Declaration on Corporate Governance
The Management and Supervisory boards of BRAIN Biotech AG (hereinafter also referred to as the “company”) orientate their actions towards sustainable business performance while considering their responsibility to overall society. Transparency, responsibility, and sustainability are the guiding values of their actions. This statement combines the corporate governance statement of BRAIN Biotech AG pursuant to Section 289f of the German Commercial Code (HGB) and the Group corporate governance statement for BRAIN Biotech Group pursuant to Section 315d HGB. It comprises the statement of conformity pursuant to Section 161 of the German Stock Corporation Act (AktG), relevant information about corporate governance practices, the description of Management and Supervisory boards’ working methodology, as well as the composition of their committees.
Statement of conformity by the Management and Supervisory boards of BRAIN Biotech AG with the recommendations of the German Corporate Governance Code (DCGK) pursuant to Section 161 (1) Sentence 1 of the German Stock Corporation Act (AktG)
The Management Board and the Supervisory Board of BRAIN Biotech AG declare that, since the last statement of conformity was issued on 20 December 2022, BRAIN Biotech AG has complied and will continue to comply with the recommendations of the “Government Commission on the German Corporate Governance Code” in the version dated 27 June 2022 (“GCGC”), with the following exceptions.
F.2: The consolidated financial statements and the group management report shall be made publicly accessible within 90 days from the end of the financial year, while mandatory interim financial information shall be made publicly accessible within 45 days from the end of the reporting period.
Note relating to F.2: Due to the additional financial accounting requirements as a listed company, the auditing of the financial statements lasted, and lasts, longer than 90 days, so that the audited figures cannot be published together with the annual report within the 90 days period after the financial year-end, but only after the 90-day period. Prospectively, this will also remain the case for future annual consolidated financial statements.
The publication of all financial information during the course of the year occurs regularly within two months. The Management and Supervisory Board regard this as appropriate.
Furthermore, in light of various unlisted subsidiaries and participating interests held abroad, publication of the consolidated financial statements and the Group management report as well as mandatory interim financial information within shorter periods would necessitate the deployment of considerable financial and personnel resources that would not be commensurate with the information that shareholders require for a company of the size of BRAIN Biotech AG. As a consequence, the periods required in the German Corporate Governance Code are not complied with.
In relation to the publication of annual and interim reports, BRAIN Biotech AG complies with statutory regulations as well as the Prime Standard stock exchange regulations of the Frankfurt Stock Exchange.
G.6: The share of variable remuneration achieved as a result of reaching long-term targets shall exceed the share from short-term targets.
Note relating of G.6: In accordance the previous remuneration system, the variable remuneration was paid out annually in cash in accordance with the achievement of performance targets. Based on the underlying fair values, the share options taken into account in the previous remuneration system have a lower value than the variable remuneration paid out in cash for the achievement of annual (interim) targets. The revised Management Board remuneration system approved by the Annual General Meeting on 8 March 2023 stipulates that the value of the long-term variable remuneration exceeds that of the short-term variable remuneration in the event of 100 % target achievement. This revised Management Board remuneration system is effective from the 2023/24 financial year through amendment agreements to the Management Board contracts concluded with the Management Board members.
G.10: Taking the respective tax burden into consideration, variable remuneration amounts of Management Board members shall be invested predominantly in company shares by the respective Management Board member, or shall be granted as share-based remuneration. Granted long-term variable remuneration components shall be accessible to Management Board members only after a period of four years.
Note relating to G.10, first sentence: It should be noted that, in accordance with the remuneration scheme and the specific contracts, the short-term variable remuneration for the annually defined targets is paid out in cash after they have been reviewed and that no provision is made for share-based payment. The revised Management Board remuneration system approved by the Annual General Meeting on 8 March 2023 stipulates that the value of the share-based long-term variable remuneration exceeds the value of the short-term variable remuneration paid out in cash if 100 % of the targets are achieved. In addition, the Management Board members can only access the long-term variable remuneration amounts after four years. The revised Management Board remuneration system is effective from the 2023/24 financial year via amendment agreements to the Management Board contracts concluded with the Management Board members. In this respect, recommendation G.10 of the GCGC will be complied with from the 2023/24 financial year.
G.11: The Supervisory Board shall have the possibility to account for extraordinary developments to an appropriate extent. It shall be permitted to retain or reclaim variable remuneration, if justified.
Note relating to G.11, second sentence: The previous Management Board contracts did not include any provision for claw-back of variable remuneration. The revised Management Board remuneration system approved at the Annual General Meeting on 8 March 2023 now provides for such claw-back clauses. Due to the amendment agreements to the Management Board contracts concluded with the members of the Management Board to adjust these contracts to the revised Management Board remuneration system, these claw-back clauses will be part of the contracts from the 2023/24 financial year. This means that recommendation G.11 sentence 2 of the GCGC will be complied with from the 2023/24 financial year.
Zwingenberg, December 2023
For the Supervisory Board of BRAIN Biotech AG:
Dr. Michael Majerus, Supervisory Board Chairman
For the Management Board of BRAIN Biotech AG:
Adriaan Moelker, Management Board Chairman (CEO)
Relevant information about corporate governance practices
Corporate Governance at BRAIN Biotech AG
The entire corporate structure is oriented towards the responsible, transparent and efficient management and controlling of the company. For this reason, the company also supports the targets and principles of the German Corporate Governance Code (DCGK). The Management and Supervisory boards as well as the other management levels and employees are obligated to adhere to these principles of responsible corporate governance. The Management Board is responsible for compliance with corporate governance principles within the company.
BRAIN Biotech AG has established compliance structures in light of the company’s current size and will further develop them in light of growing requirements imposed by the regulatory environment and with a view to the company’s constant development and growth.
As part of compliance, a whistleblower system for potential misconduct on the part of its own employees has been arranged. Employees can notify the whistleblower system of potential misconduct, either anonymously or openly. A whistleblower system from an external provider is used in order to ensure anonymity. After initial allocation, and depending on the corporate areas involved, the whistleblower system forwards such notifications to the Management Board and/or Supervisory Board to instigate countermeasures in the instance of actual misconduct, or for archiving at the whistleblower system if it is established that no misconduct has occurred.
Furthermore, BRAIN Biotech AG has decided to obligate its subsidiaries’ expanded management teams to comply with closed periods at least 30 days before the publication of the company’s results. This enables efficient and transparent communication with the respective managers in the periods preceding the publication of corporate results and ensures that consistent governance rules apply to the individuals involved.
The purpose of BRAIN Biotech AG and of the BRAIN Biotech Group is to identify, research, develop, produce and market biological, biochemical, and biotechnology processes and products, especially enzymes, biocatalysts, microorganisms, and other bioactive natural compounds for the production of foodstuffs and animal feed, cosmetics, and medical products, for industrial applications in chemical companies, for the disposal of waste and hazardous materials, as well as to produce energy and raw materials, including the development, production, and marketing of such processes and products that contain bioactive components, are based on biotechnical mechanisms, exhibit bioactive effects, or enable biotechnology applications. Within BRAIN Biotech Group, services are also rendered for the pharmaceuticals industry.
The company complies with all statutory corporate governance regulations as well as the recommendations of the German Corporate Governance Code (DCGK) – apart from the exceptions specified and justified in the statement of conformity.
As far as the DCGK recommendations are concerned, the company also intends to comply with them in the future.
The company’s bylaws can always be viewed on the BRAIN Biotech Group website at www.brain-biotech-group.com/en/investors/-corporate-governance/
Transparency
The shares of BRAIN Biotech AG are listed in the Prime Standard segment of the Frankfurt Stock Exchange. The company is thereby subject to the highest level of statutory and stock exchange law transparency regulations. In particular, BRAIN Biotech AG reports on the situation and development of the company and of the Group in both German and English in the following form:
- annual financial report for the past financial year,
- interim financial report as of the first half of the financial year (6M),
- quarterly statements as of the first quarter (3M) and after the first nine months of the financial year (9M),
- quarterly analyst telephone conferences,
- corporate presentations,
- publication of corporate and IR announcements,
- publication of notifications of shareholding threshold levels,
- publication of ad hoc statements,
- publication of PR, IR and marketing releases,
- presentations at investor conferences,
- multimedia investor communication formats,
- the company’s Capital Markets Day,
- ESG reporting (ESG report and annual ESG data sheet).
Corporate responsibility and ESG
As corporate responsibility and ESG issues become more important, the Supervisory Board, the Management Board, and employees are paying more attention than ever to the resultant aspects. In 2021, BRAIN Biotech AG joined the UN Global Compact as an active member. The company has now formally committed itself to the values of the world’s largest initiative for corporate social responsibility and is thereby committed to ten universal principles in the areas of human rights, labor standards, the environment, and climate, as well as the prevention of corruption. Moreover, the company supports the German Sustainability Code (DNK) as guidelines for sustainable corporate governance. BRAIN Biotech AG published its first ESG report in June 2022 (press release "BRAIN Biotech publishes first ESG and Sustainability Report").
The data relevant to the BRAIN Biotech Group were identified for the report and short- and medium-term targets were developed on this basis. As a consequence, these data and targets are now also used in the context of the Management Board compensation scheme. The ESG report was also discussed and approved by the Supervisory Board prior to publication. Since the 2022/23 financial year, Michael Schneiders has been responsible on the Management Board for all ESG issues. The Supervisory Board supports sustainable corporate governance as part of its overall responsibility. The ESG report (ESG fact sheet) was updated for the first time in December 2023.
Description of the Management and Supervisory boards’ working methodology as well as composition and working methodology of the Supervisory Board’s committees
BRAIN Biotech AG is a public stock corporation under German law and the BRAIN Biotech Group parent company with subsidiaries in Germany, the UK, the Netherlands, and the USA. It is especially subject to the regulations of the German Stock Corporation Act (AktG), and also operates the normal dual executive and supervisory structure consisting of a management board and a supervisory board. The company’s Management and Supervisory boards work together closely in the company’s interest.
The Supervisory Board consults regularly with the Management Board concerning the management of BRAIN Biotech AG and supervises the Management Board’s activities. The Management Board involves the Supervisory Board in good time concerning all decisions of fundamental significance for the company. It coordinates the company’s strategic orientation with the Supervisory Board, and at regular intervals discusses with it the status of strategy implementation. The Management and Supervisory boards’ joint goal is to successfully implement the corporate and growth strategy that has been approved.
Management Board working methodology
The Management Board manages the company’s business according to statutory regulations, the company’s bylaws, and the rules of business procedure for the Management and Supervisory boards. In this context, it is subject to the restrictions that the company’s bylaws or the Management and Supervisory boards’ rules of business procedure have established in relation to the power to manage the business, or which the Supervisory Board or the AGM determine within the scope of their powers. It informs the Supervisory Board regularly, promptly, and comprehensively in the form of detailed written and verbal reports on all questions of relevance to the company relating to strategy, planning, business development, the risk position, risk management, sustainability, and compliance. The Management Board prepares the separate and consolidated annual financial statements.
Pursuant to Section 7 (1) of the company’s bylaws, the Management Board consists of one or several individuals. The Supervisory Board determines the number of Management Board members. The Supervisory Board appoints the Management Board members, recalls them from office, and determines the allocation of their responsibilities. It can also appoint a Management Board Chair (CEO) and a Deputy Management Board Chair, as well as deputy Management Board members.
Composition of the Management Board
During the 2022/2023 financial year, the Management Board of BRAIN Biotech AG consisted of the following members:
| Name | Function | Management Board member since | Contract end |
|---|---|---|---|
| Adriaan Moelker | Chief Executiv Officer | 1 February 2020 | 31 January 2027 |
| Michael Schneiders | Chief Financial Officer | 1 October 2022 | 30 September 2025 |
All Management Board members are individually responsible for managing the business division entrusted to them; in this context, the company’s overall interest has to be taken into consideration at all times. The allocation of business areas to the individual Management Board members is derived from the business allocation plan, which is prepared with the Supervisory Board’s approval, and can be modified at any time with its approval.
The business allocation plan included the following allocations during the 2022/23 financial year:
Adriaan Moelker (Chief Executive Officer – CEO):
- Corporate strategy
- M&A
- Coordinating the individual Management Board areas and contacts with the company’s boards
- Business development of the BioScience segment including Akribion Genomics
- Business development of the BioProducts segment
- Technology management, research and development, technological process optimization
- Personnel, including occupational safety
- Strategic purchasing
- Grants and academic partnerships
- Product development
- Formulation and application technology
- Quality assurance
- Production, scale-up
- Innovation management
- Registration and approval
- Patent strategy
Michael Schneiders (Chief Financial Officer – CFO):
- Management of shareholdings
- Corporate finance
- Financial communications (IR)
- Press and public relations work (corporate communications)
- Corporate responsibility and ESG
- Accounting and controlling
- Compliance
- Risk management
- Legal, administration and organization, Group audit
- IT, digitalization
- Project: Spin-off / external financing of Akribion Genomics
The Management Board has a set of rules of business procedure. The rules of business procedure for the Management Board were approved by the Supervisory Board and the allocation of business responsibilities were last updated in December 2022 in accordance with the Management Board’s proposal. These particularly include regulations about the working methodology of the Management Board and the allocation of responsibilities between the Management Board members, as well as relating to collaboration with the Supervisory Board. They include a catalog of actions and legal transactions requiring Supervisory Board assent.
The Personnel Committee of the Supervisory Board is responsible for discussing long-term succession options with the Management Board. The Management and Supervisory boards agree on requirements for the appointment of successors based on the planned development for the company, which provide guidelines for the selection of candidates. The Supervisory Board is endeavoring to achieve a staggered duration of mandates in the future, if possible by means of mandate extensions or reappointments, thereby dispensing with the need to fill several Management Board mandates concurrently if no scheduled mandate extension occurs.
The Supervisory Board has approved an age limit of 65 years for members of the Management Board.
Management Board meetings
Management Board meetings are held as required, which is generally every three weeks. These must be convened if the company’s interests so require. Management Board resolutions are passed with a simple majority of the votes cast unless statutory provisions prescribe another majority. If the Management Board consists of at least three members, the vote of the Management Board Chair (CEO) is decisive given an equal number of votes.
Collaboration with subsidiaries
At least once a quarter, the Management Board of BRAIN Biotech AG and the management of the subsidiaries meet in person or hold video conferences to discuss the course of business and forthcoming developments at the subsidiaries. The subsidiaries report monthly to BRAIN Biotech AG and consult with the Management Board at short notice in the event of deviations from the planning or forecast. The Management Board reports to the Supervisory Board on reporting and coordination with the subsidiaries and, if requisite, consults with it separately on individual topics.
With the completion of the One-BioProducts strategy and the resultant transfer of the subsidiaries Biosun Biochemicals Inc., WeissBioTech GmbH and the majority interest in Weriol Group B.V. (holding company of Breatec B.V.) to Biocatalysts Ltd., a unified BioProducts management team was also established, which holds meetings with the Management Board at least every quarter and engages in intensive dialog and consultation with the Management Board on the development of the BioProducts segment. This reflects the special importance of the BioProducts segment for the BRAIN Biotech Group.
Management Board compensation
On 19 January 2023, the Supervisory Board approved several changes to the previously applicable compensation scheme for members of the Management Board on the recommendation of its Personnel Committee. The new compensation scheme was approved by the Annual General Meeting on 8 March 2023 and is available on the BRAIN Biotech Group website at: www.brain-biotech-group.com/en/investors/corporate-governance/compensation/
Amendment agreements relating to the Management Board contracts were concluded with both of the Management Board members to adjust these contracts to reflect this revised Management Board compensation scheme, which will take effect at the start of the 2023/24 financial year.
Detailed information about the compensation structure and compensation of the individual members of the Management Board and the compensation of the members of the Supervisory Board can be found in the compensation report pursuant to Section 162 of the German Stock Corporation Act (AktG), which can be downloaded from www.brain-biotech.com/investors/compensation.
Notifiable securities transactions
The Management and Supervisory board members, other individuals with management roles with regular access to the company’s insider information and who are authorized to take important business decisions, as well as certain individuals closely related to the aforementioned, are obligated by law to disclose to BRAIN Biotech AG the purchase and sale of BRAIN shares and related financial instruments, especially derivatives, from upwards of an amount of € 20,000 in the calendar year. Notifications of corresponding transactions are also published on our website at www.brain-biotech-group.com/en/investors/financial-calendar-publications/financial-and-corporate-news/
For the 2022/23 financial year, the company was notified of three such securities transactions, namely by Michael Schneiders (published on 13 October 2022), by Dr. Georg Kellinghusen (published on 13 October 2022) and by Dr. Michael Majerus (published on 20 April 2023). Michael Schneiders purchased shares in October 2023 for a total purchase price of € 30,895.60. For the sake of clarity, it should be noted that Michael Schneiders voluntarily reported all purchases on 10 October 2022 and on 11 October 2022 in order to clarify the total volume of the initial order placed. Dr. Georg Kellinghusen purchased shares in October 2022 for a total purchase price of € 4,884.80. This was preceded by a non-reportable purchase of shares, whereby shares worth a total of € 24,684.80 were purchased from Dr Kellinghusen. Dr. Michael Majerus purchased shares in April 2023 for a total purchase price of € 142,290.60.
Supervisory Board working methodology
The Supervisory Board has all responsibilities and rights transferred or allocated to it by law, the company’s bylaws, or in another manner. This especially includes supervising the executive management of the company, the appointment and dismissal of Management Board members, as well as the amendment, cancellation, and termination of employment contracts with the Management Board members. The Supervisory Board consults regularly with the Management Board concerning the management of the company. The Supervisory Board is involved in good time in all decisions of fundamental significance for the company. The Supervisory Board has established a set of rules for its own business procedures. These include, among other matters, the working methodology and type of passing of resolutions on the Supervisory Board, as well as the tasks of the Supervisory Board committees that are formed (the Audit Committee, the Personnel Committee, and the Nomination Committee). Separate sets of rules are also approved for the committees to regulate their working methodologies. All rules of business procedure are adapted regularly to reflect any modifications to the German Corporate Governance Code (DCGK).
The Supervisory Board held a total of seven face-to-face meetings in the 2022/23 financial year. In addition, 13 video conferences and one conference call were held by the Supervisory Board and the committees, as well as four face-to-face meetings. The Audit Committee held three face-to-face meetings, one video conference and one conference call in the 2022/23 financial year. The Personnel Committee held three video conferences in the 2022/23 financial year. The Nomination Committee held one face-to-face meeting and one telephone conference in the 2022/23 financial year.
The Management Board participates in ordinary meetings of the Supervisory Board when invited to do so, reports in writing and orally on the individual agenda items and draft resolutions, and answers the questions of the individual Supervisory Board members. The Supervisory Board Chair has the Management Board provide regular information concerning current business, forwarding such information in an appropriate form to the entire Supervisory Board.
Supervisory Board resolutions are generally passed at face-to-face meetings of the Supervisory Board members. Absent Supervisory Board members can submit a written vote through another Supervisory Board member. This also applies for the submission of the second vote of the Supervisory Board Chair. Outside the scope of attended meetings, the passing of resolutions is permissible through votes conveyed by written, telegram, telephone, telex or modern telecommunications means (by conference call or video conference or by email, for example), if so arranged for special reasons by the Supervisory Board Chair, or, if the Supervisory Board Chair is prevented from so doing, the Deputy Supervisory Board Chair. The Supervisory Board is considered quorate if all members are convened in good time via their last provided address, and at least half of the members of which it is to consist in total participate in the passing of the resolution. Supervisory Board members also participate in the passing of a resolution if they abstain from voting. Supervisory Board resolutions are passed with a simple majority of votes submitted unless other majorities are required by law. This also applies in the case of elections. Abstentions are not counted when determining the results of voting. In the case of an equal number of votes, the Supervisory Board Chair – or if the Supervisory Board Chair is prevented from so doing, the Deputy Supervisory Board Chair – decides whether a further vote is to be held at the same meeting. Given a further vote on the same matter, the Supervisory Board Chair has two votes; the Deputy Supervisory Board Chair does not have this right to a second vote.
All Supervisory Board members must disclose conflicts of interest to the Supervisory Board, including potential conflicts of interest based on advising, or being a director of, a customer, supplier, lender or other third party, whereby this list is not conclusive. In the case of conflicts of interest that are significant or not just of a temporary nature, the respective Supervisory Board members must step down from office. The Supervisory Board provides information in its report to the AGM on conflicts of interest that arise and how they are handled. No conflicts of interest arose in the reporting period.
The Supervisory Board conducted a self-assessment in the 2022/23 financial year. This self-assessment was conducted in light of the fact that the last self-assessment was held in 2020 and also in view of the changes in the composition of the Supervisory Board. In order to conduct the self-assessment, the current situation was appraised on the basis of questionnaires, and the results from the questionnaires were subsequently discussed by the Supervisory Board. No external consultants were involved. After evaluating the results, the Supervisory Board notes that it performs its activities efficiently. Potential improvements identified as part of the audit are taken into consideration for the future. The Supervisory Board plans to conduct the next self-assessment in the 2026 calendar year.
Composition of the Supervisory Board
Pursuant to Section 9 (1) of the company’s bylaws, the Supervisory Board of BRAIN Biotech AG consists of six members elected by the AGM. Unless the AGM approves a shorter period for the election of individual members – or for the entire Supervisory Board – the Supervisory Board members are appointed until the end of the Ordinary AGM that approves the discharge for the third financial year after the start of the period of office. The year in which the period of office starts is not included in the calculation. Reelection is permissible. When a Supervisory Board member is elected, a replacement member can be elected at the same time who moves up to the Supervisory Board if the Supervisory Board member steps down before the end of the respective period of office without a successor having been appointed. The appointment of the replacement member moving up to the Supervisory Board in this manner lapses as soon as a successor for the departing member has been appointed, although this is to occur at the latest as of the end of the period of office of the departing Supervisory Board member.
During the 2022/23 financial year, the Supervisory Board consisted of the following individuals:
| Name, role | Member since | Appointed until the AGM in the respective FY | Further board mandates in 2022/23 |
|---|---|---|---|
| Dr. Georg Kellinghusen Chairman of the Supervisory Board until 8 March 2023 |
9 March 2017 | 2022/23 (stepped down on 8 March 2023, at the end of the AGM) |
Member of the Advisory Board of Advyce GmbH, Munich Member of the Advisory Board of Simplifa GmbH, Berlin Member of the Bavaria Advisory Board of Deutsche Bank AG, Frankfurt am Main (listed company) |
| Dr. Michael Majerus Chairman of the Supervisory Board since 8 March 2023 |
7 March 2019 | 2026/2027 | |
| Dr. Anna C. Eichhorn Deputy Chair |
9 March 2017 | 2024/25 |
CEO of humatrix AG, Pfungstadt Management Board member (Deputy Chair) of Initiative Gesundheitswirtschaft-rhein-main e. V. Member of the Supervisory Board of Frankfurter Innovationszentrum Biotechnologie GmbH Frankfurt am Main, Member of the Management Board of House of Pharma & Healthcare e. V., Frankfurt am Main |
| Stephen Catling Supervisory Board member |
14 October 2020 | 2024/25 |
Chairman of the Board of Directors of the Cambridgeshire Community Foundation, UK Chairman of the Board of Trustees of FoodCycle, UK |
| Dr. Florian Schnabel Supervisory Board member |
8 March 2023 | 2026/27 |
Managing Director of MP Beteiligungs-GmbH, Kaiserslautern Managing Director of BSN GmbH, Kaiserslautern |
| Prof. Dr. Wiltrud Treffenfeldt Supervisory Board member |
14 October 2020 | 2024/25 |
Member of the Supervisory Board of ProBioGen AG, Berlin Member of the Board of Trustees of the Fraunhofer Institute for Systems and Innovation Research ISI, Karlsruhe Member of the Board of Trustees of the Fraunhofer Institute for Interfacial Engineering and Biotechnology IGB, Stuttgart |
| Christine Uekert Supervisory Board member |
8 March 2023 | 2026/27 |
Managing Director nSight Consulting GmbH, Berlin Member of the Supervisory Board of Titanium Textiles AG, Rostock (until July 2023) Managing Director of Evolve Partners – Biofin Consulting, GmbH, Berlin |
With the exception of Dr. Florian Schnabel, who is a managing director of the anchor shareholder, all members of the Supervisory Board are independent in the meaning of Sections C.6 and C.7 DCGK. The recommendation of C.9 DCGK is complied with.
The recommendations in Sections C.4 and C.5 DCKG regarding the total number of mandates held are complied with by the Supervisory Board members.
The Supervisory Board’s competency profile and objectives are composed as follows: the Supervisory Board is of the opinion that one third of its members should cover with particular expertise the areas of entrepreneurship/new business areas, corporate finance/capital markets and the sector, and that it fulfills all self-imposed requirements in the intended number.
Moreover, the Supervisory Board regards the recruiting of a further individual with specific knowledge of the North American market as a relevant medium-term objective for the company. The new women’s quota set in 2022 was met and the last women’s quota set was exceeded. The Supervisory Board has set an age limit of 75 years for newly appointed Supervisory Board members. The Supervisory Board endeavors to ensure that the average age of the entire board does not rise any further in the case of new appointments, and that the board’s heterogeneity in terms of differing curricula vitae is not reduced. To date, the Supervisory Board has not set a limit for the maximum length of service. The Supervisory Board also deals extensively with sustainability issues and plans to further strengthen these competencies.
| Dr. Michael Majerus | Dr. Anna Eichhorn | Stephen Catling | Prof. Dr. Wiltrud Treffenfeld | Christine Uekert | Dr. Florian Schnabel | |
|---|---|---|---|---|---|---|
| Business area (with highlighted expertise) | X | X | X | |||
| New business areas (with highlighted expertise) | X | X | X | X | ||
| Corporate finance/capital markets (with highlighted expertise) | X | X | X | |||
| Sector (with highlighted expertise) | X | X | X | X | ||
| Internationality (professional experience and/or residency) | X | X | X | X | X | X |
| M&A | X | X | X | X | X | X |
| Controlling & Risk Management | X | X | X | |||
| Sustainability | X | X |
Committees
The Management Board of BRAIN Biotech AG has not formed any committees.
The Supervisory Board has formed a total of three committees to efficiently perform its work: an Audit Committee, a Personnel Committee, and a Nomination Committee. The committees prepare resolutions for the Supervisory Board as well as agenda items to be handled by the plenary meeting. In all cases, the committee chairs report on the committees’ work at the subsequent meeting. The Supervisory Board also meets annually for a strategy meeting.
Audit Committee
The Audit Committee consists of the following individuals until the end of their respective periods of office (the chair and up to two further members):
| Name | Position | Independence |
|---|---|---|
| Christine Uekert | Chair since 8 March 2023 | yes |
| Dr. Michael Majerus | Member; Chair until 8 March 2023 | yes |
| Dr. Florian Schnabel | Member since 8 March 2023 | no |
| Dr. Georg Kellinghusen | Member until 8 March 2023 | yes |
| Stephen Catling | Member until 8 March 2023 | yes |
The Audit Committee concerns itself especially with the supervising of financial accounting, the financial accounting process, the efficacy of the internal control system, the risk management system, the internal audit system, the audit of the financial statements, sustainability topics as well as compliance. The Audit Committee submits a substantiated recommendation for the election of the auditor to the Supervisory Board, which comprises of at least two candidates if the audit mandate is to be put out to tender. The Audit Committee supervises the auditor’s independence and concerns itself with services to be rendered additionally by the auditor, the award of the audit mandate to the auditor, the setting of focus audit areas, as well as arranging the auditor’s fee.
Pursuant to the German Stock Corporation Act (Sections 107 (4), 100 (5) AktG), at least one member of the audit committee must possess expertise in the financial accounting area and at least one further member must possess expertise in the auditing area. The Audit Committee Chair, Christine Uekert, meets the statutory conditions pursuant to the German Stock Corporation Act (Sections 107 (4), 100 (5) AktG) and also possesses specialist knowledge in the area of financial auditing.
In addition, she has many years of experience in the areas of finance and controlling as well as in management, including at listed companies. Supervisory Board Chairman Dr. Michael Majerus, who is also a member of the Audit Committee, possesses expertise in the auditing area as a former head of accounting and CFO, including at three listed companies. His main areas of expertise are controlling and risk management, corporate finance, and capital markets, as well as financial accounting. Moreover, he commands a broad spectrum of knowledge in compliance topics as well as in the investor relations area. In addition to the committee chair and the Supervisory Board Chairman, the Audit Committee includes Supervisory Board member Dr. Florian Schnabel.
Personnel Committee
The Personnel Committee consists of the following individuals until the end of their respective periods of office (the chair and up to two further members):
| Name | Position |
|---|---|
| Dr. Michael Majerus | Chair (independent) since 8 March 2023 |
| Dr. Georg Kellinghusen | Chair (independent) until 8 March 2023 |
| Prof. Dr. Wiltrud Treffenfeldt | Member (independent) |
| Stephen Catling | Member (independent) since 8 March 2023 |
The Personnel Committee concerns itself mainly with personnel matters relating to the Management Board. In particular, it plays a preparatory role for the Supervisory Board in the selection, appointment and recall from office of Management Board members, the agreeing and supplementation of Management Board contracts and pension arrangements, setting the compensation scheme for Management Board members and its implementation in the Management Board contacts, target setting for the variable compensation, setting and reviewing the appropriateness of overall compensation of the individual Management Board members, and approving the annual compensation report. It also submits recommendations for resolutions. Moreover, the Personnel Committee can pass resolutions on the Supervisory Board’s behalf in relation to the following matters: certain legal transactions with Management Board members (e.g. in the meaning of Section 112 of the German Stock Corporation Act [AktG]), and approving Management Board members’ outside activities pursuant to Section 88 AktG, especially where Supervisory Board mandates outside BRAIN Biotech Group are accepted.
Nomination Committee
The Nomination Committee consists of the following individuals until the end of their respective periods of office (the chair and up to two further members):
| Name | Position |
|---|---|
| Dr. Anna C. Eichhorn | Chair (independent) |
| Dr. Georg Kellinghusen | Member (independent) until 8 March 2023 |
| Dr. Michael Majerus | Member (independent) since 8 March 2023 |
The Nomination Committee submits appropriate candidates to the Supervisory Board for it to propose to the AGM for election.
Remarks concerning the working methodology of the Management Board, the Supervisory Board, and the committees in the financial year are also presented in the report by the Supervisory Board, which is included in the annual report of BRAIN Biotech AG.
Dialog with investors
The Supervisory Board discussed the suggestion contained in Number A.6 of the German Corporate Governance Code (DCGK) and was in favor of the Supervisory Board Chairman being available to respond to investors’ questions relating specifically to the Supervisory Board. The Management Board of BRAIN Biotech AG also welcomes this move.
Supervisory Board compensation
Pursuant to Section 14 (1) of the company’s bylaws, all Supervisory Board members receive not only reimbursement of their outlays but also a fixed annual payment of € 30,000.00. The Supervisory Board Chair receives twice this amount, and the Deputy Supervisory Board Chair receives one and a half times this amount. Supervisory Board members who have not been Supervisory Board members for a full year of service receive the aforementioned compensation pro rata temporis to the level of one twelfth for each month of service they commence. The chairs of the Supervisory Board committees also receive an annual payment of € 15,000.00 and all committee members € 5,000.00. All Supervisory Board members receive a meeting fee of € 2,000.00 for each face-to-face meeting of the Supervisory Board and its committees they attend. The members of the Supervisory Board receive an attendance fee of € 1,000.00 for participating in a meeting of the Supervisory Board or its committees conducted as a video conference, and an attendance fee of € 500.00 for participating in a conference call of the Supervisory Board or its committees.
The company has taken out D&O (directors & officers) insurance cover for the Supervisory Board members. No deductible was arranged for Supervisory Board members.
Detailed information about the Supervisory Board members’ compensation can be found in the compensation report pursuant to Section 162 of the German Stock Corporation Act (AktG), which can be downloaded at www.brain-biotech-group.com/en/investors/corporate-governance/compensation/
Commitment to promote participation by women in management positions pursuant to Section 76 (4) and Section 111 (5) of the German Stock Corporation Act (AktG)
At its meeting on 23 September 2016, the Supervisory Board of BRAIN Biotech AG passed a resolution whereby the Supervisory Board should include one woman, corresponding to a 17 % ratio. The deadline for implementation was set at 30 June 2017. This objective was implemented on 9 March 2017 when Dr. Anna C. Eichhorn was elected to the Supervisory Board of BRAIN Biotech AG. The retention of this goal was confirmed at the meeting on 28 September 2017 for the period until 30 June 2022.
Also on 28 September 2017, the Supervisory Board passed a resolution to leave the target ratio for women on the Management Board of BRAIN Biotech AG unchanged at 0 % until 30 June 2022.
With the re-election of Dr. Anna C. Eichhorn and the election of Prof. Dr. Wiltrud Treffenfeldt, the ratio set for the Supervisory Board was exceeded on 10 March 2021.
On 15 December 2022, the Supervisory Board increased the target for the composition of the Supervisory Board to 33 %, with an implementation deadline of 30 June 2027. With the election of Christine Uekert at the Annual General Meeting on 8 March 2023, the ratio stands at 50 % at present.
On the same date, the target for the composition of the Management Board was retained at 0 %, with an implementation deadline of 30 June 2027. This target was maintained on the basis that the medium- to long-term planning for the Management Board assumes that the members of the Management Board in office in the 2022/23 financial year are scheduled for an extension of their periods of office. Setting a different ratio would stand at variance with this medium- to long-term planning. In the event of an increase in the number of members of the Management Board, this objective would require review, as would be the case if the Management Board members in office in the 2022/23 financial year did not renew their service contracts.
The Management Board is composed exclusively of men at present. For the first management level below the Management Board, the Management Board of BRAIN Biotech AG passed a resolution to set a 14 % target for participation by women and determined that this goal should be implemented by 30 June 2017. This target was reached with a level of 14 % on 30 June 2017.
As a consequence, the Management Board of BRAIN Biotech AG has set the target for the proportion of women at the first management level below the Management Board at 14 %, with a deadline for implementation by the end of 30 September 2020. With the end of the implementation period mentioned above, the proportion of women at the first management level was reached. The Management Board has approved a 20 % ratio of women by 30 September 2025 for the first management level below the Management Board in the meaning of Section 76 (4) AktG.
Taking into consideration the management matrix structure established within the company, especially including command and reporting lines between Management Board and subordinated levels, as well as taking into consideration the company’s size, only one management level exists below the Management Board in the meaning of Section 76 (4) AktG.
Shareholders and AGM
The shareholders exercise their co-management and controlling rights at the Shareholders’ General Meeting (the Annual General Meeting/AGM), which is chaired by the Supervisory Board Chair pursuant to the company’s bylaws. Each share in BRAIN Biotech AG grants one vote. Shareholders can exercise their voting rights at the AGM itself, or have it be exercised by an authorized representative of their choosing or by a company proxy. The Management Board is authorized to ensure that shareholders who do not attend the AGM can also participate in the AGM and exercise their rights wholly or partly by way of electronic communications (online participation), or to issue their votes without participating in the meeting by way of written or electronic communications (postal option). The Management Board is also authorized to set the specific arrangements relating to the scope and procedure for online participation and postal voting. These are to be announced in the convening document for the AGM. All shareholders are entitled to participate in the AGM, to speak on the respective agenda items, and to request information about the company’s affairs, where such information is required in order to arrive at an objective assessment of an agenda item.
The seventh public Annual General Meeting of BRAIN Biotech AG was held for the third time as a virtual Annual General Meeting on 8 March 2023 in Offenbach. The invitation for the AGM was published in good time in the German Federal Gazette (Bundesanzeiger) pursuant to statutory regulations, including the agenda with the proposed resolutions of the management and of the Supervisory Board as well as the terms for participating in the AGM and the exercising of voting rights, among other matters. All reports and documents required by law were available on the website of BRAIN Biotech AG from the date when the AGM was convened. Directly following the AGM, BRAIN Biotech AG published the attendance and voting results on its website. Ten out of eleven items on the agenda were submitted to the vote at the AGM. All of the proposed resolutions were accepted given an attendance of the share capital of BRAIN Biotech AG of 67.48 %.
Financial accounting and auditing
The unaudited quarterly financial statements as of 31 December 2022 (3M) and 30 June 2023 (9M) as well as the unaudited half-year financial report (6M) as of 31 March 2023 and the consolidated financial statements for the financial year ending 30 September 2023 were prepared in accordance with Section 315e (1) of the German Commercial Code (HGB) and International Financial Reporting Standards (IFRS). The separate financial statements of BRAIN Biotech AG for the 2022/23 financial year were prepared in accordance with the regulations of the German Commercial Code (HGB), and the German Stock Corporation Act (AktG).
Zwingenberg, December 2023
Management Board and Supervisory Board