KWS SAAT SE & Co. KGaA has a system of dual management in which the responsibilities are strictly assigned as follows: The Executive Board of the personally liable partner is responsible for management of the company’s business. The Supervisory Board of KWS SAAT SE & Co. KGaA supervises how the company is run and managed by the personally liable partner. The Executive Board still had five members in the year under review; however, Dr. Léon Broers left the board as planned when his appointment expired effective December 31, 2021, after serving on it for almost 15 years and Nicolás Wielandt was appointed as a member of KWS SE’s Executive Board effective January 1, 2022. The Supervisory Board of KWS SAAT SE & Co. KGaA consists of four representatives of the limited partners and two employee representatives.
The Executive Board and the Supervisory Board worked together constructively in a spirit of mutual trust. Both bodies were committed to the common goal of generating sustainable and long-term growth on the basis of the established corporate philosophy. There was constant close contact between the Chairman of the Supervisory Board and the Chief Executive Officer and individual members of the Executive Board. There were also monthly meetings between the Chairman of the Supervisory Board and the Executive Board as a whole. Among other subjects, the current business performance, questions of strategy, the risk situation, risk management, compliance at the company, and occurrences of special importance were discussed intensively at these meetings.
Working practices of the Executive Board
The personally liable partner KWS SE, represented by the Executive Board of KWS SE, was jointly responsible for conducting the business of KWS SAAT SE & Co. KGaA in accordance with the law, the company’s Articles of Association and the bylaws, with the goal of increasing the company’s value lastingly and achieving the defined corporate objectives. It did so taking into account the interests of the shareholders, employees and other groups associated with the company (stakeholders). The Executive Board was careful to ensure diversity in selecting professionally qualified candidates to fill management posts and in particular ensure appropriate consideration of women for them. It observed the recommendations of the German Corporate Governance Code and reported on deviations from it.
The task areas of the Executive Board were divided into divisions, which are documented in writing in the distribution-of-business plan. The distribution-of-business plan has been published on our homepage at https://www.kws.com/corp/en/company/investor-relations/corporate-governance/ in the section “Executive Board.” The individual members were directly responsible for the divisions assigned to them; this does not affect the fact that they have joint responsibility for managing the company’s business. The Executive Board decided in its entirety on significant matters relating to the company. These have been specified in the bylaws for the Executive Board of KWS SE, which can also be viewed in the above-mentioned section “Executive Board” of our homepage at www.kws.com/corp/en/company/investor-relations/corporate-governance.
The Executive Board of KWS SE developed the company’s strategic orientation, coordinated it with the Supervisory Boards of KWS SE and KWS SAAT SE & Co. KGaA, and ensured that it was implemented. The Executive Board also coordinated and controlled the company’s main activities and decided on how resources were distributed. It defined the guidelines and principles of the corporate policy, was responsible for ensuring compliance with them and with statutory regulations, and ensured adequate risk management and risk controlling at the company.
The Executive Board convened every week (for half a day) or every two weeks (for a whole day). These meetings were used to adopt resolutions by the Executive Board as a whole as well as to reach mutual agreement and provide information on all important events at the individual divisions. Any member of the Executive Board was able to ask for a meeting of the body to be convened. According to the bylaws, necessary resolutions must be adopted unanimously or, after prior discussion, by the majority of the votes.
The Chief Executive Officer, who is appointed by the Supervisory Board of KWS SE, represented the Executive Board and the company publicly in matters of principle. He was responsible for organizing the Executive Board meetings and for monitoring implementation of the resolutions adopted by the Executive Board. The Executive Board provided the Chairman of the Supervisory Board with regular, prompt and extensive information on all questions of relevance to the company relating to strategy and planning, business performance, the risk situation, risk management and compliance at the company. As in the previous year, the Executive Board did not form any committees in the year under review. No conflicts of interest were reported to the Supervisory Board by Executive Board members in the past fiscal year. Finally, in the year under review no member of the Executive Board reached the age limit of 65 stipulated for its members by the Supervisory Board of KWS SE in the bylaws for the Executive Board.
Working practices and composition of the Supervisory Board of KWS SAAT SE & Co. KGaA
In accordance with Section 8 of the company’s Articles of Association, the Supervisory Board of KWS SAAT SE & Co. KGaA consists of six members, with four members being elected by the Annual Shareholders’ Meeting and two members being elected by KWS employees from its workforce in the European Union. Their term of office is approximately five years, unless otherwise specified when they were elected. In accordance with the board’s bylaws, members must not be 72 or above at the time they are elected by the Annual Shareholders’ Meeting.
The Supervisory Board of KWS SAAT SE & Co. KGaA still consisted of six members in the period under review. Dr. Arend Oetker still bore the title of “Honorary Member of the Supervisory Board.” He is not a member of the Supervisory Board or of equal rank to one; in particular, he does not have the rights vested in a member of the Supervisory Board.
You can find an overview of the members of the Supervisory Board of KWS SAAT SE & Co. KGaA on our homepage at www.kws.com/corp/en/company/investor-relations/corporate-governance.
As usual, the next election of the shareholder representatives by the Annual Shareholders’ Meeting of KWS SAAT SE & Co. KGaA will be held at the Annual Shareholders’ Meeting scheduled for December 6, 2022. Before that, the workforce will elect two employee representatives to serve on the Supervisory Board of KWS SAAT SE & Co. KGaA, along with a personal substitute member for each of them. This election was held by KWS’ European Employees’ Committee (EEC) on July 26, 2022. Christine Coenen (Chairwoman of the European Employees’ Committee), who has served on the Supervisory Board since December 2017, was reelected, while Eric Gombert (an employee at KWS France and likewise a member of the European Employees’ Committee) was elected for the first time.
The rights and obligations of the Supervisory Board at a partnership limited by shares are limited compared to those at a stock corporation or SE; in particular, the Supervisory Board at a partnership limited by shares does not hold personnel responsibility as regards management. The Supervisory Board at a partnership limited by shares is not responsible for appointing or removing personally liable partners and their Executive Board members. It is therefore also not responsible for defining the contractual terms and conditions for them, such as in particular their compensation. The Supervisory Board at a partnership limited by shares is likewise not responsible for setting an age limit for members of the Executive Board of the personally liable partner or the term they are appointed to serve, succession planning, enacting bylaws for the Executive Board, or defining business transactions requiring its consent. These tasks are discharged by the Supervisory Board of KWS SE. However, if the German Corporate Governance Code contains recommendations on a Supervisory Board’s tasks that are discharged by the Supervisory Board of KWS SE due to its legal form, these recommendations of the German Corporate Governance Code shall apply accordingly to the Supervisory Board of KWS SE.
The Supervisory Board of KWS SAAT SE & Co. KGaA is responsible for overseeing how the business of KWS SAAT SE & Co. KGaA is run and managed by its personally liable partner, KWS SE. It supervises entrepreneurial decisions with regard to whether they are proper, expedient and cost-effective. The Supervisory Board also examines the annual financial statements of KWS SAAT SE & Co. KGaA and the consolidated financial statements, taking into account the audit reports by the independent auditor and the Non-Financial Declaration. In addition, the Supervisory Board draws up proposed resolutions for all items on the agenda on which the Annual Shareholders’ Meeting is to adopt resolutions; these usually relate to the proposal on the appropriation of the net retained profit and the appointment of the independent auditor, for example.
The composition of the current Supervisory Board was based on the profile of skills and expertise adopted in 2017 and complies with the recommendations of the German Corporate Governance Code in its version dated December 16, 2019. In this regard, the Supervisory Board also addressed the question of an appropriate number of independent members representing the shareholders on the Supervisory Board. Under recommendation C.6 of the German Corporate Governance Code, a Supervisory Board member is considered independent if he or she is independent of the company and its Executive Board, and independent of any controlling shareholder. The Supervisory Board considers that at least two shareholder representatives on the Supervisory Board should be independent within the meaning of the recommendation.
That target has been met. In the period under review, the Supervisory Board had two shareholder representatives – Victor W. Balli and Cathrina Claas-Mühlhäuser – who were independent of the company and the Executive Board and also independent of any controlling shareholder.
Moreover, all the other shareholder representatives – i.e. all the shareholder representatives and, therefore, also the Chairman of the Supervisory Board, the Chairman of the Audit Committee and the Chairman of the committee that deals with Executive Board compensation – are independent of the company and Executive Board.
In assessing the independence of the Chairman of the Supervisory Board, Dr. Drs. h.c. Andreas J. Büchting, from the company and Executive Board, the shareholder representatives also took into consideration that Dr. Andreas J. Büchting meets two of the criteria stated in recommendation C.7 of the German Corporate Governance Code, namely that he has been a member of the company’s Supervisory Board since December 2007, i.e. for more than fourteen years, and that his son Dr. Felix Büchting has been a member of the Executive Board since January 2019.
According to Commission Recommendation 2005/162/EC, a Supervisory Board member can be considered independent owing to the specific circumstances of his or her person, even though he or she does not meet the criteria for independence.
Dr. Andreas J. Büchting is considered by the Supervisory Board as independent of the company and Executive Board, since in his case the length of time he has served on the Supervisory Board and the fact that he is related to one of the five Executive Board members cannot on their own cause a “substantial – and not merely temporary – conflict of interest” on the part of Dr. Andreas J. Büchting in the assessment of the shareholder representatives. In all the time he has worked for the company and been a member of the Supervisory Board, Dr. Andreas J. Büchting has contributed important know-how, in-depth knowledge of the industry, vision and his great knowledge of the company. He also has a very strong sense of integrity and responsibility, as well as the necessary experience, to maintain a professional distance from the company and the Executive Board, which is necessary for a member to discharge his or her office independently. Moreover, Dr. Andreas J. Büchting not only serves on the company’s Supervisory Board, but also on that of its personally liable partner KWS SE, as a result of which he is particularly able to fulfill his supervisory duties.
All the other targets for the Supervisory Board’s composition have likewise been met or exceeded. That goes for the age limit, the target for the ratio of women and men, and international expertise. The ratio of women to men is currently 50%, both on the Supervisory Board and among its shareholder representatives, i.e. the targets of 16.6% for the Supervisory Board as a whole and 25% for the shareholder representatives have been exceeded.
The fields of expertise required in the profile of skills and expertise dating from 2017 are also fully covered by the members of the Supervisory Board. That not only relates to commercial and business experience and general knowledge of the seed industry or related sectors, but also the requirements for personal skills, such as a high degree of integrity, willingness to perform, sound judgment, and the ability to discharge the duties of a member of a Supervisory Board at a large international company and safeguard the company’s public reputation. All members of our Supervisory Board also made sure that they had sufficient time to discharge their duties as members and that the necessary education and further training measures were carried out. The company supported them in that to the best of its abilities. Every member of the Supervisory Board must disclose conflicts of interest to the Supervisory Board immediately. Conflicts of interest that have arisen are reported to the Annual Shareholders’ Meeting.