Dr. Peter-Alexander Wacker
Chairman of the Supervisory Board
of Wacker Chemie AG
2015 was another year in which WACKER posted good figures. Whereas lower polysilicon prices dampened what would otherwise have been even stronger growth in sales and earnings, our chemical divisions performed very well – due, in part, to favorable exchange-rate effects and lower raw-material costs. The important thing is that we took advantage of these tailwinds to substantially increase our sales volumes. This is clearly reflected in chemical-division earnings, which grew at a significantly faster rate than sales. It is particularly remarkable that we again succeeded in increasing the share of specialty silicones in our sales mix, and that, by commissioning new facilities for dispersions and dispersible polymer powders, we have paved the way for further growth worldwide.
In large part, these accomplishments were due to our employees. Their high performance levels, their outstanding expertise and their strong identification with WACKER are key to ensuring the company’s long-term success. The Supervisory Board of Wacker Chemie AG wishes to thank them for their achievements in 2015.
2015 was a special year for WACKER. The completion of production facilities at our new site in Charleston, Tennessee (USA) concludes the biggest investment program in the company’s 101-year history. We financed our capital expenditures of € 830 million in 2015 through our own cash flow, which was an excellent achievement. Over the next few years, we will be establishing the Charleston location as an integrated production site that will open up new opportunities for us to continue expanding in the USA, the world’s second-largest chemical market. We now own integrated production sites in what are currently the world’s key regions, thereby strengthening our global presence and enhancing our cost positions. This is especially important for further growth.
We will scale back our investing activities in the next few years, substantially increasing our cash flow as early as this year and, from 2017 onward, lowering our net financial debt.
The greatest challenge we face going forward will be to take an even more systematic approach to transforming our strengths into business success. This could be particularly important if the benefits from favorable exchange rates and low raw-material costs are no longer as marked as they were in 2015. Our main task, therefore, is to continue making every effort to improve our cost positions and our efficiency at each process stage. WACKER has clearly shown on many occasions in the past that it is capable of meeting such challenges.
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 2015, the Supervisory Board performed – with great diligence – the duties incumbent upon it under law, the Articles of Association, and the internal rules of procedure. The Supervisory Board was involved at an early stage in every decision of fundamental significance for the company.
In both written and oral 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 close contact with the Executive Board, especially with the CEO, and was kept informed of 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 or 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, the company’s liquidity and financial position, and the IPO of Siltronic AG.
The Supervisory Board held four ordinary meetings in 2015, two in the first half of the year and two in the second. In addition, extraordinary Supervisory Board meetings took place on April 16, 2015 and May 8, 2015 to prepare the IPO of Siltronic AG. Between meetings, the Executive Board 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.
Every Supervisory Board member attended at least half of the meetings of the Supervisory Board or of the committees on which that member sat.
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 the inspection of corporate documents or the appointment of experts.
Major areas of deliberation dealt with by the Supervisory Board were:
- The IPO of Siltronic AG
- Future and ongoing investment projects
- The representation of women in Wacker Chemie AG’s supervisory and managerial structures
- The extension of Dr. Tobias Ohler’s membership on the Executive Board and the appointment of Dr. Christian Hartel as a new Executive Board member and as Personnel Director
- The anti-dumping proceedings against the solar industry in the USA, EU and China; their impact on WACKER; and corresponding courses of action
- Progress of construction at the polysilicon production site at Charleston, Tennessee (USA)
- Performance of the share price
The Supervisory Board discussed the WACKER Group’s plans for fiscal 2016 at its meeting of December 10, 2015. On that occasion, the Supervisory Board also dealt with medium-term corporate plans for the period 2016 – 2020. It also discussed and approved the capital-expenditure budget for 2016.
Work in the Committees
The Supervisory Board is assisted in its work by the committees 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 Franz-Josef Kortüm, the Chairman of the Supervisory Board, Dr. Peter-Alexander Wacker, 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 2014, 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 auditing contract (which included determining the focus of auditing) to the chosen auditors and submitted a proposal for the choice of auditors for 2015 to the full Supervisory Board.
The Executive Committee convened twice in fiscal 2015. Its discussions centered around personnel matters related to the Executive Board (compensation, performance goals, changes in Board composition, 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, 2015, 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 provides details – also on behalf of the Supervisory Board – on corporate governance at WACKER in accordance with Item 3.10 of the German Corporate Governance Code.
At its meeting in December 2015, 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 for fiscal 2015, the consolidated financial statements and the combined management report (as of December 31, 2015), as prepared by the Executive Board, including the relevant accounts.
The Supervisory Board’s Audit Committee had awarded the auditing contract in accordance with the resolution of the Annual Shareholders’ Meeting of May 8, 2015. 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 February 29, 2016, the Audit Committee closely examined the aforementioned financial statements and reports, as well as the auditors’ reports on 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 of March 8, 2016, the full Supervisory Board closely examined and discussed the relevant annual accounting documents with knowledge and in consideration of both the report of the Audit Committee and the auditors’ reports. 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 raise no objections to the annual financial statements of Wacker Chemie AG, the consolidated financial statements or the combined management report, or the auditors’ reports.
We therefore approve the annual financial statements of Wacker Chemie AG and the consolidated financial statements as of December 31, 2015 as prepared by the Executive Board. The annual financial statements of Wacker Chemie AG are hereby adopted. We concur with the Executive Board’s proposal for the distribution of retained profit.
Changes in the Composition of the Supervisory and Executive Boards
After many years as a Supervisory Board member, Dr. Bernd W. Voss left the Supervisory Board effective December 31, 2014. He was succeeded by Dr. Andreas Biagosch, who was appointed by court order on January 26, 2015.
The mandate and Executive Board contract of Dr. Joachim Rauhut, member of the Executive Board and Chief Financial Officer of Wacker Chemie AG, expired as scheduled on October 31, 2015. At the Supervisory Board meeting on June 24, 2015, Dr. Christian Hartel was appointed as a new Executive Board member and as Personnel Director effective November 1, 2015. The duration of his contract is three years. Previously, Dr. Hartel had been president of the WACKER SILICONES division.
At its meeting of June 24, 2015, the Supervisory Board also extended Dr. Tobias Ohler’s membership of the Executive Board for a further five years and appointed him Chief Financial Officer.
The Supervisory Board expresses its thanks to the Executive Board and to the company’s employees and employee representatives. Their efforts have helped Wacker Chemie AG have another successful year.
Munich, March 8, 2016
The Supervisory Board
Dr. Peter-Alexander Wacker
Chairman of the Supervisory Board of Wacker Chemie AG