Declaration of compliance by the Executive Board and Supervisory Board of UNITEDLABELS Aktiengesellschaft in accordance with Section 161 AktG with the German Corporate Governance Code
The Management Board and Supervisory Board of UNITED LABELS Aktiengesellschaft declare that the recommendations of the “Government Commission on the German Corporate Governance Code” published by the Federal Ministry of Justice and Consumer Protection in the official section of the Federal Gazette have generally been complied with in the past and will be complied with in the future. The following statement refers to the recommendations of the ‘ Government Commission on the German Corporate Governance Code’ in the version dated April 28, 2022, published in the Federal Gazette on June 27, 2022 (‘Code 2022’ or ‘Code’).
Furthermore, the Executive Board and the Supervisory Board declare that the recommendations of the “Government Commission on the German Corporate Governance Code” have only been deviated from as follows and are likely to be deviated from in the future:
A. Management and supervision
Recommendation A.1
According to the new recommendation A.1, the board of directors should identify and evaluate the risks and opportunities for the company associated with social and environmental factors as well as the ecological impacts of the company’s activities. Environmental and social goals should also be adequately taken into account in the corporate strategy. Corporate planning should include appropriate financial and sustainability-related goals.
The Executive Board and Supervisory Board generally recognize sustainability aspects as important and take them into account appropriately in their work for the company. However, the recommendations mentioned are vague and any statement about whether they are followed is therefore subject to considerable uncertainty. The Executive Board and the Supervisory Board therefore declare a deviation in this respect as a precautionary measure.
Recommendation A.3
According to the newly introduced recommendation A.3, the internal control system and the risk management system should also cover sustainability-related goals, if not already required by law. This should include the processes and systems for collecting and processing sustainability-related data.
The design of the internal control system and the risk management system is currently based on the legal requirements. Due to the size of the company, sustainability-related goals that go beyond these legal requirements are not yet covered by the internal control system and the risk management system.
Recommendation A.4
There is no whistleblower system for employees or third parties. Due to the size of the company and an open corporate culture, the formal establishment of a whistleblower system is not considered necessary.
Recommendation A.5
According to the newly introduced recommendation A.5, the management report should describe the key features of the internal control system and the risk management system and should comment on the appropriateness and effectiveness of these systems.
The company has an internal control system and risk management system. However, the recommendations regarding the information in the management report go well beyond the legal requirements. The company is currently following the legal requirements with regard to the management report and considers these to be sufficient.
B. Composition of the Board of Directors
Recommendation B.1
The Code recommends paying attention to diversity in the composition of the Board of Directors. Since the board only consists of one member, diversity cannot be achieved. The Supervisory Board will also include the aspect of diversity in its considerations when expanding the composition of the Board of Directors.
Recommendation B.2
UNITED LABELS AG deviates from this recommendation. Since the Supervisory Board believes that the Executive Board remains well-staffed, there is currently no need to ensure long-term succession planning.
Recommendation B.5
UNITED LABELS AG deviates from this recommendation. There is no maximum age for the board of directors. The suitability test should continue to be carried out regardless of age in the future. An age limit is also not considered appropriate taking into account the prohibition of discrimination.
C. Composition of the Supervisory Board
Recommendations C.1/C.2 :
In addition, the supervisory board should specify specific goals for its composition and develop a competency profile for the entire board. The status of implementation should be disclosed in the form of a qualification matrix in the corporate governance declaration. This should also provide information about the appropriate number of independent shareholder representatives and the names of these members in the opinion of the shareholder representatives on the Supervisory Board.
In the opinion of the Executive Board and the Supervisory Board, the composition of the Supervisory Board must be aligned with the company’s interests and must ensure effective monitoring and advice to the Executive Board. The Supervisory Board therefore selects the candidates for nominations to the Annual General Meeting solely based on their professional and personal competence and experience. Other characteristics such as gender or national affiliation as well as age were and are irrelevant for these nominations for reasons of equal opportunities. In addition to these selection criteria, the company generally considers the aspects mentioned in the Code to be taken into account and the Supervisory Board will include them in its decision at the time of the respective election proposals, taking into account the company-specific situation at that time. However, this cannot be determined for the reasons mentioned, also taking into account the small number of supervisory board mandates to be filled.
For these reasons, no specific objectives are specified for the composition of the Supervisory Board, nor is a competency profile developed for the entire board. For the same reasons, reporting in the form of a qualification matrix is not carried out.
The code recommends setting age limits for members of the supervisory board and disclosing them in the corporate governance statement. The suitability test should continue to be carried out regardless of age in the future. An age limit is also not considered appropriate taking into account the prohibition of discrimination
Recommendation C.14
With regard to the attachment of a CV to the Supervisory Board’s candidate proposal and the publication of CVs of all Supervisory Board members together with an overview of the main activities in addition to the Supervisory Board mandate, the Management Board and the Supervisory Board are of the opinion that with the fulfillment of the statutory submission obligations in the notice of the general meeting as well as in the appendix or A comprehensive picture of the supervisory board candidates and members is provided in the notes to the annual and consolidated financial statements. The publication of CVs would also inappropriately interfere with the right to informational self-determination of supervisory board candidates and members.
D. Working methods of the supervisory board
Recommendation D.2/D.3:
The Code recommends the formation of technically qualified committees depending on the specific circumstances of the company and the number of its members. The supervisory board only consists of three members. He therefore did not form any committees. The Supervisory Board does not see the need for technically qualified committees to increase the efficiency of the Supervisory Board’s work with regard to the company and its specific circumstances, considering that it only consists of three people.
Recommendation D.4:
The supervisory board consists of only three members. These are elected exclusively by the shareholders. The Supervisory Board therefore sees no need to set up a nomination committee.
F. Transparency and external reporting
Recommendation F.2
The recommendation of the Code stipulates that the consolidated financial statements should be publicly accessible within 90 days of the end of the financial year and the interim reports within 45 days of the end of the reporting period. Since the company gives priority to the quality of financial reports over compliance with the aforementioned deadlines , this may result in the company not being able to comply with the publication deadlines recommended by the German Corporate Governance Code. Rather, the consolidated financial statements and interim reports are published within the statutory deadlines set by Deutsche Börse for the Prime Standard.
G. Remuneration of the Executive Board and Supervisory Board
Recommendation G1
With regard to remuneration in the GI area, the Code contains a number of recommendations on the remuneration of the Executive Board. The current remuneration system in relation to the sole board member Peter Boder does not fully comply with the new regulations and the company is therefore declaring a deviation in point GI as a precautionary measure, even if the existing board contract is grandfathered.
In particular, the current remuneration system does not fully comply with the following recommendations: G.3 (peer group comparison of executive board salaries), G.4 (comparison of executive board salaries with top management), G.8 (exclusion of subsequent changes to goals), G.11 sentence 2 (Possibility of reclaiming or retaining variable remuneration by the Supervisory Board), G.16 (crediting remuneration for external supervisory board mandates).
, the Supervisory Board of UNITED LABELS Aktiengesellschaft has decided on a new remuneration system for the Executive Board, which was approved by the 2021 Annual General Meeting and which should also be taken into account in particular for future Executive Board contracts concluded. The remuneration system submitted for approval to the 2021 Annual General Meeting and the resolution are published at https://www.unitedlabels.com/investor-relations/haupttreffen/.
Recommendation G.17.
The Code’s recommendation stipulates that, among other things, the chairmanship and membership of the committees should also be taken into account when remunerating the Supervisory Board. The amount of remuneration for the members of the Supervisory Board is conclusively regulated in Section 10 of the Articles of Association. There are still no committees, so the chairmanship and membership in the committees are not taken into account in the remuneration of the Supervisory Board.
Münster, March 2024
The Board of Directors The Supervisory Board
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