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Corporate Governance

DECLARATION OF HANSEYACHTS AG ON CORPORATE GOVERNANCE IN ACCORDANCE WITH ART. 289a GERMAN COMMERCIAL CODE (HGB)

 

This declaration on Corporate Governance contains the Declaration of Compliance, particulars on Corporate Governance practises and a description of the procedures of the management and supervisory boards. HanseYachts AG has as its goal to ensure that its presentation of Corporate Governance remains clear and incisive.

The management and supervisory boards of HanseYachts AG are committed to the German Corporate Governance Code (GCGC) and identify with the goals of the Code to promote proper, responsible Corporate Governance that is oriented to benefit shareholders, staff and customers.

This fact is evident from a policy of responsible management and supervision of HanseYachts AG based on maximizing profitability. This also entails transparently presenting its corporate principles and developments in its business, with the aim of ensuring and reinforcing the confidence of customers, business partners and investors in HanseYachts. Parameters of proper corporate management continue to be close and efficient cooperation between the management board and the supervisory board, regard for shareholders’ interests, open corporate communication, correct accounting and auditing as well as responsible risk management.

 

HanseYachts AG regards Corporate Governance as an ongoing process and will continue to follow future developments attentively and make use of them accordingly.

 

DECLARATION OF COMPLIANCE WITH THE GERMAN CORPORATE GOVERNANCE CODE (GCGC) in Accordance with Art. 161 of the German Stock Corporation Act (AktG)

 

On 5 October 2010, the management and supervisory boards issued a declaration of compliance with the recommendations of the Government Commission on the German Corporate Governance Code (GCGC) pursuant to Article 161 of the German Stock Corporation Act and have made it accessible at all times on HanseYacht’s website at www.hansegroup.com. The declaration of compliance states the following:

 

"Since its last declaration of compliance on 26 October 2009, HanseYachts AG has complied, and will continue to comply, with the recommendations of the Government Commission on the German CGC in the version of 05 August 2009, and since it went into effect on 2 July 2010, with the Code version of 26 May 2010, with the exception of the following deviations and will continue to do this in future with the exception of the following non-conformance:

 

 

  • There has been no compliance with the recommendations in accordance with Section 3.8 of the German CGC (Deductible in the D&O Insurance for the Supervisory Board as well) and there will be no compliance. A deductible has not been arranged for the supervisory board, as in the opinion of the HanseGroup it would not be useful in influencing the motivation and responsibility, with which the members of the supervisory board discharge their tasks. Moreover a deductible is not considered commensurate in light of the low amount of remuneration received by the supervisory board's members.

 

  • The recommendations under Sections 4.2.4 and 4.2.5 of the Code have not and will not be applied, as remuneration is not disclosed for individual members of the management board. At the general shareholders’ meeting on 16 January 2007, HanseYachts’ shareholders passed a corresponding resolution valid for five years.

 

  • The recommendations in No. 5.1.2., Paragraph 2, Sentence 3, and No. 5.4.1., Sentence 2 of the GCGC have not been observed and will not be observed in future in so far as an age limit for members of the management and supervisory boards should be fixed. A generalised age limit does not represent a suitable criterion for quality in the opinion of HanseYachts AG and would unnecessarily restrict the search for particularly qualified and experienced candidates. Moreover, the present age structure of the directors and officers (D&O) would not make establishing such an age limit imperative.

 

PARTICULARS ON CORPORATE GOVERNANCE PRACTISES

 

The HanseGroup makes use of all legally stipulated practises in implementing Corporate Governance. There are no additional company-wide applicable standards such as ethical standards or labour and social standards.

 

 

PROCEDURES OF THE MANAGEMENT AND SUPERVISORY BOARDS

The management and supervisory boards of HanseYachts AG work together closely and trustfully. All relevant questions about business situations and developments, financing as well as strategies and planning are discussed between the two management bodies.

The supervisory board advises and oversees the management board in administering the HanseGroup and examines all important business transactions by inspecting the documents involved on the basis of the German Stock Corporation Act (AktG) and the articles of incorporation. The supervisory board is elected by the shareholders at the general meeting. Members of the management board are appointed by the supervisory board. The supervisory board decides on the number of members on the management board and on its chairman (CEO). In the rules of procedure for the management board, the supervisory board has stipulated a catalogue of business transactions requiring Board approval and a distribution-of-business plan. The supervisory board acts on the basis of its own rules of procedure.

The supervisory board finalises the annual financial statements and approves the consolidated financial statements. Every year, the chairman of the supervisory board outlines the activities of the Board in his report to shareholders and at the general meeting. The supervisory board of HanseYachts AG consists of six members.

There is also an audit committee, which is formed by three members of the supervisory board. Its mission includes discussing corporate planning as well as advising on examining the annual financial statements.

The management board currently comprises three members: a chairman (CEO), a financial director (CFO) and a director of production (COO). A management board consisting of three members has proven effective at HanseYachts AG. The management board administers the HanseGroup on its own responsibility. Areas of responsibility are stipulated in the distribution-of-business plan. Heads of the respective business divisions report to the management board about their operating divisions and bear responsibility for results within their divisions. The management board regularly reports to the supervisory board on planning, business developments and the situation of its concern as well as on risk management, comprehensively and in timely fashion both in writing and at regularly scheduled meetings. The management board takes part in all of the supervisory board's meetings, reports orally and in writing on individual items on the agenda and draught proposals and answers questions posed by individual members of the supervisory board.

Proposals for resolutions are to be conveyed in writing to the members of the supervisory board prior to the respective meetings. The possibility of making decisions in writing by circulation procedure is utilised relatively seldom and only for cases that are particularly urgent.

 

REMUNERATION OF THE MANAGEMENT BOARD (REMUNERATION REPORT) PURSUANT TO SECTION 4.25 GCGC

 

Remuneration for the management board has been fixed at a commensurate level by the supervisory board. Criteria for determining this commensurate level are, in particular, the responsibilities of the respective member of the management board, personal performance, the performance of the management board as a whole, the economic situation, the Company’s success and future prospects in light of a comparable market situation.

 

The members of the management board of HanseYachts AG receive a fixed annual salary, which also includes compensation for side activities at affiliates, and comparable mandates. The members of the management board also receive a commensurate annual bonus in accordance with a separate bonus agreement.

In addition, the members of the management board may participate in any (to date nonexistent) stock-option plans offered by HanseYachts AG.

Remuneration for the members of the management board is determined by the supervisory board. This remuneration comprises a fixed and a variable component. The annual fixed salary for the entire management board including provision of company vehicles and insurance premiums currently amounts to EUR 509 000. Taxes accruing for private use of company vehicles are borne by the members of the management board themselves. The variable components are performance-based. Performance parameters are the absolute amount of earnings before taxes as well as the net profit ratio (ratio of EBT to total turnover). Variable remuneration consists of a proportional share of earnings before taxes (EBT).

There is a ceiling on the variable components. The variable remuneration component is paid once annually, depending on the results of the past fiscal year after the annual financial statements have been finalised. No provision has been made for pensions. In the fiscal year that ended on 31 July 2010, the fixed remuneration component for the entire management board amounted to EUR 509 000 (EUR 516 000 last year). the management board did not receive a variable remuneration component for the year under review, as was the case the previous year.

 

At two-year intervals, the supervisory board reviews total remuneration paid to the management board, considering in particular the earnings situation of HanseYachts AG and the performance of the individual members, and adjusts total remuneration accordingly.

 

 

Furthermore, HanseYachts has taken out liability insurance for pecuniary damages for directors and officers (D&O insurance) with a commensurate deductible to be borne by them.

 

In the event of revocation of an appointment of a member to the management board or resignation of a management board mandate, the employment contract will end, and hence payment of remuneration and other benefits provided by HanseYachts AG, six or twelve months after the end of the calendar month, in which said revocation or resignation shall have taken place. Should the office as a member of the management board expire or be eliminated due to, or as a result of, a change in corporate form or a restructuring measure, HanseYachts or a legal successor shall have, inter alia, the option of terminating the employment contract of the members of the management board by giving twelve-months notice. If a member of the management board resigns in such a case, any severance pay shall be limited to his or her income for one year.

The Chief Financial Officer is entitled to an extraordinary right to give notice to cancel his employment contract if another shareholder should take over control of a majority of the voting rights (Change of Control). Should the Chief Financial Officer exercise this right, he is entitled to compensation amounting to the salary that he would have earned until expiration of the regular term of his contract, but limited to the income for one year.

 

At the general meeting, the chairman of the supervisory board will also inform the shareholders of HanseYachts AG about the basic principles of the remuneration system and any amendments to it.

 

REMUNERATION OF THE SUPERVISORY BOARD PURSUANT TO NO. 5.4.7 GCGC

 

Remuneration for members of the supervisory board is determined by the shareholders at the general meeting and has been regulated in Article 14 of the articles of incorporation of HanseYachts AG. In addition to expenses, each member of the supervisory board first receives fixed annual remuneration of EUR 6000.00 at the end of a fiscal year. In addition each member of the supervisory board receives variable remuneration of EUR 50 for each cent, by which consolidated earnings after taxes per share exceed EUR 1.30. The chairman of the supervisory board receives three times the normal fixed and variable remuneration; the vice-chairman and heads of commissions receive two times those amounts. Remuneration or any other benefits for services personally rendered by members of the supervisory board were not paid or granted by HanseYachts AG in the year under review. For the past fiscal year, the supervisory board did not receive any variable remuneration components, as was the case the previous year.

 

SHAREHOLDINGS OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD PURSUANT TO SECTION 6.6 GCGC

 

Mr Michael Peter Schmidt is entitled to 64.67 % of the voting rights (4 139 000 shares) of HanseYachts AG, of which 38.28 % of the voting rights (2 450 000 shares) have been assigned to him via the Michael Schmidt Beteiligungs-GbR. Otherwise, the members of the management and supervisory boards of HanseYachts AG do not have any shareholdings above 1% of stock issued by their company that would require disclosure within the scope of Section 6.6 (GCGC).

 

HanseYachts AG provides comprehensive information about the stockholdings and stock transactions of its management and supervisory boards. Stock transactions falling under the law on mandatory disclosure in accordance with Art. 15a of the Securities Trading Act (WpHG), so-called Directors' Dealings, are always duly published on the HanseGroup's web site.

 

ADDITIONAL INFORMATION ON CORPORATE GOVERNANCE

 

Transparency and the requirement to inform shareholders and the public quickly and comprehensively have a high priority at HanseYachts AG. Consequently, current developments and vital company information are made available in real time on HanseYachts AG’s website (http://www.hansegroup.com). In addition to information on Corporate Governance, the website also publishes details about the management board, the supervisory board and the general shareholders’ meeting, legally required company reports (annual financial statements, six-month financial report and interim reports from management), a financial calendar including all key dates as well as ad hoc press releases and notifiable securities transactions (Directors’ Dealings).

 

Greifswald, 5 October 2010

 

HanseYachts AG

 

The Supervisory Board                                     The Management Board