(Abridged version of the annual report)
Effective implementation of corporate governance is an important aspect of PUMA’s corporate policy. Transparent and responsible corporate governance is a prerequisite for achieving corporate targets and for increasing the Company’s value in a sustainable manner. The Administrative Board and the Managing Directors work closely with each other in the interests of the entire Company to ensure that the Company is managed and monitored in an efficient way that will ensure sustainable added value through good corporate governance.
Statement of Compliance pursuant to Section 161 of the German Stock Corporation Act (AktG)
2012 Statement of Compliance:
Pursuant to Art. 9 (1) c (ii) of the SE Regulation (SE-VO) and Section 22(6) of the German SE Implementation Act (SEAG), in conjunction with Section 161 AktG, PUMA SE’s Administrative Board declares that PUMA SE (formerly PUMA AG) has been and is in compliance with recommendations issued by the “Government Commission on the German Corporate Governance Code” in the code version dated May 26, 2010, valid since July 2, 2010, (the “Code”) and in the code version dated May 15, valid since June 15, 2012, (the “Code”) since the last Statement of Compliance from October 2011 in consideration of the particulars of PUMA SE’s single-tier system described under item 1 with the exceptions mentioned under item 2, and where it is not in compliance, explains why not.
1. Particulars of the Single-Tier Corporate Governance Systems
According to Art. 43 – 45 SE-VO, in conjunction with Sections 20 et seq. SEAG, under the single-tier system, management of the SE is the responsibility of a single company organ, the Administrative Board; see Para. 4 of the Code’s Preamble. The Administrative Board manages the Company, determines the Company’s basic business strategies and monitors the implementation of said strategies by the Managing Directors. The Managing Directors manage the Company’s business, represent the Company in and out of court and are bound by instructions from the Administrative Board.
Basically, PUMA SE takes those parts of the Code that used to apply to the Supervisory Board and applies them to the Administrative Board and takes those parts of the Code that used to apply to the Board of Management and applies them to its Managing Directors. The following exceptions apply with respect to the legal framework for the single-tier system:
- In derogation of No. 2.2.1(1) of the Code, the Administrative Board must submit the annual financial statements and the consolidated financial statements to the Annual General Meeting, Section 48 (2)(2) SEAG.
- In derogation of Nos. 2.3.1(1) and 3.7(3) of the Code, the Administrative Board is responsible for convening the Annual General Meeting; Sections 48 and 22(2) SEAG.
- The duties of the Board of Management listed in Sections 4.1.1 (Corporate Governance), 4.1.2 in conjunction with 3.2(1) (Development of the Company’s Strategic Orientation), 6.1 (Publication of Insider Information) and 6.2 (Publication of Notifications on Voting Rights) of the Code are the responsibility of the Administrative Board, Section 22(1) SEAG.
- The powers of the Board of Management governed by Sections 2.3.3(2) (Proxy Bound by Instructions), 3.7(1) (Statement on a Takeover Bid) and 3.7(2) (Conduct during a Takeover Bid), as well as 3.10 (Corporate Governance Report), 4.1.3 (Compliance) and 4.1.4 (Risk Management and Controlling) of the Code shall be the responsibility of PUMA SE’s Administrative Board; Section 22(6) SEAG.
- In derogation of Nos. 5.1.2(5) and 5.1.2(6) of the Code, Managing Directors, unlike members of the Board of Management, are not subject to a fixed, maximum term of appointment; Section 40(1)(1) SEAG.
- In derogation of Nos. 5.4.2(2) and 5.4.4 of the Code, members of the Administrative Board may be appointed as Managing Directors, provided that the majority of the Administrative Board continues to consist of non-executive Managing Directors; Section 40(1)(2) SEAG.
2. Exceptions to the Code’s recommendations
- In derogation of No. 3.8(3) of the Code, members of the Administrative Board are provided with D&O insurance with no deductible. The Administrative Board feels that it can dispense with a deductible for members of the Administrative Board, because the D&O insurance is group insurance for people in Germany and abroad, and a deductible is fairly unusual abroad.
- In derogation of No. 4.2.3(5) of the Code, no limits on severance payments for premature termination as a Managing Director due to a change of control have been agreed to, because an agreement drawn up in advance would not be able to take into account the specific situation that gave rise to a premature termination or the other circumstances of the individual case of termination.
- In accordance with the authorization by the Annual General Meeting on April 22, 2008, pursuant to Section 286(5) HGB, the Company has not published the amount of compensation for individual members of the Board of Management and, until the authorization expires, will not publish the amount of compensation for individual Managing Directors (Sections 4.2.4 and 4.2.5 of the German Corporate Governance Code. The authorization applies to the Managing Directors and they shall adhere to the authorization when they prepare the annual financial statements.
- Deviating from Sec. 5.4.6 of the Code the remuneration of the Administrative Board members is not shown individually. In the opinion of PUMA SE this is no additional information relevant to the capital market as the respective remuneration regulations are public domain in the Articles of Association.
The Statement of Compliance has been made permanent available to the shareholders on the Internet page under http://about.puma.com/category/investors/corp-gov/declaration/?lang=en
Relevant disclosures of corporate governance practices that are applied beyond the regulatory requirements
The Company is run by the Administrative Board (“single-tier system”), which determines the guidelines of the Company’s business activities and monitors the implementation of said activities by the Managing Directors.
In order to ensure that the Company’s value will increase in a sustainable way, guidelines have been developed and these have been summarized in PUMAVision (see http://about.puma.com under “Sustainable Development. The PUMA Code of Ethics and Code of Conduct (see http://about.puma.com under “Sustainable Development”) prescribed ethical standards and environmental standards with which both employees and suppliers are required to comply.
Taking diversity and our international culture into account
The Administrative Board and the Managing Directors of PUMA SE must consider the recommendations of the German Corporate Governance Code, according to which the Company’s international operations and diversity, among other things, must be taken into account when determining the composition of the Administrative Board and the Managing Directors, as well as when filling management positions within the Company – and in particular, they must see to it that a reasonable percentage of women will be placed in such positions.
The members of the Administrative Board have strong international backgrounds. Some of them have many years of international ties all over the world and have amassed extensive international experience through various assignments abroad.
The Administrative Board has established the goal of ensuring that future members of the Board will also have international backgrounds by requiring that proposed candidates to the Administrative Board must also have a strong international background and the relevant networks, international experience and orientation. Likewise, a reasonable percentage of women on the Administrative Board should be guaranteed by nominating a corresponding percentage of female candidates.
The Administrative Board prevents potential conflicts of interests of its members by regularly monitoring and critically scrutinizing its members’ other activities.
The Administrative Board shall also act to ensure diversity in the composition of the Managing Directors and shall endeavor to ensure that women comprise a reasonable percentage of the Managing Directors. In the future, the inclusion of women amongst the Managing Directors shall be guaranteed in the event of a new appointment, in particular by giving special consideration to women from among several equally qualified applicants. If a position must be filled by outside candidates, we will take special care to consider properly qualified female candidates.
The same applies when filling management positions. When filling positions, the Managing Directors shall act to ensure diversity and shall endeavor to ensure that women comprise a reasonable percentage of the candidates considered. Today, there are several women in management positions. In order to include even more women in management positions in the future, PUMA SE is using part-time and half-day models, as well as flexible working hours and the provision of more childcare places to promote a better balance between work and family life.
Members of PUMA SE’s Administrative Board, its Managing Directors and other executives have the opportunity to attend appropriate training and continuing education programs.
Description of the working practices of the Administrative Board and the Managing Directors and the composition and working practices of their committees
The Rules of Procedure for the Administrative Board and the Managing Directors are available under “Company” at http://about.PUMA.com.
In accordance with the Articles of Association, the Administrative Board consists of at least three members. The members of the Administrative Board are appointed by the Annual General Meeting, a third of them pursuant to the German Codetermination Act based on binding nominations by employee representatives.
The following individuals were members of the Administrative Board in 2012:
• Jochen Zeitz (Member and Chairman until 11/30/2012)
• Jean- François Palus (Chairman as of 12/01/2012)
• François-Henri Pinault
• Grégoire Amigues (Member until 04/24/2012)
• Todd Hymel (Member as of 04/24/2012)
• Thore Ohlsson
• Michel Friocourt
• Bernd Illig (Employee Representative)
• Martin Köppel (Employee Representative)
• Victor Fernandes (Member until 04/24/2012) (Employee Representative)
• Guy Buzzard (Member as of 04/24/2012) (Employee Representative)
The members of the Administrative Board are appointed for a period up to the close of the Annual General Meeting that adopts the resolution approving the actions of the Board for the fourth financial year after the term of office began (the financial year in which the term of office begins is not counted) and no later than six years after the respective Administrative Board member was appointed. Administrative Board members may not be reappointed.
Meetings of the Administrative Board must be held at least every three months. Meetings must also be held if required for the Company’s welfare or if a member of the Administrative Board demands that a meeting be convened.
The Administrative Board convened four times in 2012.
The names of the members of the Administrative Board are listed in the explanatory disclosures in the Notes.
To perform its duties, the Administrative Board has established various committees, which report to it regularly on their work.
The members of the Executive Committee in 2012 are Jochen Zeitz (Member and Chairman until 11/30/2012), Michel Friocourt, Martin Köppel and Thore Ohlsson (Member and Chairman as of 12/01/2012). The Executive Committee is responsible for organizing meetings of the Administrative Board and for making decisions when instructed by the Administrative Board to do so on its behalf.
The members of the Personnel Committee in 2012 are François-Henri Pinault (Chairman), Jochen Zeitz (Member until 11/30/2012), Bernd Illig and Jean-François Palus (Member as of 12/01/2012). Personnel Committee meetings are scheduled to coincide with meetings of the Administrative Board. The Personnel Committee is responsible for entering into and making changes to Managing Directors’ employment contracts and for establishing policies for Human Resources and personnel development. The entire Administrative Board decides on issues involving the Managing Directors’ compensations based on recommendations from the Personnel Committee.
In 2012 the Audit Committee is comprised of the Administrative Board members Thore Ohlsson (Chairman), Jean-François Palus, Bernd Illig (Member until 07/25/2012) and Guy Buzzard (Member as of 07/25/2012).
In particular, the Audit Committee is responsible for accounting issues and monitoring the accounting process, the effectiveness of the internal control system, the risk management system, internal audits, compliance and the audit of the financial statements, and here in particular for the required independence of the statutory auditors, issuing the audit assignment to the statutory auditors, defining the audit areas of focus, any additional services to be performed by the statutory auditors and the fee agreement.
The Chairman of the Audit Committee must be an independent shareholder representative and must have expertise in the fields of accounting and auditing in accordance with Section 100(5) AktG.
The recommendation of the Administrative Board on the selection of the statutory auditors must be based on a corresponding recommendation by the Audit Committee. Once the Annual General Meeting has appointed the statutory auditors, and the Administrative Board has issued the audit assignment, the Audit Committee shall work with the statutory auditors to specify the scope of the audit and the audit areas of focus.
The statutory auditors shall attend the meeting convened by the Audit Committee to review the annual financial statements and the consolidated financial statements and shall report on the key findings of their audit, in particular material weaknesses of the internal control and risk management system relating to the accounting process. They shall also inform the Committee about other services they have provided in addition to auditing services and shall confirm their independence.
Each month, the Audit Committee shall receive financial data on the PUMA Group, which will allow the tracking of developments in net assets, financial position, results of operations and the order books on a continual basis. The Audit Committee shall also deal with issues relating to the balance sheet and income statement and shall discuss these with Management. In addition, when the internal audit projects are completed, the Audit Committee shall receive the audit reports, which must also include any actions taken.
In 2012 the members of the Sustainability Committee were Jochen Zeitz (Member and Chairman until 11/30/2012), François-Henri Pinault, Martin Köppel and Jean-François Palus (Member and Chairman as of 12/01/2012). It is responsible for promoting PUMA.creative, PUMA.safe and PUMA.peace along with the principles of creativity, sustainability and peace, and an awareness of the need to act fairly, honestly, positively and creatively in every decision made and every action taken.
Only shareholder representatives serving on the Administrative Board may be members of the Nominating Committee. The Administrative Board has elected François-Henri Pinault (Chairman until 11/30/2012), Jochen Zeitz (Member until 11/30/2012), Grégoire Amigues (Member until 04/24/2012), Jean-François Palus (Member and Chairman as of 12/01/2012) und Todd Hymel (Member as of 07/25/2012) to the Nominating Committee. The Nominating Committee is responsible for proposing suitable shareholder-candidates to the Administrative Board for its voting recommendations to the Annual General Meeting.