Report of the Supervisory Board
In the year under review, the Supervisory Board of Deutsche Bahn AG (DB AG) observed the entirety of the responsibilities incumbent upon them by virtue of the law, the company’s statutes and its bylaws. The Supervisory Board extensively advised and supervised the Management Board in the management of the company and business operations. The Management Board reported regularly, without delay and in detail to the Supervisory Board regarding corporate planning and the business, strategic and financial development of DB AG and its subsidiaries. All significant business events were discussed in full sessions of the Supervisory Board and the responsible committees based on reports of the Management Board. Significant deviations in actual business development were explained by the Management Board and reviewed by the Supervisory Board. The Chairman of the Supervisory Board maintained close contact at all times with the Chairman of the Management Board, who regularly reported on the latest business developments at DB AG, upcoming business decisions and risk management.
Meetings of the Supervisory Board
The Supervisory Board was involved in all decisions of fundamental significance for DB AG. In the year under review, the Supervisory Board held four ordinary meetings and two extraordinary meetings, as well as one strategy meeting. In addition, after the scheduled end of the previous term of office, the Supervisory Board commenced a new term of office with a constituent meeting. Details of the annual financial statements were also explained to the Supervisory Board in two information events and, at the beginning of the new term of office, particularly for the new Board members, key data and issues relevant to Deutsche Bahn Group (DB Group) were presented. In the reporting period, all members of the Supervisory Board participated in at least half of the meetings in full. In the reporting period, four resolutions were passed by written procedure. Meetings of the Executive Committee, the Personnel Committee and the Audit and Compliance Committee were held in preparation for the scheduled meetings of the Supervisory Board of DB AG. In the reporting period, the main focus of the deliberations in the full meetings, particularly from the second quarter of 2020 onwards, was the significant impact of the Covid-19 pandemic on the development of DB Group. In this context, issues relating to developments in revenues, profit and employment in the individual business units and developments in significant capital expenditure and investment projects were also discussed. The Supervisory Board regularly discussed the progress and the cost development of the major Stuttgart 21/Wendlingen — Ulm project in its scheduled meetings during the reporting period, on each occasion joined by the Chairman of the Advisory Board of DB Projekt Stuttgart — Ulm GmbH. In the annual strategy discussion, the Supervisory Board discussed in detail the information on the implementation status of the Strong Rail strategy presented by the Management Board, focusing on the strategy and restructuring measures for DB Cargo. The Supervisory Board also discussed key individual matters, such as the progress of the audit of the advisory agreements, future courses of action with regard to the disposal of DB Arriva and the further capital expenditure activities of the business unit, along with the development of broadband expansion, and passed the necessary resolutions. In the reporting period, the Supervisory Board also passed the reappointment of a member of the Management Board of DB AG.
Its main topic in the reporting period was in particular the severe consequences of the Covid-19 pandemic for DB Group, which had a significant impact on the economic situation of DB Group from March 2020 onwards. The Management Board discussed the economic situation of DB Group, the impact on revenue and profit development in the business units, corporate planning, and the planned measures to compensate for the economic impact with the Supervisory Board. In December, the Supervisory Board discussed the medium-term planning for DB Group from 2021 to 2025 and approved DB Group’s budget for the 2021 financial year and DB Group’s project and capital expenditure plan for the medium-term period. DB Group’s medium and long-term planning was noted.
Meetings of the Supervisory Board committees
In order to carry out its tasks efficiently, the Supervisory Board of DB AG has set up four standing committees. The Supervisory Board’s Executive Committee met six times in the year under review and was in regular contact with the Management Board regarding all major business policy issues. In its meetings, it focused in particular on preparing the focal topics for each of the Supervisory Board meetings. In the year under review, the Audit and Compliance Committee held six meetings and, in preparation for the discussions in the full sessions of the Supervisory Board, focused particularly intensively on the effects of the Covid-19 pandemic on the economic situation of DB Group and its individual business units using the current monthly and half-year figures. In line with its agenda, the committee discussed the progress and cost development of the major Stuttgart 21 project on the basis of the quarterly reporting of the Management Board, each of which was reviewed by an audit firm and an engineering firm. In its December meeting, the committee also discussed in detail the risk report, the budget and capital expenditure plan presented and DB Group’s medium and long-term planning. The committee also continued to address updates in corporate governance and the internal control system necessitated by the German Accounting Law Modernization Act (Bilanzrechtsmodernisierungsgesetz; BilMoG). The Audit and Compliance Committee also received regular information on compliance issues and the findings of audits by the internal audit department. In addition, the committee discussed the hiring of the audit firm for the financial statements and the progress of the auditing process for the reporting period. The committee was also informed of individual issues of economic significance, including the capital expenditure activity relating to DB Arriva calls for tender. In addition, the committee dealt with the further development of the capital expenditure reporting format and prepared decisions for the Supervisory Board regarding a revised version of the catalog of transactions requiring approval, in particular capital expenditure projects requiring approval. The Chairman of the Audit and Compliance Committee was in regular contact with the Management Board and the external auditor, and reported regularly and in detail on the committee’s work to the full Supervisory Board.
In the year under review, the Personnel Committee held a total of seven – three regular and four extraordinary – meetings or telephone conferences to prepare Management Board-related matters for discussion by the Supervisory Board, discussed questions regarding compensation for the members of the Management Board, and prepared the corresponding resolutions for the Supervisory Board as a result.
The Mediation Committee established in accordance with section 27 (3) of the Co-Determination Act (Mitbestimmungsgesetz; MitbestG) did not have occasion to meet in the year under review.
During the year under review, the Management Board and Supervisory Board of DB AG again considered the further development of corporate governance. In a Cabinet decision on July 1, 2009, the Federal Government adopted the Public Corporate Governance Code (PCGK) and revised it in its resolution of September 16, 2020. The PCGK sets out the essential provisions of applicable law governing the management and monitoring of non-listed companies in which the Federal Republic of Germany holds a majority stake, while outlining the internationally and nationally acknowledged principles of good and responsible corporate management. The Supervisory Board of DB AG dealt with the application of the PCGK within DB Group and adopted the necessary resolutions. The process of implementing the requirements derived from the revised PCGK that came into force during the business year was still being reviewed and preparations being made at the time this report was printed. The Supervisory Board will continue to address this matter in the financial year 2021 and discuss the progress of its implementation with the Management Board.
Annual financial statements
The annual financial statements and management report of DB AG, as prepared by the Management Board, and the consolidated financial statements and Group management report for the period ending on December 31, 2020 were audited and awarded an unqualified audit opinion by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC), the auditor appointed by resolution of the Annual General Meeting. The auditors’ report was reviewed by the Audit and Compliance Committee in its meeting held on March 22, 2021, and was discussed in full at the Supervisory Board’s financial statements meeting held on March 24, 2021 in the presence of the auditors who signed the audit reports. The auditors reported on the salient audit findings and were available to answer questions. The Supervisory Board concurred with the audit findings. The Supervisory Board reviewed the annual financial statements and management report of DB AG, the consolidated financial statements and Group management report for the year under review, and the proposal for the disposition of income, noting no objections. The DB AG annual financial statements for the 2020 financial year were approved and thereby adopted. The audit firm additionally reviewed the report on relationships with affiliated companies prepared by the Management Board. The auditors issued an unqualified audit opinion and reported on their audit findings. The Supervisory Board also reviewed this report, raising no objections concerning the Management Board’s concluding declaration contained in the report or the result of the audit conducted by PwC.
Changes in the compositionof the Supervisory Board and the Management Board
The period of office of the members of the Supervisory Board elected by the General Meeting, Dr. Ingrid Hengster, Prof. Dr. Susanne Knorre, Dr. Jürgen Krumnow, Ms. Kirsten Lühmann, Mr. Michael Odenwald, Mr. Eckhardt Rehberg and Mr. Christian Schmidt, as well as the period of office of the members of the Supervisory Board delegated by the Federal Government, State Secretary Werner Gatzer (BMF), Mr. Oliver Wittke (formerly of the Federal Ministry of Economics and Energy; BMWi) and State Secretary Dr. Tamara Zieschang (Federal Ministry of Transport and Digital Infrastructure; BMVI), along with that of the employee representatives on the Supervisory Board (Mr. Jürgen Beuttler, Mr. Jörg Hensel, Mr. Klaus-Dieter Hommel, Mr. Alexander Kirchner, Mr. Jürgen Knörzer, Ms. Heike Moll, Mr. Mario Reiß, Ms. Regina Rusch-Ziemba, Mr. Jens Schwarz and Mr. Veit Sobek), duly expired at the end of the Annual General Meeting on March 25, 2020. At this Annual General Meeting, Dr. Ingrid Hengster, Prof. Dr. Susanne Knorre, Ms. Kirsten Lühmann, Mr. Michael Odenwald, Dr. Immo Querner, Mr. Eckhardt Rehberg and Mr. Christian Schmidt were elected to the Supervisory Board as shareholder representatives for the period from March 25, 2020, up to the end of the Annual General Meeting, which resolves on their discharge for the fourth financial year following the start of their period of office. State Secretary Werner Gatzer (BMF), State Secretary Dr. Tamara Zieschang (BMVI) and Parliamentary State Secretary Elisabeth Winkelmeier-Becker (BMWi) were delegated directly to the Supervisory Board by the BMVI as additional shareholder representatives, with effect from March 25, 2020. Against the backdrop of the Covid-19 pandemic, the delegate meetings scheduled for February 10/11, 2020 to elect employee representatives to the co-determined Supervisory Boards of DB Group, including the Supervisory Board of DB AG, could not take place, so the Supervisory Board of DB AG requested a judicial replacement appointment of the employee representatives instead. On March 12, 2020, the Berlin-Charlottenburg District Court appointed the following persons as members of the Supervisory Board, with effect from March 25, 2020: Mr. Jürgen Beuttler, Mr. Jörg Hensel, Mr. Klaus-Dieter Hommel, Ms. Cosima Ingenschay, Mr. Jürgen Knörzer, Ms. Heike Moll, Mr. Mario Reiß, Mr. Jens Schwarz, Mr. Veit Sobek and Mr. Torsten Westphal.
At the constituent Supervisory Board meeting, which also took place on March 25, 2020, Mr. Michael Odenwald was again elected Chairman of the Supervisory Board, while Mr. Torsten Westphal was elected Deputy Chairman of the Supervisory Board. On April 25, 2020, Mr. Torsten Westphal resigned his mandate as Deputy Chairman of the Supervisory Board with immediate effect and his mandate on the Supervisory Board of DB AG with effect from May 31, 2020. As his successor, Mr. Klaus-Dieter Hommel was elected Deputy Chairman of the Supervisory Board at the Supervisory Board meeting on May 15, 2020. On June 18, 2020, the District Court of Berlin-Charlottenburg appointed Mr. Martin Burkert to the Supervisory Board as an employee representative in order to fill the mandate left vacant by the departure of Mr. Westphal.
In the reporting period, the following changes were made in the Management Board of DB AG: in its meeting on November 7, 2019, the Supervisory Board of DB AG appointed Dr. Sigrid Nikutta as a Board member of DB AG for the period from January 1, 2020 to December 31, 2022, responsible for the newly created Freight Transport division. In its meeting on December 11, 2019, the Supervisory Board of DB AG appointed Dr. Levin Holle as a Board member of DB AG, responsible for the Finance and Logistics division, for the period from February 1, 2020 to January 31, 2023. Furthermore, in its meeting on February 19, 2020, the Supervisory Board of DB AG reappointed Mr. Martin Seiler, Labor Relations Director and Board member of DB AG, responsible for the Human Resources and Legal Affairs division, from January 1, 2021 to December 31, 2025.
The Supervisory Board thanks the departing members of the Supervisory Board for their committed and constructive support for the company. The Supervisory Board would also like to thank the Management Board, the employees and the employee representatives of DB AG and affiliated companies for their achievements in the year under review.
Berlin, March 2021
For the Supervisory Board
Chairman of the Supervisory Board
of Deutsche Bahn AG