The page has been saved

You can access your saved pages in the document centre

 
 

REPORT OF THE SUPERVISORY BOARD

Götz Mäuser
Chairman of the Supervisory Board: Partner at Permira Beteiligungsberatung GmbH (Permira)

Dear Shareholders,

Once again in 2012, the Supervisory Board of ProSiebenSat.1 Media AG performed the duties incumbent upon it under the law, the articles of incorporation, and its own rules of procedure, also taking into consideration the recommendations of the German Corporate Governance Code. The Supervisory Board supervised the management of the Executive Board and assisted it with advice.

Cooperation between the Executive Board and Supervisory Board

In the last financial year, the Supervisory Board regularly advised the Executive Board on the management of the company in close, trusting cooperation and carefully and continuously supervised its conduct of business. It dealt in depth with the development of the Group’s operations and strategy. The Supervisory Board was regularly, promptly and fully informed about all issues relevant to the Company concerning strategy, planning, business performance, the risk situation, risk management and compliance. When trading performance deviated from plans, the Executive Board explained the details to the Supervisory Board and discussed with it. In this way it was directly involved at an early stage in all decisions of fundamental importance to the Company. Supervisory Board meetings were characterized by intensive and open exchange between the Executive Board and the Supervisory Board. In addition, in the framework of Supervisory Board meetings, so-called “Executive Sessions” took place, in which members of the Supervisory Board have the opportunity to discuss topics without the Executive Board.

Where the law, the articles of incorporation, or the rules of procedure demanded the approval of the Supervisory Board or a committee for individual measures, a corresponding resolution was passed. Members of the Supervisory Board prepared for resolutions on Executive Board measures requiring their consent with the regular aid of documentation provided in advance by the Executive Board. Here, they were supported by the competent committees in each case, if applicable, and discussed plans on which decisions were pending with the Executive Board. All matters requiring its consent were submitted to the Supervisory Board promptly for review.

In addition to reporting in the Supervisory Board meetings, the Executive Board regularly advised the Supervisory Board of the most important financial figures — through written monthly reports — and submitted the interim and annual financial reports to it. The Executive Board also informed the Supervisory Board immediately of particular events between meetings and in objectively justified cases asked it to pass resolutions in writing in consultation with the Chairman of the Supervisory Board. The Chairman of the Supervisory Board also maintained a close personal dialog with the CEO on an ongoing basis even outside meetings.

On the basis of the Executive Board’s regular reports, the Supervisory Board was always promptly and thoroughly informed about the Company’s condition and pending decisions and was able to perform its tasks in their entirety. There was therefore no need for the Supervisory Board to examine the Company’s books and other records for the purposes of Section 111 (2) of the German Stock Corporation Act — apart from the documentation provided to the Supervisory Board in the course of the Executive Board’s reporting activities.

Changes in the membership of the Executive and Supervisory Boards

Andreas Bartl resigned his Executive Board position effective at the end of February 29, 2012, in consultation with the Supervisory Board. Effective October 1, 2012, Heidi Stopper, previously Executive Vice President Human Resources, was appointed as an additional member of the Executive Board. She is in charge of the newly created “Human Resources” Executive Board department.

There were the following changes to the Supervisory Board in the 2012 financial year: Herman van Campenhout and Robin Bell-Jones resigned their positions as members of the Supervisory Board effective at the end of the Annual General Meeting on May 15, 2012. The Annual General Meeting of May 15, 2012 elected Drs. Fred Th. J. Arp, CFO of Telegraaf Media Groep N.V., and Stefan Dziarski, investment professional at Permira Beteiligungsberatung GmbH, as new members of the Supervisory Board in a by-election. They were both appointed to the Supervisory Board for the remainder of the terms of office of the departing Supervisory Board members. Therefore, their terms of office end with the conclusion of the Annual General Meeting that decides on discharge for the 2013 financial year.

Points of emphasis of the Supervisory Board’s advisory and monitoring activities

In total, four ordinary meetings of the Supervisory Board took place in 2012 as well as two extraordinary meetings in the form of teleconferences. More than half of these meetings were attended by all members of the Supervisory Board. Outside personal meetings, the Supervisory Board made nine decisions by written correspondence.

Once again in the 2012 financial year, the Supervisory Board dealt with the business and financial situation, fundamental questions of corporate policy and strategy, the personnel situation and investment projects. The following topics were points of emphasis of the Supervisory Board’s advisory and monitoring activities:

  • In a vote by correspondence of February 15, 2012, the Supervisory Board approved the takeover of Austria 9 TV GmbH and the subsequent station relaunch as sixx Austria.
  • In an extraordinary Supervisory Board meeting on February 22, 2012, the Supervisory Board acknowledged and approved Andreas Bartl’s resignation from the Executive Board effective at the end of February 29, 2012 and decided upon a corresponding termination agreement. It also approved the conclusion of a consulting contract with Mr. Bartl on the recommendation of the Compensation Committee.
  • On March 5, 2012, the Supervisory Board approved the acquisition of a controlling interest in the British TV and film production company Endor Productions Ltd. via the Red Arrow Entertainment Group GmbH.
  • In its ordinary meeting of March 27, 2012, the Supervisory Board adopted the documents of the annual financial statements, the Corporate Governance Report and the Declaration of Compliance for the financial year 2011. In addition, the Supervisory Board considered the Executive Board’s profit allocation proposal and approved the proposed resolutions on the agenda of the 2012 Annual General Meeting including the resolution proposed to the Annual General Meeting that Drs. Th. J. Fred Arp be elected as a new member of the Supervisory Board. As well as passing the budget for the 2012 financial year, the Supervisory Board approved the consolidation of programming licenses. The annual review of Executive Board compensation was also a topic of discussion. In this respect, the Supervisory Board addressed the appropriateness of Executive Board compensation in detail and approved the bonus payments for the 2011 financial year and the target agreements for members of the Executive Board for the 2012 financial year. In the Executive Board’s absence, the Supervisory Board carried out a review of the efficiency of its working procedures in terms of Item 5.6 of the German Corporate Governance Code.
  • In addition to the proposed resolutions on the agenda of the 2012 Annual General Meeting already adopted, on April 2, 2012 the Supervisory Board approved the resolution proposed to the Annual General Meeting that Mr. Stefan Dziarski be elected as a new member of the Supervisory Board by correspondence.
  • In a vote by correspondence on May 7, 2012, the Supervisory Board approved the acquisition of a majority interest in the Israeli production firm July August Communications and Productions Ltd.
  • The Annual General Meeting on May 15, 2012 elected Drs. Fred Th. J. Arp and Mr. Stefan Dziarski to the Supervisory Board. In a subsequent ordinary meeting of the Supervisory Board, Drs. Fred Th. J. Arp was elected to the Compensation Committee and Mr. Stefan Dziarski to the Presiding Committee and the Audit and Finance Committee. In this meeting, the Supervisory Board also addressed strategic issues and the Company’s financial position.
  • In a vote by correspondence on June 13, 2012, the Supervisory Board approved the implementation of a new share-based compensation plan (Group Share Plan). This replaces the Long Term Incentive Plan, which was last renewed in 2011. In addition to Executive Board members, the Group Share Plan benefits selected managers and other selected employees of the ProSiebenSat.1 Group.
  • On July 27, 2012, the Supervisory Board approved a controlling interest in the US production company Left/Right Holdings, LLC via the Red Arrow Entertainment Group GmbH.
  • In another vote by correspondence on August 21, 2012, the Supervisory Board approved the foundation of a new free TV station, “SAT.1 Gold”, which went on air on January 17, 2013. The channel is aimed at affluent older, primarily female viewers — a target group of increasing relevance to advertising customers.
  • In a vote by correspondence on September 11, 2012, the Supervisory Board approved a consensual settlement of the two pending Federal Cartel Office proceedings. The cases are based on the accusation of anti-competitive collusion between the two TV station groups ProSiebenSat.1 and RTL with regard to the encryption of their digital free TV programs.
  • In its ordinary meeting on September 27, 2012, the Supervisory Board appointed Heidi Stopper to the Executive Board as an additional member. On October 1, 2012, Heidi Stopper took on the newly created “Human Resources” Executive Board department. Other subjects of the meeting were various operational and strategic issues such as expected offers from various parties interested in purchasing the ProSiebenSat.1 Group’s Northern European TV and radio interests.
  • At its last ordinary meeting of the 2012 financial year, on November 28, 2012, the Supervisory Board approved the budget for the 2013 financial year. Another topic was the development of the proportion of women in management positions in the ProSiebenSat.1 Group.
  • In an extraordinary meeting held by teleconference on December 13, 2012, the Supervisory Board approved the sale of the ProSiebenSat.1 Group’s TV and radio interests in the Northern European countries (Norway, Sweden, Finland and Denmark) to Discovery Communications. In this meeting, the Supervisory Board also addressed the planned dividend proposal and the planned conversion of preference shares into common stock.
  • In another vote by correspondence on December 17, 2012, the Supervisory Board approved the acquisition of a stake of 10% of the share capital of KüchenQuelle GmbH by SevenVentures GmbH.

Report on the committees’ work

The work of the ProSiebenSat.1 Media AG Supervisory Board is supported by the committees it has set up. Once again in 2012, the Supervisory Board had three committees at its disposal so as to conduct its work efficiently — the Presiding Committee, the Compensation Committee and the Audit and Finance Committee.

  • The Presiding Committee prepares meetings of the Supervisory Board and approves matters of particular business significance such as the purchase of programming rights. This committee furthermore acts as a nominating committee under the German Corporate Governance Code, suggesting suitable Supervisory Board candidates to the full Supervisory Board for nomination at the Annual General Meeting. In 2012, the Presiding Committee adopted seven resolutions by correspondence; there was one meeting in person.
  • The Compensation Committee makes preparations for various resolutions for plenary sessions of the Supervisory Board on personnel-related Executive Board issues. For example, this includes the annual review of the Executive Board members’ compensation by the full Supervisory Board. In 2012, the Compensation Committee held four ordinary meetings; one extraordinary meeting took place via telephone. One resolution was passed by correspondence.
  • In accordance with Section 107 (3) Sentence 2 of the German Stock Corporation Act and Item 5.3.2 of the German Corporate Governance Code, the Audit and Finance Committee is concerned with monitoring the financial reporting process and the effectiveness of the internal controlling system, the risk management system, compliance and the internal auditing system. In particular, the Audit and Finance Committee prepares the Supervisory Board’s resolutions on the annual and consolidated financial statements and agreements with the auditor (specifically the audit assignment, determination of the focal points of the audit and the fee agreement); it also takes appropriate steps to verify and monitor the auditor’s independence. Finally, it prepares the Supervisory Board’s decision for the Supervisory Board’s proposal to the Annual General Meeting on the selection of the auditor and submits a recommendation on this issue to the Supervisory Board. The Audit and Finance Committee also decides in place of the Supervisory Board on certain measures requiring approval referred to the Committee. The Audit and Finance Committee met five times in 2012 and adopted one resolution by correspondence.

At its plenary sessions the Supervisory Board was informed about the Committees’ work regularly and in full.

Audit of the annual and consolidated financial statements 2012

The 2012 financial statements of ProSiebenSat.1 Media AG and the consolidated financial statements of the Group, together with the management reports for ProSiebenSat.1 Media AG and the Group, were audited in accordance with the regulations by the Munich office of KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG), which issued an unqualified audit opinion in both cases. The audit paid particular attention to impairment testing of goodwill and other intangible assets under IAS 36, impairment of assets, measurement of programming assets, recognition and measurement of deferred taxes for the Group in compliance with IAS 12, income taxes, determination of revenues in conformity with the requirements of IAS 18, revenues, recognition and measurement of financial instruments, and testing of plausibility of information in the Group management report.

The Supervisory Board extensively reviewed these documents. All documents relating to the financial statements, as well as the KPMG audit reports, were made available to the members of the Supervisory Board in good time. These documents were discussed in detail, in the presence of the auditor, first within the Audit and Finance Committee and then at the review meeting of the full Supervisory Board. Here, the auditor reported on the material results of the audit. No weaknesses were identified in the internal control and risk management systems in relation to the reporting process. There were no circumstances that could cause partiality on the part of the auditor. The auditor performed services in addition to the auditing services amounting to EUR 1.3 million. The Notes to the consolidated financial statements include details of the auditor’s services and the level of compensation, reproduced in this Annual Report.

The Supervisory Board noted with approval the results of the auditor’s examination of the financial statements, and for its own part, following its own examination, also found no cause for objection. The Supervisory Board approved the parent company financial statements and the consolidated financial statements prepared by the Executive Board and audited by the auditor, as well as the management reports for both the parent company and the consolidated Group. The annual financial statements are thereby adopted. Finally, the Supervisory Board also reviewed the Executive Board’s proposal for the allocation of profits, and concurred in that proposal.

In its capacity as auditor of the financial statements, KPMG also reviewed the report of the Executive Board on relationships with affiliated enterprises during the 2012 financial year. The auditor’s examination revealed no cause for objection. The auditor issued the following unqualified opinion: “Based on the results of our audit, performed in accordance with our professional duties, we confirm that

  1. the factual information in the report is accurate,
  2. in the legal transactions mentioned in the report, the consideration paid by the Company was not disproportionately high, or else any disadvantage was compensated.”

The Supervisory Board’s own review of the report on relationships with affiliated companies likewise revealed no cause for objection. The Supervisory Board therefore concurred in the results of the auditor’s review. In accordance with the final results of its own examination, the Supervisory Board had no objections to the declaration of the Executive Board at the conclusion of the report on relationships with affiliated businesses.

Conflicts of interest

No conflicts of interest occurred in the Supervisory Board in the year under review.

Corporate Governance

The Executive Board and Supervisory Board have compiled a separate report on corporate governance. This and the Management Declaration in accordance with Section 289a of the German Commercial Code can be found online at http://en.prosiebensat1.com/en/company/corporate-governance/management-declaration and in the Annual Report.

Thank you from the Supervisory Board

On behalf of the Supervisory Board, I would like to thank the Executive Board as well as all employees for their commitment and their work in the past year. Through it they have supported the successful business performance of the ProSiebenSat.1 Group. I also thank Mr. van Campenhout and und Mr. Bell-Jones for their activity in the ProSiebenSat.1 Supervisory Board.

Unterföhring, March 2013

On behalf of the Supervisory Board


Götz Mäuser,

Chairman

 

MEMBERS OF THE SUPERVISORY BOARD OF PROSIEBENSAT.1 MEDIA AG AS OF DECEMBER 31, 2012

1Drs. Fred Th. J. Arp succeeds Herman van Campenhout, Telegraaf Media Groep N.V. (CEO). 2Stefan Dziarski succeeds Robin Bell-Jones, Permira Advisers LLP (Partner).
Götz Mäuser,
Chairman
Permira Beteiligungsberatung GmbH (Partner) Member of the Supervisory Board since: March 7, 2007
Johannes P. Huth,
Vice Chairman
Kohlberg Kravis Roberts & Co. Ltd. (Member of the Investment Committee) Member of the Supervisory Board since: March 7, 2007
Drs. Fred Th. J. Arp Telegraaf Media Groep N.V. (CFO) Member of the Supervisory Board since: May 15, 20121
Gregory Dyke Ambassador Theatre Group (Company Chairman) Member of the Supervisory Board since: May 7, 2004
Stefan Dziarski Permira Beteiligungsberatung GmbH (Investment Adviser) Member of the Supervisory Board since: May 15, 20122
Philipp Freise Kohlberg Kravis Roberts & Co. Ltd. (Investment Executive) Member of the Supervisory Board since: March 7, 2007
Lord Clive Hollick Retired Member of the Supervisory Board since: March 7, 2007
Dr. Jörg Rockenhäuser Permira Beteiligungsberatung GmbH (Managing Partner) Member of the Supervisory Board since: June 4, 2009
Prof. Dr. Harald Wiedmann Gleiss Lutz Hootz Hirsch Partnerschaftsgesellschaft von Rechtsanwälten und Steuerberatern (German Certified Public Accountant, Tax Adviser, Attorney at Law) Member of the Supervisory Board since: March 7, 2007