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Corporate Governance

The concept of corporate governance refers to the management and control of companies in a responsible manner that also seeks to create value over the long term.Effective cooperation between the Management Board and Supervisory Board, taking shareholders' interests into account, and open-handed, transparent corporate communication are key aspects of sound corporate governance.

The commitment of CENTROSOLAR Group AG

CENTROSOLAR Group AG is a German stock corporation. The company's administration is consequently the responsibility of the Management Board and Supervisory Board. The Management Board and Supervisory Board work together closely to the benefit of the company, Intensive ongoing dialogue between these two corporate bodies provides the basis for effective management of the company. At CENTROSOLAR, this dialogue takes place not just at formal meetings, but also on an informal basis. Important decisions are scrutinised analytically and the interests of shareholders, employees and customers all taken into account in them. We are guided throughout not simply by the rules of the Code, but above all by our conscience.

Declaration of Compliance

Pursuant to Section 161 of German Stock Corporation Law, the Management Board and Supervisory Board of a company listed on the stock exchange are obliged to declare once a year whether and to what extent the German Corporate Governance Code has been and is complied with. CENTROSOLAR Group AG has published the following declaration:

Declaration by the Management Board and Supervisory Board of CENTROSOLAR Group AG on the German Corporate Governance Code pursuant to Section 161 of German Stock  Corporation Law

The Management Board and Supervisory Board of CENTROSOLAR Group AG declare that the recommendations of the "German Corporate Governance Code" as amended on June 18, 2009 are and have been complied with, with the exceptions stated below:

1. Article 4.2.3 of the Code recommends that the remuneration of the Management Board should comprise a variable as well as a fixed component. The variable component is, in particular, intended to be performance-related, have a long-term incentivising effect and possess a risk character. The Code quotes stock options schemes as an example. CENTROSOLAR Group AG has been operating a stock options scheme for the Management Board members since 2005. We believe that the scheme reflects the spirit of the Code, but we draw attention to two aspects which might be interpreted as a departure from it.
   
   The Code recommends reference to comparative parameters. The stock options scheme envisages a performance target based on the absolute increase in the share price. This form was chosen in order to provide an incentive for success in absolute rather than relative terms.
   
   The Code in addition recommends that the variable remuneration be capped. In the case of the stock options scheme, this was realised through allowing the exercise of options only within a limited time frame (for the first time two years after issue, for the last time seven years after issue). Options received as a result of the attainment of targets are not retrospectively withdrawn by the company, nor the parameters governing them altered. In addition to the aforementioned share price target, the exercising of the options is moreover linked to further internal performance targets in order to preserve a demanding but equitable form of variable remuneration.
   
   
2. For D&O insurance cover for the Management Board, German Stock Corporation Law, as reflected in Article 3.8. of the Code, calls for an excess of at least ten percent of the loss up to at least one and a half times the fixed annual remuneration of the Management Board member to be agreed. The Code recommends a corresponding agreement for D&O insurance cover for the Supervisory Board. A corresponding excess will be agreed with the Management Board and Supervisory Board within the statutory time limits.
   
   
3. Article 5.3 of the Code recommends the formation of committees on the Supervisory Board. These shall, however, be dependent on the specific circumstances of the company and the number of members of the Supervisory Board. Our Supervisory Board consists of three members, who consider all matters concerning the company jointly. Consequently, we do not regard the creation of committees to be appropriate in our case. We believe that our view is compatible with the Code, but supply this information as a precautionary measure by way of clarification.
   
   
4. Article 5.4.2 of the Code recommends that the Supervisory Board should include an adequate number of members who – in the board's own opinion – are deemed to be independent. A member is to be regarded as independent if they have no business or personal relations with the company or with its Management Board that could constitute a conflict of interests. In its own opinion, our Supervisory Board includes an adequate number of independent members. Although Supervisory Board members do have business relations with the company, these do not constitute a conflict of interests.

Munich, December 2009