Report of the Supervisory Board
ProSiebenSat.1 Group has concluded another very successful financial year in 2015 and it consistently implemented its growth strategy. Against this backdrop, in October 2015 the Company raised its medium-term targets considerably again and now expects revenue growth of EUR 1.85 billion compared to 2012 by 2018. We, as the Supervisory Board of the Company, will provide the Executive Board of the Company with extensive advice and support in this process.
In 2015, ProSiebenSat.1 Media AG was converted into a European Stock Corporation (Societas Europaea, SE). The conversion was entered into the Company’s commercial register and thus took effect on July 7, 2015. The tenure of the Supervisory Board of ProSiebenSat.1 Media AG thereby ended, and only the Supervisory Board of ProSiebenSat.1 Media SE has since been active. Once again in financial year 2015, the Supervisory Board performed the duties incumbent upon it under the law, the articles of incorporation, and its own rules of procedure, while also taking into consideration the recommendations of the German Corporate Governance Code.
Cooperation Between the Executive Board and the Supervisory Board
In financial year 2015, the Supervisory Board regularly advised the Executive Board on the management of the Company in close and trusting cooperation, and carefully and continuously supervised its conduct of the business. We dealt in depth with the development of the Group’s operations and strategy.
To this end, the Supervisory Board was regularly, promptly and fully informed in detail — both during meetings of the Supervisory Board and outside them — about all issues relevant to the Company concerning strategy, planning, business performance, the risk situation, risk management and compliance. When business performance deviated from plans, the Executive Board explained and discussed the details with the Supervisory Board. For this reason, we were directly involved at an early stage in all decisions of fundamental importance to the Company.
The Supervisory Board meetings were characterized by intensive and open exchanges with the Executive Board. In addition, an integral part of the meetings is represented by “closed sessions,” in which the members of the Supervisory Board meet without the Executive Board being present.
Where the law, the articles of incorporation, or the rules of procedure demanded the approval of the Supervisory Board or a committee for individual measures, we have debated these and passed a corresponding resolution. The Supervisory Board was consistently and comprehensively informed of all matters requiring its approval, and corresponding proposals for resolution of the Executive Board were submitted promptly for review. The Board was supported in this process by the competent committees in each case and discussed plans pending a decision with the Executive Board.
In addition to its reports at the Supervisory Board meetings, the Executive Board informed us of the most important financial figures in written monthly reports and submitted the interim and annual financial statements to us. We were also informed immediately of particular events between meetings and outside the regular reporting and, where necessary, were asked to pass resolutions in writing in consultation with the Chairman of the Supervisory Board. In addition, I, as Chairman of the Supervisory Board, maintained an ongoing and close personal dialog with the CEO of the Company, Thomas Ebeling, and when necessary with the other Executive Board members too.
On the basis of the reports of the Executive Board, the Supervisory Board was always thoroughly informed about the situation of the Company, was involved in pending decisions directly and at an early stage, and was thus able to perform its tasks in their entirety. There was therefore no need for the Supervisory Board to examine the Company’s books and other records beyond the documentation provided to us in the course of the Executive Board’s reporting activities.
Focal Points of the Supervisory Board’s Advisory and Monitoring Activities
The plenary Supervisory Board and its committees also dealt in financial year 2015 with the business and financial situation, the fundamental questions of corporate policy and strategy, the general personnel situation, and the specific investment plans. The focal points of its advisory and supervisory activities were formed here by the following topics:
- By means of a circular resolution, the Presiding Committee approved the extension of the master agreements with Joko Winterscheidt and Klaas Heufer-Umlauf on January 22, 2015. They present TV shows such as “Circus HalliGalli.”
- At the financial statements meeting on March 13, 2015, the Supervisory Board approved the annual and consolidated financial statements, the combined management and Group management report, and the corporate governance report for financial year 2014, as well as the 2014 Declaration of Compliance. The Board reviewed and concurred in the proposal of the Executive Board for the allocation of the profits. The Supervisory Board also concurred in the election proposal of the Audit and Financial Committee for the appointment of the auditor for financial year 2015. We also concurred in the proposals of the Presiding Committee: the election of Angelika Gifford to the Supervisory Board of ProSiebenSat.1 Media AG as successor to Stefan Dziarski and the candidates for the first Supervisory Board of ProSiebenSat.1 Media SE.
At the same meeting, we also approved the conversion of ProSiebenSat.1 Media AG into a European Stock Corporation. The Supervisory Board was given a detailed overview of the current performance of the Company. It dealt intensively with the Executive Board’s target achievement for 2014 and target setting for 2015, which we approved at this meeting.
The agenda also included portfolio measures: The plenum approved the acquisition of the remaining shares (53 %) in Flaconi GmbH and the acquisition of a further 52 % in Sonoma Internet GmbH. ProSiebenSat.1 therefore holds 100 % of the shares in Flaconi GmbH and 75 % of the shares in Sonoma Internet GmbH. Flaconi GmbH operates the website flaconi.de, which is Germany’s second-largest online store for perfume, make-up, and cosmetics; Sonoma Internet GmbH operates the website amorelie.de.
- On April 1, 2015, the Supervisory Board adopted the proposed resolutions for the agenda of the Annual General Meeting 2015 by means of circular resolution.
- Also by written circular resolution, the Presiding Committee approved an agreement on the sale of advertising time with various agencies. This took place on April 20, 2015.
- After appropriate and extensive consultation within the Supervisory Board as a whole, the Board approved the adjustment and standardization of the contracts of employment with the active members of the Executive Board of the Company by means of written circular resolution on April 20, 2015.
- The constituent meeting of the first Supervisory Board of ProSiebenSat.1 Media SE took place following the Annual General Meeting on May 21, 2015; the members appointed me, Dr. Werner Brandt, as Chairman and Dr. Marion Helmes as my Deputy. The Annual General Meeting had previously elected the proposed candidates to the first Supervisory Board of ProSiebenSat.1 Media SE. During the meeting, the Supervisory Board of ProSiebenSat.1 Media SE adopted its rules of procedure and the rules of procedure for the Executive Board of ProSiebenSat.1 Media SE. It also voted on the composition of its committees and appointed the first Executive Board of ProSiebenSat.1 Media SE with Thomas Ebeling as its Chairman.
The former Supervisory Board of ProSiebenSat.1 Media AG continued to exist in parallel with the Supervisory Board of ProSiebenSat.1 Media SE until the conversion into the SE took effect. In its ordinary meeting on May 21, 2015, it obtained a detailed report on the development of the Company and the upcoming projects. This also included measures to guarantee IT security at the Company.
- By circular resolution on June 9, 2015, the Presiding Committee of the Supervisory Board of ProSiebenSat.1 Media AG approved the conclusion of a long-term master license agreement with Walt Disney Germany GmbH for Germany, Switzerland and Austria.
- On June 23, 2015, the Supervisory Board of ProSiebenSat.1 Media AG approved the acquisition of a majority interest in Verivox GmbH. Verivox is the largest independent consumer portal for energy in Germany and also holds a leading market position as a comparison portal for financial services in Germany.
- Once a year, the Supervisory Board and Executive Board discuss the strategic orientation of ProSiebenSat.1 Group in depth. In 2015, the two-day strategy meeting was held on June 25 and 26.
During the meeting, I informed the Executive Board of Philipp Freise’s resignation effective as of the end of July 31, 2015. In addition, the Supervisory Board of ProSiebenSat.1 Media AG approved the acquisition of two majority interests: Firstly the acquisition of a 51 % stake in Virtual Minds AG. Virtual Minds’ programmatic-advertising technologies enable the automated sale of digital advertising. Secondly, we approved another transaction that resulted in a majority interest of 75 % in Collective Digital Studio, LLC (CDS). CDS runs one of the leading multi-channel networks (MCN) in the United States and was combined with the MCN of Studio71 GmbH.
- On July 1, 2015, both the Supervisory Board of ProSiebenSat.1 Media AG and the Supervisory Board of ProSiebenSat.1 Media SE prematurely extended Thomas Ebeling’s appointment as member and Chairman of the Executive Board of the Company until the Annual General Meeting 2019 and approved a corresponding extension of his contract of employment. This resolution was adopted by means of a written circular, after the Supervisory Board had dealt in depth with the continuity of the composition of the Executive Board and corresponding long-term planning. Mr. Ebeling has had a crucial influence on the Company’s strategy and thus has created long-term growth prospects. With the early extension of the contract of employment, the Supervisory Board also laid the foundation for a long-term succession planning and ensured that the Company can continue its growth-oriented digitalization and diversification process.
- The Presiding Committee adopted circular resolutions on August 20, 2015, and September 2, 2015. Among other things, it approved the commissioning of a new season of the casting show “Germany’s Next Top Model by Heidi Klum” and the conclusion of a comprehensive agreement with IBM regarding various IT services.
- On September 8, 2015, the Supervisory Board of ProSiebenSat.1 Media SE convened in an ordinary meeting. We were given a detailed insight into the strategically important US market. The US is one of the most important TV markets in the world and has a dynamic start-up culture.
In addition to this educational session, the Executive Board informed us about current developments in the most important business areas and about opportunities to intensify the digital strategy — especially through greater internationalization.
- Another Supervisory Board meeting was held as a teleconference on September 30, 2015. At this meeting, we dealt in depth with the implementation of the act on the equal participation of women and men in management positions and the establishment of respective targets for the proportion of women on the Supervisory Board and the Executive Board. After detailed consultation, we approved the targets for the Supervisory Board and Executive Board and corresponding deadlines for achievement; for further information, please refer to the Corporate Governance Report of the Annual Report.
- On October 8, 2015, the Board approved by means of written circular resolution the acquisition of the pan-European online air travel agency etraveli via ProSieben Travel GmbH. ProSiebenSat.1 is thus advancing the expansion and internationalization of the Travel Vertical, where the Company bundles its investments relating to all topics of travel. In order to avoid a potential conflict of interest, Antoinette (Annet) P. Aris participated in neither the prior consultation nor the vote. She is on the Supervisory Board of Thomas Cook PLC.
- By means of written circular resolution on October 9, 2015, the Supervisory Board approved the Presiding Committee’s proposal to allow the judicial appointment of Ketan Mehta as a new Supervisory Board member. He succeeds Philipp Freise, who resigned from office with effect from the end of July 31, 2015. The local court (Amtsgericht) of Munich followed the proposal and appointed Ketan Mehta as member of the Company’s Supervisory Board until the next Annual General Meeting by decision dated November 19, 2015. On October 31, 2015, the Supervisory Board approved by means of written circular resolution the respective grants to the Executive Board members under the Group Share Plan introduced in 2012.
- In another circular resolution on November 6, 2015, the Supervisory Board approved the majority acquisition (60.0 %) of Crow Magnon, LLC, by Red Arrow Entertainment Group. Crow Magnon is the parent company of Karga Seven Pictures Inc. This company based in the US produces and develops shows in a large number of genres and formats with a focus on non-fiction. It is already Red Arrow Entertainment Group’s sixth shareholding in the US.
- At the ordinary Supervisory Board meeting on December 8, 2015, the 2016 budgeting for ProSiebenSat.1 Group was presented and explained to us in detail. We received extensive reports about performance in the most important business areas. The Supervisory Board also dealt with the appropriateness of the Executive Board compensation according to section 87 of the German Stock Corporation Act in conjunction with article 9(1) lit. c) ii) of the SE regulation and item 4.2.2 of the German Corporate Governance Code. In addition, the Board obtained a detailed report on the current state of IT security at the Company and further measures in the future.
In 2015, there were two ordinary meetings attended in person and a two-day session of the Supervisory Board of ProSiebenSat.1 Media AG. The Supervisory Board of ProSiebenSat.1 Media SE held three ordinary meetings attended in person and one teleconference. In total, the full Supervisory Board therefore held seven meetings. All members of the Supervisory Board attended more than half of the meetings. Attendance at the meetings is disclosed on an individual basis in the Corporate Governance Report, which can be found online and onward in the Annual Report. Outside these meetings, the Supervisory Board of ProSiebenSat.1 Media AG also adopted 15 resolutions by means of written circular procedure and the Supervisory Board of ProSiebenSat.1 Media SE adopted eleven resolutions. Altogether, 26 written circular resolutions were passed.
Report on the Work of the Committees
The Company’s Supervisory Board has set up various committees, which support it in its work. To perform its work efficiently, the Board also made use of three committees in 2015: The Presiding and Nomination Committee, the Compensation Committee, and the Audit and Finance Committee. These committees have reported on their activities regularly and comprehensively to the Supervisory Board in its plenary sessions. Their key responsibilities are described below:
- The PRESIDING AND NOMINATION COMMITTEE coordinates the work of the Supervisory Board and prepares its meetings. It also passes resolutions and makes decisions on business transactions delegated to it by the rules of procedure defined by the Supervisory Board. For example, in financial year 2015, the committee granted its approval to the license contract with Walt Disney Germany GmbH and the agreements with Joko Winterscheidt and Klaas Heufer-Umlauf described in more detail above.
This committee is additionally responsible for the duties of a nominating committee pursuant to the German Corporate Governance Code. It thus submitted to the plenary Supervisory Board suitable Supervisory Board candidates for the Supervisory Board’s election proposals to the Annual General Meeting on May 21, 2015. The Presiding and Nomination Committee met a total of four times in 2015. This included one meeting attended in person and one teleconference of the Presiding and Nomination Committee of ProSiebenSat.1 Media AG; the Presiding and Nomination Committee of ProSiebenSat.1 Media SE held two meetings by means of teleconference. In addition, the Presiding and Nomination Committee adopted six resolutions by means of written circular procedure. Four of these circular resolutions were passed in the reporting year by the Presiding and Nomination Committee of ProSiebenSat.1 Media AG; the two other circular resolutions were passed by the Presiding and Nomination Committee of ProSiebenSat.1 Media SE.
- The COMPENSATION COMMITTEE prepares resolutions for plenary sessions of the Supervisory Board on personnel-related Executive Board issues. In financial year 2015, it dealt in particular with the amendment of the existing Executive Board agreements of employment, including the extension of the appointment of/agreement with Thomas Ebeling as member and Chairman of the Company’s Executive Board. The Compensation Committee is also tasked with the annual review of the compensation of the Executive Board members, which was most recently conducted by the full Supervisory Board at the ordinary meeting on December 8, 2015.
In 2015, the Compensation Committee of ProSiebenSat.1 Media AG held two ordinary meetings attended in person. Four circular resolutions were passed. The Compensation Committee of ProSiebenSat.1 Media SE held three ordinary meetings attended in person and passed three circular resolutions. Therefore, a total of five meetings of the Compensation Committee took place in 2015 and a total of seven circular resolutions were passed.
- The AUDIT AND FINANCE COMMITTEE prepared the audit of the annual and consolidated financial statements and the proposed allocation of profits for the Supervisory Board and discussed the half-year and quarterly financial reports with the Executive Board. The Audit and Finance Committee discussed the strategy and the results of the audit with the auditor.
The monitoring of financial reporting focused particularly on the potential impairment of goodwill and other intangible assets, the measurement of programming assets, acquisitions of companies and shareholdings, the recognition of revenues, hedge accounting, and income taxes.
In addition, the Audit and Finance Committee dealt with the monitoring of the financial reporting process, with the effectiveness of the internal control system, the risk management system, and the internal audit system, and with the compliance function.
The Audit and Finance Committee engaged the auditor for financial year 2015, monitored the quality of the audit and the independence of the auditor, and submitted a proposal on the election of the auditor for financial year 2016 to the Supervisory Board.
In 2015, the Audit and Finance Committee met five times in total. The Audit and Finance Committee of ProSiebenSat.1 Media AG met three times in 2015; one circular resolution was passed. The Audit and Finance Committee of ProSiebenSat.1 Media SE met twice in ordinary meetings attended in person.
For the individualized disclosure of attendance at the meetings of the Supervisory Board committees, we refer to the Corporate Governance Report, which can be found on our website as well as in the Annual Report.
Audit of the Annual and Consolidated Accounts for Financial Year 2015
The annual and consolidated financial statements of ProSiebenSat.1 Media SE and the combined management report for financial year 2015 were audited in accordance with the regulations by the Munich office of KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG), and were issued on February 24, 2016, with an unqualified audit opinion.
All documents relating to the financial statements, the Risk Report, and the KPMG audit reports were made available to the members of the Supervisory Board promptly and were reviewed extensively by us. These documents were discussed in detail, in the presence of the auditors, first within the Audit and Finance Committee and then at the meeting of the full Supervisory Board. In the process, the auditor reported on the material results of the audit. No weaknesses were identified in the internal control and risk management systems in relation to the reporting process, nor were there any circumstances that could give cause for concern about the partiality of the auditors.
In addition to the auditing services, the auditors performed other attestation services amounting to EUR 0.4 million (previous year: EUR 0.3 million), tax advisory services amounting to 0.5 million (previous year: EUR 0.3 million) and other services amounting to EUR 1.5 million (previous year: EUR 0.4 million). Details of the services provided by the auditors and the level of compensation are presented in the notes to the consolidated financial statements under Note 41.
The Supervisory Board noted with approval the results of the auditor’s examination of the annual financial statements and, after completing its own examination, also found there was no cause for objection on its part. The Supervisory Board approved the annual and consolidated financial statements prepared by the Executive Board and audited by the auditor, as well as the combined management report. The annual financial statements are thereby adopted. Finally, the Supervisory Board also reviewed the Executive Board’s proposal for the allocation of profits, and concurred in that proposal.
Conflicts of Interest
The members of the Supervisory Board are required to disclose possible conflicts of interest immediately to the Presiding Committee. In financial year 2015, the following conflicts of interest were indicated on account of individual members of the Supervisory Board simultaneously holding mandates on corporate bodies at competitors and or business partners of ProSiebenSat.1 Media SE:
- Antoinette (Annet) P. Aris is a member of the Supervisory Board of Thomas Cook PLC. As a precaution, she therefore took her leave from the Company’s Supervisory Board meetings before any discussions that concerned the Travel business area. She rejoined the meetings only after these discussions were completed or after resolutions were adopted.
- Philipp Freise is head of the “European Media Industry” department at Kohlberg Kravis Roberts (KKR). To avoid any conflicts of interest, he was not involved in discussions about a possible cooperation of ProSiebenSat.1 Group with another TV company in the German-speaking area. As a further precaution, he took his leave from Supervisory Board meetings in which a potential investment in a Europe-wide online marketplace was discussed.
Beyond that, there have not been any indications of the existence of conflicts of interest.
The Executive Board and Supervisory Board have compiled a separate report on corporate governance. This and the Management Declaration pursuant to section 289a of the German Commercial Code can be found on our webpage and in the Annual Report.
Changes in the Composition of the Executive Board and Supervisory Board
Dr. Gunnar Wiedenfels succeeded Axel Salzmann as Chief Financial Officer of ProSiebenSat.1 Media AG on April 1, 2015. At the same time, Dr. Ralf Schremper was also appointed to the Executive Board of ProSiebenSat.1 Media AG as Chief M&A and Strategy Officer. He took on the new “Investment & Strategy, Mergers & Acquisitions” department. Both had already worked for the Company in executive positions for several years.
The tenures of the members of the Executive Board of ProSiebenSat.1 Media AG ended when the conversion into an SE took effect on July 7, 2015. The first Supervisory Board of ProSiebenSat.1 Media SE appointed the former Executive Board members as members of the Executive Board of ProSiebenSat.1 Media SE. The members of the Executive Board of ProSiebenSat.1 Media SE are Thomas Ebeling (Chairman), Conrad Albert, Dr. Ralf Schremper, Dr. Christian Wegner and Dr. Gunnar Wiedenfels.
The composition of the Company’s Supervisory Board also changed in financial year 2015:
The Annual General Meeting on May 21, 2015, elected Angelika Gifford to the Supervisory Board of ProSiebenSat.1 Media AG as a successor to Stefan Dziarski, who had resigned from office with effect from the end of October 30, 2014.
The tenures of the Supervisory Board members of ProSiebenSat.1 Media AG ended when the conversion into a European Stock Corporation took effect. The Annual General Meeting on May 21, 2015, elected Lawrence Aidem, Antoinette (Annet) P. Aris, Dr. Werner Brandt, Adam Cahan, Philipp Freise, Angelika Gifford, Dr. Marion Helmes, Erik Adrianus Hubertus Huggers and Prof. Dr. Rolf Nonnenmacher to the ProSiebenSat.1 Media SE Supervisory Board. Prof. Dr. Harald Wiedmann’s term of office ended when the conversion into an SE took effect on July 7, 2015; he had been a member of the Supervisory Board since March 7, 2007, and Chairman of the Audit and Finance Committee. On the Supervisory Board of ProSiebenSat.1 Media SE, Prof. Dr. Rolf Nonnenmacher now took over the duties of Prof. Harald Wiedmann.
Philipp Freise resigned from his office as a member of the Supervisory Board of ProSiebenSat.1 Media SE with effect from the end of July 31, 2015. Ketan Mehta was appointed to the Supervisory Board as his successor by decision of the local court (Amtsgericht) of Munich dated November 19, 2015; his term of office commenced when the decision was served on November 24, 2015, and runs until the Company’s next Annual General Meeting.
Thank You from the Supervisory Board
On behalf of the Supervisory Board, I would like to explicitly thank the members of the Executive Board as well as all employees for their great commitment in financial year 2015. Their work has been the cornerstone for the success of ProSiebenSat.1 Group.
Furthermore, I thank the departed members of the Supervisory Board for their many years of work on the ProSiebenSat.1 Supervisory Board.
Last, but not least, I would like to express my thanks to you, our esteemed shareholders, for your confidence in the Company and in the ProSiebenSat.1 share.
Unterföhring, March 2016
On behalf of the Supervisory Board
Dr. Werner Brandt, Chairman