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WashTec Cleaning Technology GmbH

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86153 Augsburg

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Corporate Governance

Corporate Governance means the regulatory framework for responsible and transparent management and supervision of a company in the company’s interest, and with the aim of sustained added value creation. Essential therefore is the consideration of the needs of the employees and shareholders as well as all other affiliated groups of the company (stakeholder).

With the German Corporate Governance Code (“Code”), the “Government Commission German Corporate Governance Code” (“Commission”) aims to make Germany’s rules regarding management and supervision of a company transparent for both national and international investors, customers, employees and the public thus strengthening confidence in the management of German corporations. The Commission adopted the Code on February 26, 2002. Since then, the Government Commission has followed the development of Corporate Governance in legislation as well as in practice and verifies at least once a year the necessity of aligning the Code. The new versions of the Code are published in the German Federal Gazette (Bundesanzeiger) and can be downloaded from the website of the Commission.

WashTec understands Corporate Governance as a continuous process. Thus, WashTec AG’s management and supervisory boards regularly give their attention to satisfying the requirements of the Code and will attentively follow future developments. After careful consideration, WashTec AG decided not to implement all of the recommendations of the Code. Instead, the Company systematically applies Corporate Governance where it suits the size, type and structure of WashTec. However, in substantial respects, the recommendations and suggestions of the Code have been implemented.

Sustainable Management

Sustainable Development

As the worldwide leading supplier of products along the car wash value chain, WashTec meets the highest standards not only in matters involving product and service quality, but also in matters of environmental protection.

WashTec is committed to the principle of environmental sustainability, and therefore always manages its business affairs in a manner that uses resources and materials as efficiently as possible. Our environmentally friendly products allow us to help preserve the globally scarce sources of energy and raw materials.

Our goal is to offer our customers at all times the best possible products and processes as well as the best possible service for operating a successful car wash business. In order to review the extent to which we can satisfy this goal, we constantly carry out customer satisfaction surveys in which we review the level of satisfaction with our products and our customer service.

Due to the Company’s sustainable business model, WashTec shares are included as components in investment funds that focus on sustainable investment. In 2007, WashTec received the »SRI Pass-Status« as a sustainable investment (Sustainable & Responsible Investment).

Declaration of Conformity

Code of Ethics

Remuneration Report

Management Information

 

Management Board

More information about the Management Board

 

Management Board remuneration

Remuneration and the remuneration system for the Management Board of WashTec AG are determined and regularly reviewed by the Supervisory Board. In conformity with the Code, the remuneration system as a whole is structured in such a way as to take account of the responsibilities and personal performance of each Management Board member, the performance of the Management Board as a whole, the economic situation, the performance and outlook of the Company, and customary levels of compensation taking into account peer companies and the compensation structure in place in other areas of the Company. The Supervisory Board also considers the relationship of Management Board remuneration to that of senior management and of the workforce as a whole, including with regard to its development over time.

The remuneration of the members of the Management Board complies with the statutory requirements of the German Stock Corporation Act and with the recommendations contained in the Code. The remuneration system was last discussed in depth by the Supervisory Board at its meeting of December 20, 2018 and adopted by resolution, including the major elements of remuneration (Section 4.2.2 para. 1 of the Code). The overall remuneration of members of the Management Board is made up of monetary and non-monetary as well as fixed and variable components and is linked overall to sustained growth of the Company. All remuneration components are structured in such a way that they are reasonable, both individually and in the aggregate, and do not encourage the taking of unreasonable risks. The variable components of Management Board remuneration are intended to create incentives for the Management Board to further the commercial success of WashTec AG and take both positive and negative developments into account by the stipulation of ambitious targets. They do not account for more than approximately 70% of total remuneration, with the amounts limited individually in each ­Management Board contract.

Fixed remuneration

The fixed remuneration – in addition to the fixed salary, which is paid in twelve equal monthly amounts – also includes benefits in kind, notably comprising the provision of company cars, insurance coverage and reimbursement of weekly home travel. The fixed remuneration components ensure that the Management Board members receive basic compensation permitting them to exercise their office in the best interests of the Company and with the due diligence of a prudent businessperson, without exclusive dependence on solely short-term performance targets.

Short-term variable remuneration: performance-related components

The variable remuneration components include short-term components linked to the achievement of various targets (annual bonus) to be set by the Supervisory Board. The annual bonus tracks strategic and/or operational and financial targets set each year by the Supervisory Board. For the short-term variable annual remuneration, an amount corresponding to 100% target attainment is agreed with each Management Board member. The annual bonus may be reduced to as little as 0% of the agreed amount If one or more targets are not met and increased to up to 130% of the agreed amount if one or more targets are exceeded.

Components providing long-term incentives

All Management Board contracts in force provide for long-term Management Board remuneration based on separate strategic, financial and operating targets based on a multi-year assessment and set by the Supervisory Board.

Following the expiration of the previous Long Term Incentive Program (LTIP) on December 31, 2017, the Supervisory Board established an LTIP with a term (incentive period) running from January 1, 2018 to December 31, 2020. The current LTIP contains a component without personal investment, the maximum amount of which corresponds at full target attainment to the short-term annual variable target income and which can, at maximum, be doubled by the Management Board member personally investing in WashTec AG shares. Payments due at the end of the incentivization phase are contingent upon attainment of the performance targets. Performance targets have been set for return on capital employed (ROCE) and total shareholder return (TSR) over the incentive period. Target attainment on these must be at least 91% in order to count. On at least 91% but less than 100% target attainment on either target, 10% less is paid out for that the target for each percentage point below 100%. If target attainment is less than 91% on either target, there is no payout for that concerned. If target attainment is less than 91% on both performance targets, no bonus is paid. The ROCE target has a weighting of 70% and the TSR target has a weighting of 30% in determination of the bonus payment.

Benefits following termination of employment

Where members of the Management Board are subject to a post-contractual non-compete covenant clause, they are entitled to remuneration amounting to 50% of the monthly pro rata portion of their fixed annual salary for the duration of the non-compete covenant.

The current Management Board contracts contain a provision, pursuant to which if service on the Management Board is terminated early other than for cause justifying termination of the Management Board contract, then severance payments are agreed that do not exceed the remuneration entitlements for the remaining term of the contract and are to be limited to a maximum of two years’ compensation including reimbursables (severance cap).

Other information

The Supervisory Board may at its due discretion decide an exceptional performance bonus for individual or all members of the Management Board. The members of the Management Board do not receive any loans or indemnities from the Company. No bonuses are paid on appointment.

Tabular presentation in the remuneration report of the remuneration of individual Management Board members (Section 4.2.5 paras. 3 and 4 of the Code)

In accordance with a resolution of the Annual General Meeting of May 11, 2016, the Company refrains from presenting Management Board remuneration on an individual basis in accordance with the Sections 286 (5) and 314 (2) sentence 2 HGB (preamendment). The Management Board has been provided with an exemption from the disclosures pursuant to Section 314 (1) no. 6a sentences 5 to 8 HGB for the fiscal year commencing January 1, 2016 and for all subsequent fiscal years up to and including at the latest the fiscal year ending December 31, 2020. Further details on remuneration are provided in the notes to the consolidated financial statements of this year´s annual report.

Amount of Management Board compensation (HGB)

The members of the Management Board active in each reporting year were remunerated as follows:

Total remuneration granted in fiscal year 2018 to the Management Board (DRS 17) amounted to €4,278k (prior year: €1,649k). €1,079k (prior year: €1,069k) of this total consisted of non-performance-related components, €608k (prior year: €580k) of performance-related components and €2,591k (prior year: €0k) of components with a long-term incentive effect.

Total remuneration in fiscal year 2018 (HGB):

in €k 2018 2017
Fixed remuneration 1,015 1,015
Incidental benefits 65 54
Total (fixed) 1,079 1,069
Single-year variable remuneration 608 550
Fair value of multi-year variable renumeration at grant date 2,591 0
Bonus (once-only) 0 0
Total (variable) 3,199 580
Total remuneration 4,278 1,649


Management Board shareholdings developed as follows:

Shares held by members of the Management Board (units) 2018 2017
Dr. Volker Zimmermann (until February 28, 2019) 16,100 15,000
Axel Jaeger (since July 1, 2018) 4,900 0
Karoline Kalb 3,590 3,300
Stephan Weber 3,740 3,000
Rainer Springs (until February 28, 2018) - 4,000

Supervisory Board

Supervisory Board

Supervisory Board remuneration

The remuneration of the Supervisory Board is specified in Section 8.16 of the Articles of Association of WashTec AG. It comprises fixed and variable remuneration components. The basic fixed remuneration for an ordinary member of the Supervisory Board is €35,000 for each full fiscal year of membership of the Supervisory Board. The Deputy Chairman receives fixed remuneration of €70,000 for each full fiscal year, and the Chairman receives €100,000 for each full fiscal year of his membership of the Supervisory Board. In addition, each Supervisory Board member receives an attendance fee of €1,500 for each meeting of the Supervisory Board and its committees that they attend. The Chairman of the Supervisory Board receives double the attendance fee. Every Supervisory Board member also receives €500 for each cent by which consolidated earnings per share (IFRS-basis) exceeds the equivalent amount for the prior fiscal year.

Each member of a committee (with the exception of the Audit Committee) receives additional fixed remuneration of €2,500. The chairperson of a committee (with the exception of the Audit Committee) receives additional fixed remuneration of €5,000. Each member of the Audit Committee receives an additional fixed remuneration of €5,000, and the Chairman receives additional fixed remuneration of €10,000.

The fixed and performance-based total remuneration in accordance with the Articles of Association together with attendance fees are limited a maximum of €75,000 for each regular Supervisory Board member and €100,000 for the Chairman of the Audit Committee. The total remuneration is limited to a maximum of €150,000 for the Deputy Chairman of the Supervisory Board and of €200,000 for the Chairman of the Supervisory Board.

Any Supervisory Board members who have served on the Supervisory Board for only part of a fiscal year receive proportionately reduced fixed and performance-based remuneration.

The Company did not pay any remuneration or grant any benefits to members of the Supervisory Board in fiscal year 2018 for services provided individually (Section 5.4.6 of the Code).

Pursuant to Section 8.16 of the Articles of Association, the Annual General Meeting also approved a Long Term Incentive Program (LTIP) for the Supervisory Board, stipulating a personal investment in WashTec shares on or before June 30, 2015 as a condition for participation (Chairman: 25,000 shares maximum; all others: 5,000 shares maximum). Performance targets have been set for EBIT, ROCE and earnings per share (EPS). The reference base for the targets comprised the key performance indicators for fiscal year 2014. Depending on whether one, several or all of the targets are fulfilled, a different multiplier applies for the bonus payment, which is the sum total of the reference price, number of shares and multiplier. The bonus payment is payable in fiscal year 2019. Entitlement to the bonus payment is conditional on the Supervisory Board member still being on the Supervisory Board and still holding shares in the Company. Supervisory Board members Dr. Blaschke, Mr. Bellgardt, Dr. Hein and Dr. Liebler participate in the LTIP with the maximum number of shares.

The Annual General Meeting 2018 resolved a new Long Term Incentive Program (LTIP) for the Supervisory Board with an incentive period running from January 1, 2019 to December 31, 2021. The new LTIP likewise provides for a personal investment in WashTec shares and stipulates EPS, ROCE and free cash flow performance targets.

Supervisory Board remuneration 2018

in €k, (rounding differences possible) Fix Variable Attendance fees Total Cap1 Payout amount Multi-year variable remuneration (long-term component)2
Dr. Günter Blaschke 100.0 0 62.0 162.0 200.0 162.0 -
Ulrich Bellgardt 70.0 0 47.5 117.5 150.0 117.5 -
Jens Große-Allermann 35.0 0 20.5 55.5 75.0 55.5 -
Dr. Sören Hein 35.0 0 24.5 59.5 75.0 59.0 -
Dr.Hans Liebler 35.0 0 21.0 56.0 75.0 56.0 -
Dr. Alexander Selent 35.0 0 38.0 73.0 100.0 73.0 -
Total 310.0 0 213.5 523.5 675.0 523.5 -

1 Payout limited by cap (according to term of service/position)
2 Fair value of LTIP at grant date

Supervisory Board remuneration 2017

in €k, (rounding differences possible) Fix Variable Attendance fees Total Cap1 Payout amount Multi-year variable remuneration (long-term component)2
Dr. Günter Blaschke 100.0 23.5 68.0 191.5 200.0 191.5 -
Ulrich Bellgardt 70.0 23.5 49.0 142.5 150.0 142.5 -
Jens Große-Allermann 35.0 23.5 23.5 82.0 75.0 75.0 -
Dr. Sören Hein 35.0 23.5 29.0 87.5 75.0 75.0 -
Roland Lacher3 12.0 8.0 7.0 27.0 25.0 25.0 -
Dr. Hans Liebler 35.0 23.5 32.0 90.5 83.0 83.0 -
Dr. Alexander Selent4 23.0 16.0 26.0 65.0 67.0 65.0 -
Total 310.0 141.0 234.5 686.0 675.0 658.0 -

1 Payout limited by cap (according to term of service/position)
2 Fair value of LTIP at grant date
3 until May 3, 2017
4 since May 3, 2017

Cash-settled share-based compensation

There are contracts in place with the members of the Management Board that provide for a share-based payment transaction. A share-based payment transaction plan for the Supervisory Board was established by resolution of the 2015 Annual General Meeting and is made use of by Supervisory Board members Dr. Blaschke, Mr. Bellgardt, Dr. Hein and Dr. Liebler. These are intended to give members of the Management Board and Supervisory Board additional incentives to secure the business success of the Company in the medium and longterm and to seek to deliver sustained growth in shareholder value.

The previous Management Board cash-settled share-based payment transaction for the fiscal years 2015 to 2017 expired at the end of fiscal year 2017 and was paid out in March 2018. The new cash-settled share-based payment transaction with a term from 1 January 2018 to 31 December 2020 has two components. These comprise a component without personal investment, in the amount of the applicable shortterm variable remuneration at full target attainment, and an optional component requiring a personal investment in shares that makes it possible to double the first component. To make use of the second component, a member of the Management Board must have made a personal investment in WashTec shares by June 30, 2018. The multiple year variable remuneration is paid at the end of the incentive period. Payments due at the end of the incentive period are contingent on attainment of the agreed targets.

Obligations for share-based payments were measured at fair value as for cash-settled share-based payment transactions in accordance with IFRS 2. The long-term share-based payment transaction for the Supervisory Board expires as of December 31, 2018. It is paid out in fiscal year 2019. The material assumptions used in measuring the fair value of the longterm share-based payment transaction for the Management Board are based on an expected volatility of 12.99% and a risk-neutral interest rate of -0.34% with a remaining duration of two years.

The obligations are recognized as a current or non-current liability at the fair value thus determined and taking into account the remaining duration of the program, and changes in fair value are recognized as part of personnel expenses in profit or loss. The obligations are as follows:



in €k 2018 2017
LTIP obligations 2,160 3,372
Total 2,160 3,372


The personnel expenses recognized under the Long Term Incentive program (LTIP) are as follows:

in €k 2018 2017
LTIP expenses 1,188 1,105
Total 1,188 1,105

The Company refrains from publishing information about the remuneration of individual Management Board members. By resolution of the Annual General Meeting of May 11, 2016, the Management Board has been provided with an exemption from the disclosures pursuant to Section 314 (1) no. 6a sentences 5 to 8 HGB for the duration of five years.



Former members of the Management Board

There are pension obligations to a former Management Board member and to surviving dependants of a former Management Board member in the amount of €260k (prior year: €258k), which are covered by a relief fund. A severance payment of €650k (prior year: €0) is entitled to a former member of the board.

Constitution

Female Quota

Targets for the percentage of women on the Boards

Under the Act on Equal Participation of Women and Men in Leadership Positions in the Private and Public Sectors of April 24, 2015, the Supervisory Board of WashTec AG is required to set targets for the percentage of women on the Company\x92s Supervisory Board and Management Board together with dates for their attainment. The WashTec AG Management Board has a corresponding obligation with regard to the two management levels below it.

During the 2018 financial year, the Management Board and the Supervisory Board of WashTec AG set new targets to be achieved by 30 June 2023. On July 26, 2018, the Supervisory Board resolved to set a target of at least 25% as the female quota for the Management Board. This target was already met in the 2018 reporting year. The percentage of women on the Management Board is currently 25%.

Also on July 26, 2018, the Supervisory Board resolved to set a target of 0% as the female quota for the Supervisory Board. This decision is intended to create the greatest possible flexibility for constituting the Board on the basis of qualification. In the 2018 reporting year, the percentage of women on the Supervisory Board corresponded to the set quota.

On December 20, 2018, the Management Board set a target of at least 10% for each of the two management levels below it. Taking into account the specific circumstances and conditions at WashTec - notably the objects of the Company, its size, workforce composition and international business activities - the Management Board believes these percentages are reasonable as they provide flexibility in terms of filling positions on the basis of qualification. The target set for the two management levels below the Management Board was already met in the 2018 reporting year. The figures were 9.52% at the first management level below the Management Board and 10.00% at the second management level below the Management Board.

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