The Management and Supervisory boards of BRAIN Biotech AG declare that since the last statement of conformity was issued on 19 December 2020, BRAIN Biotech AG has complied with the recommendations of the “Government Commission German Corporate Governance Code” in the version dated 20 March 2020 (“DCGK 2020”), and will continue to comply with them in the future, with the following exceptions.
F.2: The consolidated financial statements and the Group management report shall be publicly accessible within 90 days of the end of the financial year; the mandatory interim financial information shall be publicly accessible within 45 days of the end of the reporting period.
Note relating to F.2: Due to the additional financial accounting requirements as a listed company, the auditing of the financial statements lasted, and lasts, longer than 90 days, so that the audited figures cannot be published with the annual report within 90 days after the financial year-end, but instead not until after the expiry of 90 days. Prospectively, this will also remain the case with future annual consolidated financial statements.
The publication of all financial information during the course of the year occurs regularly within two months. The Management and Supervisory boards regard this as appropriate.
Furthermore, in light of various unlisted subsidiaries and participating interests held abroad, publication of the consolidated financial statements and the Group management report as well as mandatory interim financial information within shorter periods would necessitate the deployment of considerable financial and personnel resources that would not be appropriately related to the information that shareholders require for a company of the size of BRAIN Biotech AG. As a consequence, the periods required by the Corporate Governance Code are not met.
In relation to the publication of annual and interim reports, BRAIN Biotech AG complies with statutory regulations as well as the Prime Standard stock exchange regulations of the Frankfurt Stock Exchange.
G.1: In particular, the compensation scheme is to specify,
- how the target total compensation is determined for the individual members of the Management Board and what amount the total compensation may not exceed (maximum compensation),
- the relative share of fixed compensation on the one hand, and short-term variable and long-term variable compensation components on the other, in relation to the target total compensation,
- which financial and non-financial performance criteria are decisive for the granting of variable compensation components,
- the nature of the link between the achievement of the previously agreed performance criteria and the variable compensation,
- in what form and when the Management Board member can dispose of the variable compensation amounts granted.
Note relating to the third indent under G.1: As a precautionary measure, the company declares that, in the compensation scheme as approved by the Annual General Meeting on 10 March 2021, the financial performance criteria were identified explicitly; non-financial performance criteria, to the extent that they are understood as ESG objectives, were not explicitly listed in this compensation scheme, as the company did not have a measurable system for reviewing ESG objectives at the time when the resolution was proposed. However, an objective of the company is to establish an ESG system that allows for the review of ESG targets. The Supervisory Board plans to take non-financial performance criteria (in the sense of the ESG criteria) into consideration in the future when setting targets for variable, performance-related compensation on the basis of an ESG system that will then have been established.
G.6: The variable compensation deriving from the achievement of long-term goals should exceed the share deriving from short-term goals.
Note relating to G.6: The variable compensation is geared to medium-term, sustainable targets and is paid out annually in line with performance. The stock options included in the compensation scheme encourage the pursuit of long-term objectives. Taking into consideration the fair values from 2020 for the stock options, these have a lower value than the variable compensation paid out in cash for the achievement of annual (interim) targets. The compensation achievable through stock options can exceed the value of the variable compensation paid out annually in cash if the value of the company increases in the long term.
G.10: The variable compensation amounts granted to the member of the Management Board are to be invested by him or her predominantly in shares in the company (taking into consideration the respective tax burden), or are to be granted accordingly on a share-based basis. The Management Board member should not be able to dispose of the long-term variable grant amounts until a four-year period has expired.
Note relating to G.10, first sentence: It should be noted that, in accordance with the compensation scheme and the specific contracts, the variable compensation for the annually defined targets is paid out in cash after they have been reviewed, and no share-based granting is provided for. The Supervisory Board is examining the possibility of paying out the variable compensation for the annually defined targets on a pro rata share basis in the future in the event of a further development of the compensation scheme.
G.11: The Supervisory Board should have the possibility to take extraordinary developments into consideration within an appropriate framework. In justified cases, it should be possible to withhold or reclaim variable compensation.
Note relating to G.11, sentence 2: The Supervisory Board has not made any provision for the clawback of variable compensation. The Supervisory Board is examining the possibility of taking into account so-called claw-back clauses in future developments of the compensation scheme.
Zwingenberg, December 2021
For the Supervisory Board of BRAIN Biotech AG:
Dr. Georg Kellinghusen, Supervisory Board Chairman
For the Management Board of BRAIN Biotech AG:
Adriaan Moelker, Chief Executive Officer
Note: The statement of conformity was published on the Internet in December 2021 and will not be updated during the year.