Corporate Governance Policy (31.12.2015)

Austrian Code of Corporate Governance (July 2012) 

 

Disclosures in accordance with section 243b UGB (Austrian Business Code)

 Frauenthal Holding AG was one of the first companies to commit to implementation of the voluntary Austrian Code of Corporate Governance. On 27 March 2003 the Company undertook to adhere to these rules, which go beyond its legal obligations, wherever possible. In 2015 the Executive and Supervisory boards again attached prime importance to adhering as closely as possible to all the rules of the Code, and to maintaining and enhancing the Company’s high internal standards.

Frauenthal Holding AG’s corporate governance policies are based on Austrian law (in particular the Austrian Companies Act and Capital Market Act), the articles of association, the rules of procedures of the Company’s governing bodies and the Austrian Code of Corporate Governance.

The Code is constantly being developed in order to increase transparency for all stakeholders – which is also a long-standing goal of the Frauenthal Group.

Corporate Governance Report

Frauenthal Holding AG has been listed on the Vienna Stock Exchange since 10 June 1991. The Austrian Code of Corporate Governance is generally recognised on this market. Frauenthal Holding AG complies with all binding L-Rules (legal requirements) and the C-Rules (comply or explain) of the Code in its version of January 2015, and regularly has its compliance with the Code externally evaluated in accordance with R-Rule 62 (recommendation). The Code is available for download at www.corporate-governance.at and is posted on www.frauenthal.at.

Our compliance with the Code of Corporate Governance was last evaluated by our auditors, BDO Austria GmbH, at the start of 2016. The evaluation report certifies our adherence to the Code and the correctness of this Corporate Governance Report.


Executive Board

 The Executive Board liaises with the Supervisory Board on Group strategy, reporting to it regularly on implementation and the Company’s current situation, including the risk outlook. The rules and procedures of the Supervisory Board, audit committee and Executive Board give form to the legal framework that defines the responsibilities of the Company’s governing bodies and how they function.

Composition of the Executive Board

The Executive Board is made up of Martin Sailer and Wolfgang Knezek, who have equal rights.

From 1 January 2015 to 24 September 2015 Hannes Winkler held an interim position on the Frauenthal Holding AG Executive Board. Hannes Winkler has since returned to his position on the Supervisory Board following the appointment of Wolfgang Knezek to the Executive Board.

On 24 September Wolfgang Knezek was appointed to the Executive Board of Frauenthal Holding AG for a term of office that ends on 31 December 2016. Mr Knezek joined the Executive Board of SHT Haustechnik AG in 2002. He was instrumental in the company’s turnaround in 2005, and in its achievement of market and service-quality leadership in the years that followed. A lawyer and logistics expert, he will bring his extensive experience to bear in the integration of ÖAG AG. In his new post Mr Knezek will have overall responsibility for the strategic alignment and management of the Frauenthal Trade Division and retains his post as a member of the Executive Board of SHT Haustechnik AG. These changes in the membership of the Frauenthal Group’s governing bodies reflect the requirements currently associated with implementing the strategy for the Frauenthal Trade Division.

Martin Sailer remains head of the finance department of Frauenthal Holding AG, and is also responsible for the Frauenthal Automotive Division and business development at the holding company level.

As the Executive Board has only two members there is no need for a chairperson. Martin Sailer and Wolfgang Knezek bear joint overall executive responsibility. Neither has been appointed to the supervisory boards of any other companies.

Martin Sailer was appointed to the Frauenthal Holding AG Executive Board in September 2008, and his term of office expires on 30 June 2016.

Born in 1962, Martin Sailer studied business administration from 1980–1984, and was a research assistant at the universities of Graz and St. Gallen for several years, after which he accumulated 25 years of experience in the financial departments of various international companies. After a spell with the corporate controlling department at Daimler-Benz AG, from 1989-1992, he was Head of Finance at a major car importer from 1993-1998, and was Vice President Finance at the Ventana Group between 1998 and 2000. Before joining Frauenthal, he was finance director with the Austrian and German subsidiaries of the Pfizer pharmaceutical group (2001–2008). Since September 2008 he has been responsible for finance at Frauenthal Holding, as well as investor relations. In addition, he has been responsible for the Frauenthal Automotive Division since July 2012. He is also a member of the SHT Haustechnik AG Supervisory Board (Deputy Member since December 2014) and member of Supervisory Board of the ÖAG (Chairman of the Supervisory Board from the start of April 2014, then Deputy Chairman since December 2014).

Wolfgang Knezek was appointed to the Frauenthal Holding AG Executive Board in September 2015 and his term of office runs until 31 December 2016.

Wolfgang Knezek was born in 1963. He studied law at the University of Vienna from 1981 to 1987 and began his working life at Herba Apotheker AG in 1978. He became assistant to the managing director [R1] at Hild Logistikservice GmbH in 1991, and was appointed as managing director in 1997. Wolfgang Knezek has been a member of the Executive Board of SHT Haustechnik Beteiligungs AG since 2002. He was appointed to the Executive Board of Frauenthal Holding AG on 24 September 2015, with overall responsibility for the Frauenthal Trade Division.


Supervisory Board

The Frauenthal Holding AG Supervisory Board held seven meetings in 2015. The Supervisory Board consists of six members elected by the Annual General Meeting and three members delegated by the central works council. The six elected board members are Dietmar Kubis (Chairperson), Hannes Winkler (Deputy Chairperson), Oskar Grünwald, Johannes Strohmayer, Birgit Eckert and Johann Schallert. The members delegated to the board by the central works council are August Enzian, Klaus Kreitschek and Thomas Zwettler.

In accordance with section 90(2) Aktiengesetz (Companies Act), on 4 December 2014 the Supervisory Board appointed Hannes Winkler to the Executive Board for the period from 1 January to 30 September 2015, until the vacant position on the Executive Board had been filled. Hannes Winkler has returned to his position on the Supervisory Board following the appointment of Wolfgang Knezek to the Executive Board on 24 September. Mr Winkler has relinquished his duties as Chairman of the Supervisory Board, and will be succeeded by Dietmar Kubis, with Hannes Winkler as Deputy Chairman. 

Heike Jandl’s term of office expired and her successor, Johann Schallert, was appointed to the Supervisory Board for a period of three years.

As well as monitoring the Company’s day-to-day business activities, during the reporting period the Supervisory Board focused on strategic business development planning and maximisation of shareholder value for the Frauenthal Group and its divisions.


Composition of the Supervisory Board

Johannes Strohmayer also holds a supervisory board seat on another Austrian or foreign listed company. He is chairman of the supervisory board of Österreichische Staatsdruckerei Holding AG, which has been listed on the Austrian Stock Exchange since November 2011.

Supervisory Board committees

Employee codetermination on supervisory boards is an aspect of the Austrian corporate governance system which is required by law. As well as the audit committee, which is required by law, a remuneration committee was installed. The audit committee met twice in the course of the year under review, and the remuneration committee three times. The Group’s strategic focus is regularly discussed and evaluated by the Supervisory Board.

Members of the audit committee

Oskar Grünwald (chairperson), Dietmar Kubis and employee representative August Enzian make up the audit committee. The committee is mainly responsible for overseeing the audit of the individual annual financial statements and preparations for their adoption, the audits of the consolidated financial statements, the dividend recommendation, the separate parent company and Group operating reviews, and the Corporate Governance Report. Oversight of the Group’s accounting processes, and the effectiveness of the internal controlling, internal audit and risk management systems are high priorities for the committee. A further important responsibility of the audit committee is preparing the Supervisory Board’s recommendation for the selection of the auditors, and monitoring the independence of the auditors of the individual and consolidated financial statements, particularly with regard to the provision of any additional services. A unanimity voting system has been adopted.

Members of the remuneration committee

The remuneration committee consists of its chairperson Dietmar Kubis, Birgit Eckert and employee representative Klaus Kreitschek. This committee concludes Executive Board employment contracts, and determines the compensation of Executive Board members. It also sets the targets for the performance-related pay components and monitors their attainment. A unanimity voting system has been adopted.

Independence of the Supervisory Board

The criteria for the independence of Supervisory Board members conform to the guidelines set out in Annex 1 to the Austrian Corporate Governance Code, and have therefore not been separately posted on the Group’s website. A Supervisory Board member may declare himself/herself to be independent if he/she has no business or personal relationships with the Company or its Executive Board which constitute a material conflict of interest and might therefore influence the member’s behaviour. A majority of the members of the Supervisory Board of Frauenthal Holding AG are independent in this sense (Dietmar Kubis, Oskar Grünwald, Johannes Strohmayer and Johann Schallert), and have no business or personal relationship with the Company or its Executive Board.

Equal opportunities

As a company committed to sustainable business practices, Frauenthal addresses social responsibility issues such as equal opportunities at work. All employees are treated equally, regardless of gender, age, religion, culture, colour of skin, social background, sexual orientation or nationality.

The Group is attempting to increase the number of women on management committees, the Supervisory Board and the Executive Board, as well as in senior management at Group companies by conducting targeted searches for suitable candidates when filling such positions. At the time of writing, out of the six executive board positions (three at ÖAG AG, two at Frauenthal Holding AG and two at SHT Haustechnik AG – Wolfgang Knezek holds two positions, at Frauenthal Holding AG and SHT Haustechnik AG), one is held by a woman. One of the nine members of the Supervisory Board is female. One other senior management position at Frauenthal Holding AG is held by a woman. The Group actively supports staff who demonstrate readiness to take on management responsibilities.

Compliance

Frauenthal Holding AG has implemented Group-wide compliance guidelines to prevent insider trading. Frauenthal was also one of the first listed companies in Austria to set up an e-learning platform to support inside area staff in keeping to the compliance guidelines and to guard against insider trading. Wolfgang Knezek is the Company's Compliance Officer.

Remuneration report 


Executive Board

 The remuneration committee of the Supervisory Board is responsible for determining Executive Board pay. The compensation of the Executive Board consists of a fixed salary and a variable component of up to EUR 200,000 per annum (gross), geared to the personal performance of each Board member. The variable component is based on target setting agreements that contain quantitative and qualitative objectives. The quantitative objectives include budget and liquidity targets. Qualitative objectives relate to goals for individual divisions, for the Group as a whole, and for human resource and management development.

In 2015 the total remuneration of the Executive Board, including contributions to pension funds and accident insurance plans, was EUR 669,000. Remuneration of EUR 564,000 (including a variable component of EUR 200,000) was paid to Martin Sailer and EUR 105,000 (including a variable component of EUR 26,000) was paid to Wolfgang Knezek for his time as Member of the Executive Board for the three months at the end of 2015. Payment of retirement benefits is not tied to performance criteria. Members have no contractual entitlements to termination benefits on leaving office.


On 1 June 2011 the Frauenthal Holding AG Supervisory Board approved a share option plan for 2012-2017 for members of the Company’s Executive Board and for Frauenthal Group senior management. Under the plan, members can be awarded up to 10,000 options annually, each entitling them to subscribe to one no par bearer share at a price of EUR 2.00, for outstanding performance during the FY 2011-2016 period. The exercise price of EUR 2.00 corresponds to the rounded-up average carrying value of Frauenthal treasury shares according to the annual financial statements of Frauenthal Holding AG for the year ended 31 December 2010. Options granted cannot be exercised until three years after their allocation to plan members, and must be exercised by the end of the same financial year. They are not transferable, and must be exercised in person. Shares acquired by exercising options will be subject to a 36-month holding period. All plan participants will be entitled, before expiry of the holding period, to sell as many of the shares acquired by exercising the options as are needed to pay the personal income tax to which they become liable through exercise of the options, out of the net sales proceeds.


Further details are provided in a written report by the Executive and Supervisory boards, dated 1 June 2011, which is available for inspection at corporate headquarters and on the corporate website (www.frauenthal.at). Additional information can also be drawn from Note [47] to the consolidated financial statements, Share option plan.


Supervisory Board

Members of the Supervisory Board receive annual basic compensation of EUR 5,000, due at the end of the year. If membership of the Board commences during a calendar year, basic compensation is calculated on a pro rata basis. Members may also receive performance-related compensation of EUR 5,000 each. This bonus is only granted in financial years when the Annual General Meeting approves the payment of a dividend for the previous financial year. It is due upon approval of a resolution to this effect by the Annual General Meeting, and is only paid to members who sat on the Supervisory Board in the previous financial year. Until further notice, members of the Supervisory Board (except members delegated by the works council) will also receive a flat attendance fee of EUR 2,000 for each Board meeting they attend. The same applies to attendance of meetings of Supervisory Board committees unless these take place on the same day as meetings of the full Board. In addition, the Company compensates members' travel expenses incurred in relation to attendance at meetings of the Supervisory Board and Board committees.

The remuneration of the Supervisory Board in 2015 totalled EUR 125,000. As in previous years, Hannes Winkler, Deputy Chairman of the Supervisory Board, waived his entitlement to compensation for attendance in 2015. No stock option plans are granted to Supervisory Board members. 


Directors and officers (D&O) insurance cover

Frauenthal Holding AG has taken out directors and officers (D&O) insurance cover for the Executive Board, chief executives of Group companies and the Supervisory Board, and bears the cost of EUR 42,000 (2014: EUR 39,000). 

Related party transactions

Disclosures on related party transactions are made in Note [49] to the consolidated financial statements, Related party disclosures.

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