E_mg_GB_03_vorne-29_3_04

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8 REPORT OF THE SUPERVISORY BOARD In 2003, the Supervisory Board monitored the company’s situation closely and performed the duties incumbent upon it by virtue of the law, the articles or incorporation and the rules of internal procedure. These duties included deliberations based on regular, timely and comprehensive information provided by the Executive Board, involvement in decisions of material importance to the company, and the necessary monitoring of the Executive Board. The Supervisory Board was informed in detail about the company’s business performance and financial position, including its risk position and risk management systems. Any deviations in its business development from the budgets and targets it had set were explained. The company’s new strategy was agreed with the Supervisory Board. Prior to and in between meetings, the Executive Board submitted written reports on material events. Furthermore, the Chairman of the Supervisory Board remained in regular contact with the Executive Board, especially with its Chairman, who constantly provided him with timely information about significant developments and pending decisions. Business transacted by the company that required the consent of the Supervisory Board was submitted for approval. Nine Supervisory Board meetings were held in 2003, including the constituent meeting after the Annual Shareholders’ Meeting on June 3. Three members of the Supervisory Board attended less than half of the meetings scheduled during their respective term of office either due to ill health or because these meetings clashed with other prior commitments. The Supervisory Board was also provided with detailed information between meetings about projects and ventures of particular importance or urgency for the company. Where necessary, resolutions were adopted in writing. Focal points of the Supervisory Board’s deliberations The main issues discussed at the Supervisory Board meetings on February 4, March 25, and April 10, 2003 were the annual financial statements for 2001/2002 and for the short 2002 fiscal year as well as the proposals to be put to the Annual Shareholders’ Meeting for approval on June 3, 2003. The meeting immediately prior to the Annual Shareholders’ Meeting was used to prepare for this event. The Executive Board’s plans to sell the Stahlbau Plauen Group, which had been making losses for years, were approved. At its meetings on September 11 and October 2, 2003, the Supervisory Board dealt principally with questions pertaining to the company’s strategy, financial position, organizational structure, risk situation, and the options available for the future direction of the Group. Having conducted a comprehensive review and carefully examining the company’s strategy to date, the Supervisory Board concluded at its October meeting – also attended by the Executive Board – that the only way to ensure sustainable, profitable growth for the mg Group and to pay down its debt was to dispense with its traditional two-pronged strategy and, instead, to concentrate on the GEA Group’s process engineering and components businesses and the companies engaged in industrial plant engineering. The Chemicals division, consisting of the Dynamit Nobel Group and solvadis, is to be sold. The Supervisory Board noted with approval the Executive Board’s plans to reduce complexity and cut costs by flattening hierarchies, merging holding-company functions, and concentrating the processes available in the industrial plant engineering business. In order to obtain a clearer picture of the current positions, prospects and strategies of GEA and Lurgi Lentjes, the Supervisory Board arranged for the chief executive officers of these two companies to give presentations on their respective organizations. Presentations by Lurgi and Zimmer will follow in the course of 2004.
MANAGEMENT SHARE STRATEGY SPECIAL SECTION MANAGEMENT REPORT FINANCIAL STATEMENTS FURTHER INFORMATION Executive Board • Letter to the Shareholders • Supervisory Board • Report of the Supervisory Board • Corporate Governance at mg Work of the committees By the time its term of office had expired on June 3, 2003, the Supervisory Board had set up two committees: the Audit Committee and the legally prescribed Mediation Committee (pursuant to section 27 (3) of the German Codetermination Act (MitbestG)). The Audit Committee met on six occasions. In addition to its usual remit of discussing the company’s financial statements and accounts, it negotiated the modification and termination of certain executive directors’ employment contracts. At the meeting on March 18, 2003, the head of Internal Audit reported on the focal points of the audits conducted in 2001/2002 and the short 2002 fiscal year as well as the audit schedule for 2003. In compliance with the recommendations of the German Corporate Governance Code, it was decided on June 3, 2003 that the Audit Committee’s responsibilities should be shared between the newly formed Chairman’s Committee and the Audit Committee. The Chairman’s Committee was given responsibility for dealing with personnel-related matters pertaining to the Executive Board, strategic issues, and the preparation of the plenary sessions. The Audit Committee is responsible for accounting, risk management and auditing issues. The posts of Audit Committee Chairman and Supervisory Board Chairman are now no longer held by the same person. At a joint meeting of the Chairman’s Committee and the Audit Committee on June 4, 2003, the new Supervisory Board members on these committees were informed about the mg Group’s various business units and their respective market positions, its key performance indicators, its budget, and its strategy to date. In 2003, the Chairman’s Committee also met on three occasions to discuss strategic issues and, in particular, matters pertaining to the contracts of Executive Board members. The Audit Committee met on two further occasions. Its deliberations here focused on the measures taken by management to reduce the company’s debt, risk management, and presentations by auditing firms to help the Audit Committee decide which company’s name should be submitted to the 2004 Annual Shareholders’ Meeting so that it could vote on the auditors to be appointed. The Mediation Committee did not have to be convened. At the plenary sessions, the Chairmen of each of the committees reported at length on the meetings and work of their respective committees. Corporate governance A further focal point of the Supervisory Board’s deliberations was an ongoing review of the corporate governance principles applied across the mg Group. Having adopted a resolution to this effect at the meeting on December 16, 2003, the Supervisory Board and the Executive Board jointly submitted the declaration of compliance prescribed by section 161 of the German Joint Stock Corporation Act. This declaration confirms that, with three exceptions concerning the remuneration of the members of the Executive Board and the Supervisory Board (Executive Board members’ remuneration is not specified individually, no separate compensation is paid for membership of the committees, and no performance-related compensation is paid to members of the Supervisory Board), the company complies with the recommendations of the German government’s commission on the German Corporate Governance Code. Modifications to the Supervisory Board’s rules of internal procedure to bring it into line with current legislation and the German Corporate Governance Code as well as rules of internal procedure for the newly formed committees were discussed and were adopted in 2004 but still need to be approved in part at the Shareholders’ Meeting to become effective. 9
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mg's mission is to ensure sustainab
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Key Figures for the mg Group RESULT
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