Corporate Governance Report
Annual Corporate Governance Statement pursuant to section 289a of the Handelsgesetzbuch (HGB – German Commercial Code)
This Annual Corporate Governance Statement contains information about the main components of Deutsche Post DHL Group’s corporate governance structure. These include the Declaration of Conformity by the Board of Management and the Supervisory Board, relevant corporate governance practices that exceed legal requirements, the working methods of the Board of Management and the Supervisory Board, the composition and working methods of the committees, and the composition targets for the Supervisory Board.
In December 2014, the Board of Management and the Supervisory Board once again issued an unqualified Declaration of Conformity pursuant to section 161 of the AktG, which reads as follows:
“The Board of Management and the Supervisory Board of Deutsche Post AG declare that the recommendations of the Government Commission German Corporate Governance Code in the version dated 13 May 2013 / 24 June 2014 have been complied with since issuance of the Declaration of Conformity in December 2013 and that it is intended to comply with all recommendations of the Code in the version dated 24 June 2014 in the future.”
We also intend to implement the suggestions made in the Code, with one exception: the Annual General Meeting will only be broadcast on the internet up to the end of the Chief Executive Officer’s address.
Our guiding principle is “respect and results”: we expect our corporate governance to rise to the challenge of achieving first-class results every day whilst also considering the needs of our employees, customers and investors.
Accepting corporate responsibility is integral to our Group strategy. We put our knowledge and global presence to good use so as to make a positive contribution to the environment, society and our business. We systematically include our stakeholders’ expectations and needs in our strategic decisions, develop sustainable solutions for our customers and use our expertise in logistics to also address social issues. We concentrate these efforts on environmental protection, disaster management and improving educational and employment opportunities. We also support voluntary activities undertaken by our employees. Our annual Group-wide Employee Opinion Survey has again revealed high levels of continuing positive feedback. As in 2013, 77 % of our employees participated in the survey.
Furthermore, the annual private customer survey conducted by the Kundenmonitor Deutschland independent market study confirmed that customer satisfaction remains high at 95 %. We achieved excellent results in transit times for letters sent within Germany, thus exceeding the statutory requirement of 80 % for next-day letter deliveries by a wide margin. According to surveys conducted by the quality research institute Quotas, 94 % of the letters received during our daily opening hours and before final post box collections were delivered the next day.
Our Code of Conduct remained unchanged in 2014. It has been a firm part of our corporate culture since 2006 and is applicable to all regions and divisions and the basis of guidelines within the Group. The Code of Conduct and these guidelines, together with regional guidelines and procedures, provide the framework for ethical and environmentally sound corporate conduct. The guidelines serve as a clear point of reference for all employees, informing them of our values and principles. The guidelines are based upon the principles set out in the Universal Declaration of Human Rights, the United Nations (UN) Global Compact, the ILO Declaration on Fundamental Principles and Rights at Work of 1998 and the OECD Guidelines for multinational enterprises. The Code is available in 21 languages. Employees can attend webinars to learn about the Code.
The Code of Conduct also sets out our commitment to the health of our employees, respect for human rights, the rejection of child and forced labour, and our position on diversity and inclusion. The Corporate Diversity & Inclusion Statement issued in 2013 reflects our belief that diversity represents both a key factor for success and a distinct competitive advantage. In the Statement we also undertake to promote an inclusive working environment and express our opposition to all forms of discrimination. The Diversity Council began work in February 2014, meeting on three occasions during the year under review. The participants discussed the strategic direction of diversity and exchanged views on the divisions’ various requirements of diversity management.
The Supervisory Board supports the Group’s diversity strategy, placing particular emphasis on the target for increasing the number of women on the Board of Management. The Supervisory Board sees efforts to increase diversity as part of long-term succession planning, for which the Supervisory Board and Board of Management are jointly responsible. In the opinion of the Supervisory Board, the targeted increase in the number of women in executive positions is necessary to ensure that, overall, more suitable female candidates are available for vacant positions on the Board of Management. As at 31 December 2014 the proportion of women in management around the world remained almost stable at 19.3 % (previous year: 19.6 %). The international composition of the Board of Management already clearly reflects the company’s international activities.
In order to protect our employees from hazards and risks in the workplace, we have created a comprehensive regulatory framework that goes far beyond statutory occupational safety requirements and minimum standards. In addition, preventive measures were defined in the course of occupational safety information events organised around Germany in the year under review. We seek to maintain and improve the health and wellbeing of our employees. All measures undertaken to promote health and safety at work are consistent with our Group-wide strategy for health, safety and wellbeing.
Within Deutsche Post DHL Group, the Chief Compliance Officer is responsible for the compliance management system and reports directly to the Chief Financial Officer. The Chief Compliance Officer is supported by the Global Compliance Office, which establishes Group-wide compliance management standards and supports the implementation of related activities within the divisions. Each of the four operating divisions has a Compliance Officer, who regularly presents a report to the Board of Management member for the respective division. These reports are incorporated into the Chief Compliance Officer’s report to the Board of Management and to the Finance and Audit Committee of the Supervisory Board.
The main compliance management activities within Deutsche Post DHL Group include creating a system for identifying potential compliance risks, evaluating business partner compliance, and developing and organising compliance-related training and communications. Our compliance hotline is a key factor in reporting breaches of the law or our guidelines. The hotline is available in around 150 countries and assists employees in reporting potential breaches of the law or the Code of Conduct within the company. The hotline also provides a structure for addressing and resolving such breaches. The insights gained from reported cases are used to improve the compliance management system on an on-going basis. Group-wide communications on compliance ensure that all employees are aware of the relevance of compliance, and provide briefings on specific features of the Code of Conduct.
As a German public limited company, Deutsche Post AG is required to use a dual management system. The Board of Management is responsible for managing the company. The Board of Management is appointed, overseen and advised by the Supervisory Board.
In addition to the board departments of the Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and the Board Member for Human Resources, the Board of Management also includes four operating divisions: Post - eCommerce - Parcel, Express, Global Forwarding, Freight, and Supply Chain. Group management functions are centralised in the Corporate Center. The Group Strategy provides a framework for the whole Group. It follows the goal of remaining the postal service for Germany and becoming the logistics company for the world. The Board’s rules of procedure lay down objectives for the basic internal structure, management and co-operation within the Board of Management. Within this framework, each Board member manages their department independently and informs the rest of the Board about key developments at regular intervals. The Board of Management as a whole decides on matters of particular significance for the company or the Group, including all decisions that have to be presented to the Supervisory Board for approval, and on all tasks that cannot be delegated by law. The entire Board of Management also decides upon matters presented by one member of the Board of Management for decision by the Board of Management as a whole.
When making decisions, members of the Board of Management may not act in their own personal interest or exploit corporate business opportunities for their own benefit. The Supervisory Board must be informed of any conflicts of interest without delay.
The Supervisory Board advises and oversees the Board of Management and also appoints the members of the Board of Management. The Supervisory Board has established rules of procedure that include the basic internal structure, a catalogue of Board of Management transactions requiring Supervisory Board approval and rules for the Supervisory Board committees. The Supervisory Board meets at least twice every six months in a calendar year. Extraordinary Supervisory Board meetings are held whenever particular developments or measures need to be discussed or approved promptly. In financial year 2014, the Supervisory Board met for eight plenary meetings, 20 committee meetings and one closed meeting, as described in the Report of the Supervisory Board. All members attended at least half of the meetings. The overall attendance rate remained high in the year under review, at over 95 %.
The Board of Management and the Supervisory Board engage in regular dialogue regarding the Group’s financial position and performance, strategic initiatives, key business transactions, the progress of acquisitions, compliance and compliance management, risk exposure and risk management, and all material planning and related implementation issues. The Board of Management informs the Supervisory Board promptly and in full about all issues of significance. The Chairman of the Supervisory Board and the CEO maintain close contact and discuss current issues. The Chairman of the Supervisory Board also has regular contact with other Board of Management members between Supervisory Board meetings.
The Supervisory Board carries out an annual efficiency review of the work of the Supervisory Board, which includes assessing co-operation with the Board of Management. The efficiency review for financial year 2014 concluded that the Supervisory Board had performed its monitoring and advisory duties efficiently and effectively.
All Supervisory Board decisions, particularly those concerning transactions that require Supervisory Board approval, are discussed in detail in advance by the relevant committees. Each Supervisory Board plenary meeting includes a detailed report on the committees’ work and decisions taken.
None of the Supervisory Board members holds positions on the governing bodies of, or provides consultancy services to, the Group’s main competitors. The Supervisory Board has not been informed of any conflicts of interest affecting individual members during the year under review.
Executive committees prepare the decisions to be made by the entire Board of Management and take decisions on matters delegated to them. The duties of the executive committees include preparing and/or approving investments and transactions in the various divisions. The Deutsche Post Executive Committee is responsible for the Post - eCommerce - Parcel division; the cross-divisional DHL Executive Committee is in charge of the Express, Global Forwarding, Freight, and Supply Chain divisions; the CC & GBS Executive Committee covers the Corporate Center (CC) and Global Business Services (GBS). The CEO, the CFO and the Board Member for Human Resources have permanent representation on the committees, whilst the Board members responsible for the divisions are represented on the committees in matters relating to their divisions. First-tier executives from the level immediately below the Board of Management also attend executive committee meetings that cover topics relevant to their field. For example, Accounting & Controlling, Corporate Finance, Corporate Development and Legal Services will be invited to take part in discussions on acquisitions. The Deutsche Post Executive Committee and the DHL Executive Committee each meet at least once a month; the CC & GBS Executive Committee usually meets every quarter.
Business review meetings also take place once a quarter. These meetings are part of the strategic performance dialogue between the divisions, the CEO and the CFO. The business review meetings discuss strategic initiatives, operational matters and the budgetary situation of the divisions.
For details of the members of the Board of Management, see the sections on the Board of Management and Mandates held by the Board of Management.
The Supervisory Board has formed six committees to ensure the efficient discharge of its duties. In particular, these committees prepare the resolutions for the Supervisory Board plenary meetings. The Supervisory Board delegates the final decisions on certain topics to the individual committees.
The Executive Committee’s duties include arranging the appointment of members of the Board of Management and determining the Board of Management remuneration for approval by the Supervisory Board plenary meeting. The members of the Executive Committee are Wulf von Schimmelmann (Chair), Andrea Kocsis (Deputy Chair), Rolf Bauermeister, Werner Gatzer, Roland Oetker and Stefanie Weckesser.
The Finance and Audit Committee oversees the accounting process, the effectiveness of the internal control system, the risk management and internal auditing systems, and the audit of the financial statements. It examines corporate compliance issues and discusses the half-yearly and quarterly financial reports with the Board of Management before publication. Based upon its own preliminary assessment, the Committee submits proposals for approval of the annual and consolidated financial statements by the Supervisory Board. The members of the Finance and Audit Committee are Stefan Schulte (Chair), Stephan Teuscher (Deputy Chair), Werner Gatzer, Thomas Koczelnik, Simone Menne and Helga Thiel. The Chair of the Finance and Audit Committee, Stefan Schulte, is a financial expert as defined in sections 100 (5) and 107 (4) of the AktG.
The Personnel Committee discusses human resources principles for the Group. The members of the Personnel Committee are Andrea Kocsis (Chair), Wulf von Schimmelmann (Deputy Chair), Thomas Koczelnik and Roland Oetker.
The Mediation Committee carries out the duties assigned to it pursuant to the Mitbestimmungsgesetz (MitbestG – German Co-determination Act). The members of the Mediation Committee are Wulf von Schimmelmann (Chair), Andrea Kocsis (Deputy Chair), Rolf Bauermeister and Roland Oetker.
The Nomination Committee presents the shareholder representatives of the Supervisory Board with recommendations for shareholder candidates for election to the Supervisory Board at the AGM. The members of the Nomination Committee are Wulf von Schimmelmann (Chair), Werner Gatzer and Roland Oetker.
The Strategy Committee prepares material for strategy discussions in the Supervisory Board and for resolutions on corporate acquisitions and disposals requiring approval by the plenary meeting of the Supervisory Board. The Committee also regularly discusses the competitive position of the company and the individual divisions. The members of the Strategy Committee are Wulf von Schimmelmann (Chair), Andrea Kocsis (Deputy Chair), Rolf Bauermeister, Henning Kagermann, Thomas Koczelnik and Ulrich Schröder.
Information about the work of the Supervisory Board and its committees in financial year 2014 is also contained in the Report of the Supervisory Board. Details of the members of the Supervisory Board and the composition of the Supervisory Board committees can be found in the sections on the Supervisory Board and Mandates held by the Supervisory Board.
The Supervisory Board set specific targets for its composition in December 2010. In 2012, the Supervisory Board added a target for the number of independent Supervisory Board members. During the year under review, the Supervisory Board resolved to pursue the goal of 30 % of its members being women beyond 2015.
- The candidates proposed by the Supervisory Board to the AGM for election as Supervisory Board members must be made purely in the interests of the company. Subject to this requirement, the Supervisory Board aims to ensure that the independent Supervisory Board members as defined in number 5.4.2 of the German Corporate Governance Code comprise at least 75 % of the Supervisory Board and that at least 30 % of the Supervisory Board members are women.
- The company’s international activities are already adequately reflected in the composition of the Supervisory Board. The Supervisory Board aims to maintain this and will therefore, in future proposals to the AGM, consider candidates whose origin, education or professional experience equip them with international knowledge and experience.
- Conflicts of interest affecting Supervisory Board members are an obstacle to providing independent and efficient advice to, and supervision of, the Board of Management. The Supervisory Board will decide how to deal with potential or actual conflicts of interest on a case-by-case basis, in accordance with the law and giving due consideration to the German Corporate Governance Code.
- In accordance with the age limit adopted by the Supervisory Board and laid down in the rules of procedure for the Supervisory Board, proposals for the election of Supervisory Board members must ensure that the term of office ends no later than the close of the Annual General Meeting after the Supervisory Board member reaches the age of 72.
The current composition of the Supervisory Board meets all these targets. Simone Menne was elected as a member of the Supervisory Board by the 2014 AGM. She has worked for Lufthansa AG for many years, which has given her a great deal of business experience and an excellent understanding of the industry. Simone Menne will also be able to support the Supervisory Board as an additional financial expert. With regard to the employee representatives, Heinrich Josef Busch, the executive management representative, resigned from the Supervisory Board as of 30 November 2014, after many years of service. He was succeeded by Jörg von Dosky, who was appointed by the court as a Supervisory Board member on 9 December 2014. Having been a manager with the company for many years, Jörg von Dosky has a sound understanding of the management perspective. At present, 35 % of Supervisory Board members are female, which is above our target. The number of independent members of the Supervisory Board also currently exceeds the target. All members of the Supervisory Board are independent members as defined by the German Corporate Governance Code. In view of the European Commission’s recommendation on independent non-executive directors, the wide-ranging protection against summary dismissal and the ban on discrimination contained in the Betriebsverfassungsgesetz (German Works Constitution Act) and Mitbestimmungsgesetz (German Co-Determination Act), it must be assumed that being an employee is consistent with the requirement for independence as defined by the Code. The largest shareholder in the company, KfW Bankengruppe, currently holds approximately 21 % of shares in Deutsche Post AG. There are therefore no controlling shareholders as defined in the Code with whom relationships might exist that could call into question the Supervisory Board’s independence. The international nature of the company’s business is also appropriately reflected in the extensive international experience of many Supervisory Board members.