ALTANA

Corporate Governance

Good corporate governance is the basis for the sustainable success of ALTANA. Even as a company not listed on the stock exchange, ALTANA orients itself to the rules of the German Corporate Governance Code.

At least once a year, the Management and Supervisory Boards deal with the regulations of the German Corporate Governance Code and examine which recommendations and suggestions ALTANA can follow even as a company not listed on the stock exchange and sensibly apply within the company given its shareholder structure.

ALTANA follows, or will follow, the vast majority of the applicable recommendations of the German Corporate Governance Code in the current version of February 7, 2017. This especially applies to the recommendations regarding the cooperation between the Management Board and the Supervisory Board, the cooperation between the Chairman of the Supervisory Board and the Supervisory Board plenum, dealing with conflicts of interest of the Supervisory Board members, the setting up and composition of the committees, as well as matters relating to the audit.

Management and Control

The Management Board of ALTANA AG consists of three members, who are appointed by the Supervisory Board for a period of five years. The selection criteria include experience, business and professional expertise, as well as competence in ecology and social responsibility. Considerations regarding diversity also play a role in the selection process. The Management Board members manage the Group independently and are solely committed to the interests of the company. Together with the presidents of the divisions and selected heads of central functional areas, the Management Board forms the Executive Management Team. In regular meetings, this team discusses and analyzes the development of business and important business incidents, as well as plans for the Group’s future development and sustainability issues.

The company’s Supervisory Board has twelve members. Half of them are employee representatives, elected by Group employees in Germany in accordance with the German Codetermination Act. The remaining six members are elected by the Annual General Meeting. Experience and expertise, as well as independence, are also important criteria in the selection of the members of the Supervisory Board. The members of the Supervisory Board are generally elected for a period of five years. The Management Board regularly reports to the Supervisory Board in a timely and comprehensive manner on all issues relevant for the company regarding business development, risks, and planning, and discusses ALTANA’s strategy with the Supervisory Board. Sustainability issues are also discussed regularly at the Supervisory Board meetings. The Supervisory Board monitors and advises the Management Board in its management activities. The Supervisory Board’s tasks also include approving the annual financial statements. Specially defined business decisions of the company, such as major acquisitions and divestments, require the approval of the Supervisory Board, in accordance with a list of transactions that are subject to authorization.

The Supervisory Board formed an Audit Committee, a Human Resources Committee, and a Mediation Committee, legally required in accordance with section 27 (3) of the German Codetermination Act. Each committee consists of two shareholder representatives and two employee representatives. The Chairman of the Human Resources Committee and the Mediation Committee is the Chairman of the Supervisory Board, Dr. Klaus-Jürgen Schmieder. The Chairman of the Audit Committee is Dr. Lothar Steinebach. He has the necessary knowledge and expertise in the fields of accounting and auditing in accordance with the German Stock Corporation Act.

There is a D&O liability insurance scheme for members of the Management and Supervisory Boards. The insurance covers personal liability risks in the event that a claim is made against members of the Management and Supervisory Boards while they are performing their activities. The insurance contract stipulates a deductible of ten percent of the damages, but a maximum of one-and-a-half times the amount of the fixed annual compensation of the respective member of the Management or Supervisory Board per insurance year. Further information on the compensation of the Management and Supervisory Boards can be found on the Consolidated Financial Statements.

Compliance

The trust of our business partners and customers, as well as the public, in the lawful and responsible behavior of the ALTANA Group and its employees is decisive for the success and reputation of the company. Compliance is therefore extremely important for ALTANA.

Since 2008, ALTANA has had a so-called Compliance Management-System (CMS). It aims to ensure that its companies and employees abide by the laws, regulations, and internal company rules the non-observance of which can pose considerable risks for the company. The objective of the CMS is therefore to identify the primary risks that can arise through violations of laws and rules, and to assure that the company’s employees receive training regarding the content and importance of rules and regulations relevant to them and that measures are taken to prevent infringements of laws and internal regulations.

Furthermore, the CMS aims to ensure that the necessary control mechanisms are implemented so that violations of laws and rules can be detected and terminated. The CMS encompasses nine compliance areas, including corruption, antitrust law, environmental protection and safety, human resources, customs and foreign trade, data protection, financial reporting, as well as taxes and information technology.

ALTANA’s CMS follows the ALTANA structure and thus is decentralized. The main responsibility for making sure that the individual subsidiaries and their employees behave in accordance with the rules rests with the local managing directors and the local management. ALTANA AG lives up to its responsibility of ensuring compliance by providing a framework, making competencies available, creating platforms and forums for local authorities, and by taking concrete measures to secure compliance on the part of the management of subsidiaries or to impose minimum requirements, especially through guidelines that are binding Group-wide.

ALTANA’s Code of Conduct, which holds for the entire company, contains binding rules regarding responsible, ethical, and lawful behavior for all staff members. This applies in particular to issues such as antitrust law, corruption, conflicts of interest, environmental protection, and discrimination. Together with the company’s Guiding Principles, the Code of Conduct provides a guideline for responsible corporate action. The Code of Conduct and our Guiding Principles are published on our website (www.altana.com). Since 2010, ALTANA’s employees have been trained with the help of an e-learning program regarding the content of the Code of Conduct and further issues relevant to com­pliance such as corruption and bribery, as well as competition law issues.

Moreover, for each compliance area further specific measures have been developed and implemented to ensure that laws and internal regulations are adhered to.

Another important element to guarantee compliance is the management system. Since 2016, specifically developed compliance tests have been carried out regularly at ALTANA and its subsidiaries.

With the ALTANA Compliance Hotline ALTANA provides a further central means for ensuring compliance. The hotline gives employees the possibility to report illegal behavior, if need be, anonymously and regardless of levels of hierarchy. In 2018, we are also permitting third parties to use the ALTANA Compliance Hotline to report severe legal violations on the part of ALTANA or its employees.

Once a year, the Audit Committee receives a written report on compliance that is then also presented and discussed in a meeting of the committee. The report gives an overview of the risks identified for each compliance area, as well as of already implemented or planned measures to advance the system. The Audit Committee is also informed about compliance violations in this framework.

ALTANA joined the UN Global Compact initiative, whose members are voluntarily committed to adhering to social and environmental standards as well as the protection of human rights. By joining Global Compact, ALTANA has not only acknowledged its principles but also shown a general commitment to support and promote overall UN aims.