Cooperation, composition and activities of the Managing Board and Supervisory Board
The management structure at HUGO BOSS is primarily derived from the requirements of corporate law. As a German stock corporation, HUGO BOSS AG has a dual management and control structure. The Managing Board is responsible for the Group’s strategy and management. The Supervisory Board advises the Managing Board and monitors its management activities.
The Managing Board and Supervisory Board cooperate closely for the benefit of the Group. The common objective is to sustainably increase the enterprise value. The Managing Board regularly informs the Supervisory Board in a timely manner and in detail about Group-relevant issues concerning strategy, planning, business development, risk position, changes in the risk situation and compliance. Deviations from targets and budgets are explained to the Supervisory Board and its committees in detail. The strategic alignment and further development of the Group are also discussed and coordinated with the Supervisory Board.
When making decisions and in performing their duties for HUGO BOSS, members of the Managing Board and Supervisory Board are not permitted to pursue their personal interests or grant other persons unjustified advantages. No conflicts of interest of members of the Managing Board or Supervisory Board were reported in fiscal year 2020. The mandates held by the Managing Board and Supervisory Board members in statutory supervisory boards or comparable oversight committees of commercial organizations in Germany and other countries are listed in the notes to the consolidated financial statements. No member of the Managing Board sits on more than three supervisory boards of listed companies outside the Group. The same applies to members of the Supervisory Board who sit on the managing boards of other listed companies. Notes to the Consolidated Financial Statements, Note 27
The Managing Board
The Managing Board of HUGO BOSS AG is composed of the Spokesperson of the Managing Board and the members of the Managing Board with equal rights and their respective areas of responsibility. The position of Chairman of the Managing Board has not been reassigned for the period form the department of Mark Langer on July 15, 2020 until his successor Daniel Grieder joins the company, which is expected to take place on June 1, 2021. Consequently, the Managing Board had three members at the end of fiscal year 2020.
HUGO BOSS is managed by the Managing Board of the parent company HUGO BOSS AG, in which all of the Group management functions are bundled. The Managing Board’s core duties include corporate strategy, corporate finance, risk management (including the establishment and monitoring of the risk management system), decisions on the collections, product sourcing and management of the sales network. In addition, the Managing Board is responsible for preparing the annual, consolidated, and interim financial statements as well as the presentation of the Company to the media and the capital market.
The bylaws of the Managing Board stipulate the internal rules of the Managing Board, in particular the allocation of duties to its members as well as the procedures to be followed for passing resolutions. The bylaws also define the disclosure and reporting duties as well as those matters requiring the approval of the Supervisory Board. The bylaws of the Managing Board are available on the Company’s website. group.hugoboss.com
The Supervisory Board pays attention to diversity in the composition of the Managing Board (diversity concept for the Managing Board). Diversity among the Managing Board’s members serves to ensure the Company’s success over the long term. The Supervisory Board takes account of a number of aspects in the composition of the Managing Board, including the following:
- Members of the Managing Board should have long-standing management experience.
- Members of the Managing Board should have an international background (i.e. individuals with experience gained outside Germany due to current or past activities and/or non-German citizenship).
- As many different educational and professional backgrounds as possible should be represented in the Managing Board as a whole.
- In addition to the legally required qualifications, the Managing Board as a whole should have members with knowledge of branding, supply chain matters and sales.
- The Managing Board as a whole should have a balance of ages among its members in the interest of long-term succession planning.
- The Supervisory Board is pursuing the target of having at least one woman sitting on the Managing Board by no later than December 31, 2021.
- Members of the Managing Board shall as a rule not be older than 60 at the time of their appointment.
Decisions on the specific composition of the Managing Board shall be made by the Supervisory Board in the interest of the Company with regards to the circumstances of the individual case. Except for the target ratio of women on the Management Board, the aforementioned targets for filling the Managing Board were met or exceeded throughout the reporting period.
Pursuant to Sec. 111 (5) AktG [“Aktiengesetz”: German Stock Corporation Act], the Supervisory Board of HUGO BOSS AG set the target of having at least one woman sitting on the Managing Board of the Company by no later than December 31, 2021.
The GCGC stipulates that the Managing Board must consider diversity when filling management positions in the Company and specifically that women must be adequately represented. The Managing Board is committed to this objective. It already monitors the diversity of the workforce and will continue to do so in future. HUGO BOSS, however, also continues to be committed to the core principle of hiring solely based on applicants’ qualifications, even if this might result in a decrease in the proportion of women employed. Furthermore and pursuant to Sec. 76 (4) AktG, the Managing Board has set a target gender quota of at least 30% women in the first management level and 35% in the second management level below the Managing Board to be achieved by December 31, 2021. As of December 31, 2020, the proportion of women in the first management level was 25%, and hence on the prior year level (December 31, 2019: 25%). The target at the second management level was again clearly exceeded by December 31, 2020, with a proportion of women of 43% (December 31, 2019: 48%). Employees
Jointly with the Managing Board, the Supervisory Board conducts long-term succession planning for the Managing Board. In this context, the Supervisory Board considers the target for the proportion of women on the Managing Board and the criteria set out in the diversity concept for the Managing Board’s composition as well as the requirements of the German Stock Corporation Act (Aktiengesetz) and the GCGC. Respecting the concrete qualification requirements and the above-mentioned criteria, the Personnel Committee prepares an ideal profile, on the basis of which it compiles a shortlist of available candidates. Interviews are then conducted with these candidates. Afterwards, a proposal is submitted to the Supervisory Board for approval. When developing the profile of requirements and selecting candidates, the Supervisory Board is supported, if necessary, by external consultants.
The Supervisory Board
HUGO BOSS attaches great importance both to the skills and independence of the Supervisory Board members and to diversity in the composition of the Board. The members of the Supervisory Board of HUGO BOSS have the knowledge, skills, and professional experience required to duly perform their duties.
In accordance with the recommendation in C.1 of the GCGC, the Supervisory Board at its meeting on December 7, 2017 decided on a Supervisory Board skills profile and set specific targets in terms of the Board’s composition. At least two members of the Supervisory Board should accordingly have an international background. In fiscal year 2020, both before and after the new election, the Supervisory Board had four members who were not German citizens. In addition, other Supervisory Board members who have German nationality have an international professional background. Furthermore, no member may be exposed to any conflicts of interest. No conflicts of interest of members of the Supervisory Board were reported in fiscal year 2020. None of the current members of the Supervisory Board have previously held a Managing Board position within the Company. Furthermore, there were no advisory or other service agreements in place between members of the Supervisory Board and the Company in the reporting year. In addition, no member of the Supervisory Board should be older than 69 years on the date of the election. The Supervisory Board has, on the other hand, not defined any maximum term of office for its members. HUGO BOSS believes that a predefined maximum period of office is not appropriate as it is keen to benefit from the experience of the long-standing members of the Supervisory Board.
The Supervisory Board has also set a specific target for the number of independent members of the Supervisory Board as defined in the German Corporate Governance Code. Of the twelve members of the Supervisory Board, including the six employee representatives, a total of at least nine members should be independent. In addition to the six employee representatives, the four shareholder representatives Iris Epple-Righi, Christina Rosenberg, Robin J. Stalker and Hermann Waldemer are independent as defined in recommendation C.6 of the GCGC.
The following further targets for filling the Board, which will help to achieve overall diversity in the Supervisory Board (diversity concept for the Supervisory Board), were similarly adopted by the Supervisory Board:
- The Supervisory Board should have at least two members with an international background (i.e. individuals with experience gained outside Germany due to current or past activities and/or non-German citizenship).
- The Supervisory Board should have at least one member with expertise in branding, supply chain and/or national or international sales matters.
- The Supervisory Board should have at least two members who are currently or formerly managers of another company.
- The Supervisory Board should have at least four members possessing extensive knowledge and experience of the Company itself.
- Aside from the employee representatives, the Supervisory Board should have at least three members who are independent and two who have expertise in the areas of accounting or auditing.
The targets for filling positions were either reached or exceeded throughout the reporting period.
The Supervisory Board currently includes five women. The gender quota pursuant to Sec. 96 (2) AktG is fulfilled at HUGO BOSS separately by the shareholder representatives and the employee representatives. With three female employee representatives and two female shareholder representatives, the gender quota is fulfilled on both sides.
The Supervisory Board audits the efficiency of its activities on a regular basis. In 2020, the assessment of the Supervisory Board members was queried, as in the previous years, using a comprehensive questionnaire. External analysis of the completed questionnaires and the improvements suggested were analyzed and discussed at length at the Supervisory Board meeting on December 3, 2020. The Supervisory Board drew an overall favorable conclusion.
The Supervisory Board has adopted bylaws which, among other things, govern its duties and responsibilities as well as the procedures for convening, preparing and chairing meetings and for passing resolutions. The bylaws of the Supervisory Board are available on the Company’s website. group.hugoboss.com
The Supervisory Board has created five committees on behalf of and representing the Supervisory Board as a whole, which fulfill duties assigned to them to the extent permitted by law, the Articles of Incorporation and/or bylaws. The bylaws provide that the Audit Committee, the Personnel Committee and the Working Committee shall each have a 50:50 ratio of shareholder representatives and employee representatives.
1. Audit Committee
The Audit Committee, which has equal representation, is composed of six members who are elected by the Supervisory Board. In accordance with the German Corporate Governance Code, the chairman of the Committee must be independent. The Audit Committee is responsible for monitoring the financial reporting process, the effectiveness of the systems of internal control, risk management and internal auditing as well as the audit of the annual financial statements. It has the following main duties:
- To perform a preliminary audit of the annual financial statements and the consolidated financial statements, the combined management report of HUGO BOSS AG and the Group and the profit appropriation proposal, to discuss the audit report with the external auditor and to prepare the Supervisory Board’s decision on the approval of the annual financial statements and the consolidated financial statements;
- To examine the quarterly reports (interim reports and quarterly statements) and discuss them with the Managing Board;
- To prepare the Supervisory Board’s proposal to the Annual Shareholders’ Meeting concerning the appointment of an external auditor and, in particular, to satisfy itself of the external auditor’s independence and to examine the additional services which are provided;
- Following consultation with the Managing Board: To engage the external auditor and to sign the corresponding fee agreement for the audit of the Annual Financial Statements and the Consolidated Financial Statements on the basis of the resolution passed at the Annual Shareholders’ Meeting, including the determination of the key audit points and the auditor’s reporting duties towards the Supervisory Board;
- To satisfy itself that the statutory provisions and internal company policies have been complied with (“compliance”).
The Supervisory Board has satisfied itself of the independence of the members of the Audit Committee representing the shareholders and of the Chairman of the Audit Committee, Robin J. Stalker.
As of December 31, 2020, the Compliance Committee comprised Robin J. Stalker (chairman), Gaetano Marzotto, Sinan Piskin, Martin Sambeth, Antonio Simina, and Hermann Waldemer.
2. Personnel Committee
The Personnel Committee, which has equal representation, is made up of the Chairman of the Supervisory Board and five other members elected by the Supervisory Board from its own number. It makes decisions on the service contracts of the Managing Board members and other contractual matters (including those relating to former Managing Board members and their surviving dependents) not related to the compensation of Managing Board members. Decisions concerning the compensation of Managing Board members (including former Managing Board members and their surviving dependents) as well as regular deliberation on and the review of the compensation system are the responsibility of the full Supervisory Board. However, the Personnel Committee submits proposals in preparation for decisions on these matters. In addition, the Personnel Committee makes decisions in accordance with Sec. 114 AktG (Contracts with Supervisory Board Members) and Sec. 115 AktG (Loans to Supervisory Board Members) as well as matters requiring the Supervisory Board’s consent in connection with senior executives (including the granting of loans to senior executives within the meaning of Sec. 89 (2) AktG). To the extent permitted by law, it represents the Company in transactions with Managing Board members (including former Managing Board members and their surviving dependents).
As of December 31, 2020, the Personnel Committee comprised Hermann Waldemer (chairman), Anita Kessel, Luca Marzotto, Sinan Piskin, Christina Rosenberg, and Antonio Simina.
3. Working Committee
The Working Committee, which has equal representation, comprises the Chairman of the Supervisory Board and five other members whom the Supervisory Board elects from its own number. They assist and advise the Chairman of the Supervisory Board. In accordance with the statutory provisions, the Working Committee works closely with the Managing Board to prepare the meetings of the Supervisory Board. In particular, the Working Committee performs the monitoring duties between the meetings of the Supervisory Board. This does not prejudice the monitoring duties of the individual members of the Supervisory Board. The Working Committee makes decisions on transactions requiring consent in cases where the Supervisory Board has delegated its powers accordingly. To the extent permitted by law, the Working Committee may make decisions on urgent matters in lieu of the full Supervisory Board. In such cases, it must immediately notify the Supervisory Board in written form and report orally in detail at the next Supervisory Board meeting on the decision, the reasons for it and the need for the decision by the Working Committee.
As of December 31, 2020, the Working Committee comprised Hermann Waldemer (chairman), Iris Epple-Righi, Katharina Herzog, Luca Marzotto, Tanja Nitschke, and Sinan Piskin.
4. Nomination Committee
The Nomination Committee has two members who are elected by the representatives of the shareholders on the Supervisory Board from their own number; accordingly, it is made up solely of shareholder representatives in accordance with the recommendation in D.5 of the GCGC. It is required to identify suitable candidates for the election of shareholder representatives to the Supervisory Board and to put their names forward to the Supervisory Board as its proposed nominees for election at the Annual Shareholders’ Meeting.
As of December 31, 2020, the Nomination Committee comprised Hermann Waldemer (chairman), and Gaetano Marzotto.
5. Mediation Committee
The Mediation Committee comprises the Chairman of the Supervisory Board, the Deputy Chairman of the Supervisory Board, one member elected by the employee representatives on the Supervisory Board and one elected by the equity holder representatives on the Supervisory Board, with a majority of the votes cast in both cases. Its sole purpose is to perform the duties referred to in Sec. 27 (3) and Sec. 31 (3) Sentence 1 MitbestG [“Mitbestimmungsgesetz”: German Co-Determination Act]. Accordingly, the Mediation Committee submits proposals for the appointment of members of the Managing Board in cases in which a prior proposal has failed to achieve the necessary statutory majority.
As of December 31, 2020, the Mediation Committee comprised Hermann Waldemer (chairman), Anita Kessel, Gaetano Marzotto, and Sinan Piskin.