At the start of 2010, it was still unclear how the economy would develop during the course of the year. Markets remained apprehensive in the first two months. But, then, the global economy rebounded with unexpected vigor. From today’s vantage point, WACKER’s focused and measured response to the economic crisis has paid off. The company’s strategy to overcome it was effective, without any appreciable cuts in capacity or personnel. As a result, we were able to ramp up production extremely quickly as soon as the rebound came. In good shape for the strong global recovery, we smoothly shifted up to full capacity to post the most successful year in our corporate history.
WACKER’s robust performance is largely the achievement of its employees. It is their hard work, in-depth expertise and outstanding commitment that drive WACKER’s success. The Supervisory Board of Wacker Chemie AG sincerely thanks them for accomplishing so much in 2010.
Importantly, WACKER again funded its high-level of capital spending from net operating cash flow. The Group was healthy enough to post a €264.0 million surplus under net financial liabilities and to increase its equity ratio. Facts like this underscore WACKER’s financial strength.
In 2009, the Supervisory Board had approved a land purchase in Tennessee for constructing an integrated polysilicon facility in the USA. The project go-ahead has opened up exciting opportunities for us in the US market – undoubtedly one of the world’s largest for chemicals and industrial goods. Building an integrated polysilicon facility there is a decisive step toward establishing an integrated WACKER site in the USA. Moreover, production operations there will enable us to more effectively neutralize currency fluctuations between the dollar and euro.
This investment project is the culmination of a global WACKER goal. In recent years, we have built plants in emerging growth markets, primarily China. Now, we are expanding our supply chain in the USA. Tennessee completes our strategy of owning an integrated WACKER production location in every key region of the world.
Continuous Dialog with the Executive Board
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. In view of the uncertainty still surrounding global economic trends early in the year, we observed – along with the Executive Board – the company’s position very closely and in detail. 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 2010, two in the first half of the year and two in the second. Between meetings, the Executive Board immediately informed us – in detailed 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 of importance 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 experts from outside.
Major areas of deliberation dealt with by the Supervisory Board were:
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The decision to invest in a new polysilicon plant in the US State of Tennessee
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The acquisition of a silicon-metal plant in Holla (Norway) from the FESIL Group, and the purchase of the Lucky-Silicone brand from Henkel
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Restructuring at Siltronic AG
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Expanding 300 mm wafer capacity at the Siltronic Samsung Wafer joint venture in Singapore
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Expanding production capacity at Burghausen, Nünchritz and Zhangjiagang
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The new compensation system for Wacker Chemie AG’s Executive Board
The Supervisory Board discussed the WACKER Group’s plans for 2011 at its meeting of December 9, 2010. On this occasion, the Supervisory Board dealt with medium-term corporate plans up until 2014. It also discussed and approved the capital expenditure budget for 2011.
Work in the Committees
The Audit Committee met four times in 2010. Key aspects of its work included the audit of the annual financial statements of Wacker Chemie AG and the Group for 2009 and of the consolidated interim financial statements for the first half-year. It also discussed the consolidated quarterly reports, risk management and compliance issues. Additionally, the Audit Committee awarded the audit assignment to the chosen auditor and submitted a proposal for the choice of auditor for 2010 to the Supervisory Board’s full meeting.
The Executive Committee met once in 2010. At this meeting, it dealt with personnel issues relating to the Executive Board.
The Mediation Committee did not need to be convened in 2010.
The Supervisory Board was regularly informed about the committees’ work.
Corporate Governance
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. See further details about Corporate Governance
At its meeting in December 2010, the Supervisory Board also reviewed the efficiency of its own activities – and arrived at a positive conclusion.
Audit of the Annual Financial Statements of Wacker Chemie AG
and the WACKER Group
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 management reports, 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, 2011, the Audit Committee closely examined the aforementioned financial statements and reports, as well as the audit reports submitted by the auditors of the company’s and Group’s financial statements, and discussed and examined them in detail with the auditors before reporting to the full Supervisory Board. At its meeting on March 10, 2011, 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 objecting to the financial statements and management reports of either Wacker Chemie AG or the Group, or to the auditors’ report.
Accordingly, we concur with the audit’s result and approve the financial statements of both Wacker Chemie AG and the WACKER Group submitted by the Executive Board as of December 31, 2010. The annual financial statements of Wacker Chemie AG are hereby adopted. We approve the Executive Board’s proposal for the distribution of retained profits.
Changes in the Composition of the Supervisory and Executive Boards
At its meeting of September 22, 2010, the Supervisory Board re-allocated some areas of responsibility within the Executive Board.
Munich, Germany, March 10, 2011
The Supervisory Board
Dr. Peter-Alexander Wacker
Chairman of the Supervisory Board of Wacker Chemie AG