Cooperation, composition and activities of the Managing Board and Supervisory Board
The management structure at HUGO BOSS is primarily derived from the requirements of corporate law. As a German stock corporation, HUGO BOSS AG has a dual management and control structure. The Managing Board is responsible for the Group’s strategy and its management. The Supervisory Board advises the Managing Board and monitors its management activities.
The Managing Board and Supervisory Board cooperate closely for the benefit of the Group. Their shared objective is to increase the enterprise value in the long term. The Managing Board regularly informs the Supervisory Board in a timely manner and in detail on issues of importance for the Group concerning strategy, planning, business development, the risk position, risk management and compliance. Deviations from targets and budgets are explained to the Supervisory Board and its committees. The strategic alignment and further development of the Group are also discussed and coordinated with the Supervisory Board.
When making decisions and in performing their duties for HUGO BOSS, members of the Managing Board and Supervisory Board are not permitted to pursue their personal interests or grant other persons unjustified advantages. No members of the Managing Board or Supervisory Board had any conflicts of interest in fiscal year 2015. The offices held by the Managing Board and Supervisory Board members in statutory supervisory boards or comparable oversight committees of commercial organizations in Germany and other countries are listed in the notes under “Supervisory and Managing Board”. No member of the Managing Board sits on more than three supervisory boards of listed companies that are not members of the Group. The same applies to members of the Supervisory Board who sit on the managing boards of other listed companies. Related party disclosures are provided in the notes to the consolidated financial statements.
The Managing Board
The Managing Board comprises the chairman and the members with equal rights, whose duties cover specific corporate functions. There are three members of the Managing Board.
The HUGO BOSS Group is managed by the Managing Board of the parent company HUGO BOSS AG, in which all of the Group management functions are bundled. The Managing Board’s core duties include defining the corporate strategy (particularly the brand and distribution strategy), corporate finance, risk management, decisions on the collections and the management of the sales network. In addition, it is responsible for preparing the annual, consolidated and interim financial statements and for establishing and monitoring a risk management system.
The bylaws of the Managing Board govern the allocation of duties to its members as well as the procedures to be adopted for passing resolutions. In particular, they also define disclosure and reporting duties as well as those matters requiring the approval of the Supervisory Board.
The German Corporate Governance Code also prescribes that the Managing Board must be committed to diversity when filling management positions in the Group and specifically that women must be adequately represented. The Managing Board is committed to this objective. It already monitors the diversity of the workforce and will continue to do so in future. On September 22, 2015, the Managing Board acting in accordance with the statutory provisions set a target of at least 30% of women in each of the two management levels below the Managing Board to be achieved by June 30, 2017. Employees
The Supervisory Board
In accordance with the German Corporate Governance Code, HUGO BOSS attaches a high level of importance to the independence of members of the Supervisory Board. The members of the Supervisory Board of HUGO BOSS have the knowledge, skills, and professional experience necessary for the respective committees. The Supervisory Board currently includes four women (one of whom represents the shareholders) in accordance with Sec. 96 (2) Sentence 1 AktG. None of the current members of the Supervisory Board previously held a Managing Board position within the Group. There were also no advisory or other service agreements in place between members of the Supervisory Board and the Group in the reporting year.
Acting under Sec. 111 (5) AktG, the Supervisory Board has defined a target for the proportion of women on the Managing Board, which is to be achieved by June 30, 2017. In accordance with the recommendation of the German Corporate Governance Code, the Supervisory Board has also set specific targets for its own composition and for the composition of the Managing Board. These targets were outlined in the Corporate Governance Report for 2011 and have not changed: the Supervisory Board should have at least two non-German members, none of the members are permitted to have potential conflicts of interest and none of the Supervisory Board members may be older than 69 years of age when they are elected. In addition, the Supervisory Board has set itself a specific target as regards the number of “independent” members of the Supervisory Board within the meaning of the German Corporate Governance Code. Accordingly, of the twelve members of the Supervisory Board, at least eight members, including the six employee representatives, will have to be independent in the future. A standard maximum period of membership of the Supervisory Board has been dispensed with as HUGO BOSS takes the view that a predefined maximum period of membership is not appropriate as it may prevent the Company from benefiting from the expertise of long-standing members of the Supervisory Board.
In addition, the Supervisory Board examines the annual and consolidated financial statements and reports on the results of this audit to the Annual Shareholders’ Meeting.
The Supervisory Board has adopted bylaws which govern its duties and responsibilities as well as the procedures for convening, preparing and chairing meetings and for passing resolutions. In addition, the bylaws stipulate equal representation in the composition of all Committees.
1. Working Committee
The Working Committee comprises the Chairman of the Supervisory Board and five other members whom the Supervisory Board elects from its own number. It has the following main duties: the members of the Working Committee assist and advise the Chairman of the Supervisory Board. In accordance with the statutory provisions, the Working Committee works closely with the Managing Board to prepare the meetings of the Supervisory Board. Between Supervisory Board meetings, the Working Committee performs most of the monitoring duties. This does not affect the monitoring obligations of the individual members of the Supervisory Board. The Working Committee makes decisions on transactions requiring consent in cases where the Supervisory Board has delegated its powers accordingly. To the extent permitted by law, the Working Committee may make decisions in lieu of the full Supervisory Board in urgent matters. In such cases, it must immediately notify the Supervisory Board in writing and report orally in detail at the next Supervisory Board meeting on the decision, the reasons for it and the need for the decision by the Working Committee.
2. Personnel Committee
The Personnel Committee is made up of the Chairman of the Supervisory Board and three other members elected by the Supervisory Board from its own number. Its composition ensures equal representation. It makes decisions on the service contracts of the Managing Board members and other contractual matters (including those relating to former Managing Board members and their surviving dependents) not relating to the compensation of Managing Board members. Decisions concerning the compensation of Managing Board members (including former Managing Board members and their surviving dependents) as well as regular deliberation on and the review of the compensation system are the responsibility of the full Supervisory Board. However, the Personnel Committee submits proposals in preparation for decisions on these matters. In addition, the Personnel Committee makes decisions in accordance with Sec. 114 AktG (contracts with Supervisory Board members) and Sec. 115 AktG (loans to Supervisory Board members) as well as matters requiring the Supervisory Board’s consent in connection with senior executives (including the grant of loans to senior executives within the meaning of Sec. 89 (2) AktG). To the extent permitted by law, it represents the Company in transactions with Managing Board members (including former Managing Board members and their surviving dependents).
3. Audit Committee
The Audit Committee consists of at least four members elected by the Supervisory Board; the total number of members of the Audit Committee is determined by the Supervisory Board and must always be an even number. In accordance with the Corporate Governance Code, the Committee must have at least one independent member. The Audit Committee is responsible for monitoring the financial reporting process, the effectiveness of the systems of internal control, risk management and internal auditing, and the audit of the annual financial statements. It has the following main duties:
- To perform a preliminary audit of the annual financial statements and the consolidated financial statements, the management report of HUGO BOSS AG and the Group and the profit appropriation proposal, to discuss the audit report with the statutory auditor and to prepare the Supervisory Board’s decision on the approval of the annual financial statements and the consolidated financial statements;
- To examine the quarterly reports (interim reports) and discuss them with the Managing Board;
- To prepare the Supervisory Board’s proposal to the Annual Shareholders’ Meeting concerning the appointment of a statutory auditor, and in particular to satisfy itself of the statutory auditor’s independence and to examine the additional services which it provides;
- To engage the statutory auditor and to sign the corresponding fee agreement for the auditing of the annual financial statements and the consolidated financial statements following consultation with the Managing Board on the basis of the resolution passed at the Annual Shareholders’ Meeting, including the determination of the key audit points and the auditor’s reporting duties towards the Supervisory Board;
- To satisfy itself that the statutory provisions and internal company policies have been complied with (“compliance”).
The Supervisory Board satisfied itself of the independence of the members of the Audit Committee representing the shareholders and of the Chairman of the Audit Committee, Mr. Hermann Waldemer. Mr. Waldemer also possesses particular knowledge of and experience in the application of accounting principles and internal control processes. For this reason, he is also a designated Financial Expert.
4. Nomination Committee
The Nomination Committee has two members who are elected by the representatives of the shareholders on the Supervisory Board from their own number; accordingly, it is made up solely of shareholder representatives in accordance with the requirements set out in Sec. 5.3.3 of the German Corporate Governance Code. It is required to identify suitable candidates for the election of shareholder representatives to the Supervisory Board and to put their names forward to the Supervisory Board as its proposed nominees for election at the Annual Shareholders’ Meeting.
5. Mediation Committee
The Mediation Committee comprises the Chairman of the Supervisory Board, the Deputy Chairman of the Supervisory Board, one member elected by the employee representatives on the Supervisory Board and one elected by the shareholder representatives on the Supervisory Board, with a majority of the votes cast in both cases. Its sole purpose is to perform the duties referred to in Sec. 27 (3) and Sec. 31 (3) Sentence 1 Mitbestimmungsgesetz [Co-Determination Act]. Accordingly, the Mediation Committee submits proposals for the appointment of members of the Managing Board in cases in which a prior proposal has failed to achieve the necessary statutory majority.
Compensation of the Managing Board and Supervisory Board
The compensation report summarizes the principles underlying the total compensation of the members of the Managing Board and Supervisory Board of HUGO BOSS AG. It also explains the structure and amount of compensation paid to members of the Managing Board. In addition, it describes the principles and the amount of compensation of the Supervisory Board members. The compensation report is part of the management report. Compensation Report
Publications within the meaning of sec. 15a WpHG
Transactions conducted with shares of HUGO BOSS AG by persons within the meaning of Sec. 15a WpHG [“Wertpapierhandelsgesetz”: Securities Trading Act] are also published on the corporate website.
As of December 31, 2015, the combined number of HUGO BOSS AG shares held by all members of the Managing Board and Supervisory Board accounted for less than 1% of the shares issued by the Group.