Corporate Governance at SinnerSchrader
Clear, transparent, and understandable practices and conduct in corporate management and monitoring (subsumed under the term “Corporate Governance”) are crucial for establishing relationships based on trust between the owners of a listed stock corporation and its executive bodies, Management Board and Supervisory Board, and thus for ensuring the lasting, positive development of the company.
In June 2002, a specially appointed government commission passed a set of recommendations for such practices and conduct known collectively as the German Corporate Governance Code. This Code has been amended and officially published twice since then, on 21 May 2003 and on 2 June 2005.
The Management Board and Supervisory Board of SinnerSchrader AG have always been committed to the principles in the Code, which aim at creating value through responsible corporate management and monitoring, and they welcome the development of Corporate Governance in Germany.
Accounting Principles
The Quarterly and Annual Financial Statements of the SinnerSchrader Group and SinnerSchrader AG are key instruments for corporate management and monitoring. They form the basis for evaluating the asset, finance and earning situation of the Group and the AG and their development.
Since its IPO, the SinnerSchrader Group has employed United States Generally Accepted Accounting Principles (US-GAAP). The Annual Financial Statements of SinnerSchrader AG are drawn up in accordance with the accounting regulations in the German Commercial Code. Both Annual Financial Statements are audited by an independent auditing firm.
In 2002, the European Union issued Regulation 1606/2002, which stipulates that companies whose shares are authorized to be traded in a regulated market in a member country must use International Financial Reporting Standards (IFRS) to prepare their consolidated financial statements for financial years beginning on or after 1 January 2005. SinnerSchrader AG will therefore change over to IFRS for all accounting and reporting in the Group, beginning with the Consolidated Financial Statements for the 2005/2006 financial year, which ends on 31 August 2006. The preparations for this changeover have revealed that the change will not significantly affect the balance sheet of the SinnerSchrader Group.
Compensation Principles and Shares Held by Board Members
Transparent corporate management and monitoring ultimately also relate to the compensation of Board members. The fundamental compensation principles are therefore explained in a Compensation Report which is available on the SinnerSchrader AG website, www.sinnerschrader.de, in the “Investors” section under the heading of “Corporate Governance”.
Detailed, personalised compensation lists for the members of the Management Board and Supervisory Board for the 2004/2005 financial year can be found in the notes of the Annual Financial Statements of SinnerSchrader AG.
An overview provides information on the shares and share derivatives held by the Board members of SinnerSchrader AG as of 31 August 2005, as well as any changes reported in the 2004/2005 financial year.
According to Article 15a of the German Securities Trading Act, the Board members and persons closely connected to the Board members are obliged to disclose the purchase or sale of SinnerSchrader shares or derivates related to these shares to SinnerSchrader AG if their equivalent value during the year exceeds a total of € 5,000. In the 2004/2005 financial year, no such notices were issued by the Board members or persons closely connected to them.
Declaration of Compliance
The Transparency and Disclosure Act caused the German Stock Corporation Act to be amended in the year 2002 to include Article 161, which requires the Supervisory Board and Management Board to submit an annual Declaration of Compliance with the most recent version of the German Corporate Governance Code. On 21 November 2005, the Supervisory Board and Management Board of SinnerSchrader AG submitted the Declaration of Compliance for the year 2005 based on the version of the German Corporate Governance Code from 2 June 2005. This Declaration is reprinted in the following, and it is also permanently available to all shareholders and other interested parties on the www.sinnerschrader.de website, in the “Investors” section under the heading of “Corporate Governance”, together with the version of the Code from 2 June 2005.
