The Executive and Supervisory Boards of Deutsche Börse AG declare that all of the rec- ommendations of the Government Commission on the German Corporate Governance Code (version dated 14 June 2007) were observed, with one reservation. The recommendations of the Government Commission on the German Corporate Governance Code (version dated 6 June 2008, published in the electronic Fed- eral Gazette on 8 August 2008) have been and will continue to be observed, with two reservations.
Since 1 January 2008, the Company has no longer complied with the recommendation of agreeing an appropriate deductible for the D&O (directors’ and officers’ liability insurance) policy. The D&O policy concluded by Deutsche Börse AG does not provide cover for willful breach of duty. As a result, the question of whether or not a deductible should be agreed arises only in the case of negligent breaches of duty. In fact, a deductible in cases of negligence has to date been relatively uncommon in other countries. Hence, retaining the deductible could frustrate
the Company’s goal of staffing its boards with prominent individuals from outside Germany who have extensive business experience.
The new version of the Code dated 6 June 2008 recommends that, when entering into Executive Board contracts, maximum settlement payments (severance payment caps) should be agreed. In relation to this recommendation, it should be noted that the Supervisory Board of Deutsche Börse AG has already intensively addressed the issue of severance payment caps in the past. For instance, the current contracts with the members of the Executive Board already include limitations on settlement payments in the event of a change of control. When new Executive Board contracts are entered into or existing contracts are ex- tended, the Supervisory Board or the appropriate committee of the Supervisory Board of Deutsche Börse AG will examine the implementation of the recommendation on a case-by-case basis. The Executive and Supervisory Boards also dis- close any other departures from the suggestions in the Code without being under a legal obliga- tion to do so. A large majority of the suggestions in the Code have been and are complied with. Deutsche Börse AG complies with the Code’s suggestion that the General Meeting should be broadcast using modern communication media by giving shareholders the opportunity to follow the opening speeches of the Executive and the Supervisory Boards at the 2009 Annual General Meeting on the Web. A decision on whether to broadcast the full 2009 Annual General Meet- ing on the Web has not yet been taken. The suggestion that separate preparatory dis- cussions for Supervisory Board meetings should be held by representatives of the shareholders and of the employees has generally not been and
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Corporate Governance Report
High level of compli- ance with Corporate Governance Code
63
will not be complied with. As a departure from section 3.6 subsection 1 of the Code, the Super- visory Board of Deutsche Börse AG has decided not to institute separate preparatory meetings before Supervisory Board meetings as a stan- dard practice, but only to do so if necessary.
The Supervisory Board of Deutsche Börse AG
The Supervisory Board supervises and advises the Executive Board in the management of the Company. Important business decisions are subject to its approval. At the suggestion of its Personnel Committee, the plenary meeting of the Supervisory Board resolves the remunera- tion system for the Executive Board, including the key contract elements, and examines the system regularly.
The Supervisory Board currently still has 21 mem bers. On the basis of the resolution adopted by the Annual General Meeting of Deutsche Börse AG on 21 May 2008, the Supervisory Board will be reduced by three members as from the end of the General Meet- ing to be held on 20 May 2009. It will then have 18 members (twelve shareholder represen- tatives and six employee representatives). All shareholder representatives will be newly elected by the 2009 General Meeting; the terms of of- fice of the current representatives will expire at the end of the 2009 General Meeting.
Kurt Viermetz resigned from his position as Chairman of the Supervisory Board as at the end of 8 December 2008. At its meeting on 8 December 2008, the Supervisory Board of Deutsche Börse AG elected Dr Manfred Gentz as Chairman of the Supervisory Board and Gerhard Roggemann as Deputy Chairman with effect from 9 December 2008. Thomas Neiße was appointed to the Supervisory Board by way of a court ruling on 14 January 2009.
Work in the Supervisory Board committees
The Supervisory Board of Deutsche Börse AG has established six committees. Currently it has a Strategy Committee, an Audit and Finance Committee, a Personnel Committee, a Nomina- tion Committee, a Technology Committee and a Clearing and Settlement Committee.
The Supervisory Board regularly receives com- prehensive information about all meetings of the Supervisory Board committees. Information on the composition of the Supervisory Board and its committees can be found on pages 54 to 61 of the Report of the Supervisory Board.
Efficiency audit to optimize the work of the Supervisory Board
Deutsche Börse AG regards regular examina- tions of the efficiency of the Supervisory Board as a key component of good corporate gover- nance. In compliance with the recommendation of the German Corporate Governance Code, the Supervisory Board of Deutsche Börse AG again dealt with the examination of the work of the Supervisory Board in financial year 2008. The work of the Supervisory Board was thoroughly examined with the help of external experts. The examination confirmed once again that the core topics material to the Company receive detailed and thorough treatment from all six committees of the Supervisory Board.
The results of the efficiency audit were dis- cussed at the last Supervisory Board meeting of the year under review. In addition, it was resolved to implement recommended actions to further optimize the work of the Super- visory Board.
Close cooperation between Executive Board and Supervisory Board
The Executive and Supervisory Boards work closely together in the best interests of Deutsche Börse AG and based on mutual trust. The Exec- utive Board provides the Supervisory Board with regular, timely and comprehensive information on all issues concerning planning, business de- velopment, the risk situation and risk manage- ment in the Company. It agrees the Company’s strategic orientation with the Supervisory Board and regularly discusses with it the status of strategy implementation. The Executive Board also reports on the control systems used by the Company (risk management, internal control system, compliance, internal auditing). The Audit and Finance Committee addresses these issues in greater detail and reports on them to the full Supervisory Board. The Executive Board’s bylaws stipulate which issues must be addressed by the full Exec utive Board and which majorities are required for the adoption of Board resolutions.
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Supervisory Board forms six committees Supervisory Board reduced by three members
64 The Group: Corporate Governance
The schedule of responsibilities sets out the Company divisions for which the individual Exec- utive Board members are responsible.
Directors’ dealings
In accordance with section 15a of the Wertpa- pierhandelsgesetz (WpHG, the German Securities Trading Act), the members of the Executive and Supervisory Boards of Deutsche Börse AG are obliged to disclose the purchase or sale of Deutsche Börse shares and derivatives. A de- tailed account of directors’ dealings can be found on the website of Deutsche Börse AG.
At no time did the ownership of shares of the Company or financial instruments on these shares by individual members of the Executive and Supervisory Boards directly or indirectly exceed 1 percent of the shares issued by the Company. At no time did the total shareholdings of all Executive and Supervisory Board mem- bers of Deutsche Börse AG exceed 1 percent of the shares issued by the Company. For this reason, there were no shareholdings requiring disclosure in accordance with section 6.6 of the German Corporate Governance Code.
Transparent reporting
To ensure maximum transparency and equal opportunities for everyone, corporate communi- cations at Deutsche Börse adopts the rule that all target groups must receive all information at the same time. In its financial calendar, Deutsche Börse AG therefore informs shareholders, ana- lysts, shareholders’ associations, the media and the interested public about the most important dates such as the date of the Annual General Meeting or publication dates for financial indi- cators. In addition to ad hoc disclosures and information on directors’ dealings and vot- ing rights notifications, the Company’s website (www.deutsche-boerse.com) also provides annual reports, interim reports and company news items. Deutsche Börse supplies informa- tion about the annual financial statements at an analyst and investor conference. On publication of the interim reports, it offers conference calls for analysts and investors.
Accounting and auditing
In its Annual Report, Deutsche Börse AG informs shareholders and the interested public about its financial results for 2008. In the
course of the financial year, it publishes up-to- date information in the half-yearly financial report and in the interim reports for the first and third quarters. The financial statement docu- ments and the Annual Report are available within 90 days of the end of the financial year (31 December); interim reports are available within 45 days of the quarter concerned. Fol- lowing preparatory discussions by the Audit and Finance Committee, the annual financial state- ments are discussed and examined in greater detail by the full Supervisory Board and with the auditors before being approved.
The Executive Board discusses the half-yearly financial report and the interim reports for the first and third quarters with the Audit and Finance Committee before publication. The auditors for Deutsche Börse AG’s 2008 annual and consolidated financial statements are KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (KPMG). The 2008 Annual General Meet- ing also elected KPMG to perform the review of the half-yearly financial report. Before the election, the Audit and Finance Committee had obtained a declaration that there were no per- sonal, business, financial, or other relationships between the auditors and its governing bodies and audit managers on the one hand, and the Company and the members of its Executive and Supervisory Boards on the other, that could give cause to doubt the auditors’ independence. The audit by KPMG did not reveal any facts that are not consistent with the declaration of conformity issued by the Executive Board and Supervisory Board in accordance with section 161 of the Aktiengesetz (AktG, the German Stock Corporation Act).
Incentive programs for senior executives and employees
Group Share Plan:The commercial success of Deutsche Börse Group would not be achievable without the commitment and performance of its employees. The Executive and Supervisory Boards of Deutsche Börse AG reward this com- mitment among other things with the Group Share Plan (GSP), the Group-wide program de- signed to give employees a share in the Com- pany’s success. In 2008, eligible employees
Current directors’ dealings on the Internet ➔deutsche- boerse.com/ir_e
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were able to buy up to 300 shares at a discount of 30 or 40 percent, depending on length of service. Each participating employee received two additional Deutsche Börse shares (“bonus shares”) for every ten Deutsche Börse shares purchased. Participating employees have to keep all GSP shares for at least two years.
In 2008, Deutsche Börse also launched a Group Share Plan for its subsidiary International Secu- rities Exchange (ISE). In addition, ISE employees were given the option to take part in the 2007 tranche retrospectively. Eligible employees could use the bonus they had earned and an indi- vidual top-up payment to acquire rights to sub- scribe for Deutsche Börse AG shares. The en- titlements are received after one or two years for the retrospectively granted 2007 tranche and after three years for the 2008 tranche.
Stock Bonus Plan:Senior executives of Deutsche Börse AG and its subsidiaries and members of the Executive Management of the subsidiaries participate in the same Stock Bonus Plan (SBP) as the members of the Executive Board of Deutsche Börse AG. Details of the SBP are provided in the remuneration report (see pp. 66 to 72). Through the SBP, the beneficiaries par- ticipate in the Company’s success and increase their identification with the Company. The num- ber of SBP shares granted to each beneficiary is calculated by dividing the individual bonus determined for the beneficiary each year for the SBP by the closing auction price of Deutsche Börse shares on the day the bonus is deter- mined. A change to the calculation method is planned for 2009: Under the new SBP terms and conditions as of 2009, in the future the number of shares is to be calculated by dividing the bonus component by the average quoted price of Deutsche Börse shares in the fourth quarter of the respective fiscal year to which the bonus relates, rounded in accordance with standard practice to the nearest whole number. The average quoted price is calculated based on the average (arithmetic mean) of the closing auction prices for Deutsche Börse shares in electronic trading on the Frankfurter Wertpapier-
börse (FWB®, the Frankfurt Stock Exchange)
in the fourth quarter of the fiscal year for which the bonus component is set. After a two-year waiting period, the Company chooses whether the beneficiary then receives the shares or a cash settlement.
Control systems
Risk management:Risk management is regarded as a fundamental component of the management and supervision of Deutsche Börse Group. The Group has therefore estab- lished a Group-wide risk management concept comprising roles, processes and responsibili- ties binding for all staff and organizational en- tities of Deutsche Börse Group. This concept is designed to ensure that emerging risks can be identified and dealt with appropriately at an early stage. The risk management system of Deutsche Börse Group meets the requirements for risk management (Mindestanforderungen an das Risikomanagement, MaRisk) issued by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin, the German Federal Financial Super - visory Authority). A detailed risk report can be found on pages 100 to 108 of the manage- ment report.
Internal control system:Deutsche Börse Group’s internal control system aims to ensure the effectiveness and profitability of the Group’s business processes, avert or uncover financial loss, and thus protect all its business assets. Deutsche Börse Group’s internal control system comprises both integrated and independent process controls. It guarantees the reliability of the data used to prepare the consolidated finan- cial statements (including the Group manage- ment report) and for internal reporting. The managers of the individual business areas are accountable for the effectiveness of the inte- grated process controls and ensure that risks in the business processes are identified at an early stage. They report to the Executive Board and the Supervisory Board on the effectiveness of the integrated controls at regular intervals. Compliance:Compliance is an important part of corporate culture at Deutsche Börse Group. Deutsche Börse Group has established the Group Compliance function, which seeks to protect the Group from any prejudice that may result from failures to comply with applicable laws,
Employees and executives have a share of the Company
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