Corporate Governance

Corporate governance based on best practices

In brief

  • Integrity Committee established to monitor compliance with acceptable business conduct
  • Global unit integrates initiatives to improve corporate governance
  • Compensation reformed

Effective corporate governance in accordance with high international standards is very important to Deutsche Bank. In line with today’s increased focus on corporate governance issues, the bank established a Global Corporate Governance function, aimed at strengthening its numerous corporate governance initiatives.

Deutsche Bank’s system of corporate governance provides the basis for the responsible management and control of the bank, with a focus on sustainable value creation. It has five key elements: effective decision-making on the basis of appropriate information, good relations with shareholders, effective cooperation between the Management Board and Supervisory Board, a performance-based compensation system with a sustainable and long-term focus, as well as transparent and timely reporting.

The essential framework for the corporate governance of Deutsche Bank AG is provided, first and foremost, by the German Stock Corporation Act and the German Corporate Governance Code. As the Deutsche Bank share is also listed on the New York Stock Exchange, the bank is subject to the relevant U.S. capital markets laws as well as the rules of the Securities and Exchange Commission and New York Stock Exchange. Furthermore, the bank also takes into account European and international developments and discussions to enhance its corporate governance further.

Shareholders

Strong participation

encouraged for our Annual General Meetings

Deutsche Bank’s shareholders are one of its key stakeholders. The bank wants to intensify the relationship with its shareholders and encourage strong shareholder participation at Annual General Meetings. Shareholders participate in decisions of material importance to the bank, including amendments to the Articles of Association, the appropriation of profit, the authorization to issue new shares and important structural changes.

Deutsche Bank has only one class of shares, with each share carrying one voting right.

To make it easier for shareholders to exercise their voting rights, the bank offers absentee voting and supports the use of electronic media for the Annual General Meeting. For example, shareholders can issue authorizations and voting instructions to Deutsche Bank’s proxies through the internet.

Management Board

Corporate governance focused on sustainable

Performance

The Management Board is responsible for managing the company and exercises control over Deutsche Bank Group. It ensures compliance with all provisions of law and company policies. The members of the Management Board, together with senior representatives from the regions, corporate divisions and infrastructure functions, form the Group Executive Committee (GEC). This Committee performs advisory, coordinating and decision-preparing functions for the Management Board. These involve making preparations for the Management Board’s discussions of strategy as well as for the monitoring of the implementation of bank-wide strategic initiatives and changes in corporate structures.

In agreement with the Supervisory Board, the Management Board has established several committees that report directly to the Management Board. Furthermore, the Management Board may establish further committees.

Supervisory Board

The Supervisory Board oversees and advises the Management Board in its management of Deutsche Bank. Major decisions affecting the bank require Supervisory Board approval. The Supervisory Board may specify the information and reporting duties of the Management Board beyond what is required by law, appoints the members of the Management Board and creates succession plans for the Management Board. The Supervisory Board reviews the efficiency of its work on a regular basis. In 2013, the Supervisory Board had seven committees: the Mediation Committee, Chairman’s Committee, Audit Committee, Risk Committee, Nomination Committee, Compensation Control Committee and Integrity Committee. The last two committees were established in 2013. While the Compensation Control Committee is required by law, the Integrity Committee was voluntarily established by the Supervisory Board. It is intended to regularly advise and monitor the Management Board with regard to its measures to ensure the economically sound, sustainable development of the company while protecting the resources of the natural environment, maintaining social responsibility and observing the principles of sound, responsible management and corporate governance.

To carry out its tasks, the Supervisory Board takes care to ensure that it has a balanced composition and that its members collectively possess the required knowledge, ability and expertise. Furthermore, the Supervisory Board encourages diversity in the company, in particular when appointing members to the Management Board and making proposals for the election of the Supervisory Board.

In light of Deutsche Bank’s international activities, the Supervisory Board has an appropriate number of members with long-term international experience. The Supervisory Board also has a sufficient number of independent members.

Compensation

April 2013

The bank reforms Management Board compensation

Criteria for the variable portions of Management Board members’ compensation were realigned in April 2013, following the completion of an independent review of the bank’s compensation systems commissioned by the Supervisory Board. Already in 2013, the bank placed a stronger focus on qualitative aspects so that variable compensation is determined not just on the basis of financial targets, but also on “how” performance is achieved. Factors for determining the level of annual variable compensation include Group-wide and individual performance metrics linked to a sustainable development of earnings. Management Board members’ variable compensation has two components and takes into account a “Culture and Client Factor”, which is aligned to Strategy 2015+ and the cultural change introduced at Deutsche Bank. Most of the variable compensation is granted on a deferred basis and subject to specific forfeiture conditions. At least 50 % of the total variable compensation is equity-based and thus linked to the long-term success of Deutsche Bank.

In accordance with the new recommendations of the German Corporate Governance Code, Supervisory Board members’ compensation no longer comprises variable components and meeting fees. However, Supervisory Board members’ fixed annual compensation was increased. Additional fixed annual compensation levels for committee membership and committee function were also adjusted to better reflect the actual workload and level of complexity of the required tasks. The chair and the deputy chair of the Supervisory Board as well as the chairs and members of the Supervisory Board committees, with the exception of the Nomination Committee and Mediation Committee, receive this additional compensation.

The individual compensation of members of the Management Board and Supervisory Board as well as the structure of the compensation system are published in the Compensation Report.

Financial reporting

Shareholders and the public are regularly kept up to date through the Annual Report, including the Consolidated Financial Statements, as well as the Interim Reports. The reporting of Deutsche Bank Group is in accordance with International Financial Reporting Standards (IFRS). This provides for a high degree of transparency in financial reporting and facilitates comparability with international peers.

Declaration of Conformity

On October 29, 2013, the Management Board and Supervisory Board published the annual Declaration of Conformity pursuant to section 161 of the German Stock Corporation Act. This states that Deutsche Bank AG acts in conformity with the recommendations of the German Corporate Governance Code in the version dated May 13, 2013, with two exceptions. The first exception relates to No. 4.2.3 (3) of the Code, according to which the Supervisory Board shall define the targeted pension level to be reached with a pension scheme, taking into account the annual and long-term expense for the company. However, the defined contribution plan for members of the Management Board of Deutsche Bank AG does not aim at achieving a specific level of pensions. The second exception relates to Code No. 5.3.3, which recommends the establishment of a Nomination Committee composed solely of shareholder representatives. The Capital Requirements Directive IV Implementation Act of August 28, 2013, however, stipulates that the Nomination Committee of the Supervisory Board of Deutsche Bank AG must take on additional tasks that should be handled not solely by the shareholder representatives on the Supervisory Board. Thus, the Nomination Committee now also comprises employee representatives. However, it will be ensured that the candidate recommendations for the election proposals to the General Meeting will be made exclusively by the Committee’s shareholder representatives.

Deutsche Bank’s detailed Corporate Governance Report, along with the Corporate Governance Statement for 2013 and other documents on corporate governance, such as the terms of reference for the Management Board, the Supervisory Board and its committees, are available on the internet.

Deutsche Bank continually checks its system of corporate governance in light of new events, statutory requirements and domestic and international standards, and makes the appropriate adjustments.