Boards' working procedures
Declaration dated February 21, 2017
The structures for the management and supervision of the Company are as follows:
Shareholders and Shareholders' Meeting
Shareholders exercise their rights at the Shareholders' Meeting. The Annual Shareholders' Meeting of ADVA Optical Networking SE (“ADVA Optical Networking”) is held within the first eight months of the financial year. The Shareholders' Meeting is chaired by the Chairman of the Supervisory Board. The Shareholders' Meeting resolves all legally assigned matters (among other things: election of the members of the Supervisory Board, amendments to the articles of association, profit distribution, corporate actions). ADVA Optical Networking is under dual control of the Management Board and the Supervisory Board.
The principal role of the Supervisory Board is to appoint and to intensely advise and monitor the Management Board. At present, the Supervisory Board of ADVA Optical Networking consists of three members, whom had been elected by the shareholders in the Shareholders' Meeting. The Supervisory Board makes its resolutions with simple majority. Equality of votes leads to a resolution in favor of the vote of the Chairman.
Objectives Regarding the Composition of the Supervisory Board
The Supervisory Board of the Company specified the following objectives regarding its composition:
- At least one member of the Supervisory Board has to be an independent financial expert within the meaning of Sec. 100 Para. 5 AktG.
- At least one member of the Supervisory Board should be from a country other than Germany or should have gained significant experience outside of Germany.
- At least two members of the Supervisory Board should be completely independent from shareholders holding, directly or indirectly, more than 10% of the Company’s shares outstanding.
- At least one member of the Supervisory Board should have specific expertise in ADVA Optical Networking’s industry.
- The supervisory board members should be in their entirety familiar with the business sector ADVA is operating in (Sec. 100 Para. 5 AktG).
- At least one member of the Supervisory Board should be a woman, at least one member should be a man.
Currently, the above-mentioned objectives are fully achieved. Prior to the next recommendations on election, ADVA Optical Networking’s Supervisory Board will review these objectives and adjust them if necessary.
Information on the Remuneration of the Supervisory Board
The compensation of ADVA Optical Networking SE’s Supervisory Board members solely consists of a fixed component. On June 4, 2013, the Annual Shareholders’ Meeting resolved that each member of the Supervisory Board should receive reimbursement for expenses and a fixed compensation, payable at the end of each quarter.
Furthermore, ADVA Optical Networking bears the cost of pecuniary damage liability insurance for all members of the Supervisory Board, provided that the Company has purchased such insurance for the members of the Supervisory Board. During 2016, no loans or advance payments were granted to members of the Supervisory Board.
Provided that the 2017 Annual Shareholders’ Meeting approves the 2016 activities of the Supervisory Board, the total compensation payable to the members of the Supervisory Board for 2016 will be EUR 229 thousand, after EUR 215 thousand for 2015.
As the executive body of the Company, the Management Board manages the affairs of the Company and based on the provisions set forth in the German Stock Corporation Act (Aktiengesetz, AktG) needs to follow the interests and corporate policies of the Company. The Management Board is appointed by the Supervisory Board and consists of three members. The Management Board consistently, promptly and extensively informs the Supervisory Board about all key aspects of the business development and the Company strategy, as well as about potential risks.
Shareholdings of the Management and Supervisory Boards
An overview of the shareholdings of the members of the Management and Supervisory Boards, is included in the notes to the financial statements published in the annual and quarterly reports. In addition, ADVA Optical Networking publishes all directors' dealings in securities related to the Company immediately after receipt of the corresponding notifications.
Providing consistent, comprehensive and prompt information to the public is a key priority for ADVA Optical Networking. Reporting about the development of the business and the related development of the financial position, net assets position and results of operations is provided in annual and quarterly reports, via press conferences, conference calls and interviews with media representatives. In addition, ADVA Optical Networking publishes as appropriate.
Until July 3, 2016, ADVA Optical Networking maintained an insider register according to section 15b of the German Securities Trading Act (Wertpapierhandelsgesetz, WpHG); since July 3, 2016 ADVA Optical Networking has set up an insider register according to Article 18 Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) in connection with Commission Implementing Regulation (EU) 2016/347. All insiders listed in these registers have been informed about the respective legal duties and penalties according to the applicable laws.
Equal Opportunities for All Employees
ADVA Optical Networking is an equal opportunity employer and has an ongoing commitment to the creation of a workplace free of discrimination and harassment. The Company recruits, hires, trains and promotes individuals in all job levels without regard to race, religion, ancestry, sexual orientation, marital status, national origin, age, gender and physical or mental disability. ADVA Optical Networking is committed to a fair and equitable workplace where everyone is a respected and valued member of the team. The Company's core values (teamwork, execution, accountability and motivation) and leadership principles (integrity, honesty, decisiveness, respect) guide employees and managers in all business activities.
Accounting and Audit
The financial statements of ADVA Optical Networking SE (parent company financial statements) are prepared in accordance with the German Commercial Code (Handelsgesetzbuch, HGB), and since the fiscal year 2005, the consolidated financial statements of ADVA Optical Networking have been prepared in accordance with International Financial Reporting Standards (IFRS). Once prepared by the Management Board, the parent company financial statements and the consolidated financial statements are reviewed by the external auditor and by the Supervisory Board, and are then approved by the Supervisory Board. With this approval, the parent company financial statements are adopted. The parent company financial statements and the consolidated financial statements are published within 90 days after the end of the financial year.
Control Metrics and Risk Management
The strategic goals of the Company are:
- Growth & Profitability
- Operational Excellence
Based on these goals, the Company is ultimately managed using the control metrics "revenues", "pro forma operating income" (pro forma = prior to non-cash charges related to stock compensation programs and amortization and impairment of goodwill and acquisition-related intangible assets), net liquidity and net promoter score (a non-financial control metric obtained by asking customers how likely it is that they would recommend ADVA Optical Networking to a colleague or friend). Risks which may work against the achievement of the annually redefined target values for these metrics are captured systematically, allowing to take counteractions at an early stage. Details of the risk management system of ADVA Optical Networking are disclosed in the current annual report in the risk report section of the Group management report.