Corporate Governance

Muehlhan AG´s Executive Board and Supervisory Board see the principles of corporate government as a central focus of their entrepreneurial activity.

As a consequent implementation to this commitment, we have resolved to abide by or to implement the provisions of the German Corporate Governance Code as amended on 26 May 2010, taking into account Muehlhan AG´s size and structure.

Declaration of Conformity; as of 27 March 2012
Muehlhan AG’s Management and the Supervisory Board deal regularly with issues concerning good corporate management. Therefore, it is only logical for the company to follow the recommendations of the "Government Commission on the German Corporate Governance Code", referred to as DCGK below, to the extent that doing so is reasonable given the size and structure of the company.
Muehlhan has already complied with the Code and its main recommendations in the past. The company is currently in compliance with the requirements of the current version of the Code dated 26 May 2010, as well. To the extent that individual recommendations from the current version of the DCGK were not followed, or were followed only to a limited extent, or if the company deviated from them in another manner, or will deviate from them in the future, the Executive Board and the Supervisory Board provide justification as follows:

Section 2 of the Code: Invitation to the Annual General Meeting; electronic notification
Under paragraph 2.3.1 the DCGK recommends that shareholder’s rights should be able to be carried out by postal vote. Paragraph 2.3.3 recommends the company’s support in this matter. A postal vote is not implemented in the currently effective Articles of Incorporation of the Muehlhan AG. Furthermore, the company offers its shareholders the possibility to exercise their rights, using the proxy voter. He is appointed by the company.
Thus, shareholders already have the opportunity to cast their votes even before the day of the Annual General Meeting. The additional possibility of a postal vote would provide no discernible added value in the result.
In paragraph 2.3.2, the DCGK recommends that the invitation documents for the Annual General Meeting be sent electronically, provided that the consent requirement necessary for doing so has been met. For economic and organizational reasons, Muehlhan limits itself to the manner prescribed by statute for convening the Annual General Meeting. The reports and documents required by law for the Annual General Meeting are normally made available for inspection by the shareholders beginning on the date the Annual General Meeting is announced and may be sent to a shareholder upon request, but not electronically, because the consent requirement stipulated in § 30b, paragraph 3 of the Securities Trading Act (WpHG) has not been met. In addition, the documents will be published on the company´s website along with the agenda, provided that doing so is not contrary to the legitimate interests of the company, its shareholders or third parties. All documents can be accessed by the shareholders on the website.

Section 4 of the Code: Executive Board
In Section 4.2.2, Clause 1, the DCGK recommends that the full Supervisory Board, at the recommendation of the executive committee that deals with the Executive Board contracts, provide advice on and regularly review the structure of the compensation system for the Executive Board, including the major components of the contracts and the total compensation of individual Executive Board members.
Muehlhan AG’s Supervisory Board consists of three members. The formation of executive committees is therefore not necessary. At Muehlhan, it is the responsibility of all Supervisory Board members to deal with the Executive Board contracts. All members of the Supervisory Board provide advice on and regularly review the Executive Board’s compensation system, including the major components of the contracts and the total compensation of individual Executive Board members.
In a departure from Section 4.2.5 of the DCGK, Muehlhan does not include a separate compensation report as part of the Corporate Governance report. The annual financial statements indicate the total compensation for Executive Board members. A detailed discussion of these amounts in the form of a report would not provide any additional relevant information and would therefore not add any value for the reader. In the company´s opinion, the compilation of a separate compensation report is therefore unnecessary.

Section 5 of the Code: Supervisory Board and Executive Board
Based on the composition of the Supervisory Board already mentioned, the formation of the committees stipulated in Section 5.3.1 is deemed unnecessary. This also applies to the formation of an audit committee as recommended in Section 5.3.2, as well as the formation of a nomination committee as provided for in Section 5.3.3.
All members of the Supervisory Board have the necessary knowledge of and experience in the application of accounting principles and internal audit procedures and they jointly perform the tasks intended for the audit committee and the nomination committee. The chairperson of the Supervisory Board issues the audit mandate pursuant to the resolution by the Supervisory Board and, after a detailed discussion at a prior meeting, agrees on the areas of emphasis for the audit in consultation with the other members and signs the fee agreement with the auditor.
In line with the remarks above, Section 5.2, Clause 2 likewise shall not apply when dealing with the Executive Board contracts.
In addition, Section 5.4.1 of the DCGK recommends that age limits be determined for members of the Supervisory Board.
Muehlhan AG views such a determination as a limitation on the shareholders’ right to select the members of the Supervisory Board as they see fit and on the basis of the knowledge, abilities and technical skills required. Muehlhan AG´s Articles of Incorporation therefore include no such age limit. In a departure from the corresponding recommendation in Section 5.1.2 of the DCGK, Muehlhan sets no age limit for members of the Executive Board because this would place a blanket limitation on the Supervisory Board’s ability to select suitable Executive Board members.
Hamburg, 27 March 2012

Signing for the Executive Board
Stefan Müller-Arends

Signing for the Supervisory Board
Dr Wulf-Dieter H. Greverath