Composition of the Board of Management and Supervisory Board
The Company’s Board of Management consists of three people: Dr Frank Hiller (Chairman, responsible for technical and head-office functions), Dr Andreas Strecker (Board of Management member since 1 March 2018, initially with no areas of responsibility, then since 1 April 2018 responsible for finance, human resources, purchasing and information services) and Mr Michael Wellenzohn (responsible for sales, service and marketing).
At the Supervisory Board meeting on 8 December 2017, following preparatory work by the Human Resources Committee, the Supervisory Board, as already reported, appointed Dr Andreas Strecker as a member of the Board of Management and as the Company’s Human Resources Director for the period from 1 March 2018 to 28 February 2021. On 1 April 2018, following his appointment to the Board of Management on 1 March 2018, Dr Strecker took over responsibility for finance, human resources, purchasing and information services from Dr Margarete Haase, whose term of appointment on the Board of Management ended on 30 April 2018.
By means of a resolution dated 31 January 2018, following preparatory work by the Human Resources Committee, the Supervisory Board extended Mr Wellenzohn’s appointment by five years for the period from 1 January 2019 to 31 December 2023.
In accordance with the provisions of the German Codetermination Act (MitbestG), the Supervisory Board of DEUTZ AG comprises twelve members, six members being the representatives of the shareholders and six members being the representatives of the employees.
The changes in the composition of the Supervisory Board in 2018 are as follows:
Following the re-election of the twelve members of the Supervisory Board at the Annual General Meeting on 26 April 2018, only one new appointment was made in 2018: on 20 December 2018, at the request of the Board of Management and as recommended by the Nominations Committee, the local court in Cologne appointed Dr Ulrich Dohle as a shareholder representative on the Supervisory Board of DEUTZ AG with effect from 1 January 2019 and until the next Annual General Meeting in 2019. He succeeds Mr Hans-Georg Härter, who stepped down from his post with effect from 31 December 2018. The Annual General Meeting of DEUTZ AG on 30 April 2019 is set to confirm the appointment of Dr Dohle and to elect him as a member of the Supervisory Board for the remaining term of the other Supervisory Board members, i.e. until the Annual General Meeting in 2023.
In its meeting on 13 December 2018, the Supervisory Board elected Dr Ing Bernd Bohr as its chairman with effect from 1 January 2019 and, as such, as the successor to Mr Härter in this role.
The Supervisory Board has created four committees to enable it to perform its duties effectively. They are the Human Resources Committee, the Audit Committee, the Arbitration Committee and the Nominations Committee. The Human Resources Committee consists of two representatives of the shareholders and one employee representative; the Audit and Arbitration Committees both consist of two shareholder representatives and two employee representatives; and the Nominations Committee has three members, all of whom represent the shareholders. The Audit Committee follows its own rules of procedure, which can be viewed on the DEUTZ AG website, while the other committees work according to the rules of procedure that apply to the (full) Supervisory Board.
The Human Resources Committee makes preparations for all Supervisory Board decisions concerning the appointment of members of the Board of Management and their contracts of employment, including the remuneration specified therein, and all issues arising in this connection. The committee met twice in 2018. Among the main matters addressed were the achievement of the Board of Management’s targets for 2017 and the setting of Board of Management targets, including medium-term targets, for 2018.
The work of the Audit Committee focused on monitoring the financial accounting process and on the preparatory review of the annual and consolidated financial statements, the combined management report of DEUTZ AG and the Group for 2018 and the profit appropriation resolution. Discussions were also held with the Board of Management on the condensed interim consolidated financial statements and the interim management report for the period ended 30 June 2018, which were reviewed by the auditor, and the interim management statements for the periods ended 31 March and 30 September 2018, in all cases prior to their publication.
The Audit Committee examined the audit engagement for the year ended 31 December 2018, including a review of auditor qualification and independence, the agreed fees and the proposed focus of the audit, and discussed the permitted non-audit services that were performed by the auditor in 2018 in accordance with a pre-approval catalogue and that are scheduled to be performed in 2019 as well.
In its meeting on 27 February 2019, which was attended by the Board of Management and the external auditor, the Audit Committee examined in detail the annual and consolidated financial statements on the basis of those statements and the combined management report of DEUTZ AG, the profit appropriation resolution, the separate combined non-financial report, the Board of Management report and the corresponding auditors’ reports for 2018. During the meeting, the auditor gave a detailed report on the process and key findings of its audit of the aforementioned financial statements and of the combined management report including the key audit matters and the early-warning system for risk and answered all supplementary questions comprehensively. According to the findings of the audit, no issues were identified with the internal control system relating to the accounting system or with the early-warning system for risk. The committee’s preparatory review also covered the auditor’s review of the separate combined non-financial report for DEUTZ AG that had to be produced.
In addition, it held intensive discussions on the events that led to the review and correction of carrying amounts for the Chinese joint venture DEUTZ (Dalian) Engine Co., Ltd, and the audit carried out by the FREP in connection with this. The meetings also addressed the current status of the supplier Neue Halberg-Guss GmbH, matters related to the purchase price allocation for Torqeedo, the business performance of the subsidiaries and impairment tests for investments and goodwill. The Audit Committee gave the Supervisory Board a recommendation for its proposal to the Annual General Meeting regarding the appointment of the auditor for the single-entity and consolidated financial statements for 2019 and regarding the engagement of an auditor to review the non-financial report for 2019.
The effectiveness of the risk management system, accounting-related internal control system and internal audit were also discussed in detail, as were matters related to compliance. In the meeting on 27 February 2018, the Chief Compliance Officer gave a report and answered the Audit Committee’s questions. The Head of Group Internal Audit did the same in the meeting on 30 July 2018.
The Audit Committee held four meetings in 2018, all of which were attended by all the committee’s members, the Board of Management and the external auditors.
The Arbitration Committee set up pursuant to section 27 (3) of the German Codetermination Act (MitbestG) is responsible for the activities described in section 31 (3) of the Act. It did not need to be convened during the year under review.
The Nominations Committee is tasked with proposing to the Supervisory Board suitable candidates as shareholder representatives on the Supervisory Board. The Nominations Committee met twice in 2018. Discussions at these meetings focused on the Supervisory Board election that was held in 2018.
The entire Supervisory Board was informed of the outcome of all discussions in the committees and gave its approval to the recommendations for board resolutions submitted by the committees.
In 2018, the following changes were made to the composition of the Supervisory Board’s committees after they were reformed subsequent to the Supervisory Board election. In its meeting on 13 December 2018, the Supervisory Board elected Dr Bohr to the Human Resources Committee, Arbitration Committee and Audit Committee with effect from 1 January 2019. He succeeded Mr Härter in each case. As chairman of the Supervisory Board, Dr Bohr automatically became chairman of the Nominations Committee with effect from 1 January 2019 in accordance with section 7 (3) a) sentence 2 of the Supervisory Board’s rules of procedure, which meant that no separate election needed to take place. Dr Bohr has therefore been chairman of the Nominations Committee, Human Resources Committee and Arbitration Committee, as well as a member of the Audit Committee, since 1 January 2019.
Details of all members of the Supervisory Board and its committees, as well as other directorships held by its members, are shown separately.