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High transparency, reliable management and effective corporate
monitoring are gaining more significance world-wide. Software AG is one of the
companies which comply with the German Corporate Governance Code without reservation.
Frank F. Beelitz, Chairman of the Supervisory Board, and Karl-Heinz Streibich,
CEO, explain the status of corporate governance within company.
Software AG relies on effective corporate governance. What
importance do you place on the principles of the German Corporate
Governance Code?
Karl-Heinz Streibich One characteristic of Software AG is our
international orientation. We operate in global markets and address
both German and foreign investors. With our commitment to the Corporate
Governance Code, we accept internationally recognized standards of
good enterprise management. This promotes a lasting trust in our
company.
Frank F. Beelitz In principle, responsible company management is
synonymous with providing for the future, and thus nothing new for
Software AG. The code makes it possible to place our own activities in
a transparent context. It allows comparison and points out optimization
potentials. We have used the opportunities this offers right from the
start.
Corporate governance is fueled by continuous improvements.
What progress was Software AG able to achieve in 2004?
Frank F. Beelitz In previous years, Software AG already met the obligatory
and voluntary regulations of the code with few exceptions. In 2004, the Executive
Board and Supervisory Board took the final steps to fulfill the recommendations
completely. Therefore, in the last business year, the financial reporting was
provided in accordance with IFRS, the International Financial Reporting
Standards, for the first time. With international balancing, we increase
transparency and comparability. We also implemented the recommendation to
reveal the individual salaries of the members of the Executive and
Supervisory Boards. In order to tie executive pay more closely to business
success, since the beginning of 2005, two-thirds of this pay have been linked
to revenue, profit, and other company goals. Approximately 30 percent of
the variable compensation is only paid in the years that follow, which
promotes the desired long-term incentive effect.
Do you aspire to be a role model in terms of corporate governance?
Karl-Heinz Streibich By fulfilling the regulations of the Code as closely as
possible, we are documenting our sense of responsibility. A corresponding
corporate image occurs automatically, but it is not the main objective.
Business administration in the sense of corporate governance is not an end
in itself for Software AG. Rather, we regard it as an investment which does
demand effort, but also creates additional strengths. Elements such as the
world-wide development of a compliance system, or balancing in accordance
with international financial reporting, are effective means of securing and
consolidating the position of Software AG.
Studies confirm the connection between convincing business
administration and positive development of the stock price. Could exemplary
corporate governance be called a powerful argument?
Frank F. Beelitz Corporate governance is never the sole cause of convincing
performance, but it can provide an additional positive impulse. Investors
hold observance of the rules of conduct in high regard and prefer companies
which set an example in this regard. Particularly in the Anglo-American
region, fairness towards investors and the quality of the business
administration are fundamental criteria.
Karl-Heinz Streibich Here, the attraction goes far beyond the capital
market. Good corporate governance strengthens the company's reputation
in every field, including the operating business. The resulting benefits
create competitive advantages and thus also help promote market success.
The value of the company increases – both on the exchange and in the
market.
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