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

3.1 Working methods of the Executive Board

The Executive Board is responsible for managing the Company in accordance with the law, the Company’s articles of association, and the rules of procedure for the Executive Board in the Company’s interest and taking account of shareholders, customers, employees, and other stakeholders with the aim of creating sustainable added value. The Executive Board as a whole is collectively responsible for the KION Group’s business, which it manages in accordance with uniform policies. It also has general control over all Group subsidiaries. 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 Executive Board makes decisions in all cases stipulated by law and the articles of association. It also ensures compliance with statutory requirements and internal policies. To this end, it takes the steps that are needed to make sure that the relevant internal policies are drawn up, implemented, and applied. The remit of the Executive Board primarily involves determining the strategic direction (in consultation with the Supervisory Board) and the management of the Company, the allocation of resources, accounting and financial reporting, control and risk management (including compliance management), the orderly organization of the business, systematic identification and assessment of the environmental and social impact of the Company’s activities, and control of the Group. The Executive Board decides on appointments at the management level below the Executive Board, particularly the appointment of global key post holders. It also considers diversity when appointing people to management roles in the Group, which includes striving for the appropriate representation of women (further details can be found in the section ‘Appointments to management positions below the level of the Executive Board of KION GROUP AG’ in this corporate governance statement).

The Executive Board maintains a relationship of trust with the Supervisory Board of KION GROUP AG, the employee representatives, and the governing bodies of the Group companies.

Changes to the Executive Board; current composition

The Executive Board of KION GROUP AG comprised seven members for most of 2023.

The Supervisory Board reappointed Andreas Krinninger as an Executive Board member for a further five years. He continues to head up the Industrial Trucks & Services segment in the EMEA region in the role of President KION ITS EMEA. His new five-year term began on January 1, 2024.

Valeria Jimena Gargiulo joined the Executive Board of KION GROUP AG on May 1, 2023 in the newly created role of Chief People & Sustainability Officer (CPSO) and as Labor Relations Director. As a result, the schedule of responsibilities for the Executive Board of KION GROUP AG was updated in May 2023.

On July 6, 2023, the Supervisory Board of KION GROUP AG also appointed Christian Harm as a member of the Executive Board of KION GROUP AG and as the new Chief Financial Officer (CFO) for a term of three years. He replaced Marcus A. Wassenberg, who was CFO from January 1, 2023 to July 6, 2023. Mr. Harm has been an employee of the Company and its predecessors for 20 years. Most recently, he held the position of Executive Vice President Finance in the KION Group’s ITS EMEA Operating Unit.

At the end of the reporting year, Henry Puhl, Chief Technology Officer (CTO) of KION GROUP AG, left the Company at his own request in order to pursue new challenges elsewhere.

On January 1, 2024, Ching Pong Quek took on an additional role as the new CTO. The Executive Board member remains in his role as President KION ITS APAC but has handed over responsibility for the Americas region in the Industrial Trucks & Services segment to Michael Larsson.

Also on January 1, 2024, Michael Larsson became President KION SCS & ITS Americas, taking on Executive Board responsibility for the Supply Chain Solutions (SCS) segment and for the Americas region in the Industrial Trucks & Services (ITS) segment. He has taken over this role from Hasan Dandashly, who stepped down from the Executive Board of KION GROUP AG and retired at the end of the reporting year.

The table below contains detailed information about the six current members of the Executive Board of KION GROUP AG, including their year of birth, nationality, year in which they were first appointed, the year in which their term of office ends, their current role, and their responsibilities according to the current schedule of responsibilities.

Further information on the members of the Executive Board and their résumés, 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 Executive Board members.

Working methods of the Executive Board; cooperation with the Supervisory Board

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 international composition of the Executive Board, the meetings of the Executive Board in 2023 were mainly held in a hybrid format (i.e. with a combination of attendance in person and telephone/video conferencing). 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.

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).

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, just as 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.

Executive Board committees

The Executive Board has established various committees to provide support and advice in the context of its work. These committees are made up of senior representatives from various departments, chosen because of their experience, remit, and expertise in relation to aspects of the Executive Board’s work. Details of some of these committees are provided below.

The Executive Board has set up the KION capital markets committee for matters relating to the publication of information relevant to the financial markets. Its duties include ensuring accurate and timely publication of all inside information in this area.

The Executive Board has also set up a compliance committee, which is staffed by the heads of the Legal and Internal Audit departments and chaired by the Chief Compliance Officer. It operates as a cross-functional committee that primarily advises on and examines reported incidents of non-compliance and, if appropriate, imposes sanctions in the event of misconduct.

In addition, a risk committee ensures that the statutory requirements pursuant to section 91 AktG are applied and implemented correctly. The risk committee’s remit includes monitoring the risk strategies and analyzing risks in terms of their impact on the Company’s business objectives. The committee also monitors the KION Group’s risk situation, focusing on early detection of developments that might jeopardize the Company’s ability to continue as a going concern. Risk minimization strategies are another area of responsibility. An effectively functioning risk committee is thus a key element of successful corporate governance and helps to maintain the Company’s long-term competitiveness.

A new committee established in the reporting year is the human rights committee, which receives and processes notifications and complaints about violations of human rights and environmental regulations. It also monitors the processes set up to identify, prevent, and mitigate the risk of violations of human rights and environmental regulations and monitors the implementation of any mitigation measures initiated. The human rights committee reports to the KION Executive Board on its work at least once a year.

3.2  Working methods and composition 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. There is also a list of transactions for which the Executive Board requires approval. 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 has drawn up rules of procedure for its work that apply in addition to the requirements of the articles of association of KION GROUP AG. They were last amended on December 14, 2022. 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 2023, there were ten Supervisory Board meetings in total. The focus of the Supervisory Board’s advisory activities in 2023 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.

Changes to the Supervisory Board; current composition

Dr. Michael Macht stepped down from his roles as a member and the chairman of KION GROUP AG’s Supervisory Board with effect from the end of the Annual General Meeting on May 17, 2023. To replace him, the Annual General Meeting elected Dr. Nicolas Peter as a new member of the Supervisory Board. Hans Peter Ring, who has been a member of the Supervisory Board since June 2013, was elected as chairman of the Supervisory Board immediately after the Annual General Meeting. His previous role of chairman of the Audit Committee was taken over by Dr. Nicolas Peter.

The Supervisory Board of KION GROUP AG has 16 members. In accordance with the German Codetermination Act, it comprises equal numbers of shareholder representatives and employee 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. In accordance with the articles of association, Supervisory Board members are elected for the period until the end of the Annual General Meeting that resolves on the formal approval of its acts for the fourth financial year after commencement of the term of office. The year in which the term of office begins is not included in this calculation.

The current members of the Supervisory Board of KION GROUP AG are listed below:

3.3  Corporate governance in the Executive Board and Supervisory Board

In 2023, the Executive Board and the Supervisory Board (or its committees) regularly discussed corporate governance issues in accordance with a rolling schedule of topics. This ensured that the key elements of corporate governance within the KION Group were always on the agenda at meetings of the Company’s main decision-making bodies. The Supervisory Board in particular complied with the supervisory duties incumbent upon it under the German Stock Corporation Act. The Supervisory Board’s Audit Committee, which was appointed to support this task in relation to finance, accounting, and auditing, received regular reports on the accounting standards and associated processes, on changes to the regulatory environment and the internal control and risk management systems, and on the audit of financial statements and the effectiveness and quality of this, and then reported back to the Supervisory Board on these matters.

3.4  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 on from the previous effectiveness reviews in 2015 and 2018, the Supervisory Board last 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 findings of these self-assessments are routinely reported on at full meetings of the Supervisory Board. Any identified need for improvement is actioned. The organizational arrangements and processes for the Supervisory Board’s work are updated on an ongoing basis.

The Supervisory Board will carry out its next self-assessment in 2024.

3.5  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. Except for the Remuneration Committee and Nomination Committee, they all have an equal number of shareholder and employee representatives. 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 recommendations and suggestions of 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 their own rules of procedure that define their tasks and working methods. Details of the committees’ activities and working methods in 2023 can be found in the Supervisory Board report.

Executive Committee

The Executive Committee consists of four shareholder representatives and four employee representatives. Its chairman is always the chairman of the Supervisory Board. The main task of the Executive Committee is to prepare the meetings of the Supervisory Board and to handle ongoing matters between Supervisory Board meetings. Specifically, it prepares the Supervisory Board’s decisions relating to corporate governance, particularly amendments to the annual declaration of conformity pursuant to section 161 AktG reflecting changed circumstances and the checking of adherence to the declaration of conformity that has been issued. The Executive Committee 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, it 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. In consultation with the Executive Board, the Executive Committee regularly discusses long-term succession planning for the Executive Board. 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.

Current members of the Executive Committee:

• Hans Peter Ring (chairman)
• Özcan Pancarci (deputy chairman)
• Dr. Alexander Dibelius
• Kui Jiang
• Jörg Milla
• Dr. Nicolas Peter
• Alexandra Schädler
• Claudia Wenzel

The chairman of the Executive Committee, Hans Peter Ring, 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.

Current members of the Mediation Committee:

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

Audit Committee (also deals with sustainability matters)

The Audit Committee comprises four members, all of whom are elected by the Supervisory Board. Its task is to monitor financial reporting (including non-financial reporting), the accounting process, the appropriateness and 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 auditor and checks that the independent auditor is qualified and independent. It is responsible for preparing the engagement of the independent auditor, determining the focus of the audit, and agreeing the fee. On a regular basis, the Audit Committee evaluates and reviews the quality of the audit and discusses with the auditor the assessment of the audit risk, the audit strategy, the audit planning, and the audit findings. It advises and monitors the Executive Board with regard to the sustainability topics of relevance to the Company in the areas environment, social, and corporate governance (ESG). These topics include the Company’s sustainability strategy, the sustainability-related opportunities, risks, and objectives of the Company’s business activities, and sustainability reporting and its auditing. The further expansion of sustainability management is a particular priority. This can be understood as the structures and processes that will help to systematically develop and anchor the social, environmental, and economic aspects of sustainability within the Company. It also prepares all Supervisory Board resolutions required in this regard. In addition, the Audit Committee exercises the rights in investee companies set forth in section 32 (1) MitbestG.

The Supervisory Board also routinely holds discussions with the auditor that do not include the Executive Board.

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 auditor hold discussions, when required, on the latest developments in the Company and the findings from the audit.

The heads of the Internal Audit and Corporate Compliance departments also regularly report to the chairman of the Audit Committee outside the Audit Committee meetings and without the participation of the Executive Board.

Current members of the Audit Committee:

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

The members of the Supervisory Board’s Audit Committee are all familiar with the sector in which the KION Group operates. The chairman of the Audit Committee, Dr. Nicolas Peter, is a Supervisory Board member who is independent of the Company, the Executive Board, and the controlling shareholder. The many years of service he has given as CFO of a large listed company mean that he has the required expertise in accounting 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 auditing specified in section 100 (5) alt. 2 and section 107 (4) AktG on account of her long period of service for a major auditing firm. Finally, Hans Peter Ring, chairman of the Supervisory Board and a member of the Audit Committee, has given many years of service as a CFO for large companies – some of which are publicly listed – and he therefore also has the required expertise in accounting specified in section 100 (5) alt. 1 and section 107 (4) AktG. Their expertise also relates to sustainability reporting and its auditing.

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).

Current members of the Remuneration Committee:

• Hans Peter Ring (chairman)
• Özcan Pancarci (deputy chairman)
• Kui Jiang
• Dr. Nicolas Peter
• 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.

Current members of the Nomination Committee:

• Hans Peter Ring (chairman)
• Birgit A. Behrendt
• Dr. Alexander Dibelius (deputy chairman)
• Kui Jiang