Corporate Governance

Commitment to the Austrian Corporate Governance Code

The Austrian Corporate Governance Code provides Austrian public limited companies with a framework for the management and monitoring of the company oriented to prevailing international standards, relevant EU recommendations and the stipulations contained in Austrian stock corporation law. These public companies can voluntarily choose to apply these rules. For WEB Windenergie AG, the code represents a key building block enabling the company to strengthen the confidence of shareholders, business partners, employees and the general public in the company. Since the middle of 2006, WEB Windenergie AG has voluntarily committed itself to complying with the Austrian Corporate Governance Code in accordance with the following explanatory notes.

The Austrian Corporate Governance Code (in the January 2010 version) contains a total of 83 rules, which stipulate various levels of obligation for the particular company committed to compliance:

L-Rule (Legal Requirement): The rule is based on mandatory legal requirements.

C-Rule (Comply or Explain):  The rule should be followed, but any deviation must be explained and the reasons stated.

R-Rule (Recommendation): The nature of this rule is a recommendation; noncompliance with this rule requires neither disclosure nor explanation.

Implementation of the Austrian Corporate Governance Code by WEB Windenergie AG in the 2010 fiscal year

The Management Board and Supervisory Board continually strive, to the best of their ability, to comply with all rules contained in the Austrian Corporate Governance Code, and to optimise internal company standards on an ongoing basis. In those cases in which the company does not fully comply, it will provide a detailed explanation of the relevant reasons for its behaviour. Aside from the relatively small size of the company, the starting position of WEB Windenergie AG fundamentally differs from those of other public companies due to the fact that it is not listed on the stock market, and it maintains regular personal contact with its shareholders, who are consistently registered shareholders.

The following rules contained in the Austrian Corporate Governance Code (January 2010 version) were not complied with or only partially complied with during the period under review:

C-Rule 31: “The fixed and performance-linked annual remunerations of each individual Management Board member are to be disclosed in the Corporate Governance Report for each financial year. This shall also apply if the remuneration is paid through a management company.”

The remuneration paid to the entire Management Board and the principles underlying the total amount paid are disclosed. The remuneration paid to the individual board members is not disclosed on the grounds of protecting the private sphere of the people involved.

C-Rule 36: “The Supervisory Board shall discuss the efficiency of its activities annually, in particular, its organisation and work procedures (self-evaluation)”.

A formal and explicit self-evaluation on the part of the Supervisory Board does not take place. However, the Supervisory Board regularly discusses and evaluates the effectiveness of its activities and their impact on the company within the framework of the Supervisory Board meetings.

C-Rule 39: “The Supervisory Board shall set up expert committees from among its members, depending on the specific circumstances of the enterprise and the number of Supervisory Board members. These committees shall serve to improve the efficiency of the work of the Supervisory Board and shall deal with complex issues. However, the Supervisory Board may discuss the issues of the committees with the entire Supervisory Board at its discretion. Each chairperson of a committee shall report periodically to the Supervisory Board on the work of the committee. The Supervisory Board shall ensure that a committee has the authorisation to take decisions in urgent cases. The majority of the committee members shall meet the criteria for independence of the C-Rule 53. The Corporate Governance Report shall state the names of the committee members and the name of the chairperson. The Corporate Governance Report must disclose the number of meetings of the committees and discuss the activities of the committees.”

The Supervisory Board of WEB Windenergie AG consists of a maximum of five members, and currently consists of only four members. Due to the small number of members, but also due to the specific nature of the company’s operations, the company does not consider it useful to establish committees. As a result, the Supervisory Board performs its duties as a whole. The Austrian Corporate Governance Code also first stipulates the setting up of a nomination committee pursuant to C-Rule 41 respectively a remuneration committee pursuant to C-Rule 43 once the Supervisory Board expands to six members, i.e. reaches a “critical mass“, a criteria which WEB Windenergie AG and its four Supervisory Board members do not fulfil at the present time. The internal rules of procedure of the Supervisory Board principally allows for establishing committees if necessary without requiring further authorisation. In any case, consideration is given in the appointment of Supervisory Board members to an appropriate diversity of their professional competence.

C-Rule 49: “The company shall disclose in the Corporate Governance Report the object and remuneration of contracts subject to approval pursuant to L-Rule 48. A summary of contracts of the same kind shall be permitted”.

The company does not publish a Corporate Governance Report in the absence of a legal obligation to do so. However, information on contracts subject to approval pursuant to L-Rule 48 is contained in the Notes to the consolidated financial statements (Section 7.3; in the German version of the report only). This applies to the mandate agreement with the law firm Sattler & Schanda (Supervisory Board member Mr. Schanda is a partner of this law firm), as well as the hire-purchase agreement of WEB Windenergie AG with QR Dumeier Köbis GbR (the wife of the Management Board member Frank Dumeier is a managing partner of QR Dumeier Köbis GbR).

C-Rule 53: “The majority of the members of the Supervisory Board elected by the general meeting or delegated by shareholders in accordance with the articles of incorporation shall be independent of the company and its Management Board. A member of the Supervisory Board shall be deemed as independent if said member does not have any business or personal relations to the company or its Management Board that constitute a material conflict of interests and is therefore suited to influence the behaviour of the member.

The Supervisory Board shall define on the basis of this general clause the criteria that constitute independence and shall publish them in the Corporate Governance Report. The guidelines in Annex 1 shall serve as further orientation. According to the criteria defined, it shall be the responsibility of every member of the Supervisory Board to declare its independence vis-a-vis the Supervisory Board. The Corporate Governance Report shall clearly explain which members are deemed independent according to this assessment“.

The majority of Supervisory Board members can be seen as being independent in accordance with this rule. There is one exception in the case of Stefan Bauer, who was first appointed to the Supervisory Board in 2005. Stefan Bauer is the nephew of Andreas Dangl. He performs his duties with the same prudence and diligence as every other member, and also refers to the aspect of liability laws. The Supervisory Board of W.E.B has not explicitly defined the criteria that constitute independence.

C-Rule 64: “The company shall disclose on its website—if it has knowledge thereof—the current shareholder structure broken down by geographical origin and type of investor, any crossholdings, the existence of syndicate agreements, restrictions on voting rights, registered shares and their related rights and restrictions. Current changes in voting rights shall be disclosed without delay on the website of the company.”

The disclosure of the shareholder structure is contained in the annual report, which is, in turn, available for downloading on the website. Current changes in voting rights, inasmuch as they are relevant, are announced in the quarterly information report “W.E.B aktuell”, which is also available on the website for downloading.

C-Rule 66: “The company shall prepare quarterly reports in accordance with International Financial Reporting Standards, as adopted by the EU (IAS 34).”

The company prepares annual and half-yearly financial statements pursuant to the stipulations contained in the IFRS. The quarterly reports of the W.E.B Windenergie Group are not completely prepared in accordance with international accounting principles.

C-Rule 68: “The company shall publish annual financial reports, half-yearly financial reports and any other interim reports in English and German language, and shall make these available on the company’s website. If the annual financial report contains consolidated financial statements, the financial statements prepared under business law contained in the annual report need to be published and made available only in German language“.

The company makes its annual financial report available on the company’s website in both German and English. In the absence of a stock market listing, the half-yearly financial reports and other interim reports are not published on the website. However, corresponding information is personally sent to the shareholders.

C-Rule 74: A calendar of corporate financial events shall be posted at least two months before the start of the new business year on the Website of the company and shall contain all dates of relevance for investors and other stakeholders such as the release of the annual and quarterly reports, annual general meetings, ex-dividend day, dividend payout day and investor relations activities.”

WEB Windenergie AG publishes the most important dates of its fiscal year in the financial calendar on the company’s website www.windenergie.at. WEB Windenergie AG continually strives to keep shareholders and other interest parties informed about the latest developments. In this regard, the relevant dates are announced on the website at the earliest possible time and continually updated.