One of the main concerns of good corporate governance is to ensure that appointments to the Executive Board and Supervisory Board are appropriate to the specific needs of the business. Key criteria in this regard include the professional and personal skills and qualifications of the members of the Executive Board and Supervisory Board as well as diversity in the composition of both boards – including an appropriate degree of female representation – and the independence of the Supervisory Board.
Composition of the Supervisory Board
The Supervisory Board has laid down specific requirements and objectives for its composition in recognition of its responsibilities and obligations and taking into account the business needs of KION GROUP AG. Besides having the minimum professional skills required to be a Supervisory Board member, as specified by law and the highest courts, all members of the Supervisory Board of KION GROUP AG should meet the following criteria:
- Identification with the fundamental values and beliefs of KION GROUP AG
- Positive attitude toward the basic principles of responsible corporate governance
- Personal integrity and a responsible approach to dealing with potential conflicts of interest
- Ability to devote the expected amount of time required and compliance with the limit on the number of mandates that may be held at any one time
Other targets set by the Supervisory Board with regard to its composition are a standard age limit of no more than 70 at the time of appointment / election and a maximum limit for length of membership of four terms of office.
All of the current Supervisory Board members meet these requirements.
In addition, the Supervisory Board has defined what it considers to be an adequate number of independent Supervisory Board members. Accordingly, five shareholder representatives on the Supervisory Board should be independent of the Company and Executive Board (see recommendation C.7 of the 2020 Code). Dr. Macht, Mr. Ring, Dr. Reuter, Ms. Behrendt, Ms. Xu, and Dr. Dibelius are currently independent of the Company and Executive Board. Ms. Xu does not have any business and / or personal relationships with KION GROUP AG or any of its subsidiaries; the Supervisory Board views her role as an advisor to the anchor investor Weichai (through Weichai Power (Luxembourg) Holding S.à r.l., Luxembourg, a subsidiary of Weichai Power Co., Ltd., Weifang, People’s Republic of China) as unproblematic. Dr. Dibelius has been a member of the Supervisory Board of KION GROUP AG since 2007, but the Supervisory Board still considers him to be independent. He has no business or financial ties to the Company or Executive Board.
Two shareholder representatives on the Supervisory Board should also be independent of the controlling shareholder (see recommendation C.9 of the 2020 Code). The Supervisory Board considers four shareholders to currently be independent of the anchor investor Weichai: Mr. Ring, Dr. Reuter, Ms. Behrendt, and Dr. Dibelius.
As regards the employee representatives, the Supervisory Board believes their role as representatives of the employees does not, per se, compromise their independence.
The Supervisory Board is of the opinion that the priority in aiming for a board composition based on diversity is the expertise of the individual members and a balanced mix of personal qualities, experience, skills, qualifications, and knowledge in line with the requirements of the business. This is the basis on which the Supervisory Board has drawn up its profile of skills and expertise. The following profile of skills and expertise defines the knowledge acquired through professional practice (experience) and theoretical / academic knowledge (expertise) that should be represented on the Supervisory Board:
- Automotive industry, components, and drive technologies
- Automation, particularly automation in intralogistics
- Service / aftersales business, particularly in intralogistics
- Development of international marketing strategies and product portfolio strategies
- Development and assessment of technology
- Service / aftersales business models and technological developments in this area
- Digitalization and automation
- In-depth understanding of the markets in EMEA, the Americas, and Asia
- Management of companies with an international presence, including the development of corporate cultures and organizational structures
- Supervisory board membership in companies with an international presence
- Acquisitions and strategic alliances
- Experience and expertise
- Corporate governance and compliance principles as well as their implementation in at least two of the regions relevant to the Company
- Accounting and auditing
- Capital markets and international finance
Each of these fields of competence is currently covered by at least six members of the Supervisory Board.
As 31.25 percent of its members are female (five of 16), the Supervisory Board meets the statutory requirements regarding gender representation on supervisory boards pursuant to section 96 (2) AktG. The shareholder representatives and the employee representatives are agreed that attaining the objectives in relation to diversity, in particular the objectives relating to the involvement of women and people from different cultural backgrounds, is considered to be in the interests of KION GROUP AG and a task that forms part of the collective responsibility of the entire Supervisory Board. The Supervisory Board therefore supports the inclusion of additional female members and members from different cultural backgrounds who meet the above criteria insofar as the skills requirements are met.
When proposing candidates to the Annual General Meeting in the future, the Nomination Committee and Supervisory Board will take all of the aforementioned targets into account and strive to ensure that the profile of skills and expertise is still achieved. The Nomination Committee and Supervisory Board have no influence on the composition of the group of employee representatives on the Supervisory Board because the employees in Germany are free to choose whom they elect.
Composition of the Executive Board
Against the background of the aforementioned diversity considerations as well as demographic requirements and strategic operating challenges, the Supervisory Board strives for diversity at Executive Board level, not only in terms of appropriate female representation but also in respect of experience, skills, expertise, cultural background, and personality. Ultimately, however, the Supervisory Board is guided exclusively by the skills and qualifications of the persons concerned when making appointments to the Executive Board.
When implementing these objectives during the process of appointing successors or recruiting for a new position, the Supervisory Board draws up a shortlist of candidates who appear to be suitable for the Company as a result of their strategic management experience, expertise, skills, and qualifications. Demographic criteria (including the standard retirement age of 65 for Executive Board members) and diversity criteria are then also taken into account. However, these criteria are of a subordinate nature when making a final decision on the person to appoint. In 2017, the Supervisory Board therefore set the target for the minimum proportion of women on the Executive Board of KION GROUP AG at 0 percent, to be achieved by December 31, 2021. The specification of this type of target is required by the German Act on the Equal Participation of Women and Men in Leadership Positions in the Private and Public Sectors (FührposGleichberG).
In 2020, one of the four Executive Board members was female (Ms. Anke Groth). The proportion of women on the Executive Board of KION GROUP AG was therefore 25 percent as at December 31, 2020.
Long-term succession planning for the Executive Board
When required, the Executive Committee examines – sometimes in consultation with the Chief Executive Officer – the long-term succession planning for the Executive Board (section 7 (4) of the rules of procedure for the Supervisory Board). The Executive Committee holds four regular meetings per year. When required, long-term succession planning is included on the agenda for Executive Committee meetings. Under this agenda item, the committee discusses general parameters, such as the planning horizon, the identification of required skills and qualifications, and the internal talent pool. An external consultancy assists the Executive Committee with long-term succession planning where required.
Appointments to management positions below the level of the Executive Board of KION GROUP AG
When selecting candidates for senior management levels, the Executive Board generally considers that it is under an obligation to make such selections on the basis of diversity, capability, character, and experience.
As regards the number of women appointed to senior management positions in the Company, the Executive Board is striving in its implementation of the new KION 2027 strategy to increase the current proportion of women in management positions. In this context, the Executive Board set the target at 10 percent for the first management level below the Executive Board of KION GROUP AG and at 30 percent for the second management level, to be achieved by December 31, 2021. The specification of this type of target is required by Germany’s ‘Act for the equal participation of women and men in managerial positions in the private and public sectors’. In 2020, two of the 17 executives at the first management level and 15 of the 91 executives at the second management level were female. As at December 31, 2020, the proportion of women was therefore 11.8 percent at the first management level and 16.5 percent at the second management level at KION GROUP AG.
In 2018, as part of the HR initiative under the KION 2027 strategy, a dedicated diversity program was launched whose initial areas of activity were defined in workshops involving participants drawn from various Operating Units and sites. The Female Mentoring Program, in which the Company’s high-potential female employees are systematically coached by managers from the highest management level in the Company, was run successfully in 2019, for example. KION GROUP AG is also an active member of the initiative ‘Chefsache. Drive the Change – For Men and Women’. This network of companies and leaders from industry and science, the public sector, and the media advocates equal opportunities for women and men. By participating in this initiative, KION GROUP AG’s ambition and objective is to promote the change of mindset that is required throughout society by exploring new concepts and approaches.