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Introduced in 2002, the Corporate Governance Code sets out the main statutory regulations with respect to the management and supervision of listed companies together with internationally accepted standards of good and responsible corporate management. The Corporate Governance Code is deliberately flexible in nature to accommodate specific sector and company requirements. On the one hand, this is done by means of optional and advisable recommendations. On the other, companies may also deviate from mandatory recommendations in justified cases.

 

Nordex AG welcomes the introduction of the Corporate Governance Code as a transparent and generally acknowledged set of rules. In the period under review, the Supervisory Board and the Management Board decided to fundamentally adopt the Code in the revised version dated May 21, 2003. At the same time, Nordex opted to deviate from six recommendations contained in the code in order to avoid possible disadvantages. These deviations are described below.

 

Nordex has waived a deductible on the D&O liability cover for the members of the Supervisory Board and the Management Board. This is because it is convinced that the members of these two bodies are doing everything to avert potential harm from the Group. Responsibility towards the Company and a sense of motivation are not encouraged by imposing a deductible on D&O cover.

 

The Supervisory Board does not receive any performance-tied remuneration. Nordex is not convinced that this form of remuneration is conducive to an improvement in the quality of supervisory activities. The Company continues to refrain from breaking down compensation paid to the individual members of the Supervisory Board and the Management Board. As well as this, it does not publicly disclose the basic elements of the existing flexible compensation system for the Management Board as it does not think that details of the compensation system constitute need-to-know information for the capital markets.

 

Nordex complies with the follow-up admission rules stipulated for the Prime Standard. These transparency standards formulated by Deutsche Börse are amongst the strictest in Europe. Among other things, the stock-market rules stipulate that annual reports must be published within four months and quarterly reports within two months of the end of the period to which they refer. Nordex believes that the 90/45-day rule provided for in the Code does not necessarily heighten transparency. Moreover, the billing practices in the mechanical and plant-engineering sector make it difficult to comply with shorter reporting deadlines.

 

Nordex does not disclose the earnings of its individual subsidiaries. This is because although they are separate legal entities they do not constitute individual business units. Accordingly, these details do not provide any additional information of value to the capital market.

 

In three cases, members of Nordex AG's Supervisory Board hold positions on the boards of the Company's business partners or maintain business relations with other producers of wind turbines. However, there is no evidence of any conflict of interests. The details are as follows:

 

Flemming Pedersen, a member of Nordex AG's Supervisory Board, simultaneously holds an office on the supervisory board of tower supplier Welcon, from whom Nordex purchases some of its towers. The purchasing relations with Welcon strictly comply with arms-length requirements. Orders are placed only after intensive comparisons of prices and services. As Welcon is one of the most efficient producers of towers in Northern Europe, it has been one of Nordex's suppliers for many years.

 

Secondly, HSH Nordbank AG offers Nordex AG credit facilities. Hans Berger, a member of that bank's management board, is also a member of Nordex AG's Supervisory Board. Mr. Berger is not directly responsible for business relations with Nordex and therefore does not exert any direct influence.

 

In addition, foundry company G. Siempelkamp Giesserei supplies Nordex as well as other producers with cast parts for wind turbines. As the spokesman of the management board of G. Siempelkamp Holding, Dr. Hans Fechner, who is a member of Nordex AG's Supervisory Board, is not involved in the former company's operative decisions and does not exert any specific influence on these business relations. Finally, it should be noted that the members of the Supervisory Board hold personal mandates with duties of confidentiality.

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