Porsche 2007 Annual Report Download - page 28

sale of the companies of a certain size, the esta-
blishment and closure of plant locations, the intro-
duction or discontinuation of business divisions
as well as legal transactions with ordinary share-
holders or Supervisory Board members of Porsche
Automobil Holding SE.
Monitoring of management by the
Supervisory Board
The Supervisory Board appoints the members of
the Executive Board, and also advises and monitors
the Executive Board in their managerial activities.
The structure already ensures the fundamental inde-
pendence of the Supervisory Board in its control
of the Executive Board since a member of the
Supervisory Board may not at the same time belong
to the Executive Board and the competencies of
the two bodies are strictly segregated.
For the Supervisory Board, the change in legal form
to an SE brought with it substantial changes in the
legal basis. The German co-determination law in
which the size and composition of the Supervisory
Board of a German stock corporation is regulated
does not apply to SEs. Instead, the size and compo-
sition of the Supervisory Board is governed by the
European SE provisions. These are supplemented
by the co-determination agreement entered into
with representatives of the European Porsche
employees. This defines the competencies of the
employees in the works’ council of Porsche Auto-
mobil Holding SE and the procedure for the election
of the SE works’ council and the representation of
the employees in the SE Supervisory Board as well
as the relevant rulings in the bylaws. Shareholders
and employee representatives are equally repres-
ented on the Supervisory Board of Porsche Automo-
bil Holding SE, following the basic principles of Ger-
man co-determination. The Supervisory Board takes
its decisions with a simple majority of the votes
cast by the participating Supervisory Board mem-
bers. In the event of a tie, the Supervisory Board
chairman, who always has to be a member of the
Supervisory Board elected by the shareholders,
casts the deciding vote.
The Supervisory Board has formed an executive
committee which acts as personnel committee; in
urgent cases, it also decides on transactions requir-
ing the approval of the Supervisory Board. Other
committees are formed as required.
Rights of the shareholders
The shareholders exercise their rights in the gene-
ral shareholders meeting. When passing resolu-
tions, each ordinary share of Porsche Automobil
Holding grants one vote. There are no shares
with multiple or preferential voting rights. Nor are
there maximum voting rights. Every shareholder is
entitled to take part in the general shareholders
meeting, to express an opinion on items on the
agenda, to table motions and to demand informa-
tion about company matters if this is needed to
properly judge an item on the agenda. The general
stockholder meeting elects members of the Super-
visory Board; in the election of employee represen-
tatives they are bound by the proposals of the
employees. Among other things, the general share-
holders meeting adopts resolutions on the exonera-
tion of the Executive Board and the Supervisory
Board, the appropriation of profits, capital mea-
sures and amendments to the statutes.
Financial reporting and annual audit
The financial reporting of the Porsche Group is
prepared in accordance with International Financial
Reporting Standards (IFRSs) as endorsed by the
European Union. The standards published by the
International Accounting Standards Board (IASB),
London, that are applicable as of the balance sheet
date as well as the interpretations issued by the
International Financial Reporting Interpretations
Committee (IFRIC) that are valid for the fiscal year
have been taken into account. The financial state-
ments of Porsche Automobil Holding SE as parent
company of the Porsche Group are based on
the accounting provisions of the German Commerci-
al Code. Both sets of financial statements are audi-
ted by an independent auditor.
Risk management
Porsche has a group-wide risk management system
which helps management to recognize major risks
at an early stage, thus enabling them to initiate
counter-measures in good time. The risk manage-
ment system at Porsche is continuously tested
for efficiency and continually optimized to reflect
changed conditions. For details, please refer to
the pages 19 to 22.
Communication and transparency
Porsche attaches great importance to transparent
communication and regularly keeps shareholders,
financial analysts, shareholder associations, the
media and the general public informed about the
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