At the Supervisory Board meeting on February 29, 2008, we thoroughly examined and subsequently approved the annual financial statements of Volkswagen AG and the consolidated financial statements prepared by the Board of Management for 2007. At this meeting, we also agreed to the Board of Management’s plans to increase the share of voting rights in Scania AB. One of the topics at the meeting was the need to prepare a dependent company report for fiscal year 2007. A majority of Supervisory Board members concurred with the opinion of the Board of Management that Volkswagen AG was not a dependent company of Porsche Automobil Holding SE in fiscal year 2007.
At its meetings on April 23, 2008, July 15, 2008, and September 12, 2008, the Supervisory Board concerned itself predominantly with strategic issues. Further focuses were on the current development of the Volkswagen Group as well as of the individual subgroups and companies. We also addressed in detail the general development of the automotive sector in connection with the financial and economic crisis. The Board of Management presented its strategy to gain a sustained foothold in the US market to us at the Supervisory Board meeting on July 15, 2008. We concurred with this strategy and approved the Board of Management’s plans to build a plant in Chattanooga, Tennessee.
Because the Articles of Association of Volkswagen AG contain provisions that correspond to the wording of the three provisions of the VW-Gesetz that were reviewed by the European Court of Justice, Porsche Automobil Holding SE proposed a motion at the Annual General Meeting of Volkswagen AG on April 24, 2008 to delete these provisions from the Articles of Association. In turn, Hannoversche Beteiligungsgesellschaft mbH proposed an alternative motion that only the rights to appoint shareholder representatives and the restrictions on voting rights be deleted. Neither motion was approved by the required majority at the Annual General Meeting, not least because each of the parties proposing the motions voted against the motion proposed by the other party. The lawsuits filed against this are currently pending appeal hearings at the Celle Higher Regional Court. At its meeting on September 12, 2008, the Supervisory Board resolved to amend the Articles of Association to reflect the change in the legal position by deleting the Supervisory Board appointment rights of the Federal Republic of Germany and the State of Lower Saxony, as well as the provision restricting voting rights to 20%. The Braunschweig Local Court refused to enter these amendments to the Articles of Association. The matter is currently pending at the Braunschweig Regional Court.
On November 21, 2008, we formed a Nomination Committee as recommended by the German Corporate Governance Code and adopted resolutions regarding the remuneration system for the Board of Management, including the key contractual elements. More detailed information on the remuneration system and on the remuneration paid to the Board of Management and the Supervisory Board can be found in the . Because of the unclear market situation, we postponed the resolutions on long-term investment and financial planning that were originally planned for this meeting.
During the course of the Supervisory Board’s work, an evident potential conflict of interest arose for the members of the Supervisory Board who are related parties of Porsche Automobil Holding SE at the time of the establishment of the Committee to Approve Transactions with Porsche Automobil Holding SE (including its dependent companies) (AfbG). As a result, the AfbG was established by a majority of the votes of the unaffected members of the Supervisory Board. Two of the affected members of the Supervisory Board exercised their voting right, while one member abstained.
In the course of the work of the AfbG, evident potential conflicts of interest again arose in the case of one member in the context of decisions to approve the supply of goods and services to Dr. Ing. h.c. F. Porsche AG. The outcome was that the decisions were approved unanimously, including the vote of the affected member.
Another potential conflict of interest arose in connection with the resolution concerning the need for a dependent company report for fiscal year 2007. The employee representatives on the Supervisory Board had a potential interest in such a report due, among other factors, to the controversial issue of dependency in the context of the dispute about the codetermination agreement at Porsche Automobil Holding SE, while the members of the Supervisory Board who are related parties of Porsche Automobil Holding SE could have no interest under certain circumstances in the preparation of such a report due, among other factors, to the same reasons. The relevant interests were evident. All members of the Supervisory Board participated in the vote with no abstentions. The outcome of the vote was that the Supervisory Board rejected the need to prepare a dependent company report for 2007 in line with the resolution adopted by the Board of Management.
Following the Annual General Meeting of the Company on April 24, 2008, both the State of Lower Saxony and Hannoversche Beteiligungsgesellschaft mbH, whose sole shareholder is the State of Lower Saxony, and Porsche Automobil Holding SE – as decribed above – filed actions for avoidance of the resolutions by the Annual General Meeting on agenda items 9.1 and 9.2. Since, in accordance with section 246(2) sentence 2 of the AktG, the Company is represented jointly in actions for avoidance by the Board of Management and the Supervisory Board, and members of the governing bodies and shareholders of Porsche Automobil Holding SE, as well as members of the State Government of the State of Lower Saxony are members of the Company’s Supervisory Board, a potential conflict of interest affecting the related parties of the various plaintiffs arose in the vote on the resolution as to whether the Company should defend itself against the actions for avoidance. This conflict of interest was evident. The conflict was resolved by the affected members abstaining from the vote and the Supervisory Board resolving, together with the Board of Management, that the Company should defend itself against both actions. The Supervisory Board members who are related parties of Porsche SE abstained from the above-mentioned vote by the Supervisory Board on the resolution to amend the Articles of Association in view of the legal position advanced by Porsche SE in the actions for avoidance and the associated potential conflict of interest.
The Supervisory Board members Minister-President Wulff and Minister Hirche abstained from the vote by the Supervisory Board on the resolution on the acquisition of the equity interests in Flughafen Braunschweig-Wolfsburg GmbH held by the State of Lower Saxony because of a potential conflict of interest.