Declaration pursuant to Article 161 AktG (German Stock Corporation Act)
The Management Board and Supervisory Board of PATRIZIA AG issued the following declaration on 15 December 2021 in accordance with Article 161 AktG:
The recommendations of the "Government Commission on the German Corporate Governance Code" in the version dated 16 December 2019 ("GCGC 2020") published by the Federal Ministry of Justice on 20 March 2020 in the official section of the Federal Gazette were complied with in the period from the last Declaration of Conformity dated 16 December 2020, with the exception of the items listed below, for the reasons and in the periods stated therein:
Independence of the Chairman of the Supervisory Board
(Section C.10 Sentence 1 GCGC 2020)
According to Section C.10 Sentence 1 GCGC 2020, the Chairman of the Supervisory Board shall be independent from the company and the Management Board. According to Recommendation C.7 Sentence 2 GCGC 2020, a member of the Supervisory Board is independent of the company and its Management Board if he or she has no personal or business relationship with the company or its Management Board that could give rise to a material and not merely temporary conflict of interest. In Uwe H. Reuter, PATRIZIA has had a Chairman of the Supervisory Board who fully meets this criterion since 14 October 2021.
Only as a highly precautionary measure, a deviation from Recommendation C.10 Sentence 1 GCGC 2020 is declared for the period since the last Declaration of Conformity dated 16 December 2020 until 13 October 2021, because Mr. Reuter's predecessor, Dr Theodor Seitz, had been Chairman of the Supervisory Board of PATRIZIA AG for more than 12 years, so that his dependence was indicated in accordance with Recommendation C.7 GCGC 2020. Accordingly, since 14 October 2021, no further deviation is to be declared.
Formation of committees in the Supervisory Board
(Sections D.2 to D.5 GCGC 2020)
According to Sections D.2 to D.5 GCGC, the Supervisory Board shall form committees of members with relevant specialist expertise, in particular an Audit Committee and a Nomination Committee. After the resolution to expand the Supervisory Board from three to five members was passed at the Annual General Meeting of PATRIZIA AG on 14 October 2021 and the corresponding amendment to the Articles of Association was effectively entered in the Commercial Register, the Supervisory Board formed a three-member Audit Committee chaired by Jonathan Feuer on 15 November 2021. In addition, at the Supervisory Board Meeting on 15 December 2021, a Nomination and Remuneration Committee was formed, which also consists of three members and is chaired by Marie Lalleman.
Only as a highly precautionary measure, a deviation from Recommendations D.2 to D.4 GCGC 2020 is declared for the period since the last Declaration of Conformity dated 16 December 2020 until 14 November 2021 and from Recommendation D.5 GCGC 2020 until 14 December 2021, because the formation of committees was not considered expedient due to the small number of Supervisory Board members at that time. Accordingly, since 15 November 2021 or 15 December 2021 respectively, no further deviation is to be declared.
Additional statement regarding the more far-reaching suggestions of the German Corporate Governance Code
In order to increase transparency and to comprehensively demonstrate the significance of the Code for PATRIZIA AG, we also comment in this Declaration of Conformity on compliance with the suggestions of the Code. In the period from the last Declaration of Conformity dated 16 December 2020 all suggestions of the GCGC 2020 were complied with. These suggestions will continue to be complied with in the future.
The current Declaration of Conformity pursuant to Article 161 AktG can be found on the PATRIZIA website: https://www.patrizia.ag/en/shareholders/corporate-governance/declarations-of-conformity/.
All previous Declarations of Conformity are also permanently available to the public on the PATRIZIA website.
The Remuneration Report on the 2021 fiscal year and the auditor's report pursuant to Article 162 of the German Stock Corporation Act (AktG), the applicable remuneration system pursuant to Article 87a (1) and (2) Sentence 1 of the German Stock Corporation Act (AktG) and the last remuneration resolution pursuant to Article 113 (3) of the German Stock Corporation Act (AktG) are publicly available on the PATRIZIA website: https://www.patrizia.ag/en/shareholders/corporate-governance/remuneration-systems-for-management-board-and-supervisory-board/.
Relevant disclosures on corporate governance practices applied beyond the legal requirements
As a company, we have principles for our business operations and related goals, as well as principles for our general values that outlast the day-to-day:
- - We think long-term to shape the PATRIZIA of the future, act in a businesslike manner and ensure our development is sustainable.
- - We aim for success and make clear decisions, which we consistently implement with optimal processes and needs-based solutions.
- - We work together constructively, reflect on our own actions and give feedback in an appreciative and direct manner. Through leadership and example, we demand and encourage the necessary behaviour.
- - At PATRIZIA, social responsibility and the protection of our natural resources are of central importance.
- - The principles described above are also reflected in the PATRIZIA Group's Code of Values. This describes the common values that all PATRIZIA employees share and make the guiding principles of their daily actions.
- - PATRIZIA also has a Compliance Manual, which is to be regarded as a Group-wide guideline and contains more detailed regulations on some topics.
- - Both the Code of Values and the Compliance Manual are available in five languages and are binding for all employees throughout the PATRIZIA Group.
Description of the working methods of the Management Board and the Supervisory Board as well as the composition and working methods of their committees
In accordance with legal requirements, PATRIZIA AG operates a dual management system based on a clear separation of duties between the Management Board as the executive body and the Supervisory Board as the supervisory body. As a listed German stock corporation, corporate governance at PATRIZIA is primarily determined by the German Stock Corporation Act (AktG).
The Management Board is responsible for managing PATRIZIA AG and the Group. The Management Board's main management tasks include setting corporate goals and the Group's strategic orientation, managing and monitoring the Group and corporate planning. The main principles for cooperation within the Management Board are set out in the Management Board's rules of procedure adopted by the Supervisory Board. The members of the Management Board are jointly responsible for the entire Management Board. They work together as colleagues and inform each other on an ongoing basis about important measures and processes in their business areas. Notwithstanding the overall responsibility of the Management Board, each individual Management Board member manages the business areas assigned to him or her on his or her own responsibility. The resolutions of the Management Board shall be adopted by a simple majority of the votes of the members of the Management Board participating in the adoption of the resolution, unless unanimity is required by law. In the event of a tie, the Chairperson shall have the casting vote.
In accordance with the Articles of Association, the Supervisory Board of PATRIZIA AG consists of five members who are elected by the Annual General Meeting. The Supervisory Board is responsible for the appointment, reappointment and dismissal of Management Board members, advises the Management Board and continuously monitors its management, also with regard to the achievement of long-term corporate goals. The Supervisory Board has defined reservations of consent for certain measures and transactions. Details on the meetings and cooperation between the Management Board and the Supervisory Board in the 2021 financial year are explained in the report of the Supervisory Board.
Together with the Management Board, the Supervisory Board ensures long-term succession planning. The topic of succession planning is one of the tasks of the Nomination and Remuneration Committee established on 15 December 2021, whose members regularly discuss the topic, taking into account the current appointment periods, the performance of the Management Board members, the diversity concept and the strategic orientation, report on this to the full Supervisory Board and deal with it in the plenary session of the full Supervisory Board. In addition, the Supervisory Board exchanges views with the Management Board on suitable internal candidates and, if necessary, consults on potential external candidates.
The Supervisory Board has currently set up two committees, an Audit Committee and a Nomination and Remuneration Committee. The Audit Committee deals with the audit of the accounting, which in particular includes the consolidated financial statements and the Group management report including ESG reporting as well as financial information during the year and the individual financial statements of PATRIZIA AG in accordance with the German Commercial Code (HGB). The Audit Committee also monitors the accounting process. Furthermore, it prepares the audit and adoption or approval of the annual financial statements and the consolidated financial statements and discusses the interim reports with the Management Board prior to their publication.
It also deals with the audit of the financial statements, in particular the selection and independence of the auditor, the quality of the audit and the additional services provided by the auditor. In addition, the Audit Committee prepares the resolution of the Supervisory Board on the proposal of the Supervisory Board to the General Meeting for the appointment of the auditor, the group auditor and the auditor for a possible audit review of interim reports. It deals with the issuing of the audit mandate to the auditor, the conclusion of the fee agreement and the determination of the focal points of the audit.
The Audit Committee is also responsible for monitoring the effectiveness of the internal control system, the risk management system and the internal audit system as well as for discussing compliance issues. The chairman of the Audit Committee also maintains regular dialogue with the auditor outside of the committee meetings. The members of the Audit Committee are Mr Jonathan Feuer (Chairman), Mr Axel Hefer and Mr Uwe H. Reuter. The Chairman of the Audit Committee, Mr Jonathan Feuer, has many years of experience as a member of the Management Boards and Board of Directors of associated companies and has expertise in the field of auditing. Mr Axel Hefer has acquired expertise in the field of accounting due to his work as CFO and CEO of a listed company.
The Nomination and Remuneration Committee deals with succession planning for the Supervisory Board and the Management Board, prepares the decisions of the Supervisory Board on Management Board remuneration issues, the remuneration system and the remuneration report, and decides on the approval of sideline activities of Management Board members. Members of the Nomination and Remuneration Committee are Ms Marie Lalleman (Chair), Mr Uwe H. Reuter and Mr Philippe Vimard.
More detailed information on the committees of the Supervisory Board and their duties is contained in the Rules of Procedure for the Supervisory Board of PATRIZIA AG, which are publicly available at the following link on the PATRIZIA website: https://www.patrizia.ag/en/shareholders/corporate-governance/rules-of-procedure/.
Furthermore, the trusting cooperation between the Management Board and the Supervisory Board is closely aligned with the principles of the German Corporate Governance Code (GCGC) for the benefit of the company.
Age limits for members of the Management Board (Recommendation B.5 GCGC 2020) and members of the Supervisory Board (Recommendation C.2 GCGC 2020)
As a rule, members of the Management Board shall be appointed until they reach the age of 65 at the latest. Members of the Management Board may be appointed beyond the age of 65 with effect up to a maximum of the age of 68 if such an appointment is in the interest of the company.
Members of the Supervisory Board shall regularly not have reached the age of 70 at the time of their appointment.
Implementation of the Act for the Equal Participation of Women and Men in Management Positions in the Private Sector and the Public Sector
The Act on the Equal Participation of Women and Men in Leadership Positions in the private and public sectors obliges companies which - like PATRIZIA AG - are listed on the stock exchange to set targets for the proportion of women on the Supervisory Board, the Management Board and the two management levels below the Management Board, as well as deadlines for achieving these targets (Article 111 (5), Article 76 (4) AktG).
With effect from 1 July 2019, the Supervisory Board of PATRIZIA AG has set a target of 25% for its own composition, as well as for the composition of the Management Board, in accordance with Article 111 (5) of the German Stock Corporation Act (AktG), to be achieved by 30 June 2024. Currently, the Supervisory Board has one female member and four male members, while the Management Board consists of one female and six males. Thus, the set targets were not yet achieved in the financial year, although an improvement was realised in the Supervisory Board, as a woman was elected to the board for the first time at the 2021 General Meeting. The achievement of the targets continues to be a high priority.
With effect from 1 July 2019, the Management Board has set a target of 20% for the proportion of women in the first management level below the Management Board and a target of 30% for the proportion of women in the second management level below the Management Board in accordance with Article 76 (4) of the German Stock Corporation Act (AktG), to be achieved by 30 June 2024. Currently, the share of women in the first management level is 19%, which is a significant improvement of 6 percentage points compared to the previous year and brings the achievement of the target within immediate reach. In the second management level, the target has been reached for the second year in a row with a share of women of 30%.
In the long term, the Management Board and Supervisory Board aim to achieve the statutory target quota of 30% for both genders at all levels. However, when filling all positions in the company, especially members of the Management Board and managers, primary emphasis is placed on the best possible competence and qualifications.
Status of implementation with regard to the competence profile for the Supervisory Board and the objectives for its composition (Recommendation C.1 GCGC 2020) as well as description of the diversity concept
In 2018, the Management Board and Supervisory Board agreed on board-specific diversity concepts in accordance with Article 289f (2) No. 6 of the German Commercial Code (HGB). These describe how PATRIZIA aims to achieve a diverse composition of the top management bodies with regard to aspects such as age, gender, educational or professional background.
The diversity concept for the Management Board understands diversity as a consideration in particular of different, mutually complementary professional profiles, leadership experience, professional training and life experience, also in the international area, and, with appropriate qualifications, an appropriate representation of both genders. The diversity concept includes the target quota for the proportion of women on the Management Board of 25%.
The diversity concept for the Management Board and the requirements set out therein are taken into account by the Supervisory Board in the process of appointing Management Board members and long-term succession planning. The current composition of the Management Board meets all the requirements of the diversity concept. The Management Board members cover a broad spectrum of knowledge and experience as well as educational and professional backgrounds and have international experience.
The Supervisory Board has set concrete goals for its composition and has developed a competence profile for the entire board. According to this, the Supervisory Board is to be composed in such a way that its members as a whole possess the knowledge, skills and professional experience necessary for the proper performance of its duties. In addition, diversity should generally be taken into account in the search for qualified personalities for the Supervisory Board, who would strengthen the Supervisory Board as a whole in the best possible way with professional and management skills within the framework of these objectives. The Supervisory Board should have a broad range of experience and specialised knowledge. In addition, the Supervisory Board as a whole should have a comprehensive diversity of opinion and knowledge in order to be able to develop a good understanding of the current status as well as the longer-term opportunities and risks in connection with the business activities of the company and the group.
Election proposals of the Supervisory Board to the General Meeting for the election of Supervisory Board members representing the shareholders shall take into account the objectives for the composition of the Supervisory Board and at the same time strive to fill out the competence profile for the entire body. In this context, the diversity concept of the Supervisory Board shall also be taken into account in such a way that its implementation is supported by corresponding election resolutions of the General Meeting. However, the General Meeting is not bound by the election proposals of the Supervisory Board.
According to its own assessment, the Supervisory Board in its current composition (with the exception of the target quota for the proportion of women) fulfils the objectives named for its composition, the competence profile and the diversity concept.
The Supervisory Board of PATRIZIA AG was expanded in the 2021 fiscal year and a woman was elected to the Supervisory Board for the first time. The newly elected Supervisory Board members have different expertise and experience and represent the international business activities of the PATRIZIA Group. The Supervisory Board members have the professional and personal qualifications deemed necessary. They are familiar in their entirety with the sector in which the Company operates. In addition, all five Supervisory Board members in office are considered independent of the company and its Management Board as well as of a controlling shareholder within the meaning of the recommendations of the German Corporate Governance Code.
Self-assessment of the Supervisory Board (Recommendation D.13 GCGC 2020)
As a rule, the supervisory board assesses once a year how effectively it fulfils its tasks. For this purpose, all members of the Supervisory Board received a questionnaire in which they were asked to give their assessment of the organisation of the Supervisory Board and the effectiveness of its working methods and also had the opportunity to make suggestions for improvement. Such a self-assessment was exceptionally waived in 2021 due to the expansion and largely new composition of the Supervisory Board. In the coming year, however, such an assessment shall take place again as usual.
Augsburg, 11 March 2022
The Management Board
Dr Manuel Käsbauer
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