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, the percentage of women on the Supervisory Board, Board of Management and in the top two executive tiers, and the composition targets for the Supervisory Board.
In December 2015, 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 24 June 2014 have been complied with since issuance of the Declaration of Conformity in December 2014 and that all recommendations of the code in the version dated 5 May 2015 shall be complied with 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 seek to encourage co-operation and 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.
We see corporate responsibility as part of our Group strategy and we concentrate upon three focus areas: responsible business practice, corporate citizenship as well as environmental management and shared value. We systematically factor our stakeholders’ expectations and needs into strategic decisions. A materiality analysis has identified key issues relevant to Deutsche Post DHL Group from the areas of governance, employees and the environment. Targets and performance indicators have been defined for each of these topics. We successfully maintained our high scores in the best-known sustainability ratings during the year under review.
Response levels for our annual Group-wide Employee Opinion Survey were down slightly year-on-year at 73 % (2014: 77 %). We made further improvements to the survey in the year under review. The survey results are now almost fully comparable with an external standard which we are currently exceeding in five categories. Scores for the “Active Leadership” and “Employee Engagement” categories stabilised at a high level.
Our Code of Conduct, which was first issued in 2006, is firmly established in our corporate culture and is applicable to all regions and divisions. The Code of Conduct is based upon the principles set out in the Universal Declaration of Human Rights and the United Nations (UN) Global Compact. The code is consistent with recognised legal standards, including the applicable anti-corruption legislation and agreements. The code of Conduct and all other Group 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 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. Two years ago we set up the Diversity Council as an internal forum where participants can discuss the strategic direction, and the divisions’ differing requirements, of diversity management. The Diversity Council met on two occasions during the year under review. Members are also advocates for diversity within their divisions.
The international composition of the Board of Management already clearly reflects the company’s international activities. The Supervisory Board also supports the Group’s diversity strategy, placing particular emphasis on the target of 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. At 20.7%, the number of women in upper and middle management around the world at Deutsche Post DHL Group increased year-on-year as at 31 December 2015 (previous year: 19.3 %). The figure for Group companies in Germany was 20.6 %.
Pursuant to the Gesetz für die gleichberechtigte Teilhabe von Frauen und Männern an Führungspositionen in der Privatwirtschaft und im öffentlichen Dienst (German law on equal gender representation in executive positions in the public and private sector), we additionally report on the targets the Board of Management and the Supervisory Board have set for Deutsche Post AG in the section on the Number of women on the Supervisory Board, Board of Management and in executive positions at Deutsche Post AG. This presentation differs from the one used to determine the proportion of women in executive positions at Deutsche Post DHL Group.
We seek to maintain and improve the health and well-being of our employees, primarily through preventative measures. As a responsible employer, we offer information events and training. We also apply a range of health and safety measures. The new Group-wide Deutsche Post DHL Occupational Health & Safety Policy has put the issue more firmly in the spotlight.
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 and a network of compliance managers, which are responsible for implementing all compliance management activities. The divisional Compliance Officers report regularly to the Board of Management member for their division and maintain close contact with the Global Compliance Office. The divisional 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, devising suitable training and communications measures, evaluating business partner compliance, investigating cases of misconduct and imposing sanctions. The main purpose of the compliance programme is to prevent cases of non-compliance. Group-wide communications ensure that all employees are aware of the relevance of compliance and provide information about the relevant rules of conduct. 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 make on-going improvements to the compliance management system.
As a German public limited company, Deutsche Post AG is legally 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. 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 tasks that cannot be delegated and all decisions that have to be presented to the Supervisory Board for approval. 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 2015, the Supervisory Board met for eight plenary meetings, 22 committee meetings and one closed meeting, as described in the Report of the Supervisory Board. All members attended more than half of the meetings of the Supervisory Board and the committees on which they serve. The overall attendance rate remained high in the year under review, at over 94 %.
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 2015 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 hold positions on the governing bodies of, or provide 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 and second-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 2015 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.
Under the Gesetz für die gleichberechtigte Teilhabe von Frauen und Männern an Führungspositionen in der Privatwirtschaft und im öffentlichen Dienst, the Supervisory Board of Deutsche Post AG is required to meet the statutory gender quota of 30 %. The Supervisory Board is also obliged to set a target quota for the number of women on the Board of Management, whilst the Board of Management is required to set a target quota for women in the top two executive levels below the Board of Management. Deutsche Post AG exceeds the target for the statutory quota for the Supervisory Board, as seven women (35 %) are members of the Supervisory Board. The Supervisory Board has set a target quota of 1:7 for the number of women on the Board of Management, which applies until the end of the Annual General Meeting in 2018, after which the target will increase to 2:8 (25 %) by the end of the AGM in 2021. The deadline for achieving the first target quota for women on the Board of Management is 30 June 2017. The Board of Management has set 19 % at the first and 23 % at the second management level as target quotas for increasing the proportion of women below the Board of Management for the period until 31 December 2016. Furthermore, on 30 September 2015 target quotas and deadlines for reaching them were set for the German subsidiaries affected by the law.
The Supervisory Board set targets for its composition in 2010. Following an amendment in December 2015, a limit on the number of terms of office served was included. The targets are now as follows:
- Proposals by the Supervisory Board to the AGM for candidates to be elected 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 DCGK 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 DCGK.
- 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. As a general rule, Supervisory Board members should not serve more than three full terms of office.
The members of the Supervisory Board remained unchanged in 2015. The current composition of the Supervisory Board meets all these targets. Women currently make up 35 % of Supervisory Board members, which is above the statutory quota for women (30 %). The number of independent members of the Supervisory Board also currently exceeds the target. All Supervisory Board members are independent members as defined by the DCGK. In light of the European Commission’s recommendation on the independence of non-executive or supervisory directors, taken in conjunction with extensive protection against unwarranted dismissal and the anti-discrimination provisions contained in the German Betriebsverfassungsgesetz (Work Constitution Act) and Mitbestimmungsgesetz (Co-determination Act), employment by the company is assumed to be consistent with the requirement for independence as set out in the code. The largest shareholder in the company, KfW Bankengruppe, currently holds approximately 21 % of the 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.