Agenda
The Supervisory Board approved the Financial Statements prepared by the Board of Executive Directors and the Consolidated Financial Statements of the BASF Group on February 26, 2020. The Financial Statements have thus been adopted according to Section 172 of the German Stock Corporation Act. Therefore, according to the statutory provisions, no resolution by the Annual Shareholders’ Meeting is planned for Item 1 of the Agenda. The documents specified above have been published on our website and can be accessed at www.basf.com/generalmeeting.
The Board of Executive Directors and the Supervisory Board propose to pay a dividend of €3.30 per qualifying share from the profit retained by BASF SE in the business year 2019 in the amount of €3,899,089,714.88. If the shareholders approve this proposal, a total dividend of €3,030,979,690.20 will be payable on the 918,478,694 qualifying shares as of the date of adoption of the Financial Statements for the business year 2019 (February 26, 2020).
The Board of Executive Directors and the Supervisory Board propose that the remaining profit retained of €868,110,024.68 be allocated to the retained earnings reserve.
In accordance with Section 58(4) sentence 2 of the German Stock Corporation Act, claims to dividends are payable on the third business day following the Annual Shareholders’ Meeting, on Tuesday, June 23, 2020.
The Board of Executive Directors and the Supervisory Board propose that formal approval be given to the actions of the members of the Supervisory Board of BASF SE for the business year 2019.
The Supervisory Board and the Board of Executive Directors propose that formal approval be given to the actions of the members of the Board of Executive Directors of BASF SE for the business year 2019.
The Supervisory Board proposes – based on the recommendation of its Audit Committee – that KPMG AG Wirtschaftsprüfungsgesellschaft, Frankfurt/Main, be appointed auditor of the Financial Statements and the Group Consolidated Financial Statements of BASF SE for the business year 2020.
As he indicated prior to his election to the Supervisory Board by the Annual Shareholders’ Meeting on May 3, 2019, Dr. Jürgen Hambrecht has resigned his Supervisory Board mandate as of the conclusion of the Annual Shareholders’ Meeting 2020 and is thus leaving the Supervisory Board. In accordance with Article 40(2) and (3) of Regulation (EC) No. 2157/2001 of the Council of October 8, 2001, on the Statute for a European Company, Section 17 of the SE Implementation Act, Section 21(3) of the SE Participation Act and Article 10 No. 1 sentence 1 of the Statutes, the Supervisory Board is composed of twelve members, six of whom are elected by the Annual Shareholders’ Meeting. With the departure of Dr. Jürgen Hambrecht, there are now only five officiating members of the Supervisory Board who were elected by the Annual Shareholders’ Meeting. Consequently, the Annual Shareholders’ Meeting is required to elect a substitute member of the Supervisory Board.
Pursuant to Section 17(2) sentence 1 of the SE Implementation Act, the Supervisory Board must consist of at least 30 percent women and at least 30 percent men. Accordingly, a Supervisory Board consisting of 12 members in total must have at least four women and four men. Following the departure of Dr. Jürgen Hambrecht, the Supervisory Board comprises four women and seven men, so either a woman or a man can be elected in the by-election.
Based on the recommendation of the Nomination Committee, the Supervisory Board nominates
Dr. Kurt Bock, Heidelberg, Germany,
Former Chairman of the Board of Executive Directors of BASF SE,
for election to the Supervisory Board as a shareholder representative, effective as of the conclusion of the Annual Shareholders’ Meeting 2020. Dr. Kurt Bock retired from the Board of Executive Directors of BASF SE on May 4, 2018. The statutory two-year cooling-off period in accordance with Section 100(2) No. 4 of the German Stock Corporation Act therefore ended at midnight on May 4, 2020. In accordance with Article 10 No. 4 sentence 1 of the Statutes, the election is being held for the remainder of the term of the departing member, Dr. Jürgen Hambrecht, meaning until the conclusion of the Annual Shareholders’ Meeting in 2024.
The Annual Shareholders’ Meeting is not bound to this proposal for election. In the view of the Nomination Committee, the election of Dr. Kurt Bock to succeed Dr. Jürgen Hambrecht complies with the principles for the composition of the Supervisory Board as adopted by the Supervisory Board, including the competence profile and diversity concept. The principles for the composition of the Supervisory Board as well as its competence profile and diversity concept are published in the Corporate Governance Report 2019, which is accessible online as part of the BASF Report 2019 at www.basf.com/report.
According to the assessment of the Supervisory Board, Dr. Kurt Bock is considered to be independent. He has no business or personal relationships with BASF SE or one of its Group companies, the governing bodies of BASF SE or any significant shareholder in BASF SE, which would constitute a conflict of interest.
It is planned that, in the event of his election by the Annual Shareholders’ Meeting, Dr. Kurt Bock will be proposed to the Supervisory Board as a candidate for the chairmanship of the Supervisory Board.
The profile of Dr. Kurt Bock, information about his mandates on supervisory boards and comparable supervisory bodies as well as other information are contained under No. III. With a view to his number of mandates, Dr. Kurt Bock resigned his previous supervisory board mandate at Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft as of the end of that company’s Annual Shareholders’ Meeting on April 29, 2020, and is no longer a member of the supervisory board of Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft. Dr. Kurt Bock furthermore declared his intention to resign his supervisory board mandate at Fresenius Management SE as of the conclusion of that company’s Annual Shareholders’ Meeting 2020.
In accordance with Section 120a(1) of the German Stock Corporation Act, the Annual Shareholders’ Meeting is to adopt a resolution approving the system of compensation for the members of the Board of Executive Directors as proposed by the Supervisory Board each time a significant change to the compensation system is made, or at least every four years. The Annual Shareholders’ Meeting last adopted a resolution on the system of compensation for the members of the Board of Executive Directors of BASF SE on May 4, 2018. Based on preparatory work carried out by its Personnel Committee, the Supervisory Board resolved with effect from January 1, 2020, to change the system of compensation for the members of the Board of Executive Directors that was presented for approval to the Annual Shareholders’ Meeting 2018, in particular with regard to the variable, performance-related compensation as well as pension benefits and the introduction of a mandatory investment in BASF shares. The amended compensation system for members of the Board of Executive Directors as adopted by the Supervisory Board is described under No. IV. “Compensation system for members of the Board of Executive Directors.” This description is also accessible online at www.basf.com/generalmeeting.
The Supervisory Board proposes – based on the recommendation of its Personnel Committee – that the compensation system for members of the Board of Executive Directors as adopted by the Supervisory Board with effect from January 1, 2020, be approved. The Board of Executive Directors seconds the proposed resolution of the Supervisory Board.
The Board of Executive Directors and the Supervisory Board propose that the following resolution be adopted:
Article 10 No. 2 of the Statutes shall be amended and replaced by the following:
“The appointment of the members of the Supervisory Board is made for a term until the conclusion of the Annual Shareholders’ Meeting resolving on the formal discharge of the Supervisory Board for the third business year after the term of office commenced, with the business year in which the term of office commences not being taken into account. The Annual Shareholders’ Meeting can specify a shorter term of office when the member is elected. Reappointments are permissible.”
The BASF SE Statutes currently provide for a fixed term of office for members of the Supervisory Board until the conclusion of the Annual Shareholders’ Meeting resolving on the formal discharge of the Supervisory Board for the fourth business year after the term of office commenced, i.e., effectively a term of five years. This corresponds to the maximum elected term for Supervisory Board members allowed by the German Stock Corporation Act. The BASF Statutes do not allow for a shorter term of office by way of resolution by the Annual Shareholders’ Meeting.
The German Corporate Governance Code applicable as of January 1, 2020, recommends that the evaluation of the independence of Supervisory Board members take into account the total duration of the membership as a criterion (long-term directorship). The context for this is the consideration that with a longer membership on the Supervisory Board, there is a lessening of the critical distance to the Board of Executive Directors and the Company that is desirable for supervising the Board of Executive Directors. The Code assumes that independence may be threatened once membership exceeds 12 years. The BASF Supervisory Board has also decided to establish that exceeding 12 years of membership is a criterion for evaluating lack of independence.
Changing the term of office from five to four years via an amendment to Article 10 No. 2 of the Statutes ensures that the Supervisory Board members may continue to qualify as independent Supervisory Board members for three full terms of office, without this amendment ruling out a fourth election term of a Supervisory Board member then considered to be “not independent.”
To increase flexibility in the election of Supervisory Board members, it is also recommended that the Statutes allow for the election resolution of the Annual Shareholders’ Meeting to establish a shorter election period.
The proposed amendment has no effect on the term of office of the current Supervisory Board members, for whom the five-year term of office applicable at the time of their election in 2019 will remain in effect. The new term of office will apply for elections to the Supervisory Board beginning as of the Annual Shareholders’ Meeting 2020.
Since the new system was introduced in 2017, the compensation of the members of the Supervisory Board is composed of a purely fixed compensation with an additional obligation to use part of the Supervisory Board compensation to acquire shares in the company. These shares must be held for the duration of membership on the Supervisory Board. Until now, in accordance with Article 14 No. 7 of the Statutes, the compensation has been paid out following the Annual Shareholders’ Meeting subsequent to the conclusion of the business year. This deferred payment date, which is appropriate for variable Supervisory Board compensation linked to the success of the company or the dividend, is no longer required with a system of fixed Supervisory Board compensation. In the future, the compensation should be paid immediately following the conclusion of the business year, provided it does not have to be used to acquire shares.
Article 14 No. 3 of the Statutes requires that the shares to be acquired as part of the Supervisory Board compensation must be held in a custody account at a commercial bank in Germany. This requirement of having an account in Germany was initially introduced for technical reasons and can be eliminated, in particular as a simplification for members of the Supervisory Board not based in Germany.
The company reimburses Supervisory Board members for out-of-pocket expenses they incur in connection with their Supervisory Board and/or Committee activities. Given the steadily growing importance of the Supervisory Board as a governing body of the company in recent years and the ever-increasing intensity of its activities, it is appropriate in Article 14 No. 5 of the Statutes to stipulate that members can be provided with modern equipment and appropriately reimbursed for expenses in connection with their Supervisory Board activities. This applies in particular to the prominent role of the Chairman of the Supervisory Board, which has also become increasingly important with regard to external visibility in recent years.
The Board of Executive Directors and the Supervisory Board propose that the following resolution be adopted:
Article 14 No. 3 sentences 4 and 5 of the Statutes shall be amended and replaced by the following:
“The Company shall withhold the abovementioned portion of the compensation and arrange for the acquisition of the shares on behalf of the members of the Supervisory Board on the first day of stock market trading after the day of the Annual Shareholders’ Meeting to which the consolidated financial statements for the fiscal year for which the compensation is paid are submitted or which decides on the approval thereof. The acquired shares shall be deposited into a custody account in the name of the Supervisory Board member.”
Article 14 No. 5 of the Statutes shall be amended and replaced by the following:
“The Company shall reimburse members of the Supervisory Board for out-of-pocket expenses relating to their activities as members of the Supervisory Board or of a Committee as well as any value added tax payable on the compensation or the reimbursement of expenses. The Company can provide all members or individual members of the Supervisory Board with material resources or services in kind to carry out their Supervisory Board responsibilities, such as the use of transportation, necessary security measures, or the set-up of a Supervisory Board office to support the Supervisory Board activities. Moreover, the Company can also provide these material resources and services in kind to the Chairman of the Supervisory Board to carry out representational duties and activities in connection with this role. The Company shall include the performance of the duties of the members of the Supervisory Board in the coverage of a directors’ and officers’ loss liability insurance concluded by it. The associated premiums shall be paid by the Company.”
Article 14 No. 7 of the Statutes shall be amended and replaced by the following:
“The compensation pursuant to Nos. 1 and 2, provided it is not withheld for the purpose of acquiring shares in accordance with No. 3, shall become due after the conclusion of the fiscal year for which the compensation is paid.”
According to Section 113(3) of the German Stock Corporation Act, a resolution must be adopted on the compensation of the Supervisory Board at least every four years; a resolution simply confirming the existing compensation is permissible. The compensation of the Supervisory Board is set out in Article 14 of the Statutes and was defined by a resolution of the Annual Shareholders’ Meeting on May 12, 2017, as a purely fixed compensation with an additional obligation of Supervisory Board members to use part of the fixed compensation to acquire shares in the Company and to hold these shares until they leave the Supervisory Board.
The Board of Executive Directors and Supervisory Board propose that the provisions on the compensation of the Supervisory Board as set out in Article 14 of the Statutes be confirmed, including, if applicable, the changes adopted under Agenda Item 9. The wording of the provisions on the compensation of the Supervisory Board in accordance with Article 14 of the Statutes in the current version dated May 2019 is contained under No. V.