Corporate Governance
The principles of responsible and good enterprise management and supervision constitute the core of our Corporate Governance principles (http://www.hannover-re.com/resources/ cc/generic/CGprinciples-e.pdf). Our efforts in the field of Corporate Governance are driven by the goal of achieving sustainable growth in the value of the company and consolidating the trust placed in the enterprise through integrity at all times in our dealings with business partners, staff, shareholders and the general public. On this basis Hannover Re supports the principles of value-based and transparent enterprise management and supervision as defined in the German Corporate Governance Code (DCGK) and recognises their importance in guiding its activities.
In the year just-ended, as in previous years, the company again had to adapt to a variety of new laws and regulations in the area of Corporate Governance. Purely with regard to management board remuneration, various laws, regulations and recommendations were adopted on the national and international level (e.g. the Act and Regulation on the Prudential Requirements for the Remuneration Systems of Institutions and Insurance Companies, the Regulation on the Supervisory Law Requirements for Remuneration Schemes in the Insurance Sector (VersVergV) as well as statements released by the Financial Stability Board and the Basel Committee on Banking Supervision). In addition, the German Corporate Governance Code (DCGK) was amended and its recommendations and suggestions revised.
The Code Report for 2010 published by the independent Berlin Center of Corporate Governance on acceptance of the Code’s recommendations and suggestions found that Hannover Re once again – as in previous years – ranked as one of the leaders among DAX- and MDAX-listed companies when it came to compliance with the provisions of the Code. Based on the version of the German Corporate Governance Code as amended 18 June 2009 which was used in the survey, Hannover Re fulfilled the recommendations to a level of 98.8% with one divergence and thereby comfortably surpassed the degree of fulfilment of both DAX- and MDAX-listed enterprises. On average, companies listed on the DAX and MDAX satisfied 79 and 74.7 respectively of the 82 recommendations, hence achieving acceptance levels of 96.3% and 90.9%.
The above-average level of compliance alone testifies to the considerable importance that Hannover Re attaches to good enterprise management and supervision in the spirit of state-of-the-art Corporate Governance. It continues to be enshrined in the company’s business practices as a matter of course and is not limited to rigid adherence to formal rules. The Executive Board and Supervisory Board consistently address changes in the relevant legal framework conditions in a timely manner and the latest legal developments are promptly codified in internal corporate standards. With this in mind, the Rules of Procedure of the Supervisory Board underwent a thorough revision in the year under review with an eye to the amendments of the German Corporate Governance Code; the Code recommendations concerning the composition of the supervisory board (Item 5.4.1) were a special focus of discussion in this context. The Supervisory Board consequently specified in its Rules of Procedure its intention that at least two members of the Supervisory Board should be women. In addition, the requirements for membership of the Supervisory Board were clarified with respect to the necessary knowledge, skills and specialist experience (expert knowledge). In this context, expert knowledge is taken to mean “sound industry know-how combined with a fundamental understanding of the company’s international business activities as well as specialist and methodological expertise”. Furthermore, the members of the Supervisory Board undertake to ensure that they have sufficient time at their disposal to discharge their mandate and to engage in the (further) training measures required for their tasks at their own responsibility. They shall be appropriately supported by the company in this regard. The Code recommendation concerning the reduction of the maximum number of supervisory board mandates at non-group listed companies from five to three was also included in the Rules of Procedure.
The full Supervisory Board further deliberated for the first time on the concrete measurement of the performance bonuses of the members of the Executive Board and defined the total remuneration of individual members of the Executive Board. The revision of the system of Executive Board remuneration and the adjustment of contracts of employment with members of the Executive Board were also considered at length. These revisions were essential on account of the aforementioned changes in the legal framework conditions.
The findings of a written survey conducted among the members of the Supervisory Board regarding the efficiency of the Supervisory Board’s work were presented to the Supervisory Board in anonymised and aggregated form at its meeting held on 10 March 2010 in strict confidentiality. One outcome of this survey that should be noted is that reporting by the Supervisory Board committees to the full Supervisory Board is to be stepped up. Henceforth, such reporting is to be provided on a regular basis as a separate item on the agenda.