Corporate Governance

Declaration of Compliance (Section 161 German Stock Corporation Act)

Corporate governance at STADA Arzneimittel AG is based on the German Corporate Governance Code, as published by the Government Commission on February 26, 2002 and amended most recently on June 18, 2009. The aim of the German Corporate Governance Code is to make Germany’s corporate governance rules transparent for both national and international investors.

• Declarations of Corporate Compliance (§ 161 AktG)
  • Declaration of Compliance 2009 (PDF)
  • Declaration of Compliance 2008 (PDF)
  • Declaration of Compliance 2007 (PDF)
  • Declaration of Compliance 2006 (PDF)
  • Declaration of Compliance 2005 (PDF)
  • Declaration of Compliance 2004 (PDF)
• Declaration of Corporate Governance according to § 289a HGB (PDF)
• Articles of Incoporation/Association (PDF)
• Disclosures according to WpHG and WpPG

Furthermore STADA Arzneimittel AG made the following explanations to the Corporate Governance in the Annual Report 2009:

Corporate governance structure

STADA Arzneimittel AG is a joint stock corporation under German law and as such has a dual management and monitoring structure consisting of the Executive Board and the Supervisory Board. The third body of the Company is the Annual General Meeting. Furthermore, STADA Arzneimittel AG has an Advisory Board in accordance with its articles of incorporation.

Executive Board

The Executive Board of STADA Arzneimittel AG manages the Company in its own responsibility. The members of the Executive Board jointly assume responsibility for corporate governance. The Executive Board runs the businesses in accordance with the legal requirements, the articles of incorporation and the rules of procedure for the Executive Board and works trustingly together with the Supervisory Board. The Executive Board comprises at least two people according to the articles of incorporation.

The Executive Board is appointed and dismissed exclusively in accordance with legal regulations. The articles of incorporation do not provide special provisions on the appointment or dismissal of individual and all members of the Executive Board. Only the Supervisory Board is responsible for the appointment and dismissal. It appoints members of the Executive Board for a maximum of five years. A repeated appointment or extension of the term is allowed, for a maximum of five years each.

The members of the Executive Board of STADA Arzneimittel AG on the balance sheet date were:

• Hartmut Retzlaff, Chairman of the Executive Board (under contract until August 31, 2011)
• Christof Schumann, Chief Production & Development Officer (under contract until December 31, 2010)

In financial year 2009 the Chief Financial Officer Wolfgang Jeblonski left the Executive Board. The Supervisory Board of STADA Arzneimittel AG and Wolfgang Jeblonski, agreed on August 12, 2009 that Wolfgang Jeblonski would leave the Executive Board of STADA Arzneimittel AG with immediate effect by mutual agreement and with the thanks of the Executive Board and Supervisory Board for his many years of successful service to the Group.

The remaining Executive Board members assumed the tasks of Wolfgang Jeblonski. Christof Schumann was also responsible for Procurement until February 15, 2010 and also headed the Logistics area until February 28, 2010. Hartmut Retzlaff was temporarily also responsible until December 31, 2009 for the area of Finance and, until February 15, 2010, for the area of Information Technology (IT). Since March 1, 2010, Hartmut Retzlaff has also assumed responsibility for the Logistics area from Christof Schumann.

On October 29, 2009 STADA published that Helmut Kraft will become the new Chief Financial Officer of STADA Arzneimittel AG. The Supervisory Board appointed Helmut Kraft on January 1, 2010 for a period of three years. On January 1, 2010 Helmut Kraft assumed his activities as Chief Financial Officer. In addition to the area of Finance Helmut Kraft is also responsible for the areas of Procurement and IT since February 15, 2010.

There were no loans outstanding to members of the Executive Board as of the balance sheet date.

Supervisory Board

In accordance with the provisions of the One-Third Participation Act, the Supervisory Board of STADA Arzneimittel AG is comprised of nine members of which six are representatives of the shareholders and three represent the employees.

The Supervisory Board appoints the Executive Board members and monitors and advises the Executive Board in the running of its business operations. Through a regular dialog with the Executive Board, the Supervisory Board is informed of the business development, strategy and company planning. It agrees the company planning and approves the financial statements of STADA Arzneimittel AG and the STADA Group taking into consideration the auditor’s report.

The members of the Supervisory Board on the balance sheet date were:

• Dr. Martin Abend, Attorney, Dresden (Chairman)
• Manfred Krüger, Member of Worker’s Council released from duty, Mühlheim am Main (Deputy Chairman) (Employee Representative)
• Dr. Eckhard Brüggemann, Doctor (retired), Herne
• Heike Ebert, Head of Packaging, Niddatal (Employee Representative)
• Dr. K. F. Arnold Hertzsch, Self-employed pharmacist, Dresden
• Dieter Koch, Pharmacist, Kiel
• Constantin Meyer, Self-employed pharmacist, Seelze
• Carl Ferdinand Oetker, Banker, Düsseldorf
• Karin Schöpper, Head of Market Research, Bad Vilbel (Employee Representative)

With the completion of STADA’s Annual General Meeting on June 10, 2009, there were – as a result of a regular new election in May this year – changes in the employee representatives on STADA’s Supervisory Board. The employee representatives on STADA’s Supervisory Board are now unchanged Heike Ebert as well as newly elected members Karin Schöpper and Manfred Krüger. At the same time, Karl Hertle and Adolf Zissel left the Supervisory Board; before his departure, Karl Hertle had been Deputy Chairman of the Supervisory Board. Manfred Krüger was elected the new Deputy Chairman of the Supervisory Board of STADA Arzneimittel AG in a Supervisory Board meeting held directly after the Annual General Meeting.

On August 24, 2009 the STADA Supervisory Board elected Dr. Martin Abend as the new Chairman of the Supervisory Board.

The previous Chairman of STADA’s Supervisory Board Dr. Eckhard Brüggemann had before resigned from his position as Chairman of the Supervisory Board; he, however, remains a member of the board. In addition, the member of the Supervisory Board Uwe E. Flach had resigned from the Supervisory Board as of September 24, 2009, after the one-month period stipulated by the Company’s articles of incorporation.

With effect from November 13, 2009, the District Court of Frankfurt am Main has, based on a joint proposal of the Supervisory Board and Executive Board, appointed Carl Ferdinand Oetker as new member of the Supervisory Board of STADA Arzneimittel AG. The period in office for the replacement member Oetker is limited to the time until the end of the Annual General Meeting on June 8, 2010 at which, in accordance with Section 12 (3) of the Company’s articles of incorporation, an election is to take place.

The term of all other Shareholders’ Supervisory Board members ends with the completion of the Annual General Meeting 2013.

The Supervisory Board has established rules of procedure. In accordance with this the following Supervisory Board committees have been formed as of the balance sheet date:

• Audit Committee
  
  

  The Audit Committee is composed of two members from the shareholders and one from the employees. The Audit Committee deals in particular with questions of accounting, risk management, compliance, the required independence of the auditor, the award of the audit contract to the auditor, the determination of the main areas for the audit and with the fees agreement. In addition, it explains the annual and interim reports to the Executive Board prior to their publication.

  On the balance sheet date the Audit Committee was comprised of the following members: Dr. Martin Abend, Carl Ferdinand Oetker (Chairman) and Karin Schöpper.

• Human Resources Committee
  
  

  The Human Resources Committee is composed of two members from the shareholders and one from the employees. The Chairman of the Supervisory Board is also the Chairman of the Human Resources Committee. The Human Resources Committee prepares the personnel decisions from the Supervisory Board and ensures together with the Executive Board that long-term succession planning takes place. Furthermore, it deals with the strategic issues of the Group.

  On the balance sheet date the Human Resources Committee was comprised of the following members: Dr. Martin Abend (Chairman), Manfred Krüger, Dieter Koch.

The Supervisory Board regularly reviews the efficiency of its activities. The subject of the efficiency review are, in addition to the qualitative criteria to be established by the Supervisory Board, in particular the procedural flows in the Supervisory Board and the information flow between the committees and the plenary as well as the prompt and sufficient information provision of the Supervisory Board.

There were no loans outstanding to members of the Supervisory Board as of the balance sheet date.

Annual General Meeting and shareholders

The shareholders assume their rights in the Annual General Meeting and exercise their voting rights. Every STADA Arzneimittel AG share¹⁾ has one vote. Shareholders have the option to exercise their voting right themselves in the Annual General Meeting or to have their voting right exercised by an authorized representative of their choice or by a voting representative from the Company, but bound by instructions. Every shareholder is entitled to participate in the Annual General Meeting, to speak on individual agenda items there and to request information about Company issues, if this is required for the appropriate assessment for an item on the agenda.

The Annual General Meeting passes resolutions, among other things, on the allocation of profits, the discharge of the Executive Board and Supervisory Board, the election of the auditor as well as any changes to the articles of incorporation and capital-changing measures.

Advisory Board

Members of the Advisory Board of STADA Arzneimittel AG are appointed by the Chairman of the Supervisory Board on the proposal of the Executive Board and the Supervisory Board. According to the Company’s articles of incorporation, the duty of the Advisory Board is to support and advise the Executive and Supervisory Boards. Furthermore members of the Advisory Board are available to act as proxy for shareholders who do not wish to exercise their voting rights in person at the Annual General Meeting. The Advisory Board had 13 members on the balance sheet date.

Transparent corporate governance

In order to ensure transparent corporate governance STADA informs shareholders, financial analysts, other capital market participants, the media and the interested public regularly and promptly about the situation of the company and about any significant business changes.

The reporting about the situation and results of STADA Arzneimittel AG and the STADA Group is delivered through the Annual Report, the interim reports and at press and analysts’ conferences which can generally be followed live and for some time as a recording on the STADA website. Furthermore, Company information is published in ad hoc releases and press releases. Current presentations for capital markets are published on the Company website.

The consolidated financial statements are made available within 90 days after the financial year end and the interim financial statements within 45 days after the end of the reporting period.

Through a comprehensive Internet presence (www.stada.de and in English www.stada.com), STADA meets the legal requirements for simultaneous and equivalent information to all market participants about relevant Company events. On the STADA website all interested individuals can find both compulsory information such as ad hoc releases and annual or interim reports and comprehensive Company and share information such as Company profile, presentations and current share price information on STADA (including peer group comparisons).

The provisions of the German Corporate Governance Code are continuously fulfilled, with a few explained exceptions only.

The Declaration of Corporate Governance is to be issued within the scope of the individual financial statements of STADA Arzneimittel AG; there, use is made of the possibility to refer to the Declaration published on STADA’s website at www.stada.de and www.stada.com.

Again in 2009 STADA participated in numerous external corporate presentations and conferences for institutional investors in relevant European and US-American capital markets. The presentations shown there generally correspond to the Company presentations published on the Company website, which are each regularly updated. The dates of these events are published by STADA retrospectively on the Company website.