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Declaration on Corporate Governance pursuant to Section 289f and Section 315d of the German Commercial Code (HGB)

and Corporate Governance Report

Declaration of compliance pursuant to Section 161 of the German Stock Corporation Act (AktG)

The executive bodies of adesso SE welcome the German Corporate Governance Code with the goal of making the dual German corporate governance system transparent and comprehensible. The Code contains principles, recommendations and suggestions for the management and supervision of German listed companies that are recognised nationally and internationally as standards of good and responsible corporate governance. It aims to promote the confidence of investors, customers, the workforce and the public in the management and supervision of German listed companies.

In the declaration of compliance of December 2021 pursuant to Section 161 AktG, the Executive Board and the Supervisory Board of adesso SE declare that the recommendations of the German Corporate Governance Code in the version from 16 December 2019 have been complied with since the last declaration was issued, with the deviations listed and explained therein. The Executive Board and the Supervisory Board further declare that adesso SE complies with the recommendations of the German Corporate Governance Code in the version from 16 December 2019, with the exception of the matters presented below, and will continue to do so future with the deviations mentioned:

adesso has always cultivated open communication across all levels of the hierarchy. This also includes critical aspects. At the present time, the Executive Board and the Supervisory Board consider the established communication channels and contact persons sufficient to address indications of legal violations in the company (with protection), even without a dedicated whistleblower system (in reference to A.2, sentence 2). Against the background of the low number of internal and external candidates and applicants for a position on the Executive Board with responsibility for operational business areas, the Supervisory Board has not set itself any ambitious diversity targets with the current target figure 0 for the number of women on the Executive Board. An expansion or change in the Executive Board in the area of cross-sectional functions is not currently being sought (in reference to B.1). The Supervisory Board has not specified any concrete objectives for its composition and has not developed a competence profile for the board as a whole. The Supervisory Board considers the legal and statutory provisions for its composition to be sufficient. The Supervisory Board has so far dispensed with a formal competence profile for the board as a whole due to the manageable size of the board with currently six members (in reference to C.1, sentence 1-4). So far, no age limit has been set for members of the Supervisory Board. The Supervisory Board considers the controlling function within the framework of the procedures for the formation of the Supervisory Board and the specific shareholder structure to be sufficient (in reference to C.2). The Chair of the Supervisory Board is not to be regarded as independent of the company and the Executive Board within the meaning of the recommendations of the Code. Nevertheless, the Supervisory Board considers the special competence of its chair as co-founder and indirect main shareholder of the company as well as the resulting own interest position as the indirect largest shareholder of the company to be advantageous and sufficient for the supervisory tasks (in reference to C.10, sentence 1). The Supervisory Board has not formed any committees beyond the Audit Committee, as the Supervisory Board’s manageable size with currently six members and the current size of the company and shareholding structure do not, in the Supervisory Board’s view, require the formation of further specialised committees – such as a nomination committee in particular – to date (in reference to D.2, sentence 1; D.5). The Supervisory Board considers the supervision and controlling function to be given even without a regular meeting excluding the Executive Board. Rather, in the view of the Supervisory Board, the presence of the Executive Board provides an additional opportunity to receive, review and assess up-to-date information about the company (in reference to D.7). The variable remuneration resulting from the achievement of long-term oriented goals does not exceed the share resulting from short-term oriented goals. The Supervisory Board considers the relation defined in the remuneration system for Executive Board members to be sufficient in terms of sustainable and long-term corporate development, especially since the granting of a partially share-based long-term remuneration provides sufficient incentives for this (in reference to G.6). Only a portion of the long-term variable remuneration amounts is paid on a share-oriented basis via the possibility to acquire share options, which only become due four years after their option issue date. The Executive Board members can also dispose of the other long-term variable remuneration amounts earlier. The system does not provide for an investment obligation predominantly in shares of the company, especially since part of the variable remuneration amounts is already granted on a share-oriented basis. The Supervisory Board considers the share-based part of the long-term variable remuneration amounts provided for in the remuneration system for Executive Board members and its incentive effect to be sufficient in terms of sustainable and long-term corporate development (in reference to G.10). The withholding or clawback of variable remuneration is limited to share-based long-term remuneration. Cooperation between Supervisory Board and Executive Board members is characterised by regular exchange and great trust. The Supervisory Board considers legal remedies or the enforcement of any claims for damages against Executive Board members to be sufficient for unlikely justified cases (in reference to G.11, sentence 2). Only the chair of the Supervisory Board is considered separately with regard to remuneration, since the work of the vice-chair in the context of Supervisory Board activities does not usually differ significantly from that of the other normal members. Thus, any remuneration in excess of this would appear unjustified for these members. In this respect, the tasks of the Supervisory Board are distributed internally along the respective competence profiles. Even before the installation of the dedicated Audit Committee, corresponding activities were assumed by members of the Supervisory Board, so that the Supervisory Board currently does not consider a separate remuneration of the members of the Audit Committee or its chair to be justified (in reference to G.17). The remuneration of the members of the Supervisory Board in accordance with the articles of association provides for a variable portion derived from the net profit of the company and is thus not directly oriented towards the long-term development of the company (in reference to G.18).

Further information on the Government Commission on the German Corporate Governance Code and the current wording of the Code can be found on the website at www.dcgk.de.

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Working methods of the Executive Board and the Supervisory Board as well as shareholder participation

The corporate governance of adesso SE and the management of its affiliated companies are primarily based on the statutory provisions applicable to the respective company and also – with regard to the listed parent company – on the requirements of the German Corporate Governance Code in its currently applicable version. Furthermore, the Code of Conduct, which is valid throughout the group, guides our actions. Beyond this, adesso has no other codes of corporate governance practice in use internally or published.

In accordance with the statutory provisions, the formation of adesso’s will is subject to the shareholders, the Executive Board and the Supervisory Board. What is known as the dual management system is characterised by the strict separation of personnel between the Executive Board as the management body and the Supervisory Board as the supervisory body. The Executive Board and the Supervisory Board work closely together in the interests of the company.

By law, shareholders are involved in fundamental decisions such as amendments to the articles of association, the appropriation of net earnings, the issue of new shares and the repurchase of treasury shares, as well as in significant structural changes. adesso has only one class of shares, all of which carry the same voting rights. The company shall provide the shareholders with a proxy to exercise their voting rights at the General Meeting. A transmission of the General Meeting via the Internet as well as the exercise of voting rights via the Internet have not been provided for in the articles of association so far. As a result of the COVID-19 pandemic, adesso made use of the options created by the legislator in the 2020 and 2021 financial years to hold the General Meeting virtually without the physical presence of the shareholders or their proxies. For this purpose, the entire meeting was transmitted via adesso’s password-protected Internet service. Shareholders were able to exercise their voting rights either by postal vote or by authorising the proxies of adesso and third parties via the password-protected Internet service of adesso. Questions could be submitted by electronic communication within the time limit set by the legislator before the General Meeting. In the 2022 financial year, adesso will again make use of the extension of the COVID laws until the end of August 2022 (relief according to Sections 1 through 3 and 5 of the Act Concerning Measures Under the Law of Companies, Cooperative Societies, Associations, Foundations and Commonhold Property to Combat the Effects of the COVID-19 Pandemic (GesRuaCOVBekG)) passed by parliament on 7 September 2021 and hold the General Meeting as a virtual general meeting.

At the end of November 2021, adesso applied for admission to the Prime Standard, the sub-segment of the regulated market with extended post-admission obligations. The Prime Standard is the segment with the highest transparency requirements on the Frankfurt Stock Exchange and throughout Europe. The admission decision by the management of the Frankfurt Stock Exchange was made on 8 December 2021. The uplisting became effective with a corresponding listing on the following day. In addition to the mandatory disclosures, the Investor Relations section of the website www.adesso-group.de contains a great deal of additional information that goes well beyond the required level of transparency. Shareholders and interested investors can contact the CFO directly at any time via the menu item ‘Questions to the CFO’. adesso maintains distribution lists for proactively sending corporate news and financial reports to shareholders. Interested parties can be added to these distribution lists via the website. As part of fair disclosure, company presentations from the financial press or investor conferences as well as analyst and investor meetings are made available on the website in a timely manner.

The Executive Board manages the company on its own responsibility. Beyond that, there are no bodies with decision-making authority for the company or group-wide matters. Each member of the Executive Board has sole power of representation. The principle of overall responsibility applies, with the members of the Executive Board bearing joint responsibility for overall management. Rules of procedure for the work of the Executive Board have been in place since 17 March 2011, last updated on 9 December 2021. The Executive Board normally holds a meeting recorded in writing (minutes) every two weeks. In the reporting period, the Executive Board consisted of five members until 31 March 2021. Since the additional appointment of Torsten Wegener on 1 April 2021, it has subsequently consisted of six members. The Executive Board prepares the corporate planning and organises the internal reporting structures regarding operational business development and risk management. The Executive Board informs the Supervisory Board regularly, promptly and comprehensively about all material aspects of business development, significant business transactions and, at least quarterly, about the current earnings situation. Deviations in the course of business or in the further development of business from the plans and targets set are explained by the Executive Board to the Supervisory Board.

Long-term succession planning for appointments to the Executive Board within the meaning of recommendation B.2 of the GCGC is carried out through regular discussions between the Chair of the Executive Board and the Chair of the Supervisory Board. The contract terms and renewal options for current board members are discussed, as well as possible successors.

The age limit for members of the Executive Board at adesso within the meaning of recommendation B.5 of the GCGC results from the employment contract and refers to the end of the year in which the Executive Board member reaches the end of their 67th year of life.

The Supervisory Board monitors and advises the Executive Board in the management of the company. It consists of six members. It appoints the members of the Executive Board and decides on the system of remuneration for the members of the Executive Board. Taking into account the Act Implementing the Second Shareholders’ Rights Directive (‘ARUG II’) and the new German Corporate Governance Code, the Supervisory Board decided on a new remuneration system for the members of the Executive Board on 18 March 2021 and submitted the remuneration system to the General Meeting on 27 May 2021 for approval. The General Meeting approved the system for the remuneration of the Executive Board members with a majority of 85.46 per cent. Details of the applicable regulations can be found in the remuneration report pursuant to Section 162 AktG. As a listed company, adesso prepares a separate, joint remuneration report for the Executive Board and Supervisory Board each year. The auditor has to formally review the remuneration report and issue an opinion. The remuneration report and the auditor’s report must be published on the company’s website for a period of ten years. The applicable remuneration system, the remuneration report and the auditor’s report as well as the last resolution on the remuneration of the members of the Supervisory Board pursuant to Section 113 paragraph 3 AktG are published on the company’s website at www.adesso-group.de/corporate-governance/. The General Meeting shall decide annually on the approval of the remuneration report for the Executive Board and the Supervisory Board, which has been prepared and already audited in accordance with Section 162 AktG, for the first time by the end of the first ordinary General Meeting following 31 December 2021.

The approval of the Supervisory Board is obtained for fundamental transactions of the Executive Board. The Supervisory Board has adopted a list of transactions requiring approval, for which the Executive Board is generally bound by the approval of the Supervisory Board. The list of transactions requiring approval is part of the Rules of Procedure of the Executive Board. Rules of procedure for the work of the Supervisory Board have been in place since 27 June 2018, last updated on 19 December 2021. The rules of procedure are available on the company’s website in accordance with recommendation D.1 of the GCGC.

The Supervisory Board forms an Audit Committee consisting of two members of the Supervisory Board. The Audit Committee has an advisory function for the Supervisory Board. Since 27 May 2021, the Audit Committee has consisted of the members Hermann Kögler (Chair) and Rainer Rudolf, who, due to their many years of activity in commercial enterprises, fulfil the necessary qualifications for the committee’s work in accordance with recommendation D.2 of the GCGC. For example, the Chair of the Audit Committee served for 12 years as Chief Financial Officer/Controlling Officer and Spokesperson of the Executive Board of COGNOS AG, one of the largest private and independent educational groups in Germany, and thus fulfils the requirements pursuant to recommendation D.4 of the GCGC. Rainer Rudolf served as the company’s CEO for 14 years since the founding of today’s adesso SE and was responsible for the company’s commercial activities, among other things. Even after leaving the board, Rudolf managed various companies as a board member, member of the executive board or managing director.

Furthermore, the Supervisory Board has determined for its composition that its members as a whole have the knowledge, skills and professional experience required to properly perform their duties and are familiar with the company’s business model and target markets in their entirety. The Supervisory Board has the audit procedure and significant findings from the audit of the annual financial statements and the consolidated financial statements explained by the appointed auditor. There is currently no age limit for members of the Supervisory Board. Advisory and mediation services provided by a member of the Supervisory Board require the approval of the entire Supervisory Board by resolution. There are three approved consultancy agreements between the company and members of the Supervisory Board. The Supervisory Board shall meet at least four times in a financial year. Further details on the concrete work of the Supervisory Board in the reporting period can be found in the current report of the Supervisory Board. Following recommendation D.13 of the GCGC, the Supervisory Board also 2021 carried out a self-assessment in connection with the issuance of the declaration of compliance pursuant to Section 161 AktG. This involved assessing how effectively the Supervisory Board performed its duties overall. The self-assessment takes place within the framework of a plenary discussion in which each member of the Supervisory Board (self-)critically evaluates the effectiveness of the activities in the Supervisory Board. Within the framework of this self-assessment, the current state is surveyed and compared with a defined target. So far, the Supervisory Board has not used external consultants for its self-assessment.

The current members of the Supervisory Board were elected by the General Meeting in 2020 after the terms of office of the Supervisory Board members in their previous composition had expired.

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Diversity

For the determinations according to Section 76(4) and Section 111(5) AktG, please refer to the corresponding section of this declaration in the Corporate Governance Report.

Corporate Governance Report

Responsible management is very important to adesso. Our stringent requirements for transparency, control and business ethics increase shareholder trust in our company and the capital market. Our governance is based primarily on existing statutory requirements and the German Corporate Governance Code. Our commitment to exemplary governance is founded upon good relations with our shareholders, effective collaboration between the Executive Board and the Supervisory Board, a performance-related remuneration system, transparent accounting and comprehensive reporting.

In accordance with principle 22 of the German Corporate Governance Code, the Executive Board and Supervisory Board of adesso SE report annually on the company’s corporate governance in the declaration on corporate governance pursuant to Sections 289f and 315d of the German Commercial Code (HGB). The Declaration on Corporate Governance and the Corporate Governance Report as well as the wording of the declaration of compliance pursuant to Section 161 AktG are available on the Internet in their current version at www.adesso-group.de/corporate-governance/.

Remuneration of the Executive Board and Supervisory Board

In the spirit of good corporate governance, adesso establishes the greatest possible transparency with regard to the structure and benefit levels of the remuneration of the Executive Board and Supervisory Board. For this purpose, the Executive Board and the Supervisory Board prepare an annual remuneration report in accordance with principle 25 of the GCGC as required by law. The remuneration system approved by the General Meeting, the resolution passed by the General Meeting and the remuneration report together with the auditor’s report and the approval resolution of the General Meeting are published by adesso on the company’s website in accordance with the statutory regulations as set out in the declaration on corporate governance.

Directors’ Dealings

According to Art. 19(1) of the Market Abuse Regulation (MAR), persons who perform management duties at adesso SE and persons closely related to them must report to adesso SE and the German Federal Financial Supervisory Authority (BaFin) any proprietary trading in shares of adesso SE or related derivatives or other related financial instruments. These reports shall be made without delay and no later than three business days after the date of the transaction. Pursuant to Art. 19(3) MAR, adesso SE for its part ensures that this information is published and made available without delay and no later than three business days after the transaction in accordance with the statutory requirements.

In the 2021 reporting year, a total of three transactions were reported by a member of the Executive Board and two persons closely related to members of the Executive Board or the Supervisory Board (three times a purchase, one of which was settled via a joint custody account). We have disclosed these transactions throughout Europe by means of notifications pursuant to Art. 19(3) MAR. A list of the notifications received in the financial year as well as an archive is always available in the Investor Relations section of the website at www.adesso-group.de.

Diversity and independence of Supervisory Board members

In accordance with the Act on the Equal Participation of Women and Men in Leadership Positions in the Private and Public Sector, the Supervisory Board of adesso SE has resolved a target quota of women on the Executive Board and Supervisory Board of zero per cent each. The target quota for the Supervisory Board was set for the period 1 July 2017 to 30 June 2022 and is based on the terms of office of the six members of the Supervisory Board elected until 2020 by the General Meeting of adesso SE, all of whom are male. For the first time, on 15 September 2015, the Supervisory Board decided on a target quota of women on the Supervisory Board of zero per cent for the period until 30 June 2017. The target quota was based on the terms of office of the six members of the Supervisory Board newly elected in June 2015, all of whom are male. The target quota was met in the period up to 30 June 2017.

The target quota for the Executive Board was set against the background of the so far low number of internal and external candidates for an Executive Board position with responsibility for operational business areas. An expansion or change in the Executive Board in the area of cross-sectional functions is not currently being sought.

For the first and second management level below the Executive Board, the Executive Board has decided on a target of 29 per cent for the first management level and of five per cent for the second management level. The target figures do not fall below the status quo unless a proportion of women of 30 per cent has already been achieved.

In accordance with principle 11 of the GCGC, the Supervisory Board is composed in such a way that its members as a whole have the knowledge, skills and professional experience required to properly perform their duties and that the statutory gender quota is complied with. In the opinion of the Supervisory Board, a number of at least three independent members is appropriate for the Supervisory Board of adesso SE. There are currently five independent members, namely Professor Dr Gottfried Koch, Hermann Kögler, Heinz-Werner Richter, Dr Friedrich Wöbking and Rainer Rudolf, on the Supervisory Board of adesso SE. Professor Dr Volker Gruhn is not considered independent of the company and its Executive Board within the meaning of the recommendations of the GCGC, as he has been a member of the Supervisory Board for more than twelve years. Dr Friedrich Wöbking will also have been a member of the Supervisory Board of the company for more than twelve years as of 1 June 2022 and is then also to be regarded as not independent of the company and its Executive Board within the meaning of the recommendations of the GCGC. Nevertheless, four members, and thus more than half, are still to be classified as independent.

Transparent accounting and comprehensive reporting

Our consolidated financial statements are prepared in accordance with the internationally recognised accounting principles of the International Financial Reporting Standards (IFRS). The standards create a high level of transparency and facilitate comparability with national and international competitors. adesso has a strong interest in comprehensive reporting on financial and non-financial performance indicators, as well as operational developments in the company, in order to provide shareholders with as well-founded an assessment as possible of the company’s status and potential.

Stock option programmes

The General Meeting on 2 June 2015 authorised the Executive Board or – insofar as the members of the Executive Board are concerned – the Supervisory Board to issue up to 500,000 subscription rights for one share in the company to employees, executives and members of the Executive Board of adesso SE as well as to employees and members of the management of affiliated companies within the framework of a stock option plan 2015 (conditional capital 2015). The conditional capital increase shall only be carried out to the extent that subscription rights are issued from the conditional capital within the framework of the stock option plan 2015 until 15 December 2019, and the holders of these subscription rights make use of them within the exercise period, unless own shares are used for servicing. The options can be exercised for the first time after the end of 48 months after the respective option issue date. The prerequisite for exercising options is that the closing price of the company’s share on the Frankfurt Stock Exchange on the day before the start of a respective exercise period is at least ten per cent above the exercise price. A total of 57,448 options have been issued from the conditional capital 2015 since the beginning of 2016. Since 16 December 2019, no further share options can be issued from this programme. Of the options issued, 13,000 have expired. By resolution of the General Meeting of 3 June 2020, the conditional capital 2015 was adjusted with regard to the maximum number of outstanding options to be serviced from this capital at that time. It was reduced from the previous €500,000.00 to €50,000.00. Since initial maturity in financial year 2020, a total of 17,500 options to subscribe to 17,500 shares from the conditional capital 2015 had been converted by the time this report was prepared. Of these, the number of options converted amounted to 8,250 in 2021.

On 3 June 2020, the General Meeting authorised the Executive Board or – insofar as the members of the Executive Board are concerned – the Supervisory Board to issue up to 500,000 subscription rights for one share in the company to employees, executives and members of the Executive Board of adesso SE as well as to employees and members of the management of affiliated companies within the framework of a 2020 stock option plan (conditional capital 2020). The conditional capital increase shall only be carried out to the extent that subscription rights are issued from the conditional capital within the framework of the 2020 stock option plan until 15 December 2024, and the holders of these subscription rights make use of them within the exercise period, unless own shares are used for servicing. The options can be exercised for the first time after the end of four years after the respective option issue date. A prerequisite for the exercise of options is that the closing auction price of the company’s share on the Frankfurt Stock Exchange in Xetra trading (or a functionally comparable successor system replacing the Xetra system) on the day before the start of a respective exercise period is at least ten per cent above the exercise price. For the first time in financial year 2021, a total of 64,304 options were issued from the conditional capital 2020. As of the date of this report, no further options from the conditional capital 2020 have been granted.

The share capital of the company is thus conditionally increased by up to €532,500.00 by issuing up to 532,500 no-par value bearer shares (no-par shares) (conditional capital 2015 and 2020).

Compliance

According to principle 5 of the GCGC, the Executive Board must ensure compliance with the legal provisions and internal guidelines and work towards their observance in the company (compliance). According to recommendation A.2 of the GCGC, it shall provide a compliance management system aligned with the risk situation of the company and disclose its basic features. We therefore report here as follows: adesso SE and its group companies conduct their business and social activities in such a way that compliance with legal requirements and internal group regulations is ensured at all times. For this purpose, adesso has implemented a compliance management system. At the heart of this is the Code of Conduct, which applies throughout the group. It represents a binding code of conduct for behaviour by employees and management that is oriented towards standards and values and complies with the law. It covers the dimensions of cooperation, integrity, quality and environmental management as well as data protection and information security. In addition, the Executive Board has established working groups under direct responsibility to comprehensively address current data protection and information security concerns. A compliance officer has been installed with regard to post-admission obligations and other capital market law issues. Clear reporting structures have been implemented throughout the group. A risk inventory is carried out every six months and the results are reported as part of regular publicity. Rules of procedure were adopted for the work of the Executive Board and the Supervisory Board. The quality and environmental management of adesso SE was certified in January 2022 as part of a surveillance audit. The external review is an important part of the continuous improvement of adesso’s management systems. A good maturity level of the processes was confirmed.

An up-to-date version of the declaration on corporate governance pursuant to Section 289f and Section 315d HGB can be found on adesso’s website at www.adesso-group.de/corporate-governance/. The full text of the declaration of compliance pursuant to Section 161 AktG can also be read here.

Dortmund, 17 March 2022

For the Supervisory Board:

Professor Dr Volker Gruhn

Chair of the Supervisory Board for the Executive Board:

Michael Kenfenheuer
CEO

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An up-to-date version of the declaration on corporate governance pursuant to Section 289f and Section 315d HGB can be found on adesso’s website at www.adesso-group.de/corporate-governance/. The full text of the declaration of compliance pursuant to Section 161 AktG can also be read here.

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