Declaration of Compliance March 2012
Updating of the Declaration of Compliance with the German Corporate Governance Code, in Accordance with Section 161 of the German Corporate Governance Code, by the Board of Management and the Supervisory Board of E.ON AG
The Board of Management and the Supervisory Board hereby declare that E.ON AG has been in full compliance with the recommendations contained in the German Corporate Governance Code ("the Code"), dated May 26, 2010, prepared by the Government Commission and published by the German Ministry of Justice in the official section of the electronic version of the Federal Official Gazette, with the exception of the recommendation contained in item 5.4.6 para. 2 of the Code, and that E.ON will fully comply with the recommendations in the future, with the exception of the recommendations contained in item 5.4.6 para. 2 and item 4.2.3 para. 3, sentence 3 of the Code.
With reference to the derogation from the recommendation in item 5.4.6 para. 2, sentence 1 of the Code:
According to item 5.4.6 para. 2, sentence 1 of the Code, the members of the Supervisory Board shall receive fixed compensation as well as performance-based compensation. In May 2011, the Company’s Annual Shareholders' Meeting decided to implement a new compensation scheme which comprises fixed compensation only, and to amend the Company's Articles of Association accordingly. This new compensation scheme has been applied for the first time to the fiscal year 2011. The members of the Supervisory Board no longer receive performance-based compensation so as to further strengthen the Supervisory Board independence. In addition, the amendment to the Articles of Association reflects recent developments in the corporate governance debate.
With reference to the derogation from the recommendation in item 4.2.3 para. 3, sentence 3 of the Code:
According to item 4.2.3 para. 3, sentence 3 of the Code, retroactively changing performance targets or benchmark parameters when determining the compensation of the Board of Management shall be excluded. In March 2012, the Company's Supervisory Board decided to reduce the premium on the weighted average annual cost of capital (WACC) in the terms and conditions of the 6th tranche of the E.ON SharePerformance Plan issued in 2011. This change was due to the fact that, compared with the return expected by the Supervisory Board when it adopted its resolution on the performance rights to be awarded in March 2011, the E.ON Group's longer-term return expectation had decreased significantly as a result of the nuclear phase-out decided by the German government as well as other regulatory interventions and a substantial deterioration of the general economic environment. Because of this subsequent, unforeseeable development, it has become much more unlikely that the performance hurdle for the 6th tranche will be reached. The purpose of reducing the performance hurdle is to maintain the Plan's incentive effect as originally intended by the Supervisory Board.
Düsseldorf, March 13, 2012
For the Supervisory Board of E.ON AG:
(Chairman of the Supervisory Board E.ON AG)
For the Board of Management of E.ON AG:
Dr. Johannes Teyssen
(Chairman of the Board of Management of E.ON AG)