1&1 Drillisch AG - Corporate Governance
1&1 Drillisch AG - Corporate Governance

Statement on Corporate Management /
Corporate Governance Report (Update April)

The corporate management of 1&1 Drillisch AG, a German stock corporation listed on the stock exchange, is governed first and foremost by German Company Law [Aktiengesetz, AktG] and the provisions of the German Corporate Governance Codex (DCGK) as most recently revised.

The term corporate governance stands for responsible management and control of companies, applied with the aim of creating long-term added value. Efficient cooperation between management and supervisory boards, respect for shareholders' interests and openness and transparency of corporate communications are major aspects of good corporate governance.

The Management Board and Supervisory Board of 1&1 Drillisch AG regard themselves to be bound by the obligation to secure the existence of the Company and sustained value creation by means of corporate management in awareness of their responsibilities and with an orientation to long-term results.

The following report contains the "Declaration on Corporate Management" pursuant to Sections 289-290 HGB [German Commercial Code] and pursuant to Section 315d HGB for the corporate group and the "Corporate Governance Report" pursuant to Clause 3.10 of the German Corporate Governance Codex that have been prepared by Management and Supervisory Boards.

Declaration pursuant to Section 161 AktG regarding observance of the recommendations of the German Corporate Governance Codex

The most recent Declaration of Conformity issued by the Management Board and Supervisory Board on 27 March 2019, which has been made permanently accessible on the internet at the site www.1und1-drillisch.de (to be found there under the section "Corporate Governance", subsection "Declaration of Conformity"), reads as follows: 1&1 Drillisch Aktiengesellschaft

Declaration of the Management Board and Supervisory Board of 1&1 Drillisch AG
regarding the recommendations of the
“Government Commission German Corporate Governance Codex”
pursuant to Section 161 AktG

Management Board and Supervisory Board of 1&1 Drillisch Aktiengesellschaft hereby declare that the Company, since issue of the last Declaration of Conformity of 21 March 2018, has acted, and continues to act, in conformity with the recommendations of the "Government Commission German Corporate Governance Codex" (Codex) as revised on 7 February 2017 and announced by the Federal Ministry of Justice on 24 April 2017 in the official section of the Federal Gazette, subject to the following exceptions.

Clause 3.8 (2) and (3)
Agreement of an excess for Supervisory Board members in a D&O insurance policy for the Supervisory Board.

A liability insurance policy covering pecuniary loss along with an excess of loss agreement which does not include an excess has been concluded for the Supervisory Board.

The Management and Supervisory Boards of the Company do not believe that the motivation and sense of responsibility of the officers and directors would be enhanced by the agreement of an excess. Equally, the Management and Supervisory Boards of the Company fear that there is a risk that the agreement of an excess for negligent actions and the related liability risks would counteract the efforts of the Company to obtain the services of highly qualified persons to serve on the Supervisory Board. This is the reason for the basic decision not to agree to an excess.

Clause 4.1.3 third sentence
Whistleblowing possibility for the employees of the Company

The Company has not implemented any special whistleblowing system for employees. In view of the statutory regulation of Section 612a BGB [German Civil Code] regarding the labour law prohibition of any retribution, the Company does not see any need to set up additional protection mechanisms for whistleblowers. The statutory prohibition of any retribution forbids penalising any employee for appropriately and legally exercising his/her rights. In view of the open, solution-oriented culture of communication in the enterprise, the Company does not believe there is any practical need for a complicated whistleblowing system.

Clause 5.3
Formation of committees

The Supervisory Board has not constituted any committees since the issue of the last Declaration of Conformity; instead, it performs all duties and responsibilities as a full body. The Supervisory Board believes that it can best serve the enterprise if all Supervisory Board members have the opportunity to participate in all matters concerning the Supervisory Board. Moreover, efficient discussions and intensive exchange of opinions in a meeting of all members is possible even for a Supervisory Board comprising six members. In consequence, the Supervisory Board does not see any necessity for the formation of committees to increase the efficiency of its work.

Clause 5.4.6 (1) second sentence
Inclusion of the membership on committees in determining the compensation paid to Supervisory Board members and inclusion of deputy chairpersonship of the Supervisory Board in determining the compensation paid to Supervisory Board members

Pursuant to Section 14 of the Company's articles of association only the Supervisory Board chairperson receives a higher annual fixed compensation, but not the Board's deputy chairperson. The regulation is regarded to be appropriate in view of the duties and responsibilities related to the position because the deputy chairperson of the Supervisory Board does not at this time perform any additional duties or responsibilities that would place a heavier burden on him/her than on ordinary Supervisory Board members. The Supervisory Board has not built any committees and thus a membership in committees is not reflected in the compensation for members of the Supervisory Board.

Maintal, 27 March 2019

On behalf of the Supervisory Board
Michael Scheeren

The Management Board
Ralph Dommermuth   Martin Witt   André Driesen


Management and corporate structure

As appropriate for its legal form, 1&1 Drillisch AG has a two-tier management and supervisory structure in the form of its governing bodies, the Management Board and Supervisory Board. The third governing body is the General Meeting. The governing bodies are obligated to serve the welfare of the Company.

Supervisory Board

Working methods of the Supervisory Board

The Supervisory Board elected by the General Meeting 2018 had 6 members in 2018. As a rule, the term of office of Supervisory Board members is 5 years.

The Supervisory Board maintains regular contact with the Management Board and supervises and advises the Management Board – in accordance with law, articles of association and by-laws, rules of procedure and the recommendations of the German Corporate Governance Codex insofar as deviations in accordance with Section 161 AktG have not been declared – in the management of business operation and the risk and opportunity management of the Company.

The Supervisory Board discusses all questions of strategy and their implementation, the budget, business development, risk position, risk management and compliance relevant for the Company with the Management Board at regular intervals. It discusses the quarterly and semi-annual reports with the Management Board before their publication and adopts the annual budget. It reviews the single and consolidated annual financial statements and approves the financial statements if there are no objections. In performing this review, it takes into account the audit reports of the auditor.

Duties and responsibilities of the Supervisory Board also include the appointment of Management Board members and the determination of the remuneration paid to the Management Board as well as the regular review of the remuneration, taking into consideration the legal provisions in effect at the time and the recommendations of the German Corporate Governance Codex insofar as deviations in accordance with Section 161 AktG have not been declared.

The Supervisory Board regularly conducts an efficiency audit as a self-assessment.

The Supervisory Board members participate in any training and advanced training measures necessary for performance of their duties and responsibilities on their own responsibility and receive appropriate support from the Company in doing so.

As a rule, the Supervisory Board meetings are convened by the chairperson by written announcement at least 14 days in advance.

The points of the agenda are communicated in the convocation announcement. If a point on the agenda has not been properly announced, a resolution on this point may be adopted solely if and when there is no objection from any Supervisory Board member before the adoption of the resolution.

As a rule, resolutions of the Supervisory Board are adopted in meetings. Meetings are chaired by the chairperson of the Supervisory Board. Upon order of the chairperson, resolutions may be adopted outside of meetings by other means (e.g. by telephone or email), provided that no member objects to this procedure.

The Supervisory Board has a quorum if and when announcements have been properly sent to all of the members and a minimum of three members participate in the adoption of resolutions. A member also participates in the adoption of the resolution if and when he/she abstains from voting.

Unless otherwise mandated by legal statutes, the Supervisory Board adopts resolutions by simple majority vote.

Written minutes are kept of the discussions and resolutions of the Supervisory Board.

The Supervisory Board chairperson is authorised to submit on behalf of the Supervisory Board any declarations of intent required for the execution of the Supervisory Board's resolutions.

Targets for the composition of the Supervisory Board/competence profile for the full body

In accordance with the rules of procedure of the Supervisory Board, nominations for the election of Supervisory Board members must take into account that the Supervisory Board must at all times have members who have the knowledge, skills and professional experience they require for the correct performance of their duties and responsibilities. Among other points, the Company's international activities, potential conflicts of interest and an age limit of 70 for Supervisory Board members should be given consideration.

In accordance with Clause 5.4.1 of the German Corporate Governance Codex, the Company's Supervisory Board has set in addition the following targets for its composition – including specific competence requirements for the full body – that have consistently been observed during the election of Supervisory Board members since the setting of the targets, most recently during the election of the current Supervisory Board members by the Annual General Meeting on 17 May 2018:

  • The Supervisory Board should include at least two industry representatives from the sectors telecommunications, media and/or IT. At this time, all Supervisory Board members have pertinent knowledge of the industry and the competence that is required;
  • The Supervisory Board should have at least one member with international experience (e.g. in the sector financial engineering, telecommunications, M&A). All members of the Supervisory Board have experience and competencies in these areas and meet all of these target requirements;
  • This target criterion is also met because only Mr Vlasios Choulidis was active as a Management Board member and CEO before his election to the Supervisory Board. Furthermore, the Supervisory Board members should disclose immediately to the Supervisory Board any conflicts of interest which have currently arisen and, in the event of a permanent conflict of interest, resign their position on the Supervisory Board. No conflicts of interest of this nature arose during the reporting period;
  • The Supervisory Board should have at least two members who do not have a personal or commercial relationship to the Company, its officers and directors, a controlling shareholder or a company affiliated with the latter that can lead to a major conflict of interest which is not only temporary. In the estimation of the Supervisory Board, at least two members are independent, namely, Dr Claudia Borgas-Herold and Mr Norbert Lang;
  • Supervisory Board members should resign from the Supervisory Board upon conclusion of the Annual General Meeting following their 75th birthday. This target criterion is also observed;
  • At least one member of the Supervisory Board should be a woman. This target criterion is fulfilled by the membership of Dr Claudia Borgas-Herold on the Supervisory Board.

Furthermore, the Supervisory Board has established a general limit of 25 years for the total length of membership on the Supervisory Board pursuant to Clause 5.4.1 of the German Corporate Governance Codex; the current Supervisory Board is also in compliance with this limit.

During the reporting period as in the past, the Supervisory Board deliberated on the aforementioned targets for its composition, gave special regard to them with respect to the competence profile for the body as a whole and affirmed its commitment to them. The composition of the Supervisory Board is in line with the defined targets and the competence profile.

The Supervisory Board's nominations of candidates for election to the Supervisory Board, while taking these goals into account and seeking to fulfil the competence profile for the body as a whole, will continue to be oriented to the welfare of the Company.

In setting targets for the proportion of women on the Supervisory Board and Management Board pursuant to Section 111 (5) first sentence AktG in fiscal year 2018, the Supervisory Board remained committed to a target for the proportion of women on the Supervisory Board of 16.66% and for the proportion of women on the Management Board of 0%. The deadline for the achievement of the aforementioned targets has been set until 30 June 2022. Independently of these decisions, the selection of the potential members of the Boards should always be based on the individual competence profiles of the candidates; nevertheless, the Supervisory Board will strive to give preference to women candidates whenever the qualifications of multiple candidates are equivalent. The set targets have been and are currently met.

Unless stub periods are created, the term of office of each Supervisory Board members will end upon the adjournment of the Annual General Meeting that adopts a resolution discharging the Supervisory Board members for fiscal year 2022.

Working methods and composition of the committees

Previous to its balance sheet meeting on 21 March 2018, the Supervisory Board had maintained three committees: namely, a Nominating Committee, an Audit Committee and a Personnel Committee. The Nominating Committee comprised all of the members of the Supervisory Board, was chaired by the Supervisory Board chairperson, and was responsible for proposing to the Supervisory Board suitable candidates for the latter's election proposals to the Annual General Meeting. The Audit Committee was governed by its own rules of procedure. Moreover, unless otherwise mandated by legal provisions, the provisions of the articles of association and by-laws applicable to the Supervisory Board as well as the Supervisory Board's rules of procedure applied mutatis mutandis to this and to all other Supervisory Board committees.

During its balance sheet meeting in March 2018, the Supervisory Board decided to dissolve all of its committees so that in future all Supervisory Board members have the opportunity to participate in any and all Supervisory Board matters at peer level. Since that time, the Supervisory Board has performed all of its duties and responsibilities as a full body.

Management Board

Working methods of the Management Board

The Management Board is the managing body of the corporate group. It comprised 3 persons in fiscal year 2018. The Management Board conducts business operations in accordance with law and the articles of association and by-laws, with the rules of procedure approved by the Supervisory Board and with the applicable recommendations of the German Corporate Governance Codex insofar as deviations in accordance with Section 161 AktG have not been declared.

It is responsible for preparation of the interim and annual financial statements and for the appointments to key personnel positions in the Company.

Decisions of fundamental importance are subject to the agreement of the Supervisory Board. The Management Board reports to the Supervisory Board in accordance with the legal provisions of Section 90 AktG and reports at least once a month to the Supervisory Board chairperson orally and, at the request of the Supervisory Board chairperson, in writing; the report gives an overview of the current status of the report topics deemed relevant pursuant to Section 90 AktG. Accordingly, the chairperson of the Supervisory Board is notified without delay by the chairperson or spokesperson or the chief financial officer of any important events that are of major significance for the assessment of the position and development as well as the management of Company. An important cause includes as well any significant deviation from the budget or other forecasts of the Company. The chairperson or spokesperson of the Management Board or the chief financial officer also notifies the Supervisory Board chairperson, in advance if possible, otherwise without delay, of any and every ad hoc announcement by the Company pursuant to Art. 17 MAR.

The Management Board conducts the Company's operations in joint responsibility in accordance with consistent targets, budgets and guidelines. Regardless of the joint responsibility of the Management Board, each of the Management Board members acts on his or her own responsibility for the division that has been assigned to him or her, but is nevertheless required to subordinate the interests related to the division assigned to him or her to the welfare of the Company as a whole.

In the fiscal year 2017, the Management Board has pursuant to Section 76 (4) first sentence AktG set targets of 5.3% each for the proportion of women in the two management levels below the Management Board and a deadline for the achievement of the targets until 30 June 2022. The set targets have been and are currently met.

The Supervisory Board regulates the allocation of duties and responsibilities within the Management Board at the suggestion of the Management Board in a business allocation plan.

The Management Board members notify one another of important incidents within their business divisions.

Regardless of their responsibilities to their divisions, all Management Board members must at all times track events and information that are decisive for the course of the Company's business so that they are able to ward off imminent harm or to carry out desirable improvements or expedient changes by addressing the Management Board as a whole or by other appropriate means.

The Management Board as a whole makes decisions regarding any and all matters that are of special significance and broad impact for the Company or its subsidiaries and affiliates.

Decisions of the Management Board as a whole are made by simple majority vote. In the event of parity of votes, the Management Board chairperson casts the deciding vote. Management Board decisions are recorded in written minutes of the meetings.

As a rule, the Management Board as a whole meets every two weeks or otherwise whenever necessary.

Each and every Management Board member shall disclose without delay any conflicts of interest to the Supervisory Board.

Current composition of the Management Board

The Management Board of 1&1 Drillisch AG in fiscal year 2018 had the following 3 members:

  • Ralph Dommermuth, Management Board chairman
    (Management Board member since 1 January 2018)
  • Martin Witt, Management Board deputy chairman
    (Management Board member since 1 October 2017)
  • André Driesen, chief financial officer
    (in the Company since 2000 and Management Board member since 1 April 2015)

Information regarding relevant corporate management practices within the sense of Section 289f (2) no. 2 HGB – risk management/compliance – diversity concept

If the Company's success is to be assured over the long term, it is essential to identify and analyse the risks of business actions effectively and to eliminate or restrict their effects by means of the appropriate steering mechanisms. The Company's risk management system ensures the responsible handling of these risks. It is especially designed with the aim of recognising risks early, then assessing and controlling them. The system is the subject of constant further development and adaptation to changing circumstances. As necessary, the Management Board regularly reports to the Supervisory Board regarding current risks and the measures initiated to handle them. The effectiveness of the internal controlling system and of the risk management system – as well as the internal risk reporting – was monitored by the Supervisory Board's Audit Committee until the balance sheet meeting on 21 March 2018. Since the dissolution of the Audit Committee per 21 March 2018, the Supervisory Board has been performing this task as a full body.

The major features of the internal controlling and risk management system with regard to the accounting process are described in detail in the management report pursuant to Section 289 (4) HGB and in the consolidated management report page 54 of the Annual Report 2018) pursuant to Section 315 (4) HGB. The Management Board also reports in detail in this document on current risks and their development.

Compliance is an important element of the management and corporate culture at 1&1 Drillisch Group. For the Company, compliance encompasses the totality of all measures and actions aimed at ensuring conformity with legal statutes and regulations as well as with the Company's own internal standards, principles and rules. In the opinion of the Company, conduct that is legally and ethically beyond reproach lays the groundwork for all long-term company success. To this end, the Management Board has implemented a compliance management system that begins with, and builds on, a central compliance directive. The compliance directive applies to all of the officers, directors and employees of the corporate group and ensures that the values system is consistently and continuously practised throughout the Company.

Key elements of the compliance regulation concern a fair, respectful and trustworthy approach when dealing with colleagues and business partners as well as the conduct displayed toward competitors. Bribery and corruption are not tolerated at the Company; the compliance directive unambiguously embodies this attitude through appropriate prohibitions and instructions. Violations of compliance requirements are unacceptable for us. We rigorously follow up on any indications of violations and obtain clarification of the root causes. Whenever any violations are determined, they are immediately rectified and, if necessary, strictly sanctioned as appropriate.

Diversity aspects are always given consideration when appointing the members of the Management Board and the Supervisory Board. The Company regards diversity as more than simply a desirable element; it is decisive for the success of the Company. Accordingly, the Company pursues overall a corporate culture of appreciation in which individual differences with respect to culture, nationality, sex, age group and religion are desired, and equal opportunity - without regard for age, disabilities, ethnic-cultural origin, sex, religion and philosophy or sexual identity - is encouraged.

The strengths of individuals – meaning everything that makes the individual employees unique and distinctive within the Company – have made it at all possible for the Company to become what it is today. A workforce comprising personalities from all walks of life offers ideal general conditions for creativity and productivity – and for employee satisfaction as well. The resulting potential for ideas and innovation strengthens the Company's competitiveness and enhances its chances on the markets of the future. In keeping with this thought, a field of activity and function should be found for each and every employee in which the potential and talents of the individual can be exploited to the fullest, and not only for employees; diversity in terms of age, sex or professional experience, for example, should also be taken into consideration during the appointment of Management and Supervisory Board members – in the Company's own interest as well.

Owing to the size of its workforce and the open and trusting atmosphere, however, the Company does not pursue a concrete diversity concept going beyond this. The encouragement of diversity cannot be realised by a standard solution such as would be implemented by a concept of this type. The selection and appointment of persons to governing body positions should be based on objective factors such as qualifications and professional suitability and should be in line with the individual competence profile of the potential executives, whereby the Company strives to give priority to women candidates whenever the qualifications of multiple candidates are equivalent.

Financial publicity/Transparency

It is the declared objective of 1&1 Drillisch to inform institutional investors, private stockholders, financial analysts, employees and an interested general public about the position of the Company by regularly publishing honest and up-to-date communications that are available simultaneously and equally to all parties.

In keeping with this principle, all significant information such as press releases, ad hoc announcements and other obligatory communications (such as directors' dealings or voting rights notifications) as well as any and all financial reports are made public in conformity with statutory requirements. Moreover, 1&1 Drillisch provides comprehensive information on the Company's website (www.1und1-drillisch.de). Documents and information relating to the Company's General Meetings as well as other commercially relevant information can be found on the site.

1&1 Drillisch reports on its business development as well as its financial and earnings positions to shareholders, analysts and press representatives four times in every fiscal year in accordance with a fixed financial calendar. The financial calendar is published in accordance with legal regulations on the Company's internet site and is updated regularly.

In addition, the Management Board issues ad hoc announcements without delay regarding any circumstances that are not generally known and could have a significant impact on the stock price.

As part of its investor relations programme, management meet regularly with analysts and institutional investors. Moreover, analyst conferences are held for the presentation of the semi-annual and annual figures; investors and analysts can also obtain access to these figures by phone.

Accounting and audit

The Group's accounting is based on the principles of the International Financial Reporting Standards (IFRS, as they are applicable in the EU) while taking into consideration the provisions of Section 315e HGB. The annual financial statements relevant for the disbursement and tax assessments, on the other hand, are prepared in accordance with the provisions of the German Commercial Code (HGB). Single and consolidated annual financial statements are audited by impartial chartered public accountants. The General Meeting adopts a resolution appointing the auditor. Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Eschborn/Frankfurt am Main, has been appointed to perform the audit for fiscal year 2018. The Supervisory Board awards the audit engagement, determines the focal points of the audit and the audit fee and reviews the impartiality of the auditor.

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft has been the auditor for 1&1 Drillisch AG and the Group since fiscal year 2018. Mr Jens Kemmerich, chartered public accountant, has been in charge of the audit since fiscal year 2018.

Remuneration for Management Board and Supervisory Board

The basic features of the remuneration system for Management and Supervisory Boards are described in the remuneration report pages 69 and 70 (point 5) of the management report. The disclosure of the remuneration paid to the members of Management and Supervisory Boards, itemised and broken down according to components (in accordance with legal statutes and the German Corporate Governance Codex) is included in the remuneration report and also in the consolidated notes on page 175.

Stock option programmes

The basic features of the employee stock option programme are described in the remuneration report (pages 69 and 70, point 5) of the management report. Additional details are included on page 156 et seqq. under point 45 of the consolidated notes.

Declaration of conformity Download

Archived Declarations of Conformity (German)

Press Releases

06.09.2019

Drillisch AG

1&1 Drillisch builds mobile radio sites in rural areas - Contract signed with federal ministries
Maintal, September 06, 2019. 1&1 Drillisch concluded an agreement with the Federal Ministry of Transport and Digital Infrastructure (BMVI) and the Federal Ministry of Finance (BMF) on the construction of mobile radio sites in so-called "white spots". The company is thus helping to close existing supply gaps, especially in rural...

28.06.2019

Drillisch

Changes in the Management Board of 1&1 Drillisch
- COO Martin Witt focuses on building 5G network - CFO André Driesen leaves the company at the end of the year
Maintal, 28 June 2019. On 30 June 2019, Martin Witt (64), Chief Operating Officer (COO) of
1&1 Drillisch AG, will leave the company's Management Board. Witt has asked the Supervisory
Board not to extend his contract, which will expire at that time. After 1&1 Drillisch has
successfully acquired 5G spectrum...

16.11.2018

Drillisch AG

1&1 Drillisch criticises award terms for 5G spectrum auction — Dommermuth calls for changes to encourage competition
 
Montabaur, 16 November 2018. 1&1 Drillisch AG has criticized the planned award terms for the 5G spectrum auctions proposed by the Federal Network Agency (Bundesnetzagentur). The final draft for the agency’s Advisory Board still does not contain any service provider obligation or obligatory national roaming.
“The regulatory authority has...
Further press releases

Reports

Report on the first half-year 2019

PDF / Download size 1.2 MB

Interim Statement Q1 2019

PDF / Download size 971 KB

Annual Report 2018

PDF / Download size 3.8 MB

Interim Statement Q3 2018

PDF / Download size 706 KB

Report on the first half-year 2018

PDF / Download size 1.0 MB

Further reports
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