3. Working methods of the Executive Board and Supervisory Board and composition of the committees of the Supervisory Board; shareholders and Annual General Meeting

3.1 Working methods of the Executive Board

The Executive Board of KION GROUP AG comprised six members in 2021. It is responsible for managing the Company in the Company’s interest, i.e. taking account of shareholders, customers, employees, and other stakeholders with the aim of creating sustainable added value. The Executive Board develops the Company’s strategy, discusses it with the Supervisory Board, and ensures that it is implemented. The Executive Board as a whole is collectively responsible for the Group’s business, determines the budget and the allocation of resources, and makes key operational decisions. Every Executive Board member is responsible for his or her own area of responsibility within the scope of the rules of procedure for the Executive Board and the defined thresholds for business transactions, and keeps the other Executive Board members informed of developments on an ongoing basis.

The allocation of responsibilities was adjusted in January 2021 following the appointment of Mr. Andreas Krinninger and Mr. Hasan Dandashly as further members of the Executive Board. In July 2021, Dr. Henry Puhl succeeded Dr. Eike Böhm in the role of Chief Technology Officer (CTO), and the allocation of responsibilities was adjusted again. In January 2022, Dr. Richard Robinson Smith took over from Mr. Gordon Riske as the new Chief Executive Officer (CEO) of KION GROUP AG.

The rules of procedure laid down by the Supervisory Board define the areas of responsibility of the Executive Board members and the way in which they work together. The full Executive Board normally meets every 14 days and meetings are chaired by the Chief Executive Officer. Due to the coronavirus pandemic, Executive Board members often had to take part in meetings via video conference in the reporting year. At the meetings, the board members discuss measures and business that, under the Executive Board’s rules of procedure, must be approved by the full Executive Board. Resolutions of the full Executive Board are passed by simple majority unless a greater majority is required by law. The Chief Executive Officer has a casting vote in the event of a tied vote. Resolutions of the Executive Board may also be adopted between meetings. All resolutions are documented. The Corporate Office carries out the preparations and follow-up work for all Executive Board meetings. Company employees regularly participate in the meetings as guests.

Taking account of the requirements of section 90 AktG, the Executive Board provides the Supervisory Board with regular, timely, and comprehensive information on all matters of relevance to the business as a whole relating to the intended operating policy, strategic planning, business performance, financial position, financial performance, and business risks. The Chief Executive Officer also discusses matters regularly with the chairman of the Supervisory Board, while the CFO keeps in contact with the chairman of the Audit Committee. The Executive Board’s rules of procedure specify that important transactions are subject to approval by the Supervisory Board. Budget planning, major acquisitions, or capital expenditure, for example, require the consent of the Supervisory Board.

In accordance with its articles of association, the Company is represented by two members of the Executive Board or by one member of the Executive Board acting conjointly with a Prokurist (person with full commercial power of representation).

3.2 Working methods of the Supervisory Board

The Supervisory Board of KION GROUP AG appoints the members of the Executive Board and advises and monitors the Executive Board in its management of the Company. The Supervisory Board is fully involved from an early stage in all decisions that are fundamental to KION GROUP AG. The Executive Board and Supervisory Board of KION GROUP AG have a close and trusting working relationship focused on ensuring the sustained success of the Company. The Supervisory Board also met regularly without the Executive Board during the reporting period.

The Supervisory Board of KION GROUP AG consists of 16 members, eight of whom are employee representatives and eight are shareholder representatives. The shareholder representatives are elected by the Annual General Meeting by simple majority. The eight employee representatives are elected by the employees in accordance with the German Codetermination Act.

The Supervisory Board has drawn up rules of procedure for its work that apply in addition to the requirements of the articles of association. These rules of procedure are published on the KION GROUP AG website. According to these rules, the chairman of the Supervisory Board coordinates its work and the cooperation with the Executive Board, chairs the meetings of the Supervisory Board, and represents it externally. The Supervisory Board generally meets in person at least twice in each half of a calendar year, and adopts its resolutions at these meetings. In 2021, there were eight Supervisory Board meetings in total. The focus of the Supervisory Board’s advisory activities in 2021 is set out in detail in the Supervisory Board’s report to the Annual General Meeting along with information about meeting attendance. Between these meetings, resolutions may also be adopted in writing, by telephone, or by other similar forms of voting, provided that the chairman of the Supervisory Board or, in his absence, his deputy, decides on this procedure for the individual case concerned. The Supervisory Board adopts resolutions by a simple majority of the votes cast unless a different procedure is prescribed by law. If a vote is tied, the matter will only be renegotiated if the majority of the Supervisory Board vote in favor of this option. Otherwise the Board must vote again without delay. If this new vote on the same matter also results in an equal number of votes for and against, the chairman of the Supervisory Board has a casting vote.

Ahead of Supervisory Board meetings, the employee representatives regularly meet with the Executive Board in order to hold preliminary discussions without the presence of the shareholder representatives. The shareholder representatives hold such preliminary discussions with the Executive Board as and when required.

3.3 Self-assessment by the Supervisory Board

The Supervisory Board regularly assesses the effectiveness of its work and that of its committees (self-assessment), with support from an external advisor if required. Following the previous effectiveness reviews in 2015 and 2018, the Supervisory Board carried out a self-assessment in 2021 in order to review its work and that of its committees with the support of an external advisor.

The review involved holding discussions with the Supervisory Board and Executive Board members. Discussion guidelines structured by topic formed the basis for the discussions. The subjects addressed included (i) regulatory requirements, (ii) the tasks of the Supervisory Board (particularly examination of the Company’s strategy, the appointment of Executive Board members, and Executive Board remuneration), (iii) the membership of the Supervisory Board (particularly its composition and training), (iv) cooperation within the Supervisory Board (particularly the atmosphere and culture of discussion, preliminary discussions of the employee and shareholder representatives, and conflicts of interest and confidentiality), (v) cooperation with the Executive Board and the provision of information by the Executive Board, (vi) the structure and organization of meetings, and (vii) committee work. Each committee was evaluated as a whole, but the work of the individual Supervisory Board members was not examined.

The results are reported to the Supervisory Board regularly. Any identified need for improvement is actioned. The organizational arrangements and processes for the Supervisory Board’s work are updated on an ongoing basis.

3.4 Working methods and composition of the committees of the Supervisory Board

Some of the Supervisory Board’s work is carried out by committees. KION GROUP AG’s Supervisory Board had five standing committees in the reporting year. The Supervisory Board established the Remuneration Committee as one of its standing committees with effect from March 1, 2021. Its remit is to deal with matters relating to Executive Board remuneration and the remuneration report that has to be prepared each year. The composition and tasks of the committees are specified in the rules of procedure for the Supervisory Board. The committees’ tasks, responsibilities, and work processes comply with the provisions of the German Stock Corporation Act and the GCGC.

The chairman of each committee reports regularly to the full Supervisory Board on the committee’s work. The minutes of the committee meetings are made available to all Supervisory Board members. The standing committees have each drawn up rules of procedure that define their tasks and working methods.

Executive Committee

The Executive Committee consists of four shareholder representatives and four employee representatives. Its chairman is always the chairman of the Supervisory Board. It prepares the meetings of the Supervisory Board and is responsible for ongoing matters between Supervisory Board meetings. The Executive Committee also prepares the Supervisory Board’s decisions relating to corporate governance, particularly amendments to the declaration of conformity pursuant to section 161 AktG reflecting changed circumstances and the checking of adherence to the declaration of conformity. It also prepares documents for the Supervisory Board regarding personnel measures affecting Executive Board members and, if applicable, when a new Chief Executive Officer is to be appointed. In addition, the Executive Committee is responsible for resolutions concerning the conclusion, amendment, and termination of Executive Board employment contracts and agreements with Executive Board members governing pensions, severance packages, consultancy, and other matters and for resolutions on any matters arising as a result of such contracts and agreements, unless they relate to remuneration. The responsibilities of the Executive Committee also include resolutions about the extension of loans to Executive Board members, Supervisory Board members, and parties related to them within the meaning of sections 89 and 115 AktG, as well as resolutions to approve contracts with Supervisory Board members outside their Supervisory Board remit. In consultation with the Executive Board, the Executive Committee regularly discusses long-term succession planning for the Executive Board.

Members of the Executive Committee as at December 31, 2021:

• Dr. Michael Macht (chairman)
• Özcan Pancarci (deputy chairman)
• Dr. Alexander Dibelius
• Jiang Kui
• Olaf Kunz
• Jörg Milla
• Hans Peter Ring
• Claudia Wenzel

The chairman of the Executive Committee, Dr. Michael Macht, is a Supervisory Board member who is independent of the Company and Executive Board.

Mediation Committee

The Mediation Committee comprises the chairman of the Supervisory Board, his deputy, an employee representative, and a shareholder representative. It only convenes in exceptional cases if a resolution concerning the appointment or dismissal of an Executive Board member by the Supervisory Board is not approved with the majority specified by law. If the two-thirds-of-votes majority required by section 27 (3) and section 31 (3) MitbestG is not reached in a vote by the Supervisory Board on the appointment of an Executive Board member, the Mediation Committee must propose candidates for the post to the Supervisory Board within one month. The chairman of the Supervisory Board does not have a casting vote on the candidates proposed.

Members of the Mediation Committee as at December 31, 2021:

• Dr. Michael Macht (chairman)
• Özcan Pancarci (deputy chairman)
• Jörg Milla
• Hans Peter Ring

Audit Committee

The Audit Committee comprises four members. Its primary purpose is to monitor financial reporting (including non-financial reporting), the accounting process, the effectiveness of the internal control system, the risk management system, the internal audit system, the auditing of the financial statements, and compliance, thereby supporting the Supervisory Board in its task of monitoring the Company’s management. The Audit Committee also reviews the work carried out by the independent auditors and checks that the independent auditors are qualified and independent. It is responsible for engaging the independent auditors, determining the focus of the audit, and agreeing the fee. The Audit Committee regularly evaluates the quality of the audit. In addition, the Audit Committee exercises the rights in investee companies set forth in section 32 (1) MitbestG.

Outside of the Supervisory Board and Audit Committee meetings, and without the involvement of representatives from KION GROUP AG, the chairman of the Audit Committee and the independent auditors hold quarterly discussions on the latest developments in the Company and the findings from the audit.

The heads of the internal audit and compliance departments have a functional (dotted) reporting line to the chairman of the Audit Committee.

Members of the Audit Committee as at December 31, 2021:

• Hans Peter Ring (chairman)
• Alexandra Schädler (deputy chairwoman)
• Dr. Michael Macht
• Jörg Milla

The chairman of the Audit Committee, Mr. Hans Peter Ring, is a Supervisory Board member who is independent of the Company, the Executive Board, and the controlling shareholder and has the required expertise in accountancy specified in section 100 (5) alt. 1 and section 107 (4) AktG. Another member of the Supervisory Board and Audit Committee, Ms. Alexandra Schädler, has the required expertise in accounting and auditing specified in section 100 (5) alt. 2 and section 107 (4) AktG.

Remuneration Committee

The Remuneration Committee comprises five members. Three of its members are shareholder representatives and two are employee representatives. It is always chaired by the chairman of the Supervisory Board. The Remuneration Committee focuses mainly on issues relating to the Executive Board’s remuneration but also deals with the annual remuneration report and the preparations for the report’s approval by the Annual General Meeting. It also prepares all Supervisory Board resolutions required in this regard, especially in connection with the Executive Board members’ variable remuneration components (setting of targets and target achievement for the short-term and long-term bonuses).

Members of the Remuneration Committee as at December 31, 2021:

• Dr. Michael Macht (chairman)
• Özcan Pancarci (deputy chairman)
• Jiang Kui
• Hans Peter Ring
• Alexandra Schädler

Nomination Committee

The Nomination Committee has four members, all of whom are shareholder representatives and are elected by the shareholder representatives on the Supervisory Board. The Nomination Committee’s task is to propose candidates for the election of shareholder representatives on the Supervisory Board to the Company’s Annual General Meeting.

Members of the Nomination Committee as at December 31, 2021:

• Dr. Michael Macht (chairman)
• Dr. Alexander Dibelius (deputy chairman)
• Birgit A. Behrendt
• Jiang Kui

3.5 Shareholders and Annual General Meeting

The shareholders of KION GROUP AG exercise their rights during the Annual General Meeting, i.e. their right to speak and their right to vote. Every shareholder is entitled to participate in the Annual General Meeting.

Each share confers one vote in the voting at the Annual General Meeting. Shareholders can either exercise their voting rights themselves or appoint a third party to exercise their voting rights for them. The Executive Board is authorized to determine that shareholders can cast their votes in writing or by means of electronic communication (absentee voting). Resolutions of the Annual General Meeting require a simple majority of the votes cast, unless stipulated otherwise by mandatory provisions of law.

The Annual General Meeting is held annually in the first eight months of the financial year. The chairman of the Supervisory Board chairs the Annual General Meeting. The agenda for the Annual General Meeting, including the reports and documents requested for the Annual General Meeting, are published on the Company’s website.

The Annual General Meeting votes on all matters that it is required to vote on by law, primarily the appropriation of profit, the election of Supervisory Board members, formal approval of the acts of the Supervisory Board and Executive Board members, the appointment of the independent auditors, changes to the Company’s articles of association, and corporate actions.

Due to the special circumstances created by the COVID-19 pandemic, the Annual General Meetings in 2020 and 2021 were held as virtual events in line with the German COVID-19 Measures Act.