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Corporate Governance Code

Corporate Governance Code

The "Deutscher Corporate Governance Kodex", the German corporate governance code (the Code), consists of three elements. At first it describes legal regulations for management and supervision of German listed companies (corporate governance), which are mainly referring to the "Aktiengesetz" (German Stock Corporation Act). Further elements are international and national acknowledged standards for good and responsible corporate governance, in the form of recommendations and suggestions. Recommendations are marked in the text by use of the word “shall” and suggestions of the word “should”.

Through the declaration of conformity pursuant to § 161 "Aktiengesetz" (Stock Corporation Act), the code has a legal basis. Accordingly, the recommendations and suggestions are not mandatory. However, deviations from the recommendations – not the suggestions – have to be explained and disclosed with the annual declaration of conformity (Comply or Explain). The recommendations and suggestions of the code become valid with the publication in the official section of the Federal Gazette.

Besides giving recommendations and suggestions that reflect the best practice of corporate governance, the Code aims at enhancing the German corporate governance system’s transparency and comprehensibility, in order to strengthen the confidence of international and national investors, clients, employees and the general public in the management and supervision of German listed companies.

The latest version of the Code is published on this internet page.

In accordance with Section 161 of the German Stock Corporate Act (Aktiengesetz)

Declaration of Conformity

The Board of Management and the Supervisory Board of Brenntag SE are obliged to resolve a Declaration of Conformity in accordance with Section 161 of the German Stock Corporate Act (Aktiengesetz).The last Declaration of Conformity has been resolved on December 12, 2019. As of this time, the German Corporate Governance Code in the version as of February 17, 2017 (“GCGC 2017”) was still in place. On December 16, 2019, the Government Commission “German Corporate Governance Code” has resolved a new version of the GCGC, which has entered into force on March 20, 2020 (“GCGC 2020”).

The Board of Management and the Supervisory Board hereby declare that since their last Declaration of Conformity as of December 12, 2019, Brenntag has complied with the recommendations of GCGC 2017, with the exception of the recommendations in number 4.2.3, para. 3 and number 5.4.1, para. 2 GCGC 2017. The exceptions are declared for the following reasons:

With regard to two members of the Board of Management until August 2020, and since September 2020 with regard to one member of the Board of Management, Brenntag follows the recommendation in number 4.2.3, para. 3 GCGC 2017. There have been three members of the Board of Management who receive payments of different forms, which are partially earmarked for their pension scheme, but also, apart from that, are at the free disposal of the specific board member. Therefore, the Supervisory Board has not established target levels of pension benefits for every pension commitment.

In addition, the Supervisory Board does not set a regular limit on length of membership, as recommended in number 5.4.1, para. 2 GCGC 2017. A regular limit on length of membership does not take into account the benefits of individual members’ experience.

Furthermore, the Board of Management and the Supervisory Board hereby declare that Brenntag complies and will continue to comply with the GCGC 2020 with the exception of the recommendation in C.4 GCGC 2020:

With regard to the Supervisory Board’s chairwoman Doreen Nowotne, there is a deviation from the recommendation in C.4 GCGC 2020. Ms. Nowotne holds positions at two non-group companies and is chairwoman of the Supervisory Board at a further non-group company. With her position as chairwoman of the Supervisory Board of Brenntag SE which Ms. Nowotne has intended to take over for a transition period of two years, her total number of seats would amount to six. Therefore in accordance with the GCGC’s counting method, a deviation from C.4 GCGC is herewith declared for now. In any case, the Supervisory Board has ascertained that Ms. Nowotne has sufficient time available to discharge her duties.

Essen, December 14, 2020

Implementation of the GCGC's suggestions

In addition to the principles and recommendations, the German Corporate Governance Code contains suggestions which are represented in the Code by the term "should". Companies may deviate from the suggestions without disclosure.

In the reporting year 2020, Brenntag generally complies with all suggestions of the version of the Code published on March 20, 2020. The details are set out in the following overview:

Ref.SuggestionBrenntag's implementation
A.2The Management Board shall institute an appropriate compliance management system reflecting the enterprise's risk situation, and disclose the main features of this system. Employees shall be given the opportunity to report, in a protected manner, suspected breaches of the law within the enterprise; third parties should also be given this opportunity.Yes
A.3The Supervisory Board Chair should be available – within reasonable limits – to discuss Supervisory Board-related issues with investors.Yes
A.4The Chair of the General Meeting should be aware that the General Meeting should be completed within four to six hours.Yes
A.5In the event of a takeover offer, the Management Board should convene an Extraordinary General Meeting at which shareholders will discuss the takeover offer and, if appropriate, decide on corporate actions.Yes
D.8Participation [in meetings of the Supervisory Board] by telephone or video conference also counts as attendance, but this should not be the rule.Due to the extraordinary restrictions in the reporting year 2020 caused by the COVID-19 pandemic, it was not possible to hold physical meetings over large parts of the reporting year so the majority of meetings during this period had to be held in virtual form. In the future we hope that it will again be possible to hold predominantly meetings with physical attendance.
G.14Benefit commitments made in connection with the early termination of a Management Board member contract by the Management Board member due to a change of control should not be agreed upon.
Yes
G.18Supervisory Board remuneration should be fixed remuneration. If members of the Supervisory Board are granted performance-related remuneration, it shall be geared to the long-term development of the company.Yes
The information reflects the status at the time of publication of the statutory Declaration of Conformity 2020. The information may change at any time. Brenntag explicitly does not undertake to disclose any changes and/or to update the overview.