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The principals described in the German Corporate Governance Code are designed to generate trust
in the German capital markets. As Software AG has a large number of international-based investors,
the Company endeavors to comply not only with the legally binding provisions of the Code,
but wherever possible with its recommendations as well.
Software AG complied with the first version of the
German Corporate Governance Code, which came
into force in November 2002, with very few exceptions.
During fiscal 2003, the Company worked to
implement additional recommendations. The
original Declaration of Compliance from December
2002 was revised in respect to Section 5.4.1, Subsection
2, as well as Section 5.4.5, Subsection 3.
Accordingly, the Articles of Incorporation of the
Company were amended to set an age limit of
70 years for members of the Supervisory Board.
Rules governing compensation of Supervisory
Board members were also altered to take account
of committee membership and chairmanship.
Declaration of Compliance with amended version of Code
The second version of the German Corporate
Governance Code came into force on May 21,
2003. The Company revised its Declaration of
Compliance in accordance with Section 161 of the
German Stock Corporation Act (AktG) in December
2003. In this document, the Executive Board and
Supervisory Board of Software AG declare that
the Company complied fully with the provisions of
the Code in 2003, and that it will continue to do
so in future, with the following exceptions:
- The Company’s liability insurance policy for
directors and organizers (D&O) includes a
deductible of €5,100 for all persons included in
the insurance coverage. The Company considers
this an appropriate amount. As the Code does
not state an appropriate level, the amount is
expressly given in the Declaration of Compliance
(Section 3.8, Subsection 3 of the Code).
- Details of compensation packages for individual
Executive Board members are not stated. Both
the Executive Board and Supervisory Board consider
such statements to be an intrusion upon
members’ privacy, and as such they should not
be made public. The Company is of the opinion
that the publication of a single figure for total
Executive Board compensation provides sufficient
transparency into remuneration levels to allow
a balanced assessment of Executive Board
payment (Section 4.2.4 of the Code).
- For the same reasons, individual figures are not
given for Supervisory Board members’ remuneration
packages (Section 5.4.5 of the Code).
- Both the consolidated financial statements and
interim reports continue to be compiled according
to the German Commercial Code (HGB). The
Company intends to adopt International Financial
Reporting Standards (IFRS) for its financial
statements from fiscal 2004 (Section 7.1.1, Subsection
3 of the Code).
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