Publicly listed companies have to make and publish an annual declaration on their corporate governance. The following declaration combines the corporate governance declaration for Deutsche Wohnen SE pursuant to section 289f German Commercial Code [HGB] and the corporate governance declaration for the Deutsche Wohnen Group pursuant to section 315d German Commercial Code [HGB].
1. Declaration by the Management Board and Supervisory Board of Deutsche Wohnen SE on the German Corporate Governance Code
in accordance with section 161 Stock Corporation Act [Aktiengesetz – AktG]
The Management Board and Supervisory Board of Deutsche Wohnen SE have carefully reviewed its compliance with the standards of the German Corporate Governance Code taking into consideration the Code in the version of 7 February 2017 published in the Federal Gazette [Bundesanzeiger] on 24 April 2017 (“2017 Code”) and the Code in the version of 16 December 2019 published in the Federal Gazette on 20 March 2020 (“2020 Code”), and adopted the following declaration of conformity under section 161(1) of the German Stock Corporation Act [AktG] in December 2020.
Since making its last declaration of conformity in December 2019, Deutsche Wohnen SE has complied with the recommendations of the German Corporate Governance Code (2017 Code) with the following exception:
- The recommendation in 4.1 of the Code, which includes the definition of a regular limit of length of Supervisory Board membership and the consideration of this limit in proposals for election, was not complied with. The company believes that a fixed regular limit does not take individual factors justifying longer terms of membership of individual Supervisory Board members into account.
Deutsche Wohnen SE complies with the recommendations of the German Corporate Governance Code (2020 Code) and will continue to comply with them in the future, with the following exceptions:
The Supervisory Board will decide upon a new remuneration system under the new section 87a of the German Stock Corporation Act [AktG] and submit it to the 2021 Annual General Meeting for resolution. The provisions on remuneration of Management Board members in existing employment contracts currently do not comply with all recommendations of the 2020 Code. Its recommendations will be applied in the future in the appointment and conclusion of employment contracts of new Management Board members. Existing contracts of employment will remain unchanged during their minimum term, with amendments made as they are renewed. The current applicable remuneration system and existing Management Board employment contracts include the following deviations from the 2020 Code:
- Recommendation G 8, which provides that subsequent changes to the target values or comparison parameters be excluded, was not fully complied In its meeting on 27 April 2020, the Supervisory Board approved the conclusion of agreements (“compensatory agreements”) to compensate for the remuneration-distorting effects of the Berlin Residential Rent Cap and Reduction Act [MietenWoG Berlin, also known as the “Berlin rent cap”] announced by Berlin’s government on 5 June 2019. These agreements are between the company and Management Board members Michael Zahn, Philip Grosse and Lars Urbansky, as well as former Management Board member Lars Wittan. The compensatory agreements provide firstly for an adjustment of the long-term incentive (LTI)performance period underlying the calculation of the LTI remuneration for the purposes of measuring relative share price performance. Before the resolution on 27 April 2020, the Supervisory Board determined that the announcement of the Berlin rent cap had had significant negative impacts on the market price of the company’s shares, while the share price performance of the company’s peers that was used when calculating key LTI figures was simultaneously unaffected by the Berlin government’s announcement or only experienced a much more limited negative impact. The Supervisory Board believes there is a strong likelihood of there being an extraordinary recovery for the company’s share price if the Federal Constitutional Court should judge the Berlin rent cap to be unconstitutional. In the view of the Supervisory Board, the long-term remuneration from the share options granted through the share option programme (SOP) in 2016 and, where applicable, 2017 would also have come to a considerably larger amount without the rent cap. The reason for this is that the exercise threshold for one of the targets (relative share price performance against the EPRA/NAREIT Germany Index; 20% weighting) would not have been missed. The Supervisory Board believes that the overall sustainability and incentivizing effect of long-term remuneration would be endangered if these one-time effects of the Berlin rent cap were not to be considered separately. In this context, the Supervisory Board considers it appropriate to make an extraordinary one-time adjustment of the LTI remuneration of these Management Board members in such a way that the announcement of the rent cap and the Federal Constitutional Court’s decision about the rent cap always fall within the same LTI performance period, so as to record these extraordinary price-determining events in a single period. Furthermore, in certain conditions, the compensatory agreements provide for subscription rights being granted for share units that correspond to a minimum achievement level of the aforementioned SOP target. When drafting the compensatory agreements, the Supervisory Board made efforts to ensure that the positive effects created for the Management Board are only of the extent to which they are underpinned by corresponding share price developments that benefit the shareholders, and that the Management Board members concerned cannot profit from extraordinary share price fluctuation in view of the Federal Constitutional Court’s decision but do not become unreasonably disadvantaged in keeping with this either.
- Recommendation G 10 is potentially not fully complied with. According to recommendation G 10, first sentence, Management Board members’ variable remuneration is to be predominantly invested in company shares by the respective Management Board member or is to be granted predominantly as share-based remuneration, taking the respective tax burden into The Management Board employment contracts include the share ownership guidelines and provide for the amount of LTI remuneration to be calculated based on key LTI figures that are half calculated based on shares – through the relevant relative share performance – and half calculated based on a property yield defined in the contract. Consequently, the Management Board members have a stake in the performance of the company’s shares that is sufficient to ensure that the Management Board members, like the shareholders, have an interest in the company’s long-term development.
- The recommendation in G 11 is not complied with. This recommendation provides for the Supervisory Board to have the possibility to account for extraordinary developments to an appropriate extent and to retain or reclaim variable remuneration, if The Supervisory Board can currently reduce all remuneration components, including variable remuneration, if the company’s position deteriorates in accordance with section 87(2) of the German Stock Corporation Act [AktG]. Furthermore, the Supervisory Board can retain all remuneration components, including variable remuneration, in the event of a breach of obligation amounting to a loss for the company. Further reclamation entitlements have not been agreed.
- The recommendation in G 12 is not complied with. According to G 12, if a Management Board member’s contract is terminated, the disbursement of any remaining variable remuneration components attributable to the period up until contract termination is to be based on the originally agreed targets and comparison parameters, and on the due dates or holding periods stipulated in the The applicable Management Board employment contracts (in accordance with section 4.2.3, para. 5, of the 2017 Code) provide for the Management Board members to enjoy a one-time right to terminate the contract with three months’ notice, counted from the end of a month, in the event of a change of control for the purposes of the contract. Upon exercising the termination right, the Management Board member receives an amount of up to three years’ remuneration, capped at an amount equal to the remuneration otherwise payable after their employment ends. This severance pay becomes due for payment when the contract ends. The reason behind this provision for severance pay due to a change of control is that a change of control can be associated with changes that make it appear unjustified to make the calculation of variable remuneration components dependent on performance after the change of control and to comply with the due dates stipulated in the contract. The remuneration’s alignment with sustainable and long-term company performance is not negatively impacted by this provision because the Management Board members cannot expect a change of control during their term. The departed Management Board member Lars Wittan was also considered when deciding on the compensatory agreements mentioned above related to recommendation G 8.
- The recommendation in G 13, first sentence, is not complied with only in the exceptional event of a change of Based on G 13, first sentence, any payments made to a Management Board member due to early termination of their Management Board activity is not to exceed twice the annual remuneration (severance cap) and is not to constitute remuneration for more than the remaining term of the employment contract. As described above, the Management Board employment contracts currently provide for an amount of up to three years’ renumeration if a Management Board employment contract ends prematurely due to a change of control. The 2020 Code no longer includes an explicit provision regarding benefits in the event of a change of control. It is unclear if the general recommendation in G 13, first sentence, concerning severance pay amounts has effect in this respect. The company is therefore taking the precaution of declaring that it does not comply with recommendation G 13, first sentence.
Berlin, in December 2020
Management Board Supervisory Board
The German version of this statement is legally binding. The company cannot be held responsible for any misunderstanding or misinterpretation arising from this convenience translation.
The declaration of compliance is also available online at www.deutsche-wohnen.com/declaration-of-compliance.
2. Relevant disclosures on corporate governance practices
Deutsche Wohnen SE is based in Berlin and as a publicly listed European company (Societas Europaea, SE) is governed by the European SE Regulation and the German SE Implementation Act in addition to German stock corporation and capital market law and the provisions of its articles of association. With its decision-making bodies, the Management Board and Supervisory Board, the company has a two-tier management and supervisory structure. The Management Board leads the company and manages company business on its own responsibility. The Supervisory Board advises and monitors the Management Board and works closely with the Management Board in the interests of the company.
Shareholders of Deutsche Wohnen SE exercise their rights at the Annual General Meeting. The Annual General Meeting decides on all matters assigned to it by law, particularly the use of profits, discharging the Management Board and Supervisory Board of liability, electing Supervisory Board members and auditors, changes to the articles of association, changes in company equity, control agreements, changes of legal structure and the remuneration of the Supervisory Board. According to the Act Transposing the Second Shareholder Rights Directive [ARUG II] of 12 December 2019, the Annual General Meeting will pass non-binding resolutions for the first time in 2021 on approving the remuneration system for Management Board members proposed by the Supervisory Board and for the first time in 2022 on approving the remuneration report for the previous financial year. In accordance with section 87 para. 4 AktG as introduced by ARUG I, the Annual General Meeting can reduce the maximum remuneration set by the Supervisory Board at the application of shareholders accounting collectively for one-twentieth of share capital or an amount of EUR 0.5 million.
Responsible management, aimed at long-term value creation, is a central element of corporate governance for the Management Board and the Supervisory Board, and is the model for all areas of the company. Our commercial activities are not only defined by following the law, but are also based on generally acknowledged standards and recommendations, particularly the UN Guiding Principles of Business and Human Rights. Our activities are based on our corporate culture, whose main pillars are respect, diversity, openness and high quality. We uphold values such as competence, transparency and sustainability. We believe that sustainable business activities will secure the future viability of the Deutsche Wohnen Group and also benefit our stakeholders.
Code of Conduct
To implement its values, principles and rules for responsible corporate governance in day-to-day business Deutsche Wohnen has defined a Code of Conduct that specifies and supplements the legal provisions and applies to all employees of Deutsche Wohnen. The Code of Conduct is reviewed regularly and revised and is available to all employees on the company intranet and online.
Deutsche Wohnen SE and its Group companies are landlords and business partners, and so are dependent on gaining and maintaining the trust of customers, buyers and business partners. For Deutsche Wohnen SE, its Management Board and Supervisory Board and its employees, compliance therefore not only means following the law and the articles of association, but also respecting internal instructions and commitments in order to put the values, principles and rules of responsible corporate governance into practice on an everyday basis. The Code of Conduct is embedded in the organisational structure of Deutsche Wohnen, which is all the more important since the company relies on the initiative and sense of responsibility of its managers and employees to carry out its work.
Compliance with statutory provisions and the standards of the German Corporate Governance Code and its own Code of Conduct is an important principle for Deutsche Wohnen. Employees are encouraged to notify the company of any infringements. For this purpose we have set up a whistleblower system for the staff and business partners, which can also be used anonymously if desired. All the business segments and processes at Deutsche Wohnen are subject to regular reviews of compliance risks.
Expectations of our business partners
The Code of Conduct for Business Partners of Deutsche Wohnen SE is based on the Code of Conduct for our employees. Deutsche Wohnen aims to gain and keep the trust of its customers, employees and business partners by means of social and responsible conduct. Our working relationships with business partners are based on partnership and mutual respect. The Code defines standards for our business partners in terms of compliance with legislation, integrity and ethical benchmarks. We respect human rights and are convinced that it is part of our social responsibility to develop our business relations on the basis of human rights and internationally acknowledged labour and environmental standards. The principles and minimum standards described in our Code of Conduct for business partners are therefore drawn from the applicable conventions of the International Labour Organisation (ILO) and the UN Guiding Principles of Business and Human Rights. Deutsche Wohnen expects its business partners to comply with the principles and rules defined in the Code of Conduct and to ensure that their own business partners, subcontractors and service providers do the same.
Management of opportunities and risks
Responsible handling of opportunities and risks is a key function of the Management Board, managers and all employees and is also an expression of good corporate governance. The aim is to identify risks early, to limit them and to exploit any resulting commercial opportunities as appropriate.
The risk management process at Deutsche Wohnen SE begins with risk identification by the operating management together with the central risk manager. Individual risks are identified and measured by reference to the maximum loss, the probability of loss and the effectiveness of possible preventive measures. This review results in an assessment of the risk potential, risk measurement and subsequent management. Elements of risk management are refined continuously to adapt them to changes in the external environment.
For the Management Board itself the key risk management tool is the regular reports it receives from the operating departments (in the form of the risk inventory). In addition, the risk manager or the head of the department concerned notifies the Management Board immediately about risks or changes that occur unexpectedly. Risks may arise that are beyond the control of the Management Board. For this reason, even a fully functioning risk management system cannot ensure that all risks are ruled out. There can always be developments that differ from the Management Board’s plans.
Deutsche Wohnen attaches great importance to ensuring that shareholders and the interested public are informed uniformly, comprehensively, promptly and simultaneously about its economic situation and new facts. Shareholders and third parties are informed in particular by means of the annual report, the interim reports and statements and the sustainability report, as well as by face-to-face meetings and telephone conferences with analysts.
Important current information is also made public by way of press releases, corporate news bulletins and ad hoc announcements. All this information is provided on the Deutsche Wohnen website, which also has a wide range of other information about the company and the Deutsche Wohnen share.
The members of the Management Board and Supervisory Board of Deutsche Wohnen SE and persons closely associated with them are obliged under article 19 Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation) to disclose transactions conducted on their own account relating to the shares or debt instruments of Deutsche Wohnen SE or to derivatives or other financial instruments linked to them, insofar as the total amount of the transactions conducted by the member or persons closely associated with them reaches or exceeds EUR 20 thousand within a calendar year. The transactions reportedto Deutsche Wohnen SE in financial year 2020 were properly made public and are available on the company’s website under www.deutsche-wohnen.com/directors-dealings-en.
When necessary, Deutsche Wohnen SE maintains the insider lists required by article 18 EU Market Abuse Regulation. The persons featuring on the insider lists were and are informed of the statutory obligations and penalties resulting for them.
Deutsche Wohnen compiles the planned dates of important recurring events and publications in a financial calendar, which is published on the company website and updated regularly.
Financial reporting and audits
The consolidated financial statements, the interim consolidated financial statements and the consolidated interim reports of Deutsche Wohnen SE are prepared in accordance with IFRS as applicable in the European Union. After being prepared by the Management Board the consolidated financial statements are examined by the auditor and the Audit Committee of the Supervisory Board, and approved by the Supervisory Board after review. The company aims to publish the consolidated financial statements within 90 days of its financial year-end, in accordance with the German Corporate Governance Code. Interim announcements and the interim financial report are discussed with the Management Board by the Audit Committee of the Supervisory Board before publication.
The Annual General Meeting 2020 elected KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG) as auditor for the financial year 2020. KPMG audits follow German auditing regulations, the audit principles defined by the German Institute of Public Auditors (Institut der Wirtschaftsprüfer) and International Standards on Auditing. The Chair of the Supervisory Board and the Chair of the Audit Committee are notified without delay by the auditor of any grounds for exclusion or exemption and of any misstatements in the declaration of compliance that have arisen in the course of the audit. The auditor reports all matters and events of importance for the work of the Supervisory Board that become known in the course of the audit to the Chairs of the Supervisory Board and the Audit Committee without delay, and is obliged to notify the Supervisory Board promptly about any reasons for its exclusion or any grounds for bias.
3. Management Board
The Management Board of Deutsche Wohnen SE consists of at least two members. The Supervisory Board appoints the members of the Management Board and determines the total number of its members. The Supervisory Board may nominate a member of the Management Board as Chief Executive Officer or Spokesperson of the Board.
The Management Board of Deutsche Wohnen SE currently consists of four members. The Chair (CEO), Michael Zahn, is responsible for the strategy of the Deutsche Wohnen Group. He manages the functions Strategy, M&A/Disposals, Human Resources, Corporate Communication, IT and Nursing & Assisted Living.
Philip Grosse is Chief Financial Officer (CFO) and is responsible for Corporate Finance, Accounting & Tax, Controlling, Investor Relations & Sustainability Management and Legal.
Henrik Thomsen is Chief Development Officer (CDO) and responsible for New Construction, Portfolio Investment, Technical Infrastructure and Digitalisation.
Lars Urbansky is Chief Operating Officer (COO) and is responsible for Customer Communication and Service Strategy, Commercial and Technical Inventory Management.
The Management Board manages the company under its own responsibility, develops the company strategy, consults with the Supervisory Board and ensures that it is put into practice. It is obliged to act in the company’s best interest and create sustainable value.
The Management Board is responsible for the interim financial reports, the financial statements of Deutsche Wohnen SE, the consolidated financial statements and the combined management report for the company and the Group, including the non-financial Group statement.
To ensure that business risks are handled responsibly, the Management Board has established an internal control system and appropriate activities based on the company’s risk position, particularly a compliance management system, a risk management system and risk controlling. It ensures compliance with statutory provisions and internal policies and encourages compliance by Group companies.
The members of the Management Board are collectively responsible for managing the company. The Management Board has no committees. The division of responsibilities within the Management Board is defined by the members in a formal document. The CEO coordinates the work of the Management Board. The Supervisory Board has adopted rules of procedure for the Management Board.
They include rules on meetings and resolutions, as well as on working with the Supervisory Board. The rules of procedure also include a list of transactions requiring approval.
No member of the Management Board holds 1% or more of issued shares in Deutsche Wohnen SE. A detailed overview of the shares held by Management Board members and information about Management Board remuneration can be found in the Remuneration Report (www.deutsche-wohnen.com/remuneration-report).
4. Supervisory Board and its committees
The Supervisory Board of Deutsche Wohnen SE currently consists of six members. All six members are elected by shareholders at the Annual General Meeting. Their period of office is five years, in accordance with the statutory provisions and the articles of association. For new members of the Supervisory Board an Onboarding is conducted to familiarise them with the business model and corporate structures of the company.
The Supervisory Board is composed in such a way that its members collectively have the knowledge, skills and professional experience, particularly of capital markets and the German property market, required to fulfil their responsibilities correctly. The requirements for the composition of the Supervisory Board, which include a competence profile and a diversity concept, are described under 6. below.
CVs of the individual Supervisory Board members can be downloaded from www.deutsche-wohnen.com/board.
The Supervisory Board monitors and advises the Management Board on the management of the company and agrees on corporate strategy and its implementation with the Management Board. The Management Board notifies the Supervisory Board regularly, promptly and fully of all matters relevant to the company, particularly its strategy, corporate planning, performance, profitability and risk position, as well as risk and compliance management. It investigates any differences between the course of business and the planning or agreed targets and provides the reasons for them. The Supervisory Board regularly discusses business performance, planning, strategy and implementation with the Management Board. The articles of association and the Supervisory Board have defined transactions of fundamental importance for the company which require prior approval.
The Supervisory Board adopts the financial statements of Deutsche Wohnen SE and approves the consolidated financial statements and the combined management report on the situation of Deutsche Wohnen SE and the Group, taking into account the results of the preliminary review by the Audit Committee and the auditor’s report. Furthermore, the Supervisory Board reviews the non-financial Group statement. It passes a resolution on the Management Board’s proposal for use of distributable profit and the Supervisory Board’s report to the Annual General Meeting, and on the proposals for resolution tabled by the Supervisory Board or management at the Annual General Meeting.
It is the responsibility of the Supervisory Board to appoint and dismiss the members of the Management Board. The Supervisory Board pays attention to the diversity of the Management Board and to long-term succession planning developed jointly with the Management Board. The requirements for the composition of the Management Board, which include a competence profile and a diversity concept, are described under 6. below.
In addition, the Supervisory Board adopts a remuneration system for the Management Board members and sets the remuneration of individual Management Board members on this basis. It defines the targets for the variable remuneration of individual Management Board members and ensures that total remuneration is reasonable.
Further information on the remuneration of the Management Board is included in the remuneration report, which is available online at www.deutsche-wohnen.com/remuneration-report.
The Supervisory Board has established three committees to make its work more efficient. The committees prepare certain types of transaction and resolutions by the Supervisory Board. The committee chairs report regularly to the Supervisory Board on the committee meetings. Committee members are chosen primarily on the basis of their professional experience.
The Supervisory Board currently has the following three committees:
- The Steering and Nomination Committee is responsible for continuous consultation with the Management Board and advising the Management Board on an ongoing It also prepares the Supervisory Board meeting to the extent that this is expedient given the scope and importance of the agenda items. In accordance with relevant resolutions by the plenary session, this committee is responsible for drafting and signing the contracts with the Management Board members. To the extent permitted, it is also responsible for advising on and passing resolutions on urgent matters. This committee suggests suitable people to the Supervisory Board for its election proposals to the Annual General Meeting.
- The Audit Committee is responsible for the preliminary review of documents for the separate and consolidated financial statements, and for preparing their adoption or approval, as well as preparing the Management Board’s proposal for the use of It discusses the quarterly reports and interim financial reports before they are published. In addition, the Audit Committee discusses with the Management Board the principles of financial reporting, compliance, risk identification, audit, risk management and the suitability and effectiveness of the internal control system. The Audit Committee also prepares the Supervisory Board’s proposal to the Annual General Meeting on the election of the auditor and makes a recommendation to the Supervisory Board after reviewing the necessary independence of the intended auditor. After the resolution has been passed by the Annual General Meeting the Audit Committee appoints the auditor and defines the main elements of the audit, which includes approval of additional services to be provided by the auditor. The Chair of the Audit Committee and the members of the Audit Committee have particular knowledge and experience in the application of accounting principles and internal control processes and are familiar with the auditing of financial statements. The Chair of the Audit Committee is not Chair of the Supervisory Board at the same time nor a former member of the Management Board. All members of the Audit Committee are independent (see comments in 6. below).
- The Capital Market and Acquisition Committee discusses with the Management Board potential targets and terms for acquisitions or disposals of land or shareholdings, and prepares the corresponding Supervisory Board resolutions. It is authorised by the Supervisory Board to approve certain transactions. Furthermore, the committee discusses important capital market matters, the performance of the share price and the company’s shareholder
Further information about the work of the Supervisory Board and its committees can be found in the Supervisory Board report, which is available at www.deutsche-wohnen.com/supervisory-board.
The Supervisory Board has adopted rules of procedure. These rules of procedure govern the main working aspects of the Supervisory Board and its committees. The rules of procedure are publicly available at www.ir.deutsche-wohnen.com/websites/dewohnen/English/4900/articles-of-association-and-rules-of-procedure.html.
The Management Board regularly attends the meetings of the Supervisory Board. It reports in writing and orally on the individual agenda items and proposals for resolution and answers questions from the Supervisory Board members. In addition, the Management Board is in regular contact with the Chair of the Supervisory Board. Their discussions cover current affairs and developments. The Supervisory Board meets also without the Management Board especially to discuss personnel and remuneration topics.
Proposals for resolution and documents about the agenda items are sent to the members of the Supervisory Board in good time for the next meeting. In isolated cases resolutions may also be passed outside meetings by order of the Chair of the Supervisory Board. Use is occasionally made of this option in urgent cases. The Chair of the Supervisory Board has the casting vote. The same applies to resolutions by the Supervisory Board committees.
The Chair of the Supervisory Board comments on the work of the Supervisory Board and its committees every year in the Supervisory Board report included in the annual report of Deutsche Wohnen, and in person at the Annual General Meeting.
The Supervisory Board members assess their own work in regular discussions within the Supervisory Board, using the criteria organisational structure, working methods, competence and performance. In 2020 neither the Management Board nor the Supervisory Board saw the need for specific changes. The steps taken in 2020 to support new members starting their term of office, and to provide training to Supervisory Board members, are described in the Supervisory Board report.
No member of the Supervisory Board holds 1% or more of issued shares in Deutsche Wohnen SE. Information about the remuneration of the Supervisory Board is included in the remuneration report (www.deutsche-wohnen.com/remuneration-report).
5. Requirements of section 76 para. 4 AktG and section 111 para. 5 AktG
In accordance with the Act for Equal Participation by Women and Men in Leadership Positions in the Private and Public Sectors, the Supervisory Board of a publicly listed company, which is not subject to the Co-determination Act [MitbesG], must define a target for the percentage of women in the Supervisory Board and Management Board. The Management Board of such a company must in turn define targets for the percentage of women on the two management levels below the Management Board. If the percentage of women at the time the Management Board and Supervisory Board define the targets is below 30%, these targets may not be lower than the current percentage.
When the targets are defined, a deadline for achieving them must also be set, which may not be longer than five years.
For the target period up to 30 June 2022 the percentage of women on the Supervisory Board has been set at 16.67%. As of the reporting date the target was exceeded. The Supervisory Board currently consists of two women and four men.
The target for the proportion of women members of the Management Board has been set at 20% for the target period ending 30 June 2025. The composition of the Management Board in financial year 2020 did not meet this target as of the reporting date.
For the target period ending 30 June 2025 the Management Board has defined a target of 20% for the first management level below the Management Board and a target of 40% for the second management level below the Management Board. As of the reporting date the proportion of women in the first management level has not yet met the target with 18%. For the second management level the target was with 41% achieved.
6. Composition of Management Board and Supervisory Board (diversity concept)
Deutsche Wohnen has a diversity concept for the composition of the Management Board and Supervisory Board, which is described below. The diversity concept and the competence profile are key elements of the requirements for the composition of the Management Board and Supervisory Board. It meets the statutory requirements and the recommendations of the German Corporate Governance Code.
Diversity concept and succession planning for the Management Board
The diversity concept aims to ensure that the composition of the Management Board is as diverse as possible, that its members complement one another and that it matches the specific situation of the company. The Management Board in its entirety should have the knowledge, skills and professional experience necessary to fulfill its responsibilities correctly. The Supervisory Board decides in the company’s best interests when appointing someone to a specific Management Board position and takes all aspects of the particular situation into account. In doing so the Supervisory Board also considers the following aspects:
- In addition to the specific knowledge and professional skills required, as well as management and leadership experience for the task at hand, the Management Board members should represent as wide a range as possible of knowledge and experience, educational and professional
- The Management Board as a whole should have many years of experience of the German property market and of capital
- The aim is for different age groups to be represented on the Management Board. The Supervisory Board makes sure that the age limit defined for Management Board members is applied, which is the same as the statutory retirement
In 2020 the members of the Management Board met these criteria. Proposals for any new appointments to the Management Board will be drawn up by the Supervisory Board to implement this concept.
In financial year 2020 there were no changes in the members of the Management Board.
Diversity concept for the Supervisory Board
The diversity concept for the composition of the Supervisory Board is based on the company-specific targets for its composition and its competence profile, which have been defined in accordance with the recommendations of the German Corporate Governance Code.
These targets take potential conflicts of interest into account, the age limit set for Supervisory Board members and an appropriate proportion of women. A further objective is that at all times the Supervisory Board’s members should collectively have the varied knowledge, skills and professional experience, particularly of capital markets and the German property market, required to fulfil their responsibilities correctly, and should be independent. At least one member of the Supervisory Board must also have expertise in financial reporting or auditing and the members as a whole must be familiar with the sector in which the company operates. Only individuals who have not reached the age of 73 years at the time of their appointment may be put forward for election to the company’s Supervisory Board.
In 2020 the Supervisory Board met all the targets for its composition and the requirements of its competence profile. Proposals for any new appointments to the Supervisory Board will be drawn up to implement this concept.
In financial year 2020 there was one change in the members of the Supervisory Board of Deutsche Wohnen. The Annual General Meeting elected Kerstin Günther to the Supervisory Board to succeed Dr Andreas Kretschmer, whose period of office ended at the close of the Annual General Meeting on 5 June 2020.
After careful review the Supervisory Board has ascertained that all the Supervisory Board members are to be considered independent. The reasons for this conclusion are as follows: notwithstanding the fact that in some cases, namely Matthias Hünlein and Dr Florian Stetter, they have been members of the Supervisory Board for more than twelve years, they are to be considered independent because they have no personal or business relations with the company or the Management Board that would constitute a material and not only temporary conflict of interests. Length of tenure is only one of four indicators in the German Corporate Governance Code as amended on 16 December 2019 to be taken into account when judging the independence of Supervisory Board members and is not definitive on its own. The Supervisory Board believes that all relevant aspects must be considered collectively to ascertain the independence of its members. The other three indicators explicitly mentioned in the Code as amended on 16 December 2019 for ascertaining the independence of a Supervisory Board member are not met by the members Matthias Hünlein and Dr Florian Stetter. These indicators are namely whether the Supervisory Board member or a close family member
- was a member of the Management Board in the two years before their appointment,
- currently or in the year before their appointment has or had a material business relationship with the company or one of its affiliates, either directly or as a shareholder or in a responsible position of the company outside the Group,
- is a close family member of a Management Board
It is in the company’s interests to make use of the long-standing experience of the Supervisory Board members mentioned above on the Supervisory Board of Deutsche Wohnen. The Supervisory Board is convinced that the automatic departure of a Supervisory Board member after a period of office of twelve years, regardless of the situation of the specific Supervisory Board members and the respective composition of the Supervisory Board, would not improve the work of the Supervisory Board or make it more professional. In the opinion of the Supervisory Board it may therefore in individual cases be in the interests of the company, with regard to continuity and the sustainable long-term direction of the company, for a person to be a Supervisory Board member for longer than twelve years.
Berlin, March 2021
Management Board Supervisory Board