Dr. Peter-Alexander Wacker
Chairman of the Supervisory Board
of Wacker Chemie AG
For WACKER, 2012 was characterized by robust chemical performance and persistently difficult photovoltaic-market conditions. Although we sold more polysilicon than ever before, our volume gains did not offset the substantial price declines in this market. WACKER’s three chemical divisions were stable and delivered solid earnings.
The future will bring other cyclical swings. WACKER’s major advantage here is that it supplies over 3,200 different products to almost every major industrial sector and market. Since we are not reliant on any one specific product or market, we can compensate for difficulties on individual markets. Having a portfolio of businesses with varying risk profiles is one of WACKER’s strengths. Pure solar companies, for example, do not have this advantage. Our portfolio enables us to pursue long-term strategies, even amid headwinds. This is underscored by our high investment levels in 2012 and in the past. Last year, we invested €1.1 billion – more than ever before in the history of our company. We are sure that photovoltaics will reinforce its importance as an indispensable energy source for the future. On a solid footing, WACKER has the resources necessary to benefit from both this and other megatrends.
Importantly, WACKER’s strength has another pillar: technological and innovative expertise. Novel customer applications and continuous process innovations are vital levers for growing profitably.
WACKER has no problem taking on international competitors, provided that underlying conditions do not unduly restrict our entrepreneurial scope of action. The European Union’s anti-dumping proceedings against Chinese solar companies and the Chinese Ministry of Commerce’s response of instigating anti-dumping proceedings against non-Chinese polysilicon producers are developments that harm everyone. Political and regulatory intervention occurs whenever industries are threatened by intense competition or are felt to be in need of rescuing. Past experience shows us that such intervention provides only temporary relief. Ultimately, entrepreneurial success hinges on innovations and costs. For this reason, WACKER is emphatically in favor of unrestricted free trade. As a cost and quality leader, we laid the groundwork early on, so that we would remain a leading polysilicon manufacturer.
Our employees are essential for securing WACKER’s long-term success. Highly skilled and extremely motivated, they identify closely with their company. The Supervisory Board of Wacker Chemie AG thanks them for their accomplishments in 2012.
Continuous Dialogue with the Executive Board
At WACKER, sound corporate governance and control are built on a relationship of trust between the Executive Board and Supervisory Board as they work closely together in the company’s interest. In 2012, the Supervisory Board performed – with great diligence – the duties incumbent upon it under the law, the Articles of Association and the internal rules of procedure. The Supervisory Board was involved in every decision of fundamental significance for the company at an early stage.
In both written and verbal reports, the Executive Board regularly provided us with timely and comprehensive information on corporate planning, strategic development, business operations, and the current state of Wacker Chemie AG and the Group, including the risk situation. Outside of the scheduled Supervisory Board meetings, the Chairman of the Supervisory Board also remained in regular contact with the Executive Board, especially with the CEO, and was kept informed about the current business situation, trends and key business transactions. Any deviations from business plans and targets were explained to us in detail.
Wherever required by statutory provisions and the Articles of Association, the Supervisory Board voted on the reports and proposals of the Executive Board after detailed examination and discussion.
In the reporting year, we paid particularly close attention to investment projects, the current earnings situation, including the risk position and risk management, and the company’s liquidity and financial position.
The Supervisory Board held four scheduled meetings in 2012, two in the first half of the year and two in the second. Between meetings, the Executive Board immediately informed us in detail by means of written reports about all projects and plans of particular importance to the Group. At its full meetings and in its committees, the Supervisory Board discussed in detail business transactions important to the company on the basis of the reports submitted by the Executive Board. The full meetings were prepared by shareholder and employee representatives in their own separate sessions. In the period under review, every Supervisory Board member attended at least half of the meetings held during their period in office.
The Supervisory Board’s Main Areas of Deliberation
The development of sales, earnings, and employment in the Group and its individual segments were the subject of regular deliberations in the full meetings. At each meeting, the Supervisory Board evaluated the Executive Board’s performance – on the basis of Executive Board reports – and discussed strategic development opportunities and other key topics with the Executive Board. There was no need for additional monitoring measures, such as inspection of corporate documents or appointing expert counsels from outside.
Major areas of deliberation dealt with by the Supervisory Board were:
- the appointment of a new member of the Executive Board
- the anti-dumping proceedings against the solar industry in the USA, EU and in China; their impact on WACKER; and courses of action
- the market-price level of polysilicon, demand fluctuations in this segment, and the consequences for WACKER
- a new roadmap for constructing the polysilicon production facility at the Charleston site in the US state of Tennessee
- the financing of the Singapore-based joint venture with Samsung
- refinancing of the siloxane joint venture with Dow Corning in Zhangjiagang (China)
- the financing of the EPS pipeline project to supply ethylene to the companies based in the Bavarian Chemical Triangle
- investments in the semiconductor sector
- performance of the share price
- ensuring Group financing
The Supervisory Board discussed the WACKER Group’s plans for the 2013 fiscal year at its meeting held on December 6, 2012. On this occasion, the Supervisory Board also dealt with medium-term corporate plans for the 2013 – 2017 period. It also discussed and approved the capital expenditure budget for 2013.
Work in the Committees
The Supervisory Board is assisted in its work by the committees which it has constituted. WACKER’s Supervisory Board has created three committees – an Audit Committee, an Executive Committee, and a Mediation Committee (as per the German Co-Determination Act [MitbestG], Section 27, Subsection 3). With the exception of the Audit Committee, which is chaired by Dr. Bernd W. Voss, the Chairman of the Supervisory Board chairs the committees.
The Audit Committee met four times in 2012. Key aspects of its work included the audit of the annual financial statements of Wacker Chemie AG and the Group for 2011 and of the consolidated interim financial statements for the first half-year. It also discussed the consolidated quarterly reports, risk management, compliance and auditing issues. Additionally, the Audit Committee awarded the audit assignment (including the focus of auditing) to the chosen auditor and submitted a proposal for the choice of auditor for 2012 to the Supervisory Board’s full meeting.
The Executive Committee met twice in 2012. At these meetings, it dealt with personnel issues relating to the Executive Board (such as compensation, Executive Board membership, and employment contracts).
The Mediation Committee did not need to be convened in 2012.
The Supervisory Board was regularly informed about the committees’ work.
In 2012, the Supervisory Board dealt intensively with corporate-governance standards. At its meeting of December 6, 2012, the Supervisory Board discussed the application of the German Corporate Governance Code and adopted the annual Declaration of Conformity that must be submitted jointly by the Executive and Supervisory Boards in accordance with Section 161 of the German Stock Corporation Act (AktG). Shareholders can access the Declaration on the company’s website.
In its Corporate Governance Report, the Executive Board reports on corporate governance at WACKER also in the name of the Supervisory Board in accordance with Item 3.10 of the German Corporate Governance Code.
At its meeting in December 2012, the Supervisory Board also discussed the efficiency of its activities. Its findings were that the Supervisory Board works efficiently − one reason being the regular preliminary discussions regarding the Supervisory Board meetings.
Audit of the Annual Financial Statements of Wacker Chemie AG and the WACKER Group
KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, audited the annual financial statements prepared by the Executive Board for 2012, the consolidated financial statements and the combined management report (reporting date: December 31, 2012), including the accounting.
The audit assignment had been awarded by the Supervisory Board’s Audit Committee in line with the resolution of the Annual Shareholders’ Meeting of May 16, 2012. The auditors issued an unqualified audit report.
The auditors also examined the risk management system in accordance with Section 91 of the German Stock Corporation Act (AktG). The audit verified that the risk management system meets the legal requirements. No risks endangering the continued existence of the company were identified. The financial statement documents (including the auditors’ reports, the combined management report, and the Executive Board’s proposal for the distribution of profits) were submitted to all the Supervisory Board members in good time.
At its meeting on February 25, 2013, the Audit Committee closely examined the aforementioned financial statements and reports, as well as the audit reports submitted by the auditors of the company and consolidated financial statements, and discussed and examined them in detail with the auditors before reporting to the full Supervisory Board. At its meeting on March 7, 2013, the full Supervisory Board discussed and examined the relevant financial statements and reports intensively, taking account of the reports submitted by the Audit Committee and the auditors. At both meetings, the auditors took part in the deliberations. They reported on the main results of the audit and were available to the Audit Committee and the full Supervisory Board to answer questions and provide supplementary information.
After concluding our own examination, we found no grounds for disputing the financial statements and combined management report of either Wacker Chemie AG or the Group, or the auditor’s report.
We approve the financial statements of both Wacker Chemie AG and the WACKER Group submitted as of December 31, 2012. The annual financial statements of Wacker Chemie AG are hereby adopted. We concur with the Executive Board’s proposal for the distribution of retained profits.
Changes in the Composition of the Supervisory and Executive Boards
In 2012, there were changes in the composition of the Executive Board. Dr. Wilhelm Sittenthaler, Executive Board member of Wacker Chemie AG and its Personnel Director, whose Executive Board contract was scheduled to expire at the end of April 2013, informed the Supervisory Board that, after over 30 years at the company, he would not be available for a further term due to personal reasons. Consequently, he had asked to be relieved of his duties at the end of 2012. At its meeting of December 6, 2012, the Supervisory Board acceded to his request. Effective January 1, 2013, Dr. Tobias Ohler joined the Executive Board as a new member and was appointed Personnel Director. Dr. Ohler’s contract is for three years. Previously, he was Executive Board member and Personnel Director at WACKER subsidiary Siltronic AG.
The Supervisory Board’s middle management representative, Dr. Konrad Bachhuber, resigned his Supervisory Board position as of December 31, 2011. Konrad Kammergruber was elected to replace him, effective January 1, 2012.
Munich, Germany, March 7, 2013
The Supervisory Board
Dr. Peter-Alexander Wacker
Chairman of the Supervisory Board of Wacker Chemie AG