- Dividend proposal lowered to €3.00 (total distribution: €600 million) due to ongoing economic uncertainty
- Appointment of Andreas Wolf (59), CEO of Vitesco Technologies, to the Executive Board of Continental AG
- Uniform remuneration model for managers and the Executive Board: variable remuneration based partly on the achievement of sustainability goals reflects the company’s comprehensive sustainability strategy
- Fixed remuneration for members of the Supervisory Board in the future as suggested by the German Corporate Governance Code
- Coronavirus: Executive Board forgoes part of its fixed salary until end of July 2020
Hanover, June 3, 2020. Due to the ongoing economic uncertainty, the Executive Board and Supervisory Board of Continental AG have decided to adjust the dividend proposal from €4.00 to €3.00 per share (total distribution: €600 million). The dividend proposal is therefore 37 percent lower than last year’s dividend of €4.75 per share (total distribution: €950 million). The reduced proposal will be put to a vote by Continental’s shareholders at the virtual Annual Shareholders’ Meeting on July 14, 2020. In view of the coronavirus pandemic and the way it has sharply intensified, the Executive Board and Supervisory Board are thus retroactively adjusting their resolutions from February and March 2020.
“The economic landscape continues to be characterized by a high degree of uncertainty due to the impact of the coronavirus. In this challenging situation, ample capital resources and adequate liquidity are of top priority. At the same time, due consideration must be given to the divergent expectations of the company’s stakeholders. The new dividend proposal strikes a balance between the short-term and long-term interests of Continental, its shareholders and other stakeholders,” said Prof. Wolfgang Reitzle, chairman of Continental’s Supervisory Board, explaining the decision.
Reitzle also welcomed the appointment of Andreas Wolf as a member of the Executive Board of Continental AG: “Andreas Wolf is one of the company’s most experienced managers. It therefore makes sense for him to focus fully on driving forward the powertrain business as a member of the Executive Board until the planned spin-off. On behalf of my colleagues on the Supervisory Board, I would like to wish him all the best and every success.”
Wolf has led Vitesco Technologies, which specializes in the electrification of the powertrain, since early October 2018. He has been appointed to the Executive Board of Continental AG with effect from June 3, 2020, for a term of three years. If the planned spin-off of the powertrain business is completed within this period, his term will end ahead of time.
“The appointment of Andreas Wolf further reinforces our successful, trusting relationship. I am delighted to be able to officially welcome Andreas Wolf to the Executive Board team. He has already been a regular guest at our board meetings. I am confident that he will successfully implement the spin-off of the powertrain business as soon as the market environment allows and subsequently lead Vitesco Technologies to become a top, independent player in the fast-growing electrification market,” said Dr. Elmar Degenhart, CEO of Continental.
As part of the preparations for this year’s shareholders' meeting, the Supervisory Board today also decided to present a new remuneration system for Continental’s Executive Board members to the Annual Shareholders’ Meeting for approval. This is part of the recently revised and now uniform remuneration system for Continental executives. It focuses on the value the entire organization creates for all stakeholders.
The remuneration of Executive Board members and executives is now even more closely aligned to the sustainable and long-term development of the company. The major portion of the variable component is measured over several years and is linked in part to the performance of the Continental share price compared to relevant listed companies in the automotive sector. It is also based on the achievement of sustainability goals. In this way, Continental is directly integrating the high standards of its sustainability strategy into its remuneration system. Relevant aspects for now include the full transition to renewable sources for all externally procured electricity this year, a gradually increased representation of women in management positions, a reduction in the rate of accidents and sickness in the company, and a higher proportion of recycled waste. In addition, the Executive Board commits to acquire and permanently hold shares in Continental AG during its appointment. The new remuneration system also sets a cap on pay for members of the Executive Board. It thus fulfills all the legal requirements and the recommendations of the German Corporate Governance Code, with retroactive effect from January 1, 2020.
The adjustment of Executive Board remuneration will be supplemented by additional changes affecting all employees worldwide. The introduction of this new remuneration system, which covers all levels, will take place gradually. As is the case for members of the Executive Board, the variable salary component for executives will also be linked to the achievement of sustainability goals and the relative performance of the Continental share price. The value-sharing program for all other employees will also be adapted accordingly.
By aligning the new remuneration system with the sustainability, competitiveness and viability of the company, Continental is driving forward the fundamental transformation process that is currently underway in the entire automotive industry.
According to today's resolution, the remuneration of the Continental Supervisory Board members is also to be changed. In the future, they will receive only a fixed remuneration without any variable component. This amendment follows a suggestion of the German Corporate Governance Code and is to be proposed to the Annual General Meeting on July 14, 2020, for resolution. The change to a fixed remuneration system facilitates the advising and monitoring of the Executive Board geared toward the sustainable development of the company and strengthens the independence of the Supervisory Board members. The new regulation is to take effect retroactively from January 1, 2020. In addition, the members of the Supervisory Board agreed to forgo part of their fixed remuneration this year, in line with the decision of the Executive Board of Continental AG.
In solidarity with employees who have been affected by short-time work and other curtailments, the Executive Board already decided on a salary waiver for its members and for executives in March 2020. For Executive Board members, this means that their fixed salary has been reduced by 10 percent in the four months from April to July, in addition to their variable remuneration, which will undoubtedly be much lower. For the executives there is a similar provision, the implementation of which varies depending on the legal regulations in the various countries.
To successfully deal with the effects of the coronavirus pandemic, Continental has in addition to these steps implemented programs to protect the health of its employees worldwide. These included temporary plant closures and the introduction of a comprehensive plan for pandemic-proof production.