Corporate Governance

Declaration on Corporate Governance of HOCHTIEF Aktiengesellschaft and for the HOCHTIEF Group pursuant to Sec. 289f and Sec. 315d of the German Commercial Code (HGB)

In February 2018, the Executive Board and Supervisory Board published the annual Compliance Declaration pursuant to Section 161 of the German Stock Corporations Act (AktG). The Compliance Declaration may be viewed via the above link.

Targets for the percentage of women on the Executive Board and the two management levels beneath the Executive Board (Sections 76 (4) and 111 (5) AktG)

Under the Act on Equal Participation of Women and Men in Leadership Positions in the Private and Public Sectors, of May 2015, listed companies and companies subject to codetermination, such as HOCHTIEF Aktiengesellschaft, are required to set targets for the percentage of women on the Executive Board and the two management levels beneath the Executive Board. They must also stipulate the date by which each target for the percentage of women is to be attained. The first date stipulated for attainment must be no later than June 30, 2017.

On September 24, 2015, the Supervisory Board of HOCHTIEF Aktiengesellschaft set a target of 0% for the percentage of women on the Company’s Executive Board and the period up to June 30, 2017 as the target attainment period. The status quo was thus retained with regard to the Executive Board. For each of the two management levels beneath the Executive Board, the Executive Board of HOCHTIEF Aktiengesellschaft set a target of 7.69% and the period up to June 30, 2017 as the attainment period; the target relates solely to HOCHTIEF Aktiengesellschaft (without subsidiaries). This retained the status quo.

At the end of the target attainment period, on June 30, 2017, the percentage of women on the Company’s Executive Board was equal to the target of 0%. The target of 7.69% for the first management level beneath the Executive Board was exceeded, with 11.1%. For the second management level beneath the Executive Board, the target of 7.69% was even substantially exceeded, with 25.0%.

The Supervisory Board of HOCHTIEF Aktiengesellschaft has once again set a target of 0% for the percentage of women on the Company’s Executive Board; this target relates solely to HOCHTIEF Aktiengesellschaft (without subsidiaries). As the target attainment period, it stipulated the period up to June 30, 2022. The status quo is thus retained with regard to the Executive Board.

The Executive Board of HOCHTIEF Aktiengesellschaft has set a target of 11.1% for the first and a target of 25.0% for the second management level beneath the Executive Board; these targets relate solely to HOCHTIEF Aktiengesellschaft (without subsidiaries). As the target attainment period, it stipulated the period up to June 30, 2022. The status quo is thus retained with regard to these two management levels. This does not rule out an increase in the percentage of women at these two management levels before expiration of the target attainment period.

Targets for the percentage of women on the Supervisory Board, in top management, and at the two management levels beneath top management have also been set together with attainment periods for all other companies in the HOCHTIEF Group that are affected by the Act.

Compliance with the minimum quotas for appointments of women and men to the Supervisory Board in accordance with Section 96 (2) AktG

As HOCHTIEF Aktiengesellschaft is a listed company and also subject to full codetermination, its Supervisory Board has been required since January 1, 2016 to observe statutory minimum percentages of 30% women and 30% men when filling Supervisory Board seats that become vacant. These minimum percentages were attained in the Supervisory Board elections in spring 2016. The Supervisory Board has since comprised five women and eleven men. There was no change in this regard during 2017.

Description of the diversity policy pursued with regard to the composition of the Executive Board and Supervisory Board in relation to aspects such as age, gender, and educational or professional background, together with the objectives of that policy, the way in which it is implemented, and outcomes in the reporting year

1. Supervisory Board

In order to implement a diversity policy for the Supervisory Board, the Supervisory Board has both set targets for its composition and adopted a profile of skills and expertise for the Supervisory Board as a whole. The objective is for the Supervisory Board to be composed such that it is able to provide professional control and advice for the Executive Board. In addition, the Supervisory Board is to be composed in such a way that its members as a group possess the knowledge, ability, and professional experience required to properly complete its tasks. It cannot be expected in this connection for every single member of the Supervisory Board to possess all requisite knowledge and experience in full. However, at least one member of the Supervisory Board is required to be available as an expert authority for each area of the Supervisory Board’s work, thus ensuring that the requirement of comprehensive expertise and experience is collectively met by the members of the Supervisory Board.

Diversity
With regard to its composition, the Supervisory Board aims to include a range of professional and international experience and adequate representation of both sexes. In accordance with the Stock Corporations Act, the Supervisory Board of HOCHTIEF Aktiengesellschaft comprises at least 30% women and at least 30% men.

Profile of skills and expertise
The members of the Supervisory Board are required, collectively, to possess the skills and expertise considered material in light of the HOCHTIEF Group’s activities as a global building and infrastructure construction group. These notably include in-depth experience and expertise:

  • in management of a large, international group;
  • in the construction industry in general, and notably in the segment relating to complex projects within the transportation, energy, and social and urban infrastructure sectors as well as the mining sector;
  • in the principal markets served by the HOCHTIEF Group;
  • in control and risk management; and
  • in corporate governance/compliance.

In addition, regarding the requirement in Section 100 (5) AktG, at least one member of the Supervisory Board and of the Audit Committee must possess expertise in the areas of financial reporting or auditing, and the members of the Supervisory Board must collectively be familiar with the market for large-scale building and infrastructure construction.

International Expertise
In light of the HOCHTIEF Group’s international activities, it is important for the Supervisory Board to have a sufficient number of members with longstanding international experience. This international profile can be attained in multiple ways, such as past or present occupancy of an executive position at an internationally operating company, or a past or present professional and personal focus abroad.

Age limit for Supervisory Board members
As a rule, only individuals no older than 75 are to be nominated for election to the Supervisory Board. This rule may be departed from in individual instances where justified.

Independence and potential conflicts of interest
More than half of the Supervisory Board’s members are required to be independent within the meaning of the German Corporate Governance Code. The Supervisory Board assumes in this connection that the mere fact of holding office as employee representative on the Supervisory Board does not raise doubt as to fulfillment of the independence criteria. In addition, members of the Supervisory Board may not hold board office or serve in an advisory capacity at major competitors of the HOCHTIEF Group. No more than two former members of the Executive Board may serve on the Supervisory Board.

Means of implementation
Attainment of the objectives of the diversity policy for the Supervisory Board is assured by the fact that the elements of that policy are enshrined in law, the Code of Procedure, and the profile of skills and expertise for the Supervisory Board. For shareholder representatives on the Supervisory Board, the Nomination Committee additionally ensures compliance with the objectives regarding the Supervisory Board’s composition. The Committee takes account of the aforementioned objectives in its nominations for election to the Supervisory Board. At the same time, it also gives due consideration to fulfillment of the profile of skills and expertise for the Supervisory Board as a whole.

Outcomes attained
With its current composition as the outcome of the Supervisory Board elections in spring 2016, the Supervisory Board complied with the requirements of the above-mentioned diversity policy in 2017:

  • Since the Supervisory Board elections in spring 2016, the Supervisory Board has comprised five women and eleven men.
  • The Supervisory Board has several members who hold a degree in construction engineering. In addition, the Supervisory Board includes members with degrees in business or law and a German public auditor.
  • Six shareholder representatives on the Supervisory Board have many years’ experience in the construction industry or related sectors; six employee representatives on the Supervisory Board have many years’ experience in the construction industry from employment within the HOCHTIEF Group.
  • All eight shareholder representatives on the Supervisory Board have lived and/or worked abroad.
  • Of the eight shareholder representatives on the Supervisory Board, six are of foreign nationality or have a foreign second nationality (Spanish/Polish).
  • In the current composition of the Supervisory Board, one in two shareholder representatives is independent within the meaning of the German Corporate Governance Code.
  • With regard to the employee representatives on the Supervisory Board, the Supervisory Board assumes that the mere fact of holding office as employee representative on the Supervisory Board does not raise doubt as to fulfillment of the independence criteria under the Code.
  • No member of the Supervisory Board has held office on the Supervisory Board for an uninterrupted period exceeding 15 years.
  • No member of the Supervisory Board holds a board office or acts in an advisory capacity at a major competitor of the HOCHTIEF Group.
  • The Supervisory Board does not include any former members of the Executive Board, with the exception of one member of the Supervisory Board who was formerly, for a brief period within the meaning of Section 105 (2) AktG, acting deputy to an absent member of the Executive Board.

2. Executive Board

Under the CSR Directive Implementation Act, additional disclosures are required for annual and consolidated financial statements from 2017. The new rules require, for the first time, a description of the diversity policy applied for the Executive Board with regard to the latter’s composition in terms of aspects such as age, gender, and educational or professional background, together with the objectives of that policy. If a company does not apply such a diversity policy for the Executive Board, it is required to explain the fact.

Over the course of the last few years, the Supervisory Board has appointed an Executive Board team who deliver excellent performance. For that reason, the Supervisory Board has once again resolved a target of 0% for the percentage of women on the Executive Board of HOCHTIEF Aktiengesellschaft. As the target attainment period, it stipulated the period up to June 30, 2022. In the event that a new Executive Board member needs to be appointed prior to that date, that will be the right time to adopt a diversity policy for the Executive Board and take it into account in making the new appointment.