Dr. Peter-Alexander Wacker
Chairman of the Supervisory Board
of Wacker Chemie AG
Commissioning of the new production site in Charleston, Tennessee (USA) marked the end of a ten-year phase of high capital expenditures, during which the company at times reinvested as much as 25 percent of its sales. WACKER has now entered a new strategic phase and, in the period through 2020, will reap the benefits of these large-scale investments.
This next phase will be characterized by further organic growth in our business operations, by high inflows of liquid funds and by a substantial reduction in net financial debt. These measures will enhance the company’s financial strength. At the same time, they will equip us for future business challenges and will lay the foundations for the next capital-intensive phase of the company’s growth.
During our recent phase of intensive investment, we also managed in parallel to achieve strong organic growth in our three chemical divisions, to consolidate and build on our competitive position, and to enhance our profitability. Today, chemical business accounts for more than 60 percent of the WACKER Group’s sales and adjusted EBITDA.
WACKER POLYMERS is the global market leader in dispersions and dispersible polymer powders based on vinyl acetate-ethylene. WACKER SILICONES is the world’s second-largest silicone manufacturer and the market leader in Europe. WACKER BIOSOLUTIONS has rounded out its portfolio with selective strategic acquisitions that offer good growth opportunities in promising fields.
As for polysilicon, WACKER leads not only in cost and quality, but also in terms of quantities sold.
This trend underscores the fact that WACKER has products of recognized high quality to supply customers in almost every key industry across the globe. Our task for the future is to translate our high levels of technological expertise and innovative power into business success. To this end, we have created a strong, global position for our company over recent years.
WACKER’s employees have played a major role on this road to success. The Supervisory Board of Wacker Chemie AG thanks them sincerely for all their hard work and their high level of commitment.
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 2016, the Supervisory Board performed – with great diligence – the duties incumbent upon it under law, the Articles of Association and its own 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 and compliance issues. 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 the Supervisory Board 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, as well as the company’s liquidity and financial position.
The Supervisory Board held four ordinary meetings in 2016, two in the first half of the year and two in the second. 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 member of the Supervisory Board attended at least half of the meetings of the Supervisory Board, and all committee members attended all of their respective committee meetings.
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 pyrogenic silica (HDK®) project at the Charleston site in Tennessee (USA)
- The acquisition of a fermentation plant in Spain
- Future and ongoing investment projects
- The anti-dumping proceedings against the solar industry in the USA, EU and China; their impact on WACKER; and corresponding courses of action
- The progress of construction at the polysilicon production site in Tennessee
- The new EU Market Abuse Regulation
- The requirements of the new EU Auditing Regulation and Germany’s Auditing Reform Act as well as the resulting changes to the rules for the Audit Committee contained in the Supervisory Board’s Rules of Procedure
- Performance of the share price
- Group financing activities
The Supervisory Board discussed the WACKER Group’s plans for fiscal 2017 at its meeting of December 6, 2016. On that occasion, the Supervisory Board also dealt with medium-term corporate plans for the period 2017 – 2021. It also discussed and approved the capital-expenditure budget for 2017.
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 (in accordance with Section 27 (3) of the German Co-Determination Act (MitbestG)). 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 five times last year. Its work included the audit of the annual financial statements of Wacker Chemie AG and the Group for 2015 and of the consolidated interim financial statements for the first half-year. It also discussed the Group’s quarterly financial figures and issues relating to risk management, compliance and auditing. The Audit Committee also submitted a recommendation to the Supervisory Board for the latter’s proposal at the Annual Shareholders’ Meeting for appointment of an auditor for fiscal 2016. In addition, it awarded the auditing contract for fiscal 2016 and determined the focus of auditing.
A further area in which the Audit Committee was active was in implementing a bid and selection procedure for the audit for fiscal 2017 in accordance with Art. 16 (3) of Regulation (EU) No. 537 / 2014 of the European Parliament and of the Council of 16 April 2014 (EU Auditing Regulation). Based on the results of this procedure, the Audit Committee made a recommendation to the Supervisory Board concerning the proposal to be made by the latter to the Annual Shareholders’ Meeting to nominate the auditors for fiscal 2017. The Audit Committee also dealt with the amended requirements of the EU Auditing Regulation, in particular elaborating a policy for approving what are termed “non-audit services.”
The Executive Committee met once in 2016, discussing personnel matters in relation to the Executive Board (e. g. determining overall compensation, setting the performance goals for the variable compensation component, adjusting the fixed annual salary).
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 6, 2016, the Supervisory Board discussed 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 – of corporate governance at WACKER in accordance with Item 3.10 of the German Corporate Governance Code.
At its meeting in December 2016, 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 2016, the consolidated financial statements and the combined management report (as of Dec. 31, 2016), 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 20, 2016. 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 and internal control system meet 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 27, 2017, 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 them in detail with the auditors before reporting to the full Supervisory Board. At its meeting of March 7, 2017, 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. The auditors took part in the deliberations at both meetings. 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, 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, 2016 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
Anton Eisenacker, deputy chairman of the Supervisory Board and longstanding employee representative in that body, stepped down with effect from December 31, 2016, owing to his imminent retirement (February 2017). We wish to thank him for his tireless efforts and his constructive collaboration in the past years and wish him all the very best for the future. Hansgeorg Schuster, who had already been elected an alternate member, automatically succeeded Mr. Eisenacker on the Supervisory Board with effect from January 1, 2017.
Likewise effective January 1, 2017, Manfred Köppl was elected new deputy chairman of the Supervisory Board, also automatically succeeding Mr. Eisenacker in the Executive Committee and Mediation Committee in accordance with the Rules of Procedure and /or the statutory requirements. As Mr. Köppl was already an elected member of the Mediation Committee, the employee representatives on the Supervisory Board elected Eduard-Harald Klein as an additional member of the Mediation Committee. The full Supervisory Board elected Mr. Köppl to succeed Mr. Eisenacker on the Audit Committee.
There were no changes in the composition of the Executive Board in fiscal 2016.
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 7, 2017
The Supervisory Board
Dr. Peter-Alexander Wacker
Chairman of the Supervisory Board of Wacker Chemie AG