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 within its remit in accordance with the law, the company’s articles of association 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 by 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. The 2021 annual financial statements were also presented in detail to the Supervisory Board at an information event in preparation for the resolution at the financial statements meeting. In the reporting period, all members of the Supervisory Board participated in at least half of the meetings in full. In the reporting period, the Supervisory Board passed four resolutions by way of a 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 2022 financial year, as in the previous year, the focus of the deliberations in the full Supervisory Board was still the significant impact of the Covid-19 pandemic on the development of Deutsche Bahn Group (DB Group).
In this context, issues relating to developments in revenues, profit and employment in the individual business units, the company’s debt situation, questions about the compensation for losses caused by the Covid-19 pandemic and developments in significant capital expenditure and investment projects were also discussed. At its regular meetings in the reporting period, the Supervisory Board – including the Chairman of the advisory council of DB Project Stuttgart — Ulm GmbH – regularly dealt with the progress and cost development of the major projects Stuttgart 21 and Wendlingen — Ulm new construction line and, in an extraordinary meeting, approved the adjustment of the scope of the total value and the financing framework requested as a result of a deadline and cost analysis.
The Supervisory Board discussed other significant individual matters and passed the necessary resolutions, including a change in the allocation of responsibilities during the reporting period, in which long-distance passenger transport and regional transport were structured as independent Management Board divisions, along with the appointment of two members of the Management Board for these divisions. Following the conclusion of a tender procedure for Group-wide auditing services in the year under review, the Supervisory Board approved a corresponding resolution recommendation to the Annual General Meeting. In turn, at regular intervals, the Supervisory Board once again advised on target figures for the equal participation of men and women in management positions both for the Management Board and the Supervisory Board of DB AG and set ambitious targets with a 50% quota for both bodies by June 30, 2027. The Supervisory Board also discussed and passed resolutions on changes to investments, such as the acquisition of USA Truck Inc., Van Buren/USA, and the sale of shares in five national subsidiaries of DB Arriva and MarkenTechnikService GmbH&Co KG. Most recently, the Supervisory Board also advised on the possible sale of Schenker AG and approved the necessary preparatory work for this purpose. Following the failure of GSM-R train radio control in northern Germany in October 2022, the Supervisory Board discussed this incident and possible conclusions that can be drawn from it at a special meeting. In its December meeting, the Supervisory Board also approved DB Group’s budget for the 2023 financial year.
Meetings of the Supervisory Board committees
The Supervisory Board of DB AG has established four permanent committees to enable it to conduct its work efficiently. The Supervisory Board’s Executive Committee held four regular meetings and one extraordinary meeting 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 four regular meetings, three extraordinary meetings and one conference call, and intensively discussed the economic situation of DB Group and the individual business units in preparation for the discussions in the full Supervisory Board, based on the current monthly and half-year figures. The committee’s work in the reporting period focused on managing and guiding the tender process for auditing services. The offers of the bidders were presented to the committee by the applicants as part of a special meeting. During its regular meetings and in several special meetings, the committee dealt in detail with the essential technical and economic aspects of the offers and, after careful consideration, made a recommendation to the Supervisory Board regarding the contract. In addition, at regular intervals, the committee discussed the progress and, in particular, the cost development of the major Stuttgart 21 project on the basis of the quarterly reports of the Management Board, each of which was reviewed by the auditors and an engineering firm. The development of costs, in particular the results of a schedule and cost analysis, was also examined in more detail at an extraordinary meeting in preparation for the discussion of the full Supervisory Board. In addition the committee also discussed in detail the risk report, the submitted budget and investment planning as well as the medium- and long-term planning of the DB Group. 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 was regularly informed about Group-related compliance issues. The Chief Compliance Officer regularly reports on his work there as well as significant cases for the Group (further information on DB Group compliance instruments). Likewise, the intra-Group auditors report to the committee on a regular basis on the audit program and the key findings of the audit activities. The committee also receives regular reports on significant legal disputes. Depending on the circumstances, the various committees are also informed directly about Group-relevant/critical matters in individual cases. The committee also debated the results of a commissioned review of the second S-Bahn (metro) main line in Munich and discussed the M&A decisions requested by the Management Board in preparation for the consultation of the full Supervisory Board. 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 four regular and four extraordinary meetings 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. In further meetings, possibilities of an adjustment of the method for calculating the short-term incentive (STI) for the Management Board were discussed.
The Mediation Committee established in accordance with Section 27 Para. 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 2020 within DB Group. At the time of reporting, the approximately 100 recommendations have been largely implemented. The Supervisory Board will continue to address this matter in the 2023 financial year 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, 2022, 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 24, 2023, and was discussed in full at the Supervisory Board’s financial statements meeting held on March 29, 2023, 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 2022 financial year were approved and thereby adopted. The auditor 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 composition of the Supervisory Board and the Management Board
In the reporting period, the following changes were made to the Management Board and Supervisory Board of DB AG:
- With effect from April 30, 2022, Mr. Ronald Pofalla left the Management Board of DB AG by mutual consent.
- At the regular Supervisory Board meeting on June 23, 2022, Ms. Evelyn Palla became a member of the Management Board of DB AG for a period of three years with effect from July 1, 2022. She is responsible for the Regional Transport division, which was newly created in the same meeting; and
- also with effect from July 1, 2022, Dr. Michael Peterson was appointed as a member of the Management Board of DB AG for the Long-Distance Passenger Transport division, which was also newly created in the same meeting.
- The Infrastructure division has been managed by Mr. Berthold Huber from July 1, 2022, onwards.
- Mr. Christian Schmidt resigned his Supervisory Board mandate with effect from the end of April 30, 2022, and Ms. Kirsten Lühmann and Mr. Eckhardt Rehberg resigned their respective Supervisory Board mandates with effect from the end of June 15, 2022. With effect from June 16, 2022, Mr. Stefan Gelbhaar (Member of the German Parliament), Ms. Dorothee Martin (Member of the German Parliament) and Mr. Bernd Reuther (Member of the German Parliament) were therefore elected as members of the Supervisory Board of DB AG at the extraordinary general meeting on June 16, 2022. With effect from the end of June 15, 2022, Mr. Enak Ferlemann and Ms. Elisabeth Winkelmeier-Becker each resigned from their Supervisory Board mandates. With effect from June 16, 2022, Parliamentary State Secretary Susanne Henckel, Federal Ministry of Digital and Transport (BMDV), and Parliamentary Secretary of State Anja Hajduk, Federal Ministry of Economics and Climate Protection (BMWK), were appointed to the Supervisory Board of DB AG for the remainder of the term of office. Former State Secretary Michael Odenwald resigned his mandate and, in connection with this, also resigned from his position as Chairman of the Supervisory Board with effect from the end of July 22, 2022. Dr. Ingrid Hengster resigned her Supervisory Board mandate with effect from August 19, 2022. At the Supervisory Board meeting on September 28, 2022, State Secretary Werner Gatzer was elected to the position of Chairman of the Supervisory Board. At the extraordinary general meeting of September 29, 2022, Ms. Daniela Mattheus was elected to the Supervisory Board of DB AG with immediate effect from October 1, 2022, and at the extraordinary general meeting of December 7, 2022, Mr. Michael Sven Puschel was also elected to the Supervisory Board of DB AG with immediate effect for the remaining term of office. Mr. Jürgen Beuttler and Mr. Mario Reiss each ended their Supervisory Board activities with effect from the end of July 31, 2022. Mr. Klaus-Dieter Hommel resigned his Supervisory Board mandate with effect from the end of September 30, 2022, and Mr. Jürgen Knörzer resigned his Supervisory Board mandate with effect from the end of October 31, 2022. Alexander Kaczmarek and Klaus-
Peter Schölzke were appointed members of the Supervisory Board of DB AG with effect from September 13, 2022, by way of a judicial appointment by the Charlottenburg District Court. Mr. Ralf Damde and Mr. Manfred Scholze were also appointed members of the Supervisory Board of DB AG by way of a judicial appointment with effect from December 8, 2022. At the Supervisory Board meeting on December 15, 2022, Mr. Martin Burkert was elected Deputy Chair of the Supervisory Board.
The Supervisory Board thanks the departing members of the Supervisory Board and the Management Board for their committed and constructive support of the company.
The Supervisory Board would also like to thank the Management Board, the employees and the works council representatives of DB AG and affiliated companies for their achievements in the year under review.
Berlin, March 2023
For the Supervisory Board
Chairman of the Supervisory Board
of Deutsche Bahn AG