Interview with Georg Gayer

Corporate Governance has to be on the Social Agenda
(March 2006)

Transparent and responsible management has always been at the top of TAKKT’s agenda. Chairman of the TAKKT Management Board Georg Gayer explains how the Management and Supervisory Boards are the guardians of good corporate governance.

Question: Mr Gayer, how can transparent management be identified?

In listed companies such as TAKKT AG there is one sound indicator: serious investor relations work.The point however is not to drum up as much attention for the company as possible. Responsible management really means ensuring continual and reliable communications with all players in capital markets. This has been second nature at TAKKT for years, which is substantiated by TAKKT being awarded the Investor Relations Award in 2005.

A further criterion for responsible corporate management is communicating with staff and encouraging people to think independently and take initiative. We are able to achieve this by creating clear structures and by clearly communicating our strategy.

Question: TAKKT complies with the German Corporate Governance Code, but still you make some exceptions …

This does not mean that we have reservations against transparent corporate management. In reality openness, dependability and equal treatment have always guided our actions. There are however good reasons for not complying with the recommendation to publish the Management Board’s compensation individually. We believe that the value of publishing these figures does not outweigh the damage potentially caused. TAKKT already publishes the total sum of the Board's compensation. Breaking down this figure to each individual would hardly provide more information, but would be a violation of the privacy of the Board’s members. I believe that transparency has to end at the point where personal privacy is affected. This also applies to company secrets, which I believe should not be sacrificed in the interest of transparent communications. Especially, if other market players stand to gain from this information.

In addition we are not following the recommendation to install an audit committee, which I do not see as a disadvantage because our Supervisory Board is comparatively small. We are convinced that there is no need for an audit committee.

Question: From 2006 on publishing the Management Board’s compensation is mandatory. Where do you stand on this?

Of course we will comply with legal requirements, but as I have already mentioned, I do not see any value in individually publishing Board member’s compensation. There are of course advocates who hope that compensation will fall. Others are of the opinion that publishing these figures will improve management culture in Germany. I have my doubts about both, particularly as only listed companies are expected to publish these figures. Management Board members in other companies as well as public corporations only publish their compensation and discretionary earnings partially, if at all. The same applies to politicians. If transparency is a concern, then it has to apply to all areas equally.

Question: Despite criticising some aspects of the German Corporate Governance Code: What is your general opinion?

It is a huge success that criteria for responsible corporate management have been defined. The Code also helps to clearly define the role of the Supervisory Board in supervising the Management Board. Hopefully raising standards will not only apply to listed companies. I am convinced that corporate governance has to be on the social agenda.