The Executive Board and Supervisory Board of ProSiebenSat.1 Media AG declare that during the financial year 2009 ProSiebenSat.1 Media AG complied, and continues to comply, with the recommendations of the Government Commission on the German Corporate Governance Code in the version of June 6, 2008, as published in the official part of the electronic version of the Federal Gazette on August 8, 2008, and, as of its date of validity, the version of June 18, 2009, as published in the official part of the electronic version of the Federal Gazette on August 5, 2009, with the following exceptions:
The Executive Board of the Company has not appointed a proxy to exercise the shareholders’ voting rights at the shareholders’ meeting in accordance with instructions (Item 2.3.3 of the Corporate Governance Code). There is no need for such a proxy at present because of the current shareholder structure and the limited number of shareholders entitled to vote at the shareholders’ meeting. However, for the separate meeting of preferred shareholders, the Company’s Executive Board did appoint a representative to exercise the preferred shareholders’ voting rights in accordance with those shareholders’ instructions.
The D&O insurance policies the Company has taken out for the Executive Board and the Supervisory Board have not provided hitherto for a deductible (Item 3.8 of the Corporate Governance Code), since agreeing to a deductible did not materially reduce the insurance premiums and was hitherto not required by law. The Act on Fairness of Compensation of Executive Boards (VorstAG) of July 31, 2009, has now made it mandatory to impose a deductible for the members of the Executive Board. The Company therefore plans to obtain appropriate revisions of its D&O insurance policies within the bounds laid down both by law (Sec. 93 (2) Sentence 3 of the German Stock Corporation Act in conjunction with Sec. 23 (1) of the Introductory Act to the German Stock Corporation Act) and by the pertinent employment contracts, so as to establish a deductible for the insured members of the Executive Board. However, neither the Executive Board nor the Supervisory Board regards a deductible as an effective way of enhancing board members’ motivation or sense of responsibility. For that reason, future D&O insurance policies for Supervisory Board members will still not include a deductible.
The stock option plan first approved at the annual shareholders’ meeting in May 2005, as part of the authorization to acquire treasury stock, and most recently renewed by resolution of the meeting of June 2009, provides only for incentive targets relating to the trading price of the Company’s stock. Additional comparison parameters relating to corporate key figures (Item 4.2.3 of the Corporate Governance Code) were not included, since due to the particular conditions of the German TV advertising market, no comparable German or foreign companies can be identified.
The contracts of the Company’s Executive Board do not include a “severance pay cap” (Item 4.2.3 of the Corporate Governance Code), because the Supervisory Board regards such a severance cap as counterproductive here. Item 4.2.3 recommends that in signing Executive Board contracts, care should be taken to ensure that payments made to an Executive Board member on premature termination of that member’s employment without serious cause, including fringe benefits, do not exceed the value of two years’ compensation (severance pay cap), and provide compensation for no more than the remaining term of the contract. Normally, however, an Executive Board member’s contract can be terminated prematurely without serious cause only by mutual agreement. Even if the Supervisory Board were to insist on a severance pay cap when a given Executive Board member’s contract is initially signed or extended, that would not preclude the possibility that a severance pay cap might still have to be negotiated if the member leaves the Company prematurely. Moreover, in the case of Executive Board contracts with such a severance pay cap and remaining terms of more than two years, it would be significantly more difficult to reach agreement on an early termination, because in these cases complying with the severance pay cap would commonly be more disadvantageous to the Executive Board member concerned than it would be to simply insist on upholding the contract, with the compensation that would then continue to be paid.
No age limit has been set for Executive Board members (Item 5.1.2 of the Corporate Governance Code). The Supervisory Board believes that a rigid age limit is not a useful criterion in evaluating an individual’s fitness to serve on the Company’s Executive Board. Therefore in such an evaluation the Supervisory Board takes age into account only as one of a number of factors.
The members of the Supervisory Board receive only a fixed component of compensation. No additional results-based variable component (Item 5.4.6 of the Corporate Governance Code) is provided. The Company believes a fair fixed compensation is better suited to the function of the Supervisory Board, which is to provide oversight irrespective of profit to the Company.
Subject to the exceptions stated above, ProSiebenSat.1 Media AG intends in the future to continue complying with the recommendations of the Government Commission on the German Corporate Governance Code in the version of June 18, 2009, as published in the official part of the electronic version of the Federal Gazette on August 5, 2009.
