dr. rolf bartke chairman of the supervisory board
Dr. Rolf Bartke, born in 1947, is Chairman of the Supervisory Board of kuka Aktiengesellschaft. After studying economics and graduating as an industrial engineer, he earned a doctorate (Dr. rer. pol.) and held a number of leading positions in the Daimler Group. From 1995 to 2006, he headed up the Mercedes-Benz vans business unit. Dr. Rolf Bartke is married and has a son.
supervisory board report
In spite of the worldwide economic slump, the financial year just ended was an important one for the kuka Group, and looking back, was largely successful. The Group went into the 2008 financial year with confidence and ambitious goals. Observers appreciated kuka’s successful restructuring and its new focus on the Robotics and Systems business, with both divisions strengthening their general industry activities. In 2008, kuka received several awards for its innovation strength.
Over the course of the year, the financial market crisis worsened. This caused the economic setback to turn into a recession, which has especially impacted the automotive industry. Carmakers will thus continue to prioritize introducing new, more fuel-efficient and environmentally friendly vehicle models to the market. However, in the short term, there is a risk of declining demand as a result of postponements and isolated cutbacks in orders. Despite the fact that kuka’s revenues from the aircraft and solar industries, medical technologies and logistics, as well as metals and plastics industries have continuously risen in the past number of years, and although these businesses are being steadily expanded, the Group still receives a large number of its orders from automotive customers.
During the financial year, the Supervisory Board was strongly involved in the corporation’s business activities and consulted with the Executive Board, which it supervised in the interests of shareholders and employees. It met regularly with the Executive Board to examine in detail the company’s business situation and financial position. Among other things, it received periodic reports on the Group’s key figures (e. g., orders received, sales, order backlog, ebit, return on capital employed). The Executive Board’s reports to the Supervisory Board were related to essential issues concerning corporate planning, such as financing, capital spending and personnel budgets. The Supervisory Board asked for detailed explanations of any disagreement between the business results and the plans and targets, as well as the budgets. The Supervisory Board then reviewed the submitted documents and analyzed the discrepancies. In addition, the Executive Board reported to the Supervisory Board periodically with regard to the operational situation and the strategic direction and associated outlook. Risk and compliance management were included as part of the regular reporting. The Supervisory Board was continuously involved in decisions of material importance and, for particularly important or urgent issues, also met outside the normal schedule. When necessary, it handed down decisions through written correspondence. Executive Board members had no conflicts of interests during the reporting period.
The Executive Board complied with the Supervisory Board’s standard rules of procedure, which stipulate that certain transactions require its prior approval. The Supervisory Board’s tasks included evaluating the propriety, legality and efficiency of the Executive Board’s corporate management activities.
The Chairman of the Supervisory Board remained in close contact with the Executive Board, particularly the ceo, so that he could stay informed about important corporate developments and pending decisions and be in a position to support the Executive Board in its deliberations. The heads of the Supervisory and Executive Boards also consulted regularly with one another outside the scheduled meetings of the Supervisory Board.
election of the supervisory board
The term of office of all Supervisory Board members ended at the close of the Annual General Meeting of kuka Aktiengesellschaft on May 15, 2008. The shareholders present at the Annual General Meeting were asked to elect new shareholder representatives to sit on the board. They chose Mr. Helmut Gierse from Nuremberg as their new representative on the panel. Mr. Helmut Gierse succeeded Prof. Gerd Hirzinger, Dr.-Ing., whose term on the advisory board ended with the adjournment of the Annual General Meeting. Dr. Rolf Bartke, Dr. Reiner Beutel, Mr. Pepyn René Dinandt, Dr. Helmut Leube and Dr. Herbert Meyer were reelected to the Supervisory Board.
At the May 15, 2008 constituent meeting of the Supervisory Board, which had been newly elected for a five-year term, Dr. Rolf Bartke was reelected as Chairman of the advisory panel. Dr. Bartke has held this position since 2005. Dr. Herbert Meyer was chosen as the Chairman of the Audit Committee and Dr. Bartke was elected Chairman of both the Personnel and Nomination Committees. As per article 27 (3) of the German Act on Company Co-Determination, Dr. Bartke also assumes the chairmanship of the Arbitration Panel.
In October 2007, a voting procedure was introduced for electing employee representatives to the Supervisory Board. Their term of office also started immediately after the Annual General Meeting on May 15, 2008. Jürgen Kerner, Wilfried Eberhardt, Siegfried Greulich, Thomas Knabel, Walter Prues and Fritz Seifert were elected to the Supervisory Board as employee representatives. Mr. Jürgen Kerner was elected as deputy chairman of the Supervisory Board.
meetings of the supervisory board and its committees during the reporting period
The following committees were established by the Supervisory Board: a Personnel Committee, an Audit Committee and an Arbitration Panel in accordance with article 27 (3) of the Mitbestimmungsgesetz (German Act on Company Co-Determination). A Nomination Committee as per Section 5.3.2, clause 2 of the Corporate Governance Code (cgc), June 14, 2007 version, was also formed.
During the 2008 financial year, the Supervisory Board held five regular meetings and one extraordinary meeting.
The March 18, 2008 sitting dealt with kuka Aktiengesellschaft’s and the kuka Group’s financial results for 2007 and the resolutions for the May 15, 2008 Annual General Meeting. Along with the resolution on the agenda for the Annual General Meeting, a decision was also made on the Nomination Committee’s recommendations regarding Supervisory Board candidates for shareholder representation. At the same meeting, the Supervisory Board dealt with a progress report on the Robotics and Systems divisions’ strategies.
At the May 15, 2008 meeting, immediately prior to the Annual General Meeting, the agenda items included the preparation for the Annual General Meeting and a report on the Group’s business development. The Supervisory Board adopted a resolution on the appropriation of the net retained earnings.
The Supervisory Board meeting immediately after the Annual General Meeting on May 15, 2008 was held to discuss the results of the shareholder meeting, election of the Chairman of the Supervisory Board, election of the deputy chairman of the Supervisory Board, election of the members of the committees and scheduling of the meetings of the Supervisory Board, whose new members were meeting for the first time at this sitting. The meeting also dealt with Executive Board issues.
The Supervisory Board met on June 9, 2008 for an extraordinary meeting. It resolved to appoint Dr. Horst J. Kayser as ceo and member of the Executive Board effective October 1, 2008, and Dr. Matthias J. Rapp as member of the Executive Board responsible for finance and controlling effective July 1, 2008.
At the next Supervisory Board meeting on September 26, 2008, the strategy of the divisions and management projects regarding development of the Group were discussed. The Supervisory Board also conducted a review of the Supervisory Board’s effectiveness in accordance with Section 5.6 of the cgc, with positive results; see also the Corporate Governance Report. In addition, the Supervisory Board resolved to commission the University of Witten / Herdecke to assist with the effectiveness review of the Board; (see also the Corporate Governance Report). The Supervisory Board listened to a presentation on the concept of employee participation and management succession planning at the meeting. The Executive Board informed the members about kuka ag’s organizational concept, which aims to centralize top-level, administrative and business support functions.
The Supervisory Board held its last regular meeting of 2008 on December 9, 2008. It discussed the budget for 2009 as well as the mid-term plan to 2011. In addition, the Supervisory Board was informed about the status of the implementation of the kuka Group’s management organization, as well as the employee share purchase concept.
All members of the Supervisory Board participated in over half of the Supervisory Board meetings in 2008 (Section 5.4.8 of the cgc). Further details regarding corporate governance are included in the Corporate Governance Report, which forms part of the Annual Report.
The Personnel Committee, consisting of a chair, a deputy and one employee and employer representative each met six times in 2008 and dealt with preparing the Executive Board and its contractual issues in accordance with regulations. The Personnel Committee discussed the key issues relating to changes at the Executive Board level during the reporting period. The chair informed the members of the Supervisory Board about the agenda items and decisions.
The Audit Committee, consisting of a chair, a deputy and one employee and employer representative each met once to discuss annual financial statements related topics plus six additional times. The topics of discussion included preparation for the respective quarterly reports and the risk and compliance management reports for the Group’s companies. The Audit Committee intensively supported the Supervisory and Executive Boards’ tasks and provided the panel with important information to prepare it for making its decisions.
The committee described in article 27, clause 3 of the German Co-determination Act did not meet.
The Nomination Committee as per Section 5.3.3 of the cgc held a meeting to prepare for the Supervisory Board’s resolution regarding the recommended candidates for the Supervisory Board shareholder representatives.
executive board members nominated
In view of the pending generational transition at the executive management level of the Group, kuka ag’s Supervisory Board met on June 9, 2008 and appointed Dr. Horst J. Kayser ceo and Labor Director of kuka ag effective October 1, 2008.
After successfully serving kuka for more than 30 years, Mr. Gerhard Wiedemann, ceo and Labor Director of the company decided not to extend his contract beyond March 31, 2009 related to age. He resigned as ceo and member of the Executive Board effective the close of September 30, 2008. He will continue to work with the Executive Board in a consulting capacity until March 31, 2009.
The Supervisory Board has also appointed Dr. Matthias J. Rapp to the Executive Board and named him Chief Financial Officer effective July 1, 2008.
Dr. Jürgen Koch, member of the Executive Board responsible for finance and controlling had already declared in December 2007 that he will not be available for another period any longer for personal reasons. He resigned in June 30, 2008 and left the company on that date.
new management organization for the kuka group
The kuka Group conducts business in an economic environment that is becoming increasingly difficult. In order to further expand its flexible robot-based automation solutions business, the Executive Board, with approval from the Supervisory Board, decided to restructure the kuka Group’s management organization effective January 1, 2009. The Executive Board will from now on consist of the ceo and the cfo. The chairmen of the management boards of the management companies kuka Roboter GmbH and kuka Systems GmbH, Mr. Bernd Liepert and Dr. Stefan Söhn respectively were named chairmen of the divisions and will be part of the management team together with the Executive Board. In conjunction with the restructuring of the management organization, Mr. Bernd Liepert resigned from his position as Executive Board member of kuka ag. Mr. Liepert left the company on February 4, 2009.
independence and declaration of compliance
The Supervisory Board members complied with and continue to comply with the arms-length provisions outlined in Section 5.4.2 of the Corporate Governance Code. No conflicts of interest as defined in Section 5.5 of the Corporate Governance Code arose during the reporting period. The Supervisory Board and the Executive Board submitted identical declarations of compliance in accordance with article 161 of the German Stock Corporation Act. The annual declarations were made on February 23, 2009 by the Executive Board and on February 24, 2009 by the Supervisory Board.
work with the auditors
The annual financial statements and management report of kuka Aktiengesellschaft as of December 31, 2008, as well as the consolidated annual financial statements and Group management report as of December 31, 2008, including the bookkeeping, were audited by auditors PricewaterhouseCoopers ag (pwc), Wirtschaftsprüfungsgesellschaft, Frankfurt / Main, who issued an unqualified audit opinion on them. The kuka Group’s risk management system was also audited, as required by law. The kuka Group’s midyear report dated June 30, 2008 was also audited. kuka Aktiengesellschaft’s consolidated statements were prepared in accordance with article 315a of the German Commercial Code (hgb) based on the International Accounting Standards ifrs as adopted by the European Union.
The Audit Committee appointed the external auditors as per the resolution at the Annual General Meeting of May 15, 2008. Prior to appointing the auditors of the financial statements of the company and the Group, the Chairman of the Audit Committee and the Chairman of the Supervisory Board conducted an in-depth review with the auditors regarding audit issues, scope and fees. Furthermore, the Audit Committee obtained the arm’s-length declaration of the auditor in accordance with Section 7.2.1 of the cgc and monitored the independence of the auditor. The committee also dealt with contracts with the auditor for services that did not relate to the audit itself. Each year the audit prioritizes a different set of key topics. The key issues agreed with the auditor for the fiscal 2008 review included capitalization of development costs. The auditor had no major objections on these items. In December 2008, the auditor gave the Audit Committee Chairman a detailed explanation of the preliminary audit results. The auditor also immediately reported any findings that arose during the course of the audit that were material to the Supervisory Board’s work.
Because they had been contracted to review the June 30, 2008 midyear financial report, the auditors attended the August 4, 2008 Audit Committee meeting.
In a joint meeting with the auditor on March 9, 2009, the Audit Committee reviewed the two Annual Reports, taking into consideration the auditor’s reports. The highlights of the Annual Report were presented to the panel by the Executive Board and the auditor. The questions posed by the Audit Committee members were answered, the documentation relating to the financial statements were reviewed, discussed and checked in detail with the auditor and the audit reports were discussed in depth with the auditor. The Audit Committee reported to the Supervisory Board on the results of its meeting and its review during the board’s meeting on March 10, 2009 and recommended that the board approve kuka Aktiengesellschaft’s annual financial statements and the kuka Group’s consolidated annual financial statements.
The Supervisory Board also reviewed the draft annual financial statements submitted by the Executive Board. The audit reports provided by PricewaterhouseCoopers were made available to all members of the Supervisory Board. The auditor took part in the Supervisory Board meeting on March 10, 2009 regarding the annual financial statements in order to report on material findings in the audit and to provide additional information.
annual financial statements for 2008 adopted
After completing its own review, and with full knowledge and consideration of the Audit Committee report, the auditor’s reports and the explanations provided in the meeting of March 10, 2009, the Supervisory Board raises no objections to the results and concurs with the auditor’s findings. In the opinion of the Supervisory Board, the auditor’s reports comply with the legal requirements stipulated in articles 317 and 321 of the German Commercial Code (hgb).
The Supervisory Board is satisfied with the completeness of the management report of the kuka ag and the kuka Group. The assessments made by the Executive Board in the management report and the Group management report are in agreement with its reports to the Supervisory Board, and the statements made in the two reports are also in agreement with the Supervisory Board’s own evaluations. At the conclusion of its review, the Supervisory Board found no cause to raise objections to the management report and the Group management report.
At its financial statements meeting on March 10, 2009, the Supervisory Board approved the management report and annual financial statements prepared by the Executive Board for the 2008 financial year, including the executive compensation report and the explanatory report by the Executive Board of kuka Aktiengesellschaft regarding the information as per articles 289, para. 4 and 315, para. 4 of the German Commercial Code (hgb), which form part of the management report and the Group management report. Thus the annual financial statements are adopted.
The Supervisory Board likewise approves the consolidated annual financial statements and the Group management report of kuka Aktiengesellschaft for the year 2008 prepared by the Executive Board.
Furthermore, at its meeting on March 10, 2009, the Supervisory Board reviewed the recommendations of the Executive Board regarding allocation of the net profit. In doing so, the board paid particular attention to the company’s liquidity situation, financing and capital spending plans and the perspective of the capital markets. In consideration of the latter aspects, the Supervisory Board concurs with the Executive Board regarding allocation of the net profit for the year.
thanks to the staff
The challenges of the year 2008 were only overcome as a result of the strong commitment in all areas of the company. The Supervisory Board would like to thank all employees, members of the Executive Board, the management teams and the elected employee representatives for their efforts. Their achievements serve the interests of the company, its customers and shareholders.
Augsburg, March 10, 2009
The Supervisory Board
Dr. Rolf Bartke
Chairman