Declaration on Corporate Governance

Corporate Governance

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

At least once a year, the Supervisory and Management Boards deal with 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.

In the 2023 fiscal year, ALTANA complied with the vast majority of the applicable recommendations and suggestions of the German Corporate Governance Code in the version of April 28, 2022. This especially applies to the recommendations concerning the composition of the Supervisory Board, the cooperation between the Management Board and the Supervisory Board, the cooperation between the Chairman of the Supervisory Board and the Supervisory Board plenum, dealings 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.

The Management Board and Supervisory Board intend to again largely follow the recommendations and suggestions of the German Corporate Governance Code in the 2024 fiscal year.
 

Management and Control

The Management Board of ALTANA AG consists of three members. 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 Supervisory Board, together with the Management Board, addresses long-term planning for the succession of Management Board members and the structure of the Management Board in regular discussions between the Chairman of the Supervisory Board and the Chairman of the Management Board. An age limit of 65 years has been set for members of the Management Board. The Management Board manages the Group independently and is 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 in accordance with the German Codetermi nation Act, while the remaining six are shareholder representatives. Here, too, experience and expertise play an important role, as does independence. In 2023, all of the shareholder representatives were independent of the company and the Management Board. Despite having been a member of the Supervisory Board for many years, Ms. Klatten is considered independent of the company and the Management Board because she is indirectly the company’s sole shareholder. All of the shareholder representatives, with the exception of Ms. Klatten and Professor Dr. Richter, are in dependent of the company’s controlling shareholder. They are normally elected for a period of five years. An age limit of 70 years has been set for members of the Supervisory Board. The Management Board reports to the Supervisory Board regularly, without delay, and comprehensively 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 and the Consolidated 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. Matthias L. Wolfgruber. The Human Resources Committee also includes Mr. Jürgen Bembenek, Mr. Ulrich Gajewiak, and Ms. Susanne Klatten. In addition to the Chairman, the members of the Mediation Committee are Mr. Gajewiak, Ms. Klatten, and Mr. Klaus Koch. Dr. Jens Schulte is the Chairman of the Audit Committee. The other members of the Audit Committee are Mr. Armin Glashauser, Mr. Stefan Soltmann, and Professor Dr. Richter. Through their current and previous activities, Dr. Schulte and Professor Dr. Richter have expertise and special knowledge and experience in the fields of accounting and auditing, including the application of accounting principles and internal control and risk management systems, as well as sustainability reporting and its auditing.

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. For Management Board members, 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 Board per insurance year. Further information on the compensation of the Management and Supervisory Boards can be found in the complete Consolidated Financial Statements.
 

Compliance

Compliance with laws is the basis for all of ALTANA’s actions. In addition, we set ourselves certain rules as part of our corporate social responsibility, which we adhere to like laws.

At ALTANA, compliance is an integral part of our corporate social responsibility. The trust of our customers, business partners, employees, and the public is the basis and condition for our business success.

For this purpose, ALTANA established a Compliance Management System in 2008. Its goal is to ensure that laws and the rules we have set ourselves are observed throughout the Group. To this end, the Compliance Management System identifies significant risks that can arise from violations of laws or regulations by ALTANA employees. The Compliance Management System also ensures that employees are aware of the content and significance of the laws and regulations relevant to them and know how to behave best in light of them. Furthermore, the Compliance Management System is intended to ensure the implementation of processes that prevent, detect, and help to remedy compliance violations. The Compliance Management System encompasses eight compliance areas: corruption, antitrust law, environmental protection and safety, human resources, customs and foreign trade, data protection, financial reporting, and taxes.

The ALTANA Compliance Management System follows the ALTANA structure and is therefore decentralized. The local management is primarily responsible for making sure that the individual subsidiaries and their employees behave in accordance with the rules. ALTANA AG lives up to its compliance responsibility by providing a framework, making competencies and instruments available, creating platforms and forums for local authorities, and by taking concrete measures to ensure 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 corruption, conflicts of interest, antitrust law, environmental protection, and discrimination. Together with the company’s Guiding Principles, the Code of Conduct provides orientation for responsible corporate action. The Code of Conduct and the Guiding Principles are published on our website (www.altana.com).

Moreover, for each compliance area further specific measures have been developed and implemented to ensure that laws and internal regulations are adhered to. This includes, for example, a system through which business partners who support ALTANA’s holding company and its subsidiaries in terms of sales or in their cooperation with authorities are investigated for certain compliance risks with IT support.

Another important element to guarantee the effectiveness of the Compliance Management System is the work of Internal Audit. For a few years now, compliance programs have been carried out regularly at ALTANA and its subsidiaries.

With the ALTANA Whistleblowing System, ALTANA provides another central means of ensuring compliance. It gives employees as well as external third parties the possibility of anonymously reporting compliance violations.

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

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 in 2010, ALTANA has not only acknowledged its principles but also shown a general commitment to support and promote overall UN aims.


Internal Control System, Risk Management System

The ALTANA Group has established both an internal control system (ICS) and a risk management system. These also include the Compliance Management System described above. The ALTANA Group’s ICS is geared to the specific needs of the company. It is intended to ensure the correctness of internal and external financial reporting as well as the non-financial key figures and to ensure the effectiveness and efficiency of the company’s business activities and compliance with the relevant legal regulations and internal guidelines. It comprises all principles, instructions, and measures introduced for this purpose. The core elements of the ICS are documented in a Group guideline that defines tasks, processes, and responsibilities. Internal Audit regularly evaluates monitoring and control processes as part of its activities, thereby helping to improve the system.

The risk management system comprises all organizational regulations and measures for identifying, assessing, managing, and communicating risks. The risks identified are continuously managed, regularly reviewed, and reassessed taking into account the measures taken. The ALTANA Group’s risk management system is documented in a Group guideline that defines tasks, processes, and responsibilities. Features of the risk management system and identified risks are explained in detail in the chapter “Anticipated development” in the “Risks” section of the Group Management Report.

In designing and implementing the ICS and the risk management system, particular consideration was given to the size, structure, and complexity of the ALTANA Group. The systems aim to identify, control, and manage the main risks. Despite the comprehensive analysis of risks, however, there are inherent limitations to any control and risk management system, meaning that the occurrence of risks cannot be ruled out under all circumstances.

Responsibility for the appropriateness and effectiveness of the ICS of the accounting processes and the processes for collecting and reporting non-financial key performance indicators is clearly regulated and lies with the responsible managers and process owners. The Management Board deals with the ICS on an ongoing basis and informs the Audit Committee at least once a year. The Audit Committee informs the Supervisory Board about the results. Any significant changes to the ICS are reported immediately to the Management Board and, if necessary, to the Supervisory Board.

Upon reviewing the internal control system and risk management, the Management Board is not aware of any circumstances that raise doubts about the adequacy and effectiveness of these systems.
 

Targets for the Proportion of Women (Section 289 f (4), Sentence 1, Subsection 2, No. 4 of the German Commercial Code)

Pursuant to sections 76 (4) and 111 (5) of the German Stock Corporation Act, the Management Board and Supervisory Board of ALTANA AG set targets for the proportion of women in the two management levels below the Management Board, and on the Supervisory Board and Management Board.

Most recently, the Supervisory Board and the Management Board resolved the following targets for the proportion of women by the end of June 30, 2023: 33 % of Supervisory Board members, 0 % of Management Board members, 30 % of the first and 30 % of the second man agement level below the Management Board. As of June 30, 2023, 25 % of the members of the Supervisory Board, 0 % of the members of the Management Board, 50 % of the first and 55 % of the second management level below the Management Board were women. Consequently, the target for the proportion of women on the Supervisory Board has not been met. This situation is due to the elections of employee representatives to the Supervisory Board, which resulted in one woman being elected instead of two women as previously.

The Supervisory Board and Management Board have set new targets for the share of women by the end of June 30, 2026: 33 % of Supervisory Board members, 0 % of Management Board members, 30 % of the first and 30 % of the second management level below the Management Board. The Supervisory Board justifies the 0 % target for members of the Management Board as follows: “The already achieved and targeted percentages of women on the Supervisory Board, in the Management Board, and in the two management levels below the Management Board and in the rest of the company show that the company has long taken increasing the proportion of women in management positions seriously. However, the Management Board only has three members and the employment contracts of the Management Board members generally have terms of between three and five years. In this situation, a target figure of more than 0 % would mean that the next time the Supervisory Board decides to (re)appoint a member of the Management Board, a woman would have to be appointed instead of one of the current three male Management Board members (or the Management Board would be expanded to include a fourth, female member, which is not the intention). However, such a restriction of the Supervisory Board’s future selection decision would not be in the interests of the company. Not only because it should remain possible to reappoint the current members of the Management Board, but also because this would give the gender of the Management Board member to be appointed too much significance in the selection decision compared to other selection criteria. In the medium and long term, the Supervisory Board will of course also consider increasing the proportion of women on the Management Board as a goal when making decisions on the (re)appointment of Management Board members.”