Excerpts from Deutsche Post AG's 2014 Group Annual Report.
Wulf von Schimmelmann
In financial year 2014, Deutsche Post DHL Group continued to perform well as an attractive investment and the provider and employer of choice in the Group’s market despite a consistently challenging economic environment. Building on Strategy 2015, the Group took steps early on to ensure that growth would remain positive beyond the current planning horizon. “Strategy 2020: Focus.Connect.Grow.” underscores Deutsche Post DHL Group’s aim of becoming the world leader in logistics and sets out the strategic priorities for the coming years.
Advising and monitoring the Board of Management
During 2014, the Supervisory Board closely examined the implementation of both Strategy 2015 and its successor Strategy 2020 as well as the Group and divisional results in the context of the global economic situation. To this end, the Board of Management provided the Supervisory Board with detailed, up-to-date information on the Group’s financial position and performance, strategic initiatives, key business transactions, the progress of acquisitions, compliance and compliance management, risk exposure and risk management and all material planning and related implementation issues. The Chairman of the Supervisory Board was also kept abreast of developments between meetings. Measures requiring the consent of the Supervisory Board were subject to detailed discussion in advance by the relevant committees.
Eight meetings during the reporting year
The Supervisory Board met four times in each half of the financial year. All members attended at least half of the meetings. The overall attendance rate exceeded 95%.
The annual and consolidated financial statements and the management reports for 2013 were discussed in detail and approved at the financial statements meeting on 11 March 2014. The meeting was also attended by the auditors. After a thorough review, we endorsed the Board of Management’s proposal for the appropriation of the net retained profit for financial year 2013. We also approved a share capital increase in order to finance a share buy-back to settle share-based payments due to executives in 2014. The financial statements meeting approved the Supervisory Board’s proposed resolutions for the Annual General Meeting (AGM). The meeting also discussed variable remuneration components, with a particular emphasis on the performance targets achieved. In addition, we examined the findings of the efficiency review of the work of the Supervisory Board. The Supervisory Board noted and accepted Bruce Edwards’ resignation from the Board of Management. Mr Edwards’ successor, John Gilbert, was appointed to the Board of Management for a three-year term.
In an extraordinary meeting of the Supervisory Board on 26 March 2014, the Board of Management gave a detailed presentation setting out the principles of “Strategy 2020: Focus.Connect.Grow.”. Another extraordinary meeting was held immediately after the Deutsche Post AG AGM on 27 May 2014 to determine the composition of the Supervisory Board committees. Hero Brahms stepped down from the Supervisory Board at the end of the AGM as he had reached the upper age limit for Supervisory Board members. The members of the Supervisory Board elected Stefan Schulte as the new chair of the Finance and Audit Committee. Details of the current members of the Supervisory Board committees are shown below.
At the Supervisory Board meeting on 27 June 2014, we discussed the Group’s IT strategy. We also considered the impending mandate renewals and new appointments relevant to the Board of Management.
At the start of July, the Supervisory Board accepted Angela Titzrath’s resignation from the Board of Management using the written procedure. The Supervisory Board approved the renewal of Jürgen Gerdes’ mandate and contract for a further five years at an extraordinary meeting on 8 July 2014.
The Supervisory Board held one ordinary meeting and one closed meeting on 22 and 23 September 2014. The main focus of the Supervisory Board meeting was the question of whether Board of Management remuneration was appropriate. The Supervisory Board decided to transfer responsibility for M&A activities from the Finance and Audit Committee to the Strategy Committee. During the closed meeting, presentations by external speakers describing the customers’ and investors’ point of view, as well as contributions from other speakers on social sustainability in logistics companies and management culture, formed the basis for lively debate in the plenary meeting. The discussions focused on implementing Strategy 2015 and integrating Strategy 2020 into Group and divisional activities. As part of the on-going training and support recommended for Supervisory Board members in the German Corporate Governance Code (DCGK), the meeting was followed by a Directors’ Day, with presentations by selected speakers.
At the extraordinary Supervisory Board meeting on 31 October 2014, we appointed Melanie Kreis as member of the Board of Management and Labour Director.
On 10 December, at the last meeting of the Supervisory Board in 2014, we approved the 2015 business plan after extensive discussions and set the Board of Management’s performance targets for 2015. In addition, a share capital increase was resolved upon for the purpose of financing a share buy-back to settle share-based payments due to executives in 2015. We also reiterated our unqualified Declaration of Conformity with the German Corporate Governance Code.
Hard work by the committees
The Executive Committee met five times during the year under review. The main agenda items were matters regarding the Board of Management and preparations for the various Supervisory Board meetings.
The Personnel Committee met four times. The topics discussed included women in executive positions, personnel development measures, the Group-wide Certified programme which promotes employee commitment and changes in corporate culture, and the annual Employee Opinion Survey.
The Finance and Audit Committee met seven times. Following Hero Brahms’ resignation, both Stefan Schulte, Chair of the Finance and Audit Committee since 27 May 2014, and Simone Menne, also a member of the Finance and Audit Committee since 27 May 2014, have the accounting and auditing expertise required under the Aktiengesetz (AktG – German Stock Corporation Act). At the March meeting, the Committee examined the annual and consolidated financial statements for 2013 and recommended that the Supervisory Board approve the statements. The auditors attended the meeting and gave a detailed presentation on their findings regarding the key audit priorities for 2013 as defined by the Committee and made specific recommendations based on their findings. Following the AGM, the Finance and Audit Committee engaged the auditors to audit the 2014 annual and consolidated financial statements and the interim financial report for the first half of the year. The Committee also defined the key audit priorities. The Committee discussed the reviewed quarterly and half-year interim reports together with the Board of Management and the auditors prior to publication. The March meeting also examined recommendations to the Supervisory Board regarding the agenda of the AGM and its proposed resolutions. Key Group risk management factors were also examined during the meeting as planned. At the Finance and Audit Committee meeting on 18 June 2014, the Committee listened to a presentation on the findings of internal audits and discussed measures to implement the auditors’ recommendations on the key audit priorities. At the Finance and Audit Committee meeting on 16 September 2014, the Chief Compliance Officer presented a detailed report on compliance. The report focused primarily on enhancing compliance organisation and management. The Finance and Audit Committee advised the Supervisory Board to transfer responsibility for M&A activities to the Strategy Committee. The Committee also examined the investment strategy for pension assets. On 3 December 2014, the Finance and Audit Committee meeting concentrated on the Group business plan for 2015 and recommended that the Supervisory Board approve the plan. The Committee discussed the Group’s performance and the internal control and risk management system at regular intervals during the year. The Committee discussed the appropriateness of the Group’s accounting system with the auditors.
The Strategy Committee met twice in 2014 and focused primarily on the progress made on implementing Strategy 2015, as well as how to develop and implement Strategy 2020.
The Nomination Committee met once in 2014 to discuss nominations for the 2014 AGM and approve the recommendations made to the Supervisory Board. Here, discussions covered the re-election of Henning Kagermann, Ulrich Schröder and Stefan Schulte and the nomination of Simone Menne for membership of the Supervisory Board.
The Mediation Committee formed pursuant to section 27 (3) of the Mitbestimmungsgesetz (German Co-determination Act) met once in 2014.
The chairs of the committees reported on the committees’ deliberations in the subsequent Supervisory Board meeting.
Changes to the composition of the Supervisory Board and Board of Management
Having reached the upper age limit for office, Hero Brahms stepped down as a member of the Supervisory Board at the end of the AGM on 27 May 2014. The AGM elected Simone Menne as a shareholder representative on the Supervisory Board. At the extraordinary meeting held immediately after the AGM, the Supervisory Board voted to appoint Stefan Schulte as chair and Simone Menne as a member of the Finance and Audit Committee. Details of the current members of the Supervisory Board committees are shown below. With regard to the employee representatives, Heinrich Josef Busch, the executive management representative, resigned from the Supervisory Board as of 30 November 2014, on the grounds that he would reach retirement age at the end of the year. Jörg von Dosky was appointed by the court as his successor on the Supervisory Board on 9 December 2014. The composition of the Board of Management changed as follows during the year under review: Bruce Edwards stepped down from the Board of Management on 10 March 2014. He was replaced by John Gilbert, who became a member of the Board of Management on 11 March 2014. Angela Titzrath stepped down from the Board of Management as of 2 July 2014. Melanie Kreis was appointed as a member of the Board of Management and Labour Director on 31 October 2014. In the interim period, the Chief Executive Officer Frank Appel also took on responsibility for the Human Resources board department.
Managing conflicts of interest
None of the Supervisory Board members holds positions on the governing bodies of or provides consultancy services to the Group’s main competitors. The Supervisory Board has not been informed of any conflicts of interest affecting individual members during the year under review.
Full compliance with the recommendations of the German Corporate Governance Code
In December 2014, the Board of Management and the Supervisory Board issued an unqualified Declaration of Conformity pursuant to section 161 of the AktG, which was also published on the company’s website. The declarations from previous years are also available on the website. In financial year 2014, Deutsche Post AG complied with all recommendations of the Government Commission for the German Corporate Governance Code, as amended on 13 May 2013 and 24 June 2014. The company also intends to continue to comply with all recommendations contained in the Code as amended on 24 June 2014. The Corporate Governance Report contains more information about corporate governance within the company and the remuneration report.
Annual and consolidated financial statements audited
The auditors appointed by the AGM, PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft (PwC), Düsseldorf, conducted an audit of the annual and consolidated financial statements for financial year 2014, including the respective management reports, and issued unqualified audit opinions. PwC also reviewed the quarterly financial reports and the interim report for the first half of the year.
Following a detailed preliminary assessment by the Finance and Audit Committee, the Supervisory Board reviewed the 2014 annual and consolidated financial statements and the management reports, including the appropriation of the net retained profit as proposed by the Board of Management, at the financial statements meeting held on 10 March 2015. The auditors’ reports were made available to all Supervisory Board members and were discussed in detail with the Board of Management in the presence of the auditors. The Supervisory Board concurred with the results of the audit and approved the annual and consolidated financial statements for financial year 2014, as recommended by the Finance and Audit Committee. No objections were raised on the basis of the final outcome of the examination by the Supervisory Board and the Finance and Audit Committee of the annual and consolidated financial statements, the management reports and the proposal for the appropriation of the net retained profit. The Supervisory Board endorses the Board of Management’s proposal for the appropriation of the net retained profit and the payment of a dividend of €0.85 per share.
We would like to thank the Board of Management and all employees for their genuine commitment and all their hard work in a challenging economic climate. You have all made an important contribution to the company’s success.
Bonn, 10 March 2015
The Supervisory Board
Wulf von Schimmelmann
|Shareholder representatives||Employee representatives|
|Finance and Audit Committee|
(pursuant to section 27 (3) of the German Co-determination Act)