Corporate governance declaration of TAG Immobilien AG and the Group for 2022 pursuant to Section 289f and Section 315d HGB

TAG Immobilien AG (hereinafter also referred to as “TAG” or, together with its subsidiaries, the “Group” or “TAG Group”) has issued the following declaration in accordance with Section 289f HGB and Section 315d of the German Commercial Code, taking into account the recommendations of the German Corporate Governance Code in the version dated 20 March 2020 (“2020 Code”) and in the version dated 27 June 2022 (“2022 Code”, 2020 Code and 2022 Code jointly referred to as the “Code”). It includes the declaration of conformity pursuant to Section 161 of the German Stock Corporation Act, the disclosures on corporate governance and details of the working methods of the Management Board and Supervisory Board, including information on the remuneration they receive:

 

A. Declaration of conformity

I. Declaration of the Management Board and the Supervisory Board pursuant to Section 161 of the German Stock Corporation Act

The Management Board and the Supervisory Board declare that the recommendations of the German Corporate Governance Code, both in the version of 20 March 2020 and in the version of 27 June 2022 (“2022 Code”), have been and will be complied with, with the exception of recommendations C.5 and F.2, insofar as the latter relates to the interim reports for the first and third quarters of 2022 and the interim report for the first half of 2022.

Under recommendation C.5, a member of the Supervisory Board who is also a member of the Management Board of a listed company may not hold more than two Supervisory Board mandates and may not accept the chairmanship of Supervisory Boards of non-group listed companies. The Chairman of the Company’s Supervisory Board, Mr Rolf Elgeti, is Chairman of the Management Board of Deutsche Konsum REIT AG and OboTech Acquisition SE.. He is a member of three Supervisory Boards or comparable domestic or foreign boards of non-group listed companies. These activities by Mr Elgeti do not adversely affect the performance of his duties as Chairman of the Company’s Supervisory Board and have not done so at any point in the past. Nor are they are expected to do so in the future. Competence, expertise and many years of experience, including on other Supervisory Boards, are essential qualities for TAG Immobilien AG. Mr Elgeti possesses these qualities. The Company benefits from the fact that he is Chairman of the Supervisory Board.

Under Recommendation F.2, the mandatory interim financial information should be made publicly available within 45 days from the end of the reporting period. The Company did not publish the interim reports for the first and third quarters of 2022 or the interim report for the first half of 2022 within the recommended period due to the greater amount of time required for necessary consolidation accounting as a result of the integration of ROBYG S.A. It intends to adopt recommendation F.2 of the 2022 Code again from 2023.

The declaration of conformity was published on 6 February 2023 on the Company’s website at Declaration Of Conformity. The declarations of conformity issued in previous years are also accessible there.

 

B. Disclosures on corporate governance

The management of TAG as a listed German stock corporation and of the Group is governed by legal requirements (including the German Stock Corporation Act), the rules of the Frankfurt Stock Exchange, the German Corporate Governance Code (the “Code”) and its own rules and policies.

I. Compliance management system

The principles underlying the aforementioned rules are of crucial importance for successful business activity and the sustainable creation of value by the TAG Group. The Management Board and the Supervisory Board of TAG are particularly committed to ensuring that they are complied with. As a key component of corporate governance at the TAG Group, the compliance management system (“CMS”), which has been installed and is undergoing continuous further development, serves to systematically and permanently prevent any breaches of the law and regulations.

The CMS includes guidelines for corporate governance and all business activities carried out within the Group companies. In addition to the existing statutory requirements, TAG has defined internal business principles that are binding on all employees to encourage honest and ethical behaviour and responsible conduct towards customers, business partners and employees. Our employees are regularly trained in all relevant areas of corporate governance.

Relations with business partners are based on the Business Partner Code of Conduct, under which they undertake to observe the principles of compliance. The whistleblower system enables employees and outsiders to report possible violations of the law or the internal rules and policies - anonymously if necessary - to an external body or directly to TAG’s Compliance Office.

The members of the Supervisory Board and the Management Board as well as parties closely related to them are required to notify the Company without delay of any transactions in shares or securities issued by TAG Immobilien AG or financial instruments based on them. This information is disclosed on the Company’s website at Shareholdings/ Directors' Dealings. The total number of shares in TAG Immobilien AG held by members of the Management Board and Supervisory Board accounted for less than 1% of the total shares issued by the Company as of 31 December 2022.

II. Risk management system and internal control system

Risk management is an integral part of the TAG Group’s sustainable business activities. TAG has a risk management system tailored to its specific requirements plus an internal control system. Both systems map the defined sustainability-related goals on the basis of data that has been collected and processed.

Risks are regularly evaluated in order to identify any potential threats in good time and to take appropriate countermeasures. Furthermore, the quality and effectiveness of the risk management system and the internal control system are assessed by the TAG Group’s internal audit department. In addition to the structure and effectiveness of the two systems, the potential for enhancing value and optimising operational processes is also examined. Acting on the basis of internationally recognised auditing principles and standards, internal auditing supports the optimisation of control and governance processes.

Risk management, the risk management system and the internal control system are reviewed by or discussed with the auditor during the audit of the annual financial statements. They are regularly the subject of discussions on the Supervisory Board’s Audit Committee as well as on the Supervisory Board itself.

III. Diversity policy

TAG has not adopted a separate formal diversity policy within the meaning of Section 289f (2) No. 6 of the German Commercial Code for the Company’s Supervisory Board and Management Board. It considers the internal rules on the equal participation of women and men in management positions as well as the aforementioned diversity criteria (e.g. age, sex, educational and professional background) to be sufficient. The Supervisory Board has developed competence profiles for the Management Board and the Supervisory Board. These are taken into account when new candidates are selected. Throughout the TAG Group, attention has always been paid to balanced gender representation. The Supervisory Board has set a female representation target of at least 30% to be fulfilled by 31 January 2028 for both the Management Board and the Supervisory Board. Female representation currently stands at 50% for the Management Board and 33% for the Supervisory Board. Female representation on the first and second management levels below the Management Board has been set at a minimum of 30%. This target must be reached by 31 January 2028. Currently, it is 40% for the first management level and 62% for the second.

IV. Sustainability

TAG is committed to sustainable value creation. For this reason, economic, ecological and social aspects as well as good corporate governance are taken into account in decision-making processes in a balanced manner. In addition to the long-term increases in shareholder value, TAG also creates value for other stakeholders.

The sustainability strategy is documented comprehensively and transparently in our annual sustainability report. The report is available on the Company’s website at Sustainability Reports.

 

C. Working practices of the Management Board and Supervisory Board, Composition and remuneration

I. Management Board

1. Duties
The Management Board manages the company at its own initiative. In accordance with the requirements of company law, the individual members of the Management Board are jointly responsible for the overall management and strategy of the Company. The Company’s strategy is determined in consultation with the Supervisory Board. The principles and details of the joint activities between the Management Board and the Supervisory Board are documented in the Management Board’s rules of procedure. The responsibilities of the individual members of the Management Board and of the Management Board as a whole are set out in the rules of procedure and the allocation of responsibilities. Legal transactions and decisions requiring the approval of the Supervisory Board are specified in the rules of procedure adopted by the Management Board and the Supervisory Board.

The Management Board is required to brief the Supervisory Board regularly, comprehensively and with minimum delay on all main aspects of the Company’s business performance, significant transactions and the current earnings situation including risk position and risk management. This information is provided regularly at the meetings of the Supervisory Board, which are held at least four times a year. In addition, the Supervisory Board is updated regularly and on a monthly basis on the Company’s business performance. The Management Board communicates directly with the Chairman of the Supervisory Board on an ad hoc basis.

2. Composition and succession planning
The Management Board consists of two members: Claudia Hoyer (Chief Operating Officer) and Martin Thiel (Chief Financial Officer).

The composition of the Management Board is aligned to the interests of the Company and is intended to ensure the effective and sustainable management of the TAG Group. An initial appointment is for a maximum period of three years. The age limit for the members of the Management Board is 67 years.

The Supervisory Board and the Management Board ensure long-term succession planning for the Management Board. This is prepared by the Supervisory Board’s Personnel Committee in particular. The requirements of the German Stock Corporation Act, the German Corporate Governance Code and the gender representation targets for the Management Board, further requirements with respect to personal qualities and diversity criteria, their expertise and experience are taken into account. Accordingly, the Personnel Committee draws up a profile of requirements for the position to be filled as a basis for entering into structured negotiations with possible candidates. Subsequently, it submits a recommendation to the Supervisory Board on the further selection procedure or for a resolution. If necessary, the Personnel Committee and the Supervisory Board can seek assistance from external consultants in the preparation of job profiles and the selection of candidates.

II. Supervisory Board

1. Duties and committees
The Supervisory Board regularly advises the Management Board on the discharge of its duties and monitors its activities. It decides on the remuneration system for the members of the Management Board on the basis of a proposal by the Personnel Committee and determines the total annual remuneration, including the variable remuneration components based on the performance of the Company and the remuneration for the individual members of the Management Board. The Supervisory Board works on the basis of the applicable legal system and its rules of procedure, which define the way in which its members work together. The current version is available on the Company’s website at Bylaws.

The Supervisory Board is informed promptly, regularly and comprehensively of current business activities. This includes, in particular, matters relating to strategy, planning, the risk situation and compliance. This information is provided at least four times a year in face-to-face meetings and on the basis of written submissions. Moreover, each member of the Supervisory Board receives a monthly report on the Company’s current business performance. The Chairman of the Supervisory Board and the Management Board liaise on the above-mentioned matters on an ongoing basis outside the meetings.

The Supervisory Board has also established an Audit Committee and a Personnel Committee. The Audit Committee oversees the preparation and audit of the annual financial statements, including sustainability reporting. It also particularly deals with the risk management system, the internal control system and the CMS. The Personnel Committee also acts as the Nomination Committee. It prepares the decisions on appointments to the Management Board as well as the proposals of the Supervisory Board to be submitted to the shareholders at the annual general meeting concerning the election of Supervisory Board members.

2. Composition
Under its articles of incorporation, the Supervisory Board has six members. The law on the one-third participation of employees on supervisory boards applies to TAG. The shareholder representatives therefore have four members, while the employees are represented by two members.

The composition of the Supervisory Board and its committees is as follows:

  Supervisory Board Audit Committee Personnel Committee
Rolf Elgeti Chairman Member Chairman
Lothar Lanz Deputy Chairman Chairman Member
Prof. Dr. Kristin Wellner Member Member ./.
Dr. Philipp K. Wagner Member ./. Member
Harald Kintzel Member ./. ./.
Fatma Demirbaga-Zobel Member ./. ./.

The curriculum vitae of the members are available on the TAG Immobilien AG website at Supervisory Board.

The Supervisory Board is satisfied that all the shareholder representatives are independent within the meaning of recommendation C. 7 of the German Corporate Governance Code.

Mr Elgeti was Chairman of the Management Board of TAG from 2009 to October 2014 and was elected to the Supervisory Board in November 2014 by a large majority at an extraordinary general meeting on the basis of a shareholder proposal to this effect. The Company does not see any conflict of independence in his former activities as Chairman of the Management Board. On the contrary, the fact that he holds the Chairmanship of the Supervisory Board is considered to be beneficial in view of the continuity with which this provides the Company as well as his expertise.

3. Profile of skills, diversity, succession planning
The Supervisory Board has defined the following profile of skills and specific objectives for the entire Board. Expertise in real estate, capital markets, corporate finance, accounting, auditing, sustainability and diversity principles are taken into account. The profile of skills is also the basis for succession planning on the Supervisory Board. Members of the Supervisory Board should not hold office longer than until the end of the Annual General Meeting that follows their 75th birthday.

The following qualification matrix shows how the profile of skills is implemented:

Qualification matrix
Rolf Elgeti
Lothar Lanz
Prof. Dr. Kristin Wellner
Dr. Philipp Wagner
Harald Kintzel
Fatma Demirbaga-Zobel
Real estate industry
Capital markets / corporate finance
-
Accounting (incl. sustainability reporting)
-
-
-
Auditing (incl. sustainability reporting)
-
-
-
-
Sustainability

Due to her current position as Chair of Planning and Construction Economics/Real Estate Management at the Technical University of Berlin and her professional background, Prof. Wellner is particularly well qualified to address the sustainability questions relevant to the TAG Group.

4. Self-assessment
The Supervisory Board regularly carries out a self-assessment of the effectiveness and efficiency of its work in accordance with recommendation D.13 of the German Corporate Governance Code. This can also be done on an ad hoc basis. The self-assessment is carried out either in the form of a survey of the individual members by the Chairman of the Supervisory Board prior to a meeting or by means of self-assessment forms, which the members of the Supervisory Board complete prior to the meetings. In particular, the members of the Supervisory Board comment on its organisation, the provision of information, the activities, the selection of members, composition and the provision of information to shareholders and third parties. The results of the survey are then analysed and evaluated in a subsequent meeting. External consultants have so far not been involved in this process. The last self-assessment was completed in February 2020. As all the mandates of the shareholder representatives are expiring and Mr Lanz is retiring because he will have reached the age limit at the end of the annual general meeting for 2023, the Supervisory Board dispensed with a self-assessment in 2022. The method and intervals of the self-assessment are to be determined by the newly composed Supervisory Board.

III. Remuneration, reporting

The remuneration of the members of the Management Board and the Supervisory Board is described in the remuneration report, which forms part of the annual report for 2022 and is available at Annual Reports.

TAG’s financial reports and further information on corporate governance are published on the TAG website under Investor Relations.

Hamburg, March 2023
The Management Board