First established in 2000 and updated several times since, the Principles of Corporate Governance in effect at DOUGLAS HOLDING AG – like the requirements, recommendations and proposals for responsible management specifi ed in the German Corporate Governance Code – form a constituent component of the Group’s corporate culture. The Principles of Corporate Governance adopted by DOUGLAS HOLDING AG help to ensure that the DOUGLAS Group is managed and supervised in a responsible manner which is designed to create value. Corporate governance generates transparency, openness, respect for the interests of stakeholders, and efficient cooperation between the Executive and Supervisory Boards based on mutual trust, with the goal of producing a sustained increase of value within the Group. Compliance with the applicable versions of the DOUGLAS Principles of Corporate Governance and the German Corporate Governance Code is monitored by a specially appointed compliance officer.
During the 2005/06 business year, the Executive and Supervisory Boards of DOUGLAS HOLDING AG demonstrated full compliance with the recommendations and suggestions of the applicable version of the German Corporate Governance Code (hereinafter: “GCG Code”) with the two exceptions specified below.
1. Despite the fact that the DOUGLAS HOLDING AG financial year ends on September 30, the publication of its consolidated financial statements does not take place prior to the close (12/31) of that year, but rather in January of the following year. This ensures increased interest from investors and an improved impact with stakeholders and the media than might be expected from publication at the end of December (No. 7.1.2, Sentence 3, GCG Code).
2. In line with the statutory provisions, DOUGLAS HOLDING AG discloses the shareholdings of the members of its Executive and Supervisory Boards to the extent that same exceed or fall short of the relevant reporting limits prescribed by Section 21 of the [German] Securities Trading Act (“WpHG”), to-wit: 5, 10, 25, 50 or 75 percent. No further details of the Executive and Supervisory Board members’ shareholdings are disclosed (No. 6.6, Para. 2, GCG Code).
The Executive and Supervisory Boards of DOUGLAS HOLDING AG have issued a declaration of compliance pursuant to Section 161 of the [German] Stock Corporation Law (“AktG”), which has been published at www.douglas-holding.com/en/cg.
The remuneration of DOUGLAS HOLDING AG Executive Board members is determined by the Supervisory Board’s Executive Committee. During the 2005/06 fi nancial year, a total of 3,342,100 EUR was paid to the members of the Executive Board for their work on behalf of DOUGLAS HOLDING AG and its subsidiaries. Of this amount, 1,225,400 EUR comprised fixed components, 1,655,900 EUR variable components, and 460,800 EUR other components. The variable components are based on the result from ordinary business activities at the DOUGLAS Group or the relevant division, as well as on other performance indicators such as the interest on capital employed. The other components consisted primarily of pension commitments. There are no stock option programs for Executive Board members; nor has D&O insurance been taken out for these individuals.
Details as to the remuneration paid to Executive Board members – including pensions, pension reserves and bonuses – are published at www.douglas-holding.com/en/cg; a breakdown by member is shown in the Notes on page 140 of this report.
The remuneration of the Supervisory Board is determined by the Shareholders’ Meeting and governed by Section 14 of the DOUGLAS HOLDING AG statutes. Such remuneration contains a fixed as well as a variable, performance-oriented component that is keyed to the dividend payment. The time spent chairing and attending committee meetings is accorded due consideration. The members of the DOUGLAS HOLDING AG Supervisory Board were paid 600,000 EUR during the 2005/06 fi scal year. Of this sum, 293,800 EUR comprised fixed components and 306,200 EUR variable components. A breakdown by member is shown in the Notes on page 141 of this report. In the opinion of the DOUGLAS HOLDING AG Supervisory Board, the number of independent members in its ranks is sufficient.
During fiscal 2005/06, the members of the Executive and Supervisory Boards as well as the senior management of the DOUGLAS Group complied with the applicable reporting requirements of the [German] Securities Trading Act (“WpHG”) in respect to trading involving DOUGLAS shares. This also applies to the trading of derivatives. Security trading information can be found on page 142 of this report.
Prior to commencing the audit of the consolidated report for fi scal 2005/06, the Supervisory Board obtained confirmation from the auditors Susat & Partner to the effect that there were no business, financial, personal or other ties between the auditors, members of their executive bodies or the audit directors on the one hand and the company and the members of its executive bodies on the other which might constitute grounds to doubt the auditors’ independence. It was further confirmed that no consulting services of significance were rendered by Susat & Partner during the year ended or agreed for fiscal 2006/07.