Corporate governance aligned with the interests of stakeholders, lawful and responsible conduct, and constructive cooperation between the managerial bodies and within the company in a spirit of mutual trust constitute the essential cornerstones of Sartorius' corporate culture.
The executive and supervisory bodies of Sartorius AG are guided in their actions by the principles of transparent and responsible corporate governance. The Executive Board and the Supervisory Board report on these principles and their implementation pursuant to Article 3.10 of the German Corporate Governance Code in the Corporate Governance Report, which is published annually along with our Declaration on Corporate Governance. This Declaration issued in accordance with Section 289f of the German Commercial Code (HGB) presents details concerning the mode of operation of the Executive Board and Supervisory Board and other governance measures employed by the company.
Declaration of the Executive Board and of the Supervisory Board of Sartorius AG Concerning the Recommendations of the Government Commission on the German Corporate Governance Code Pursuant to Section 161 of the German Stock Corporation Law (“Aktiengesetz”)
1. The Executive Board and the Supervisory Board declare that Sartorius AG complied, and will continue to comply in the future, with the recommendations made by the
Government Commission on the German Corporate Governance Code (GCGC) in the version as amended on December 16, 2019, and published by the German Federal Ministry of Justice and Consumer Protection in the official section of the German Federal Gazette ("Bundesanzeiger") since their publication, with the following exception:
In divergence from the newly introduced recommendations pursuant to G.10 of GCGC, the variable remuneration of the members of the Executive Board consists only to a minor extent of share-based remuneration components; furthermore, portions of the long-term remuneration with a multi-year assessment basis are available to the members of the Executive Board before the end of four years. The Supervisory Board believes that the terms of variable remuneration in place so far also provide for an incentive structure that is geared towards the sustainable and longterm development of the company. The Supervisory Board will observe and evaluate the implementation of the recommendations according to G.10 of GCGC on the market and, if necessary, propose changes to the remuneration system to the Annual General Shareholders' Meeting at a later time.
2. The Executive Board and the Supervisory Board further declare that Sartorius AG fully complied with the recommendations made by the Government Commission on the German Corporate Governance Code in the version as amended on February 7, 2017, and published by the German Federal Ministry of Justice and Consumer Protection in the official section of the German Federal Gazette ("Bundesanzeiger") on April 24, 2017, and May 19, 2017, respectively, throughout the period from the issuance of last year's Declaration of Compliance in December 2019 to the publication of the new version of the GCGC on March 20, 2020.
Göttingen, December 3, 2020
Main Features of the Remuneration Plan for the Executive Board
The full Supervisory Board is responsible for establishing the remuneration paid to members of the Executive Board of Sartorius AG. The total value of the remuneration of an Executive Board member reflects the scope of the responsibilities of the Executive Board member concerned, the Executive Board member’s personal performance, the company’s economic situation and sustainable progress. In addition, the extent to which this amount of remuneration is typical is considered, taking into account peer companies and the remuneration structure in place in other areas of the company and in similar companies.
Remuneration is comprised of both fixed nonperformance-based components and of variable performance-based components, and is reviewed regularly to ensure that it remains appropriate. The variable performance-based remuneration components consist of those to be paid annually and of multi-year components intended to have a long-term incentive. Fixed non-performance-based remuneration is paid in the year in which it is granted. For 100% target achievement, the variable annual and long-term performance-based components generally represent at least half of total remuneration, which excludes pension commitments under a defined benefit plan as well as fringe benefits.
Variable Performance-Based Remuneration
The portion of the variable performance-based remuneration is comprised of components to be paid annually (with the subordinate targets of sales revenue | order intake, underlying EBITDA and the ratio of net debt to underlying EBITDA) as well as components providing a long-term incentive (with the subordinate targets of Group annual net profit and the phantom stock plan). The components to be annually paid and those providing a long-term incentive each account for half of the total target achievement possible. A cap is provided for all performance-based components to be paid out.
For the Executive Board Chairman and the Chief Financial Officer on this board, the subordinate targets are weighted as follows within the components to be paid annually:
– Group sales revenue | Group order intake, 30%;
– Group underlying EBITDA, 40%; and
– Group ratio of net debt to underlying EBITDA, 30%.
For Executive Board members with division responsibility, the subordinate targets of the components to be paid annually are weighted as follows:
– Group sales revenue | Group order intake, 9%;
– Group underlying EBITDA, 12%;
– Group ratio of net debt to underlying EBITDA, 9%;
– Sales revenue | Order take of the respective division, 30%;
– Underlying EBITDA of the respective division, 40%;
Within the components with a long-term incentive, the subordinate targets comprised of Group net profit and of the phantom stock plan are each weighted at 50% for all Executive Board members.
Multi-year Components as Long-term Incentives
Weighted components determined by multi-year assessment depend on the development of consolidated net profit in a multi-year period, on the one hand, and on the development of Sartorius AG's share prices, on the other hand. Multi-year components providing a long-term incentive are based on a three-year average of consolidated net profit and on a four-year average of share prices, respectively. These components are paid out after two fiscal years for net profit and at the earliest after three fiscal years for share prices.
According to Article 19 of MAR (European Market Abuse Regulation), managers, i.e. the members of the Supervisory Board and of the Executive Board, as well as other persons who carry out executive-level managerial functions at Sartorius AG, are obligated to notify Sartorius AG and the German Federal Financial Supervisory Authority (BaFin) within three business days of any transactions conducted on such members’ or persons’ own account relating to the shares or debt instruments of Sartorius AG or to derivatives or other financial instruments linked thereto. In addition, this applies to transactions of persons closely associated with such members, particularly spouses, registered civil partners, dependent children and other relatives who have lived for at least one year with the member concerned in the same household at the time the transaction took place.
Managers' Transactions as of Novemeber 26, 2020 - Ordinary shares (only German version)
Managers' Transactions as of November 26, 2020 - Preference shares (only German version)
Basic Principles of Our Compliance Management System
With our compliance management system that is valid worldwide, Sartorius ensures that the members of its individual boards, executives and employees comply with all legal regulations and codes, and perform their activities in accordance with the company’s internal rules and guidelines. Targeted training and awareness-raising prevent any misconduct, as well as economic damage and loss of image.
Sartorius makes every effort to ensure optimal risk management by using a combination of approaches: a preventive compliance approach designed to proactively stop any potential breaches before they occur and a repressive compliance approach intended to continuously monitor compliance with our rules. These processes are closely intermeshed, creating a standardized compliance management system that aims to offer the best possible protection against potential violations of our rules and regulations.
Sartorius has developed a Code of Conduct as a preventive component of our compliance management system and has committed to an Anti-Corruption Code.
Sartorius Code of Conduct
The Sartorius Code of Conduct specifies the requirements on the responsible conduct of all employees of the Sartorius Group. This set of rules provides them with guidance on how to act in a legally correct and ethically appropriate way in their daily work.
Sartorius Anti-Corruption Code
This Anti-Corruption Code serves as the basis for making all employees aware of the risks of corruption, while providing guidance, instructions and help to enable them to take the appropriate action to prevent and fight such corruption.
Sartorius ensures that all Group employees worldwide are thoroughly familiar with both Codes by requiring them to complete online training and earn a certificate.
Sartorius adheres to the principles of the United Nations Universal Declaration of Human Rights, the International Labor Organization (ILO) and the United Nations Global Compact, the world’s largest initiative for human rights, labor standards, environmental protection and anti-corruption. The company’s internal principles, such as its Code of Conduct and Code of Conduct for Suppliers, are derived from these global tenets.
In addition, Sartorius has made it a policy to require its business partners to adopt its standards of compliant conduct as well. For this reason, Sartorius performs third-party due diligence or so-called business partner checks; i.e., the company reviews the integrity of business partners on a risk-oriented basis.
Code of Conduct for Business Partners
The Sartorius Group also expects its suppliers and service providers, in particular, to comply with internationally recognized social and environmental standards, to abide by the laws, uphold the tenets of fair competition and to respect human rights. Our company excludes existing or new suppliers who are determined to be the source of considerable risks regarding compulsory, forced or child labor, other violations of human rights or negative effects on society. These requirements are set forth in our Code of Conduct for Business Partners.
An internal system is available for reporting any suspicious circumstances involving potential compliance violations.
In addition to having set up established routes for reporting compliance-related concerns to the Compliance Department or managers, Sartorius has created a whistleblower portal to enable employees, suppliers, customers or partners to report any potentially damaging conduct 24 hours a day, seven days a week. This specially secured portal is made available through an external provider who is specialized in handling confidential data securely. Every whistleblower can decide whether or not to report compliance-related concerns by giving his or her name or by doing so anonymously.
Sartorius employees, suppliers, customers or partners can use our telephone hotline to contact our Compliance Department directly. There they will receive answers to questions concerning compliance and can report damaging conduct, also anonymously, if desired. This hotline is available free of charge worldwide.
Phone: 00800 22442211
The repressive component of our compliance management system is designed to ensure comprehensive monitoring and efficiency review of the control mechanisms mentioned above. The key elements of Sartorius’ internal control system consist of a combination of process-integrated and process-independent monitoring measures. Among the most important organizational measures that have been anchored in Sartorius’ corporate culture for a long time is the rule of separation of functions, taking into account the “four-eyes” principle. In particular, the Supervisory Board and the Legal Affairs & Compliance Department play a key role in process-independent monitoring and review activities. Within the Supervisory Board, the Audit Committee, in particular, is tasked with reviewing internal control processes. In addition, this committee intensively focuses on reviewing the annual and consolidated financial statements and the quarterly financial reports. To ensure systematic, prompt identification of risks, Sartorius moreover has a monitoring system in place, pursuant to Section 91 II of the German Stock Corporation Law (AktG), for early group-wide detection of risks that have the potential to jeopardize the company’s continued existence.