a regular limit on the length of membership of the Supervisory Board and the need for diversity.
With operations in more than 100 countries, The Linde Group has a global footprint. To reflect this, at least five of the Supervisory Board members should have extensive international expertise.
Potential conflicts of interest and independence
At least 75 percent of the Supervisory Board members should have no direct or indirect business, financial or personal ties with the company or its corporate bodies, a controlling shareholder or a company affiliated with the latter, that could constitute a significant and not just temporary conflict of interest or give rise to concerns regarding partiality. The mere existence of an employment relationship between employee representatives and the company or its affiliated companies does not preclude impartiality as described above. Supervisory Board members should not have management or advisory roles on the executive bodies of the main competitors of The Linde Group. No more than two former Executive Board members should sit on the Supervisory Board.
Age limit for Supervisory Board members
Supervisory Board members should be no older than 72.
Standard threshold for membership of the Supervisory Board
The Supervisory Board has set three terms of office as the maximum period of membership of the Supervisory Board. This maximum threshold is to be adhered to as a general rule.
The Supervisory Board is committed to diversity in its composition and to the fair representation of women in particular. As Linde Aktiengesellschaft is a listed stock corporation that is subject to the provisions of the German Co-Determination Act (MitbestG), the Supervisory Board comprises at least 30 percent female members and at least 30 percent male members in line with the principles set out in § 96 (2) of the German Stock Corporation Act (AktG).
Status of implementation of the targets, skills profile and diversity concept
The current composition of the Supervisory Board matches the above-stated objectives. The Supervisory Board matches the skills profile and the areas of expertise covered by its membership include engineering, law and economics, as well as finance, accounting and financial control. All of the members of the Supervisory Board are familiar with the sector in which the company operates.
Thanks to professional experience gained during their careers to date, all of the current Supervisory Board members have special international expertise. No conflicts of interest arose for any member of the Supervisory Board during the 2017 financial year. Where such conflicts of interest do occur, they must be disclosed immediately to the Supervisory Board. No Supervisory Board members currently have management or advisory roles on the executive bodies of any of Linde’s major competitors. Four Supervisory Board members, Anke Couturier, Gernot Hahl, Andrea Ries and Frank Sonntag, are company employees. No other consultancy, service or work contracts have been concluded between Supervisory Board members and the company. One Supervisory Board member, Professor Dr Wolfgang Reitzle, is a former member of the company’s Executive Board. When he was elected by the 2016 Annual General Meeting, the two-year cooling-off period required for Executive Board members of a listed company in accordance with § 100 (2) No. 4 of the German Stock Corporation Act (AktG) was taken into account. No member of the Supervisory Board reached the age limit. The Supervisory Board currently has three members in the over-40 age category, five members in the over-50 category and four members in the over-60 category. One of the Supervisory Board members elected by the employees, Gernot Hahl, has been a member of the Supervisory Board since 1998. Otherwise, no Supervisory Board members exceed the standard threshold for membership of the Supervisory Board adopted in 2016. Due to the resignation of the Supervisory Board member Hans-Dieter Katte on 31 December 2017, the proportion of women on the Supervisory Board has increased to 33 percent. The minimum gender distribution levels set out in § 96 (2) sentence 1 AktG have been met. The Supervisory Board currently includes a total of four women, Professor Dr Ann-Kristin Achleitner and Dr Victoria Ossadnik on the shareholder representative side, and Anke Couturier and Andrea Ries on the employee representative side. This means that women account for 33 percent of the Supervisory Board on both the shareholder and the employee representative side. Professor Dr Ann-Kristin Achleitner is a member of the Nomination Committee and Audit Committee. The Chairman of the Audit Committee, Professor Dr Clemens Börsig, is impartial and, like Professor Dr Ann-Kristin Achleitner, has specialist knowledge and many years experience of financial reporting and the application of accounting principles and internal control systems.
The procedural rules of the Supervisory Board include rules regarding the independence of its members. No member of the Supervisory Board is in a personal or commercial relationship with the company or its bodies that could represent a conflict of interests. Dr Thomas Enders and Dr Victoria Ossadnik currently hold leadership functions at companies with which Linde has business relationships. Transactions with these companies take place under the same conditions as for non-related third parties. The values of all ongoing transactions with these companies in the 2017 financial year corresponded to less than 0.1 percent of Linde’s Group revenue in the 2017 financial year and, in each case, to less than 0.1 of the consolidated revenue of the companies in question. In the opinion of the Supervisory Board, the impartiality of Dr Thomas Enders and Dr Victoria Ossadnik is not affected by these transactions. Linde AG has no controlling shareholder whose relationship with a member of the Supervisory Board could jeopardise that member’s independence. Consequently, the Supervisory Board is composed exclusively of individuals with a sufficient level of independence.
Supervisory Board committees
The Supervisory Board has four committees, which lay the groundwork for the plenary Supervisory Board. The committees prepare the work of the plenary Supervisory Board. If it is permitted by law and laid down in the procedural rules of the Supervisory Board, decision-making powers may in individual cases be delegated by the Supervisory Board to these committees. The Chairman of the Supervisory Board chairs all the committees with the exception of the Audit Committee. The committee chairmen report back to the Supervisory Board on the work of their committees, doing so at the first plenary Supervisory Board meeting following the committee meeting.
The Standing Committee, which comprises three shareholder representatives and two employee representatives, advises the Supervisory Board in particular on the appointment and removal of members of the Executive Board and on decisions regarding the remuneration system for the Executive Board, including the terms and conditions of employment contracts, pension contracts and any other contracts pertinent to the remuneration of Executive Board members, and the total remuneration of individual Executive Board members. Moreover, the Standing Committee is responsible for approving transactions with Executive Board members and related parties, as well as for approving other activities of the Executive Board members, especially the holding of positions on supervisory boards and comparable boards of business entities that are not part of The Linde Group. It also provides advice on long-term succession planning for the Executive Board and reviews the efficiency of the work of the Supervisory Board on a regular basis.
The Audit Committee similarly comprises three shareholder representatives and two employee representatives. It monitors the impartiality of the auditors and looks at the additional services they provide, the awarding of the audit mandate, the definition of audit focal points and the fee agreement. The Audit Committee lays the groundwork for the decisions of the Supervisory Board regarding the adoption of the annual financial statements and the approval of the Group financial statements, taking account of the auditors’ reports, and makes arrangements with the auditors. It supports the Supervisory Board in the execution of its supervisory duties and monitors, in particular, the accounting process and the effectiveness of the internal control system, risk management system and internal audit system, as well as the statutory audit. It also deals with compliance issues. The Executive Board also discusses the interim and half-year financial reports with the Audit Committee prior to publication. The Audit Committee also submits a substantiated recommendation to the plenary Supervisory Board regarding the proposal for the election of the company’s auditors.
The Nomination Committee comprises the Chairman of the Supervisory Board, the Second Deputy Chairman of the Supervisory Board and one other shareholder representative. It makes recommendations to the Supervisory Board on proposed candidates for the election of shareholder representatives at the Annual General Meeting.
The Mediation Committee, formed under the provisions of the German Co-Determination Act (MitbestG), comprises the Chairman of the Supervisory Board, the Deputy Chairman of the Supervisory Board (elected by the employee representatives on the Supervisory Board), one shareholder representative and one employee representative. It makes suggestions to the Supervisory Board regarding the appointment of Executive Board members if the required majority of two-thirds of the votes cast by Supervisory Board members is not obtained in the first ballot.
The Supervisory Board and its committees pass resolutions at meetings which are convened on a regular basis.
The names of those sitting on the Supervisory Board and on the Supervisory Board committees when the annual financial statements were being prepared are given here. Information about the activities of the Supervisory Board and its committees, about the work it has done with the Executive Board, as well as a disclosure regarding participation in meetings by the individual Supervisory Board members in the 2017 financial year is provided in the Report of the Supervisory Board.