DECLARATION OF CONFORMITY
2020 Joint Declaration of Conformity by the Management Board and the Supervisory Board of Klöckner & Co SE pursuant to Section 161 of the German Stock Corporation Act on the German Corporate Governance Code
Klöckner & Co SE had complied with all recommendations of the German Corporate Governance Code in the version of February 7, 2017 (published on April 24, 2017 in the Federal Gazette) since the last Declaration of Conformity dated December 17, 2019.
Except for the deviations listed below, Klöckner & Co SE had, as of their entry into force, also complied with all recommendations of the German Corporate Governance Code in the version of December 16, 2019 (published on March 20, 2020 in the Federal Gazette) and will comply with those in future:
Pursuant to provision C.7 of the Code it may indicate a lack of independence with respect to the company if a member of the Supervisory Board belongs to it for more than 12 years. Prof. Vogel is a member of the Supervisory Board as of May 31, 2006, is its chairman and the chairman of its presidium (being the committee responsible for the remuneration of the Management Board). Albeit the Management Board and the Supervisory Board see no indication for a lack of independence with respect to Prof. Vogel, against the background of provision C.7 of the Code and as a matter of precaution, a deviation is declared with regard to Recommendation C.10.
In the view of the Management Board and the Supervisory Board it is in the interest of the company that Prof. Vogel remains in the Supervisory Board of the company and as its chairman and the chairman of the presidium, even if the term stated in the Code is exceeded. The value of Prof. Vogel for the work of the Supervisory Board should be beyond any doubt. Beside his professional and personal qualifications as well as his experience, particularly as chairman of supervisory bodies, Prof. Vogel also has, due to the long term of his membership to the Supervisory Board, a notably deep knowledge of the Company. Furthermore, the Management Board and the Supervisory Board appreciate the continuity represented by Prof. Vogel – particularly against the background of the personal changes during the last years.
Apart from that, with respect to Prof. Vogel, the Management Board and the Supervisory Board, both do not share the concern behind the provision C.7 of the Code that there is an increased risk of conflicts of interest the longer a person belongs to the Supervisory Board. The Supervisory Board continuously monitors the occurrence of potential conflicts of interest with regard to all of its members. Until now, with respect to Prof. Vogel no situation giving rise to a risk of conflict of interest has occurred and there is no reason at hand why such risk should be assumed solely because a certain term of membership is exceeded.
Recommendation G.1 of the Code comprises several provisions regarding the content of the remuneration system for the Management Board which is resolved by the Supervisory Board. Those provisions already consider the new Act for Implementing the Second EU Shareholder Rights Directive (ARUG II).
The remuneration system for the Management Board currently in place was approved by the general meeting in 2016. However, it does not comply to the new recommendation G.1 of the Code in all aspects. As already announced in the Annual Report for the fiscal year 2019 and in accordance with the transitional provisions of the ARUG II, an adapted remuneration system is to be proposed to the general meeting in 2021. Such adapted remuneration system will then also comply with the requirements of recommendation G.1 of the Code.
Duisburg/Germany, December 14, 2020
The Supervisory Board The Management Board
Update of the Declaration of Conformity of the Management Board and Supervisory Board of Klöckner & Co SE pursuant to Section 161 of the German Stock Corporation Act on the German Corporate Governance Code
The Management Board and Supervisory Board of Klöckner & Co SE issued the annual Declaration of Conformity on December 14, 2020. Therein, it is stated that except for the recommendations of the German Corporate Governance Code in the version of December 16, 2019 (published on March 20, 2020 in the Federal Gazette; hereinafter "Code") in Section C.10 and Section G.1, Klöckner & Co SE had, as of their entry into force, complied with all recommendations of the Code and will comply with those in the future. This declaration needs to be supplemented as follows:
Pursuant to Section G.12 of the Code, in the event of the termination of a Management Board member's contract, the disbursement of any remaining variable remuneration components attributable to the period up until contract termination shall be based on the originally agreed targets and comparison parameters, and on the due dates or holding periods stipulated in the contract.
The current Chairman of the Management Board of the Company, Gisbert Rühl, will leave the Management Board of the Company by mutual agreement after the Annual General Meeting on May 12, 2021. The termination agreement concluded with Gisbert Rühl against this background, in addition to a severance payment in the amount of the remuneration for the remaining term of his service contract until December 31, 2021 in compliance with the Code, provides for, among others, that the pro rata variable remuneration for the financial year 2021 for the period until Gisbert Rühl leaves the Company on May 12, 2021 shall be paid out ahead of schedule on June 1, 2021 in the amount of the target bonus. In addition, the obligation to invest a part of this target bonus in shares in the Company (personal investment) will not apply.
With this, the Company selectively deviates from Recommendation G.12 of the Code.
In the opinion of the Supervisory Board, the agreement reached is in the interest of the Company. It enables to have an amicable and comprehensive plus final settlement for the premature withdrawal of Gisbert Rühl and thus assures a clear transition of the position of the Chairman of the Management Board to Guido Kerkhoff.
Apart from that, the Declaration of Conformity of December 14, 2020 remains unchanged. There is no intention to deviate from Recommendation G.12 of the Code in the future.
Duisburg, 15 March 2021
The Supervisory Board The Management Board