Report of the Supervisory Board
Following the huge challenges faced by the Board of Management and the Supervisory Board as well as by a large number of employees triggered by the Group’s restructuring in 2009, the main focus of the Supervisory Board’s activity in fiscal 2010 was to assist the Board of Management in pursuing the consolidation course on which the company had embarked.
The major collapse of the worldwide material handling equipment market in 2009 was followed by the rapid recovery of global markets in the second half of 2010. Thanks to its restructuring, the Group was well equipped for this, although neither the market nor consolidates sales have managed to return to levels witnessed before the crisis. Due to the market’s strong revitalization, decision makers were able to scale up structures, thereby keeping with the momentum on all markets. This does not only apply to Asia, which was less affected by the crisis. Jungheinrich expanded its sales organization in that region and strengthened the plant site. The new cooperation with MCFA in North America, which entered into effect on January 1, 2010, has already borne fruit. In addition, the new factory in Landsberg (Saxony-Anhalt) was ramped up in 2010 and is now running at a stable level. Measures initiated and developments that occurred enabled short-time work at our German locations to be reduced and—in some cases—discontinued. All in all, measures initiated across the board to lower costs and raise efficiency have been effective, enabling earnings to post disproportionately strong growth. The task now at hand is to continue these efforts.
In the 2010 reporting year, the Supervisory Board fulfilled the tasks entrusted to it by the law, the company’s statutes and the internal rules of procedure with respect to these topics and the rest of the operating activities. The Supervisory Board thoroughly advised the Board of Management in running the company and saw to it that the company’s management was constantly monitored by the Board of Management.
The Supervisory Board was involved early on and extensively in all decisions made for the company. In particular, the Board of Management reported to the Supervisory Board on the business performance of the individual Group companies, the financial status, the personnel situation, as well as on major investment ventures and material projects. The Supervisory Board and the Finance and Audit Committee concerned themselves in detail with the material risks, risk management, the internal control system, compliance with statutory regulations and guidelines of company management as well as with the company’s compliance organization. The reports of the Board of Management were submitted in writing or orally. Deviations in the business trend from the budget were disclosed in a timely manner and reviewed by the Supervisory Board based on the information communicated to it. In view of the consolidation phase in the 2010 financial year, special attention had to be paid to maintaining the Group’s financing as the markets picked up. Management fulfilled this task successfully as well. The Chairman of the Supervisory Board and the chairmen of the committees also regularly met with the Board of Management when the Supervisory Board and its committees were out of session to discuss various issues in a timely manner and prepare decisions to be taken by the Supervisory Board and its committees.
The following topics were the focal points of Supervisory Board activity in the period being reviewed. They were addressed in six ordinary meetings and one extraordinary session.
Centre stage at the Supervisory Board’s first meeting on February 16, 2010 was taken by the update to the Group’s strategy designed by the Board of Management, the debate on the Board of Management’s new compensation system, and the reappointment of Dr. Rosenbach as member of the Board of Management responsible for technology for another three years starting on January 1, 2011.
The extraordinary session on March 12, 2010 exclusively dealt with the new remuneration model for the Board of Management, which was adopted by majority vote with effect from January 1, 2011. The Supervisory Board concerned itself in depth with the requirements and options of a new compensation system, consulting with external specialists in this regard.
The focal point of the Supervisory Board’s balance-sheet meeting on April 7, 2010 was the in-depth inspection and approval of Jungheinrich’s parent company and consolidated financial statements for the period ended December 31, 2009, in the presence of the independent auditors. To this end, the Finance and Audit Committee delivered a detailed report on its up-front analysis of the independent auditors’ audit reports. The independent auditors reported to the Supervisory Board on the material results of their audits. Furthermore, the report of the Supervisory Board and the Corporate Governance report by the Board of Management and the Supervisory Board to the Annual General Meeting were discussed and approved. The updated corporate strategy was approved and further action to be taken with respect to the audit of the Supervisory Board’s efficiency was coordinated and approved.
The new contracts for the members of the Board of Management effective from January 1, 2011 onwards were adopted, and Mr. Frey was appointed Chairman of the Board of Management for another four years as of May 1, 2011 in the Supervisory Board meeting following the Annual General Meeting on June 15, 2010.
Mr. Frey was appointed Labour Director at the September 14, 2010 session once again.
The meetings on November 17 and December 7, 2010 were dominated by the discussion and approval of the budget for the 2011 financial year. In the session on December 7, 2010, a number of draft resolutions were passed, as was the proposal submitted to the 2011 Annual General Meeting on the adoption of a new Supervisory Board compensation system. Based on preparatory work done by the Finance and Audit Committee, during this session, the Supervisory Board also addressed the recommendations and suggestions of the German Corporate Governance Code revised in the middle of 2010, for which it adopted its annual declaration. In addition, the results of the efficiency test performed by the Supervisory Board in the year under review as well as individual suggestions for further improving Supervisory Board work were debated, coordinated and agreed in detail.
One of the key criteria in all the meetings of the Supervisory Board and its committees as well as regarding all resolutions passed was to ensure the long-term welfare of the company and its employees. Despite the differences in points of view, arguments and debates were always characterized by the willingness to arrive at the best possible solutions for the company and its workforce over the long term.
The Supervisory Board committees maintained their existing composition in parts of the period under review. Once again, the Joint Committee did not have any reason to convene in the reporting period. Composed of three members, the Finance and Audit Committee again convened frequently. In six meetings, it performed all of the tasks entrusted to it in accordance with the company statutes and the internal rules of procedure both efficiently and transparently, largely in preparation of decisions to be taken by the Supervisory Board in its plenary sessions and in part by exercising the discretionary powers conferred upon it.
Composed of five members, the Personnel Committee convened at five ordinary and three extraordinary meetings in 2010. The two committees used in December 2006 (Corporate Headquarters Construction and USA Committees) continued their work until the middle of 2010, after which they were dissolved due to the completion of their respective tasks.
Committee chairmen submitted detailed reports on the contents of the resolutions passed at all committee meetings in the subsequent Supervisory Board sessions.
The parent company’s financial statements for the period ended December 31, 2010 prepared by the Board of Management as well as the management report of Jungheinrich AG and the accounts for the 2010 fiscal year were again audited by Hamburg-based Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft. The auditors did not express any reservations regarding the annual financial statements and confirmed this in their unqualified auditor’s certification.
The consolidated financial statements for the period ending on December 31, 2010 and the Group management report have been audited by the same independent auditors as well and also received their unqualified auditor’s certification.
The Finance and Audit Committee reviewed the documents supporting the annual financial statements taking account of the auditors’ audit reports and by constantly coordinating its work with the auditors and submitted a report to the Supervisory Board thereon. These documents had also been at the entire Supervisory Board’s disposal and were reviewed by it taking account of the report of the Finance and Audit Committee. The same applies to the Board of Management’s proposal for the appropriation of the balance sheet profit. The auditors who signed the annual financial statements and the consolidated financial statements attended the March 17, 2011 Supervisory Board Meeting on the relevant item on the agenda and submitted their detailed and final report on the results of their audit of the parent company and consolidated financial statements at this meeting. Furthermore, the auditors reported that the internal control system, the risk management system and the compliance system were not objectionable.
On the basis of its own in-depth and final examination of the parent company’s financial statements, the management report, the consolidated financial statements, and of the Group management report, the Supervisory Board did not raise any objections to these financial statements and approved the result of the independent auditor’s report. At its March 17, 2011 meeting, the Supervisory Board approved the annual financial statements and the consolidated financial statements for the period ending on December 31, 2010. The annual financial statements are thus adopted. The Supervisory Board seconds the Board of Management’s proposal for the appropriation of the balance sheet profit for the 2010 financial year.
There are no personnel changes on the Supervisory Board in the period under review to report on. The contracts of Mr. Frey as Chairman of the Board of Management and of Dr. Rosenbach as member of the Board of Management in charge of technology were extended by four and three years, respectively.
Hamburg, March 17, 2011
On behalf of the Supervisory Board
Jürgen Peddinghaus
Chairman