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Management structure
As a European Company (Societas Europaea – SE) based in Hannover, the formal structure of our corporate governance is determined by national law. The fundamental hallmarks are the two-tier system with its transparent and effective split into the management of the company (Executive Board) and its oversight (Supervisory Board). Overall responsibility for enterprise management and Group-wide risk management as well as for the definition of the risk strategy rests with the Executive Board of our company. The Supervisory Board takes responsibility for advising, and especially for monitoring and supervising, the Executive Board in its management of the company and also with respect to risk management. The avoidance of conflicts of interest is already extensively safeguarded by the control mechanisms stipulated in law and in the Articles of Association that exist between the three governance bodies. In order to assure the provision of independent advice to and oversight of the Executive Board by the Supervisory Board, no more than two former members of the Executive Board shall belong to the Supervisory Board. Members of the Supervisory Board may not undertake any executive role or consulting functions at significant competitors of the company.
Our stakeholders have the opportunity to report critical issues to the company's highest governance body. Within the framework of our established governance structures, critical concerns – including in relation to sustainability matters – are communicated on an ongoing basis to both the Executive Board and the Supervisory Board. In accordance with the practice adopted by the Supervisory Board and Executive Board, critical concerns are immediately addressed and dealt with at the meetings of the Supervisory Board and its committees.
Our shareholders exercise their co-determination right at our Annual General Meeting, in particular through the appointment of members of the Supervisory Board, the ratification of the acts of management of the Executive Board and the Supervisory Board, the resolution on profit appropriation and through their right to ask questions and obtain information.
The right of the employees to have their say in the company's decision-making processes is ensured through the SE-Employee Councils, the joint German Employee Council of Hannover Rück SE, E+S Rückversicherung AG and International Insurance Company of Hannover SE and through the three employee representatives on the Supervisory Board elected by this joint Employee Council. The employee-employer relationship is governed by the SE Employee Participation Act, our Articles of Association and the Agreements with the Employee Council.
Our employees Group-wide are informed of significant operational changes without delay and in accordance with legal requirements. The Supervisory Board must be advised immediately of matters that can have a material influence on the position of our company. In the context of their right to information, the Employee Council for the Hannover location and the SE Employee Council of Hannover Rück SE as well as the SE Employee Council of Inter Hannover SE also duly receive all relevant information so as to be able to influence operational changes.
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Composition of the Executive Board
Our Executive Board is composed of seven members, who are appointed by the Supervisory Board. Along with their qualifications, the Supervisory Board also pays attention to appropriate diversity in the composition of the Executive Board in the context of an approved diversity concept. For the period from 1 July 2017 to 30 June 2022, making allowance for the current mandates and service contracts of the members of the Executive Board, we have raised the target for the quota of women on the Executive Board from zero to 14%. This means that it is envisaged that one woman will belong to the Executive Board in the specified period. When appointing a new member of the Executive Board, the Supervisory Board shall therefore give preference to a potential female candidate in case of equal personal aptitude and professional qualifications. Experience in environmental and social matters is taken into consideration as part of the selection process for the Executive Board or Supervisory Board, but is not regarded as a decisive factor.
The Executive Board ensures the elaboration and implementation of a consistent business policy in keeping with the company's strategic objectives. With shareholders in mind, the Executive Board expressly attaches importance to an organisation that facilitates cost-efficient, quick and unbureaucratic decision processes. Open and trusting cooperation geared to the collective interest is the cornerstone of success. In this context, the members of the Executive Board bear joint responsibility for the overall management of business. Irrespective of their shared responsibility, each individual member of the Executive Board leads their assigned area of competence at their own responsibility within the bounds of the resolutions adopted by the Executive Board. When individuals are appointed to the Executive Board, the term of appointment is to be determined such that it expires no later than the end of the month in which the member of the Executive Board turns 65.
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Composition of the Supervisory Board
Our Supervisory Board consists of nine members. They are appointed for a term of office until the end of the Annual General Meeting that ratifies the acts of management for the 2018 financial year.
Pursuant to statutory requirements and the Agreement on the Participation of Employees in Hannover Rück SE, the employees are represented by three members.
Persons proposed to the Annual General Meeting as candidates for election to the Supervisory Board may not be older than 72 at the time of their election. Furthermore, candidates shall normally not belong to the Supervisory Board as a member for longer than three full consecutive terms of office. The latter has been applicable since the 2014 Annual General Meeting. In addition, no more than two former members of our Executive Board may belong to the Supervisory Board.
Given that members of the Supervisory Board cannot at the same time sit on the Executive Board, a high degree of independence in the oversight of the Executive Board is already ensured by structural means. In addition, in its current composition the Supervisory Board also fulfils the requirements of the German Corporate Governance Code with regard to independence.
The Rules of Procedure of the Supervisory Board stipulate an appropriate number of independent members on the Supervisory Board. Currently, the Supervisory Board is of the opinion that of the six shareholder representatives elected by the Annual General Meeting at least two are independent as defined by Item 5.4.2 of the German Corporate Governance Code (DCGK). At least one independent member must have technical expertise in the fields of accounting and the auditing of financial statements. This is also assured at the present time.
When it comes to selecting the shareholder candidates who are proposed to the General Meeting for election to the Supervisory Board, the Supervisory Board takes care to ensure that the individuals in question have the necessary knowledge, abilities and specialist experience. In addition, the Supervisory Board conducts a self-assessment of its expertise once a year and decides on suitable development and advanced training measures, as necessary. In August 2018, for example, the Supervisory Board received IT training in the context of its deliberations on the company's newly developed digitalisation strategy.
The anticipated time that can be invested in a sustainable increase in the value of the company is similarly a central criterion in the selection of candidates. Under certain circumstances the number of seats that may be held on supervisory boards outside the Group is therefore limited to three.
The principle of diversity is also taken into account by the Supervisory Board when making a selection. Allowing for the term of appointment of the Supervisory Board, the Supervisory Board has set itself a target quota of 30% for women on the Supervisory Board in the period from 1 July 2017 to 30 June 2022. This target had already been fulfilled at the end of 2017 with a proportion of 33%. The Supervisory Board has thus acted on various requirements contained in Item 5.4.1 of the German Corporate Governance Code (DCGK) regarding the composition of the Supervisory Board and has also adopted a diversity concept. The proportion of women on the Supervisory Board currently stands at 44%.
In accordance with its role, the Supervisory Board appoints the members of the Executive Board and performs its oversight and supervisory functions. The Supervisory Board is kept informed on a regular (at least quarterly) and timely basis of the business development, the execution of strategic decisions, material risks and planning as well as relevant compliance issues. The Chairman of the Supervisory Board stays in regular contact with the Chairman of the Executive Board in order to discuss with him significant business occurrences. Our Articles of Association and the Rules of Procedure of the Executive Board define the specific matters that require the consent of the Supervisory Board or its Chairman.
In order to deal with complex matters and depending on the specific circumstances of the company, the Supervisory Board forms committees under its Rules of Procedure. These are currently the Standing Committee, the Finance and Audit Committee and the Nomination Committee. Appointments to the committees are crucially guided by the respective specialist aptitude required of the committee members.
The Supervisory Board committees are each comprised of three members. They deliberate on matters within their scope of competence and prepare the adoption of resolutions for the full Supervisory Board. In addition, the committees are also assigned their own authority to adopt resolutions.
