Dr. Peter-Alexander Wacker
Chairman of the Supervisory Board
of Wacker Chemie AG
2013 was not an easy year for WACKER. The global economy’s flat trajectory, persistently low polysilicon prices and the weakness of the semiconductor market all impeded our business. Additionally, solar companies were unsettled by the anti-dumping proceedings of the European Union against Chinese solar companies and those of the Chinese Ministry of Commerce against European polysilicon manufacturers. To navigate these headwinds, we worked intensively on improving our cost positions. By focusing our resources and implementing numerous measures at our business divisions and corporate departments, we lowered our costs by some € 225 million last year. Higher production output also had a positive effect.
That success is due in large part to WACKER’s employees. Their strong commitment, their drive to perform well and their outstanding expertise are essential for keeping the company on course, especially in troubled economic waters. The Supervisory Board of Wacker Chemie AG sincerely thanks them for their accomplishments in 2013.
Looking beyond last year’s challenges, we are confident about WACKER’s future, for a number of reasons. Although we invested about € 500 million in 2013, our net financial debt did not rise significantly. Our acquisition of a majority stake in our joint venture with Samsung in Singapore in early 2014 will increase our net financial debt by around € 150 million. This move, though, strengthens our 300 mm wafer business in Asia. WACKER’s equity base remains healthy. The company’s long-term financing is secure. Our solid balance sheet continues to provide a firm foundation for WACKER’s lasting success.
Despite the difficult market conditions, we reinforced our positions in key business segments last year. WACKER POLYSILICON increased its market share as a leading producer of hyperpure polycrystalline silicon for electronic and solar applications, and is now the global market leader. WACKER SILICONES also gained ground and, for the first time, occupies the No. 2 position among the world’s largest silicone producers. And WACKER POLYMERS remains the global market leader for vinyl-acetate-based dispersions and dispersible polymer powders. Siltronic, for its part, has retained its strong No. 3 position as a producer of silicon wafers for the semiconductor industry.
These developments underpin an important fact – WACKER’s products are recognized for their high quality by customers across practically every major industry in the world’s main economic regions. Our technological expertise and our innovative strength enable us to develop new applications for our products and to find solutions for the megatrends of the coming decades.
With our high capital expenditures outside of Germany, we have not only markedly strengthened our global presence, but also improved our cost positions.
An agreement has yet to be found in the trade dispute that is still simmering about punitive tariffs for polysilicon deliveries from Europe to China. If this dispute can be resolved, the resulting situation will, on the whole, be good for WACKER’s continued growth.
Our task, then, will be to leverage our strengths into business success. During WACKER’s 100-year existence, we have often proven that we can effectively seize the opportunities that arise.
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 2013, 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 business situation, current 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 five meetings in 2013, three in the first half of the year – including the newly elected Supervisory Board’s inaugural meeting – 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 at 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 anti-dumping proceedings against the solar industry in the USA, EU and China; their impact on WACKER; and courses of action open to us
- The market-price level of polysilicon, demand fluctuations in this segment, and the consequences for WACKER
- The acquisition of the SCIL company in Halle
- Progress with constructing the polysilicon production site at Charleston, Tennessee (USA)
- The future and financing of our Singapore-based joint venture with Samsung
- Investments in the semiconductor sector
- Performance of the share price
- Group financing measures
The Supervisory Board discussed the WACKER Group’s plans for 2014 at its meeting of December 10, 2013. On this occasion, the Supervisory Board also dealt with medium-term corporate plans for 2014 to 2018. It also discussed and approved the capital-expenditure budget for 2014.
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 last year. Key aspects of its work included the audit of the annual financial statements of Wacker Chemie AG and the Group for 2012 and of the consolidated interim financial statements for the first half-year. It also discussed the consolidated quarterly reports and issues relating to risk management, compliance and auditing. Additionally, the Audit Committee awarded the audit assignment (including the focus of auditing) to the chosen auditors and submitted a proposal for the choice of auditors for 2013 to the Supervisory Board’s full meeting.
The Executive Committee met once in 2013. At that meeting, 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 last year.
The Supervisory Board was regularly informed about the committees’ work.
Last year, the Supervisory Board again looked closely at corporate-governance standards. At its meeting of December 10, 2013, 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 2013, the Supervisory Board also discussed the efficiency of its activities and found that it 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 of Wacker Chemie AG prepared by the Executive Board for 2013, the consolidated financial statements and the combined management report (reporting date: December 31, 2013), 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 8, 2013. 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 of March 4, 2014, the Audit Committee closely examined the aforementioned financial statements and reports, as well as the reports submitted by the auditors of the separate 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 13, 2014, the full Supervisory Board discussed and examined the relevant financial-statement documents 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 annual financial statements of Wacker Chemie AG, the consolidated financial statements or the combined management report, or the auditors’ reports.
Accordingly, we approve the annual financial statements of Wacker Chemie AG prepared by the Executive Board and the consolidated financial statements as of December 31, 2013. 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
At the Annual Shareholders’ Meeting on May 8, 2013, new elections were held for shareholder representatives to the Supervisory Board. Wacker Chemie AG employees had elected their employee representatives on March 21, 2013. The Annual Shareholders’ Meeting was followed by the inaugural meeting of the new Supervisory Board, at which Dr. Peter-Alexander Wacker was re-elected as the Supervisory Board chairman.
At its meeting on March 7, 2013, the Supervisory Board had re-appointed Dr. Rudolf Staudigl as president and CEO and Auguste Willems as Executive Board member for another five years, respectively, extending their contracts for five years.
Munich, March 13, 2014
The Supervisory Board
Dr. Peter-Alexander Wacker
Chairman of the Supervisory Board of Wacker Chemie AG