CORPORATE GOVERNANCE REPORT
Commitment to observing the provisions of the Austrian Corporate Governance Code
The Management Board and Supervisory Board of CA Immo are committed to the regulations of the Austrian Corporate Governance Code and thus to transparency and uniform principles of good corporate management. CA Immo has implemented in full the regulations and recommendations of the Code as amended in June 2007. The Code in its January 2009 amendment came into force for CA Immo on 1 January 2009. An evaluation to determine compliance with the Code was carried out by KPMG Wirtschaftsprüfungs- und Steuerberatungs GmbH, and duly confirmed the validity of public statements concerning compliance with the Code. The results of the evaluation may be viewed here. The active implementation of compliance guidelines by all executive bodies and employees of CA Immo also prevents insider abuse. Observance of the guidelines, and other rules of conduct, is monitored by the responsible compliance officer at CA Immo. This demonstrates the determination of the Management Board to uphold the interests of all stakeholders by ensuring equal treatment for all shareholders and avoiding conflicts of interest.
The Austrian Corporate Governance Code
Since 2002, the Corporate Governance Code has been an indispensable element in the Austrian system of corporate governance and a key instrument for building trust in corporate management and monitoring. The Code sets the standard for good corporate management and control on the Austrian capital market. It is reviewed annually in the light of national and international developments, and adapted as necessary. The last revision of the Code took place in the last business year. The revised Code, which came into effect on 1 January 2009, is available on the web site of the Austrian Working Group for Corporate Governance (www.corporate-governance.at). In accordance with the Company Law Amendment Act 2008, listed companies are obliged to compile Corporate Governance Reports under the ‘comply or explain’ principle. Click here for our Corporate Governance Report.
Shareholders and the Ordinary General Meeting
CA Immo is a public company, with around 90 % of the 87.3 million ordinary shares in free float. Bank Austria holds the remaining 10 %, including four registered shares which entitle the bank to nominate one Supervisory Board member for each share; this right has not been exercised. All Supervisory Board members are elected by the Ordinary General Meeting. CA Immo makes every effort to help shareholders take part in Ordinary General Meetings and exercise their rights to speak, access information and vote. The next Ordinary General Meeting will take place on 13 May 2009. The convening of the meeting, along with all motions and relevant information, will be published on the company’s web site no later than three weeks before this date. There are neither voting caps to limit the number of votes a shareholder may cast nor special voting rights. The ‘one share one vote’ principle, and the principle of equal treatment for both institutional and private investors, is upheld in full. The Austrian Takeovers Act ensures that all CA Immo shareholders would receive the same price for their shares in CA Immo in the event of a takeover bid. The shareholders alone would decide whether to accept or reject any such bid.
Responsibilities of the Management Board
With Gerhard Engelsberger having stepped down at the end of January 2008, the Management Board of CA Immo now comprises two members. As the spokesman for the Board, the duties of Bruno Ettenauer are similar to those of a Chief Executive Officer (C Rule 16). Along with pertinent legal provisions, the way in which the Management Board cooperates is defined in the Articles of Association and the rules of procedure passed by the Supervisory Board (including the schedule of responsibilities). Important decisions on strategy, investment policy and corporate governance are the responsibility of the entire Management Board; the Board also decides on communication tasks of critical importance. All pertinent issues are regularly and openly discussed by the Board members, agreements are reached and the implementation of resolutions passed is continually monitored.
Pairing of management and supervisory functions
To enable it to carry out its supervisory function properly, the Supervisory Board is supplied with regular, timely and comprehensive reports on all matters relevant to the development of the company. In addition to matters subject to authorisation (which are regulated partly by legislation and partly by the Articles of Association or the rules of procedure), all strategic decisions are coordinated in open discussions with the Supervisory Board that exceed the usual framework of Supervisory Board meetings.
The Supervisory Board and committees
The full Supervisory Board comprised six members in 2008, all of whom were elected by the Ordinary General Meeting. Details on the composition of the Supervisory Board and the independence of its members are found here. There are no cross-links. No former Management Board members or senior managers sit on the Supervisory Board of CA Immo. The Supervisory Board, which rules on matters of critical importance and the strategic priorities of CA Immo, held eight meetings during the year under review. Depending on the significance of particular issues, the Supervisory Board also performs its monitoring function through committees. Three committees have been set up at CA Immo, the composition of which is shown here.
The remuneration and nomination committee is responsible for all Management Board-related matters as well as succession planning, which includes the matching of suitable candidates to Supervisory Board mandates. The nomination committee (or the full Supervisory Board) proposes candidates to the Ordinary General Meeting where mandates emerge within the Supervisory Board; the main emphasis is on ensuring a balance of expertise across the Supervisory Board and the personal qualifications of candidates. No new appointments were made to the Management Board or the Supervisory Board in the year under review. Since the remuneration system for the Management Board was redefined in 2007 and remained in force until the end of the reporting year, this committee did not hold any meetings in 2008.
Working with the Management Board, and bringing in competent experts where necessary, the task of the investment committee is to prepare the ground for significant (investment) decisions to be taken by the full Supervisory Board. The investment committee may also approve transactions and measures to a maximum volume of € 75 m; beyond this limit value, the full Supervisory Board assumes responsibility. The investment committee did not meet during the reporting period because all authorisations were granted by the full Supervisory Board.
Listed companies are required to establish an audit committee, which is responsible for monitoring the entire process of financial reporting. The audit committee at CA Immo carries out preparatory work for the full Supervisory Board on all issues connected with the annual and consolidated financial statements, the proposal on the distribution of profit and the management report. It also monitors the effectiveness of the internal control system and the risk management system as well as the independence and competence of the auditing company (as assessed by ‘peer reviews’). The audit committee held one meeting in 2008. A financial expert sits on the audit committee of CA Immo in compliance with the Code.
The detailed remuneration report encompasses the principles of remuneration policy, a breakdown of the emoluments of individual Management Board and Supervisory Board members and an overview of share ownership.
Teilnahme an den Sitzungen des Aufsichtsrates und der Ausschüsse
Supervisory Board |
Audit committee |
|
(8 meetings) |
(1 meeting) |
|
Detlef Bierbaum |
7 |
|
Reinhard Madlencnik |
6 |
|
Horst Pöchhacker |
4 |
|
Gerhard Nidetzky |
8 |
1 |
Christian Nowotny |
7 |
1 |
Regina Prehofer |
4 |
1*) |
[*] In Vertretung von Mag. Reinhard Madlencnik
Preventing conflicts of interest
To prevent conflicts of interest arising, all members of the Management Board are obliged to report potential conflicts of interest to the Supervisory Board and the other members of the Management Board without delay. Management Board members may only enter into secondary activities (in particular accepting Supervisory Board mandates with companies not connected to the Group) with the approval of the Supervisory Board. Senior executives may only take up executive functions outside the CA Immo Group with the approval of the Management Board. The provision prohibiting competition has not been rescinded. Supervisory Board members are also obliged to report without delay any conflicts of interest, and especially those that may arise from consultancy or executive functions for a partner or competitor company; in such cases, they may be required to abstain from taking part in voting procedures. A number of CA Immo Supervisory Board members perform executive functions for similar companies within the sector (under C Rule 45). A full breakdown of executive posts held by Management and Supervisory Board members is published here . There are no direct agreements, and in particular no consultancy contracts between CA Immo and Supervisory Board members; there are no cross-links.
Related party disclosures
Related parties are essentially companies or persons who exert control over the company or who at least are in a position to exert a decisive influence over operational decisions of the company. The related parties for CA Immo are as follows:
Bank Austria: Reinhard Madlencnik heads the real estate division at Bank Austria, and Regina Prehofer was a member of the Bank Austria Executive Board until mid-2008. Bank Austria holds four registered shares in CA Immo which entitle the bank to nominate one Supervisory Board member for each share; this right has not been exercised. CA Immo processes the bulk of its payment transactions and of its credit financing through Bank Austria/UniCredit Group. The Group also arranges € 172.9 K of financial investment and 32.6 % of its on-balance sheet financial liabilities through Bank Austria/UniCredit Group. In addition, an agreement is in place to govern the sale of CA Immo shares. In 2008, CA Immobilien Anlagen AG’s net interest payments (including interest income, expenditures respectively income from Swaps and loan processing fees) to Bank Austria/UniCredit Group stood at € 1,205.0 K (€ 342.6 K in 2007) and € 6,264.5 K (€ 5,210.9 K in 2007) in CA Immo’s subsidiaries. Marketing and distribution fees (rebate) amounted to € 614.8 K (€ 3,816 K in 2007). No issue expenses were incurred (€ 18,840 K in 2007).
Directors’ dealings
Members of the Management and Supervisory Boards and others performing management tasks at CA Immo are obliged to disclose all personal acquisitions and sales of shares in CA Immo and CA Immo International. The ruling also applies to anyone with a close relationship to such managerial personnel. Purchases and sales of personal shares by Board members are reported at www.caimmoag.com on an ongoing basis; an overview of share ownership is provided here.
Auditing company fees
Auditing of accounts has been carried out by KPMG Wirtschaftsprüfungs- und Steuerberatungs GmbH since business year 2003. The auditor performed internal rotation of staff in 2007. CA Immo’s annual and consolidated financial statements were once again audited by KPMG Wirtschaftsprüfungs- und Steuerberatungs GmbH in 2007. In the case of foreign subsidiaries, local KPMG accountants are generally charged with reviewing and auditing the semi-annual and annual financial statements and with overseeing the conversion to IFRS. The independence of the auditing company is overseen by the audit committee, which also verifies the performance of ‘peer reviews’. The management letter from the auditing company along with a report on the effectiveness of risk management within the Group were brought to the attention of the Supervisory Board chairman and discussed by the audit committee and the full Supervisory Board. A total of € 455.9 K (€ 456.2 K in 2007) was charged for auditing the Group and associated services. Project-related consultancy services amounted to € 81.8 K in the reporting period (€ 40 K in 2007). No consulting services which could compromise independence (particularly legal/tax consultancy services) were rendered.
Risk management
CA Immo regards its risk management system as an integral element of any business process. During the year under review, the company reviewed and updated its risk profile according to the current business situation and the wider economic environment. The Management and Supervisory Boards discussed the results of the risk evaluation in great detail. Greater understanding of the risk situation enhances the basis on which opportunity-based and risk-oriented decisions are made whilst meeting the requirements of the Company Law Amendment Act 2008 as regards effective risk management systems. Risk awareness is being integrated into existing business procedures with a view to establishing a stable and sustainable risk management process. Early identification of risks is ensured thanks to the introduction of the dual verification principle, monthly reporting and other means. CA Immo still does not require the ‘internal auditing’ function on account of its clear corporate structure (C Rule 18). Internal control and monitoring functions are part of the Group controlling area, and the results of these measures are regularly reported to the Management and Supervisory Boards. Auditing of specific areas is intermittently performed by an external auditor as part of an audit procedure. If the company continues to expand, a separate internal auditing unit will be established.