Declaration of Compliance pursuant to § 161 of the German Stock Corporation Law on the observance of the Government Commission German Corporation Governance Code.
The Personally Liable Shareholder and the Supervisory Board declare that at the corporation (hereinafter referred to as the “Company”) in its legal form should be complied with all recommendations of the Government Commission German Corporate Governance Code in the version of May 26, 2010 (“Code 2010”) with the following exceptions:
Deductible for D&O insurance
The D&O insurance for the Supervisory Board does not include a deductible. A deductible would restrict opportunities for acquiring members for the Supervisory Board with extensive entrepreneurial experience, as these would have to take into account liability risks, even in the event of negligent conduct and the agreement of deductibles in the Supervisory Board area is still uncommon (Code 2010 section 3.8 paragraph 3).
Diversity regarding to the filling of management positions
When filling management positions, the company takes into account diversity. However, the focus here is on the technical qualification of the candidates (men and women) (Code 2010 Section 4.1.5)
Disclosure and explanation of the remuneration of the Management
The Chairman of the Supervisory Board will not disclose any information on the company's remuneration system and possible modifications to the Annual Shareholders' Meeting (Code 2010 section 4.2.3 paragraph 6).
The total remuneration of the Personally Liable Shareholder and the executives (hereinafter referred to as "Management") for the performance of their duties in the company is disclosed as total amount in the notes to the consolidated financial statements. The disclosure is divided according to non result-based and result-based components as well as components with long-term incentive effect respectively according to the rules of the relevant international accounting principles.
No disclosure of other information than compulsory according to the law, the explanation of the remuneration system as well as the explanation of information on the nature of the fringe benefits provided by the company in a remuneration report will be given (Code 2010 section 4.2.4 and 4.2.5).
The remuneration system is the result of confidential discussions within the Supervisory Board as well as between the Supervisory Board and the Management. The publication of details in excess of the legally required ones would increase the risk of a targeted solicitation of executives, as details of the remuneration structure would subsequently also be transparent to competition.
Sideline activities that are not legally compulsory subject to approval can be taken partly on the members of the Management even without approval of the Supervisory Board. The interests of the corporation and the expectations towards responsible decisions of the Management are preserved sufficiently by the legally compulsory regulations and other contractual obligations of the Management (Codex 2010 section 4.3.5).
Formation of Supervisory Board committees
Since the supervisory board of the Mühlbauer Holding AG & Co. KGaA consists only of three members, no committees will be formed (Code 2010 section 5.2 clause 2, 5.3.1 clause 1 and 2, 5.3.2 clause 1, 5.3.3).
Composition and remuneration paid to members of the Supervisory Board
Referring to section 5.4.1 the Supervisory Board shall specify concrete objectives regarding its composition that take into account the international activities of the company, potential conflicts of interest, an age limit to be defined for the members of the Supervisory Board and diversity under consideration of the specific situation of the company. Considering the fact that the Supervisory Board of the company only consists of three members, of which only two are elected by the Annual General Meeting, and the fact that new elections to the Supervisory Board are not due before 2013, the Supervisory Board has not yet mentioned any concrete objectives regarding its (future) composition. However, it will develop criteria that a potential new member should predominantly fulfil – in a timely manner before the next election to the Supervisory Board. In so doing, the focus will be on technical aspects. There will neither be an age limit nor a quota or a certain number of seats for female and male members. In the opinion of the company, neither the age nor the gender of a person are criteria that allow for the drawing of conclusions as to whether or not a Supervisory Board mandate can be appropriately or successfully perceived. A publication of the criteria in the Corporate Governance Report is currently not planned. (Code 2010 section 5.4.1).
Concerning the composition of the Supervisory Board the professional counselling and monitoring of the Management is in the center. Members of the Supervisory Board may also be suitable, even if they do not satisfy the criteria for independence in the sense of section 5.4.2 clause 1 in the German Corporate Governance Code (Code 2010 section 5.4.2).
As far as the Annual General Meeting elects Executives of the Mühlbauer Aktiengesellschaft in the Supervisory Board of the company, it will be decided about their change in the chairmanship of the Supervisory Board as the case arises. No reason will be given to the General Meeting for such an intention. The Personally Liable Shareholder and the Supervisory Board consider that in some cases it may prove beneficial that former Executives transfer to the chairmanship of the Supervisory Board. As the internal knowledge of former Executives about the company increases the efficiency of Supervisory Board monitoring, the Personally Liable Shareholder and the Supervisory Board do not see any need for justifying separately a possible transfer at the Annual General Meeting (Code 2010 section 5.4.4).
The remuneration paid to members of the Supervisory Board is set forth in the Articles of Association of Mühlbauer Holding AG & Co. KGaA. The Articles of Association do only include a fixed payment to members of the Supervisory Board. The introduction of a variable remuneration schemes is not intended as the company does not believe that such a component would generate additional incentive (Code 2010 section 5.4.6 paragraph 2 clause 1).
Financial statement
The Personally Liable Shareholder is responsible for drawing up the half-year and quarterly reports in accordance with the respective legal provisions. They are drawn up within a tight schedule. For this reason no discussions about the half-year and any quarterly financial reports are made between the Personally Liable Shareholder and the Supervisory Board prior to the publications (Code 2010 section 7.1.2 clause 2). The annual report should be published within 90 days after the end of the fiscal-year. Due to several organizational, intra-company changes, the annual report 2011 is expected to be published in April (Code 2010 section 7.1.2 clause 2).
In accordance with the Declaration of Conformity from November 20, 2010, the Personally Liable Shareholder and the Supervisory Board declare that corporation in its legal form was complied with the recommendations of the German Corporate Governance Code – in the version of June 18, 2009 (Code 2009) – until July 2, 2010, and subsequently with the recommendations of the German Corporate Governance Code in the version of May 26, 2010 (Code 2010), except in the respects set out below:
Deductible for D&O insurance
The D&O insurance for the Supervisory Board does not include a deductible. A deductible would restrict opportunities for acquiring members for the Supervisory Board with extensive entrepreneurial experience, as these would have to take into account liability risks, even in the event of negligent conduct. And the agreement of deductibles in the Supervisory Board area is still uncommon (Code 2010 section 3.8 paragraph 3).
Diversity regarding to the filling of management positions
When filling management positions, the company takes into account diversity. However, the focus here is on the technical qualification of the candidates (men and women).
Disclosure and explanation of the remuneration of the Management
The Chairman of the Supervisory Board will not disclose any information on the company's remuneration system and possible modifications to the Annual Shareholders' Meeting (Code 2010 section 4.2.3 paragraph 6).
The total remuneration of the Personally Liable Shareholder and the members of the Management Board of the Mühlbauer Aktiengesellschaft for the performance of their duties in the company and the subsidiary companies is disclosed as total amount in the notes to the consolidated financial statements. The disclosure is divided according to non result-based and result-based components as well as components with long-term incentive effect respectively according to the rules of the relevant international accounting principles.
No disclosure of other information than compulsory according to the law, the explanation of the remuneration system as well as the explanation of information on the nature of the fringe benefits provided by the company in a remuneration report were given (Code 2010 section 4.2.4 and 4.2.5).
The remuneration system is the result of confidential discussions within the Supervisory Board as well as between the Supervisory Board and the Management. The publication of details in excess of the legally required ones would increase the risk of a targeted solicitation of executives, as details of the remuneration structure would subsequently also be transparent to competition.
Sideline activities that are not legally compulsory subject to approval can be taken partly on the members of the Management even without approval of the Supervisory Board. The interests of the corporation and the expectations towards responsible decisions of the Management are preserved sufficiently by the legally compulsory regulations and other contractual obligations of the Management (Codex 2010 section 4.3.5).
Formation of Supervisory Board committees
No committees will be formed for as long as the Supervisory Board of Mühlbauer Holding AG & Co. KGaA only consists of 3 members (Code 2010 section 5.2 clause 2, 5.3.1 clause 1 and 2, 5.3.2 clause 1, 5.3.3).
Composition and remuneration paid to members of the Supervisory Board
Referring to section 5.4.1 the Supervisory Board shall specify concrete objectives regarding its composition that take into account the international activities of the company, potential conflicts of interest, an age limit to be defined for the members of the Supervisory Board and diversity under consideration of the specific situation of the company. Considering the fact that the Supervisory Board of the company only consists of three members, of which only two are elected by the Annual General Meeting, and the fact that new elections to the Supervisory Board are not due before 2013, the Supervisory Board has not yet mentioned any concrete objectives regarding its (future) composition. However, it will develop criteria that a potential new member should predominantly fulfil – in a timely manner before the next election to the Supervisory Board. In so doing, the focus will be on technical aspects. There will neither be an age limit nor a quota or a certain number of seats for female and male members. In the opinion of the company, neither the age nor the gender of a person are criteria that allow for the drawing of conclusions as to whether or not a Supervisory Board mandate can be appropriately or successfully perceived. A publication of the criteria in the Corporate Governance Report is currently not planned. (Code 2010 section 5.4.1).
Concerning the composition of the Supervisory Board the professional counselling and monitoring of the Management is in the center. Members of the Supervisory Board may also be suitable, even if they do not satisfy the criteria for independence in the sense of section 5.4.2 clause 1 in the German Corporate Governance Code (Code 2010 section 5.4.2).
The remuneration paid to members of the Supervisory Board is set forth in the Articles of Association of Mühlbauer Holding AG & Co. KGaA. The Articles of Association do only include a fixed payment to members of the Supervisory Board. The introduction of a variable remuneration schemes is not intended as the company does not believe that such a component would generate additional incentive (Code 2010 section 5.4.6 paragraph 2 clause 1).
Financial statement
The Personally Liable Shareholder is responsible for drawing up the half-year and quarterly reports in accordance with the respective legal provisions. They are drawn up within a tight schedule. For this reason no discussions about the half-year and any quarterly financial reports are made between the Personally Liable Shareholder and the Supervisory Board prior to the publications (Code 2010 section 7.1.2 clause 2).
Roding, 30 November 2010
the the
Personally Liable Shareholder Supervisory Board
