5. Diversity

One of the main concerns of good corporate governance is to ensure that appointments to the two governing bodies, i.e. the Supervisory Board and Executive Board, and to the two management levels below the Executive Board are appropriate to the specific needs of the business. To this end, the Executive Board and Supervisory Board of KION GROUP AG developed a joint diversity concept in 2017 that was most recently amended at the beginning of 2022.

Key criteria in this regard include, on the one hand, the professional and personal skills and qualifications of the members of the Supervisory Board, the Executive Board, and the two management levels below the Executive Board and, on the other hand, diversity in the composition of these two boards and two management levels – including an appropriate degree of female representation – and the independence of the Supervisory Board. Further details are provided below.

Composition of the Supervisory Board

The individuals who make up the current Supervisory Board, each with a different professional background, reflect the multitude of tasks assigned to the Supervisory Board and satisfy the related requirements for a supervisory board’s composition (see below, for example ‘Objectives for the composition of the Supervisory Board’ and ‘Profile of skills and expertise for the Supervisory Board’).

The résumés of the current members of the Supervisory Board, which are updated annually or more frequently if required, can be found at www.kiongroup.com/en/about-us/Management/. The résumés also provide details of any additional posts held by the Supervisory Board members.

Objectives for the composition of the Supervisory Board

In 2017, in accordance with section 5.4.1 of the GCGC as amended on February 7, 2017, the Supervisory Board laid down specific requirements and objectives for its composition in recognition of the responsibilities and obligations assigned to it and taking into account the business needs of KION GROUP AG. These requirements and objectives were reviewed and adjusted in February 2022. Besides having the minimum professional skills required to be a Supervisory Board member, as specified by law and the highest courts and in line with the recommendations of the GCGC, 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: integrity, collaboration, courage, and excellence
• 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

A further target set by the Supervisory Board with regard to its composition is a standard age limit of no more than 70 at the time of appointment/election to the Supervisory Board (target age limit). The Supervisory Board has consciously decided to have a flexible target age limit so that it has sufficient latitude to take account of circumstances on a case-by-case basis.

All of the current Supervisory Board members meet these requirements.

Profile of skills and expertise for the Supervisory Board

In connection with the objectives for its composition, the Supervisory Board also defined a profile of skills and expertise for itself in 2017. This profile is regularly reviewed as part of the Supervisory Board’s self-assessment or as necessary. It was most recently reviewed in February 2022 and adjusted in line with the Company’s current requirements. Expertise and experience in environmental, social, and corporate governance (ESG) matters and expertise in alternative energies were added to the profile, for example. The expertise area ‘in-depth understanding of the markets in Asia’ has been made more specific, and such expertise is now required to include an in-depth understanding of the Chinese market.

In the Supervisory Board’s opinion, when there is an objective of ensuring diversity in the composition of a board, there should be a focus on the skills and expertise of the individual members and on having a balanced mix of personal qualities, experience, skills, qualifications, and knowledge in line with the requirements of the business.

The Supervisory Board believes that, in its current composition, it covers all areas of the profile of skills and expertise with regard to practical experience (skills) and/or professional/academic training and knowledge (expertise).

Independence of the Supervisory Board members

To ensure that it is able to monitor and advise the Executive Board objectively, the Supervisory Board should also have an appropriate number of independent members, not just overall but also among the members elected by the shareholders (shareholder representatives). The German Stock Corporation Act and the detailed provisions of the GCGC provide the basis for making decisions on this matter.

In 2020, the Supervisory Board therefore 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 GCGC). The Supervisory Board believes that six shareholder representatives are currently independent of the Company and Executive Board: Hans Peter Ring, Birgit A. Behrendt, Dr. Alexander Dibelius, Dr. Nicolas Peter, Dr. Christina Reuter, and Xu Ping. Xu Ping 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 in this context. Dr. Alexander 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 GCGC). The Supervisory Board considers five of the eight shareholder representatives to currently be independent of the anchor investor Weichai: Hans Peter Ring, Birgit A. Behrendt, Dr. Alexander Dibelius, Dr. Nicolas Peter, and Dr. Christina Reuter.

As regards the employee representatives (including the representatives of the German Metalworkers’ Union), the Supervisory Board believes their role as representatives of the employees does not, per se, compromise their independence.

Minimum gender representation on the Supervisory Board

Section 96 (2) AktG stipulates that at least 30 percent of the Supervisory Board members must be female and at least 30 percent must be male. The KION GROUP AG Supervisory Board met this statutory requirement regarding gender representation on supervisory boards in 2023 as 31.25 percent of its members were female (five of the 16 members).

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.

Nomination of Supervisory Board members

In the process to nominate suitable candidates for the Annual General Meeting’s election of a shareholder representative to the Supervisory Board in 2023, the Nomination Committee and the Supervisory Board took all of the aforementioned targets, the profile of skills and expertise, the diversity concept, and the requirement for independent shareholder representatives into consideration so that they were all covered. When proposing candidates to the Annual General Meeting in the future, the Nomination Committee and Supervisory Board will again take all of the aforementioned targets and the diversity concept into account and strive to ensure that the profile of skills and expertise continues to be 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

The Supervisory Board strives to ensure that the Executive Board also has a diverse composition. This includes, in particular, appropriate gender representation, but also a broad range of experience, skills, expertise, cultural and international backgrounds, and personal qualities. The German Stock Corporation Act and the detailed provisions of the GCGC provide the basis for making decisions on this matter.

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.

Minimum gender representation on the Executive Board

It is also the job of the Supervisory Board to ensure that the composition of the Executive Board meets the statutory requirement for minimum gender representation. The statutory requirement pursuant to section 76 (3a) AktG stipulates that in a listed company with a supervisory board on which shareholders and employees are equally represented, the executive board must have at least one woman and one man as members if it has more than three members in total. The KION GROUP AG Executive Board meets this statutory minimum representation requirement. It comprised seven members for most of 2023. Ms. Valeria Jimena Gargiulo has held the newly created role of Chief People and Sustainability Officer (CPSO) since May 2023, which meant that the statutory minimum representation requirement was met in the year under review.

In October 2023, the Supervisory Board decided that the Executive Board of KION GROUP AG would be reduced to six members from 2024. On January 1, 2024, Ching Pong Quek took on an additional role, namely that of Chief Technology Officer. He took over this role from Dr. Henry Puhl, who has left the Company. Michael Larsson took over as President KION SCS from Hasan Dandashly, who has retired (further details can be found in the section ‘Changes to the Executive Board; current composition’). As it now has one female member and five male members, the KION GROUP AG Executive Board therefore continues to meet the statutory requirement regarding gender representation on executive boards in 2024.

Long-term succession planning for the Executive Board

With support from the Executive Committee, the Supervisory Board ensures that long-term succession planning is in place for the Executive Board. The Executive Committee is responsible for the long-term succession planning for the Executive Board (section 7 (4) of the rules of procedure for the Supervisory Board), helping the Supervisory Board to find candidates for posts on the Executive 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.

Further details on the current composition of the Executive Board can be found in the section ‘Changes to the Executive Board; current composition’.

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 capability, character, diversity, 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 KION 2027 strategy to increase the proportion of women in management positions. Going forward, the KION Group intends to fill more management positions with candidates with an international background in order to better match the Company’s increasingly global focus and complexity.

Targets for the management levels below the Executive Board and current figures

In November 2021, the Executive Board set a target of 10.5 percent (equivalent to two female managers) for the first management level below the Executive Board of KION GROUP AG and of 29.2 percent (27 female managers) for the second management level, to be achieved by December 31, 2026.

At the end of 2023, three of the 21 executives at the first management level (equivalent to 14.3 percent; year-on-year increase of 4.3 percentage points) and 16 of the 84 executives at the second management level (equivalent to 19.1 percent; decrease of 1.8 percentage points) were female.

Action to increase the proportion of women

The Executive Board continues to believe in supporting the development of talented female employees in order to meet the targets set for December 31, 2026.

A range of instruments is used for the development of high-potential employees within the Group. The structure and supervision of these instruments prevent potential discrimination against female employees or systematically help women to build on their personal strengths. The main instruments in the first category are the annual Organization Capability Talent Review (OCTR) and structured employee development programs, such as the KION Transition to Management Program (KTMP). The latter include the Women’s Mentoring Program, in which the Company’s high-potential female employees are systematically coached by managers from the highest management level in the Company. A greater focus on the next generation of talented female employees is underpinned by the selection process for KION’s management trainee program and the targeting of talented external female candidates in the recruitment process. The advancement of women within the KION Group also plays a key role in professional development for skilled workers and managers. In 2023, for example, an additional module was integrated into the ‘Fundamentals of people management’ program that is designed to raise managers’ awareness of diversity and integration in day-to-day business, both on a general basis and specifically in relation to the advancement of women.

Efforts to strengthen diversity – including the advancement of women – have been underlined by the creation of the Diversity and Inclusion Council, a cross-functional, Company-wide committee whose job is to define and implement measures that support these goals and to monitor the progress of the measures.

One of the council’s first activities was organizing and holding the first KION-wide diversity and integration awareness month in June 2023. The aim was to boost awareness of diversity, equality of opportunity, and integrity and to ensure mutual respect is embedded as a core aspect of this. Workshops, keynote talks and other events examined issues such as unconscious bias against women and other minorities, and how this can be minimized. The KION Group also supports the establishment of networking groups and employee resource groups, some of which are represented on the council. These groups are run by employees with similar characteristics or backgrounds and help to strengthen the perspectives and representation of these groups, which are often underrepresented. Some of the groups are specifically aimed at increasing the proportion of women at the management levels below the Executive Board, including the Ladies Power @KION Group, which is made up of female managers at KION GROUP AG.

KION GROUP AG is also a member of the ‘Chef:innensache’ initiative, in which it is represented by Valeria Jimena Gargiulo. 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. KION GROUP AG underpinned these efforts by signing the Diversity Charter, in which it has publicly committed to championing a working environment that is free of prejudice and that supports the respect, appreciation and integration of the diversity that employees bring to the workplace.