For 30 of the limited liability companies (GmbHs) covered by the PCGK within DB Group, shareholder’s meetings did not take place in person once a year as recommended by the PCGK; instead, they were held by way of a written resolution in accordance with Section 48 of the Act on Limited Liability Companies (Gesetz betreffend die Gesellschaften mit be­schränkter Haftung; GmbHG).

These companies are directly or indirectly wholly owned by DB AG and are integrated into DB Group via a domination and profit and loss transfer agreement. As part of DB Group, meetings held in person to discuss the financial statements with only one person present as shareholder representative would have no added value in terms of content, but would result in a significantly disproportionate administrative burden and additional expenses, due to the presence of the auditor, for example.

Continuous quarterly reporting recommended by the PCGK for the companies it covers in accordance with Section 90 of the German Stock Corporation Act (Aktiengesetz; AktG) is not implemented for six GmbHs. The previous cycle of semi-annual reporting has proved successful in these companies. The proper, timely and comprehensive information of the supervisory body continues to be effectively ensured, even with the current reporting period of at least one meeting per calendar half-year. If there are additional events, written reports by the Management Board or extraordinary meetings of the Supervisory Board may continue to take account of the reporting requirements to the Supervisory Board.

The respective rules of procedure for the companies covered by the scope of application of the PCGK generally stipulate that a 14-day period must be complied for convening the Supervisory Board, including communication of agenda items. Additions should be communicated no later than one week before the meeting (by means of subsequent dispatch). In justified exceptional cases, additions to the agenda or the submission of documents may be required at short notice so that the Supervisory Board can also be informed in urgent cases or can also make corresponding decisions. During the reporting period, some companies covered by the PCGK submitted documents within less than 14 days’ notice in isolated cases. The companies strive to comply with the 14-day deadline in principle.

In its D&O insurance policy, DB Group does not comply with the deductible recommended by the PCGK for members of GmbH management bodies. DB AG has taken out a Group-wide D&O insurance policy for all its management body members in fully consolidated companies. A deductible for management body members of GmbH companies is not prescribed by law. Unlike executives of stock corporations, for whom the deductible is prescribed by law, there are hardly any corresponding insurance offers on the market to cover such a deductible for members of the management body of GmbHs. DB AG continuously monitors the insurance market. If the corresponding offers are available on the market, DB AG will aim to implement this recommendation from the PCGK.

In D&O insurance, there is no deductible for members of supervisory bodies.

DB AG has taken out a Group-wide D&O insurance policy for all its Board members in fully consolidated companies, which also covers the members of the supervisory bodies.

A deductible makes it difficult to compete for suitably qualified candidates for members of the supervisory bodies, especially since comparatively low remuneration is paid anyway.

A significant portion of the remuneration paid to representatives on DB Group Supervisory Boards who are delegated by/elected at the behest of the Federal Government is transferred to the Federal Treasury, unless they waive their remuneration altogether. Members of the Supervisory Board representing employees also transfer a significant amount of their remuneration, in this case to the Hans Böckler Foundation. DB executives who take on Supervisory Board mandates within DB Group do not receive any separate remuneration for Group-internal Supervisory Board mandates. This being the case, it does not seem appropriate to allow members of the supervisory bodies to share in the risks arising from Directors’ and Officers’ liability cases.

DB Group has complied with the recommendation of the PCGK to subject the entity responsible for compliance directly to the general management, with two exceptions. In one company, the compliance officer is indirectly subordinated to general management, and the performance of the compliance function only represents a small proportion of their overall activity. However, there is a direct right to report to the management and professional independence, meaning that in this case indirect subordination is considered to be justifiable. In another case, responsibility for compliance is assigned to the chairman of the management body. The compliance officer assigned is responsible for compliance issues across the board for a number of companies in this business unit. As a result of the evaluation and audit, the overall approach presented was considered to be more efficient and therefore preferred to the establishment of compliance officers in the respective legal entities, who then report directly to the respective management body.

As part of the implementation of the PCGK recommendations, a standard procedure/sample documents for a transparent selection procedure were applied during the reporting period. In companies with minority shareholdings, there are, in some cases, rights to designate on the part of the minority shareholder for individual management mandates. In these cases, there is no room for DB AG to apply a structured selection procedure.

The recommendation not to appoint members of the Management Board beyond the age limit stipulated in the rules of procedure was not complied with in one case. The reason for this was the need to ensure a stable personnel situation during a phase of restructuring.

The recommendations under no. 5.3.2 Clauses 1 and 2 of the PCGK, in accordance with which executive remuneration should be decided by the responsible corporate body, are, for the most part, complied with. In individual cases, there are still ongoing Group employment contracts for historical reasons. In these cases, where the contractual partner is not the corporate body, but rather DB AG as management holding company, the recommendations of this section will be deviated from during the term of these Group employment contracts. There are no plans to conclude new Group employment contracts in the future.

DB AG intends to comply with the recommendation to establish supplementary premium and clawback clauses in the employment contracts for members of a management body. This recommendation will be integrated into contractual regulations in the context of new appointments and reappointments. Accordingly, it will take several years for the companies covered by the PCGK to fully comply with this recommendation.

The recommendations under Nos. 5.3.3 and 5.3.4 of the PCGK with regard to the determination of variable remuneration components by the responsible corporate body are, for the most part, complied with. In individual cases, there are still ongoing Group employment contracts for historical reasons. In these cases, where the contractual partner is not the corporate body, but rather DB Group management, the recommendations of this section shall be deviated from during the term of these Group employment contracts, as the targets in these cases are agreed with Group management. There are no plans to conclude new Group employment contracts in the future.

The methods for the variable remuneration/profit share in DB Group were revised in the 2023 financial year. The established methodology continues to meet the requirements of the PCGK.

In the case of DB Projekt Stuttgart — Ulm GmbH, DB Group does not comply with the PCGK’s recommendation to anchor a supervisory body in the articles of association where this is not provided for by law. In 2013, the Management Board and Supervisory Board agreed to establish the project company DB Projekt Stuttgart — Ulm GmbH for the implementation of the major Stuttgart 21/Wendlingen — Ulm projects and to set up an advisory board of specialist experts to support the company. The Advisory Board of DB Projekt Stuttgart — ­Ulm does not have any tasks, rights or duties within the meaning of the German Stock Corporation Act (Aktienrecht). However, the Chairman of the Advisory Board regularly brings the committee’s positions into the deliberations of DB AG’s Supervisory Board on the Stuttgart 21 project. In addition, the auditor PwC and the engineering firm Emch+Berger provide regular, independent monitoring and quarterly reporting on the project status to DB AG’s Audit and Compliance Committee. There is, therefore, no intention to establish a separate supervisory board for DB Projekt Stuttgart — Ulm GmbH.

DB AG does not comply with the recommendation that all companies covered by the PCGK hold one regular meeting of the supervisory body per calendar quarter. DB AG believes that holding meetings less frequently has proven to be effective, particularly in the case of smaller companies, and – given the size of the companies and the smaller variety of topics or number of reportable business transactions compared to large companies – it also constitutes proper monitoring of the Management Board. The proper, timely and comprehensive information of the supervisory body continues to be effectively ensured, even with the current reporting period of at least one meeting per calendar half-year. If there are additional events, written reports by the Management Board or extraordinary meetings of the Supervisory Board may continue to take account of the reporting requirements to the Supervisory Board.

DB AG does not follow the recommendation to disclose the remuneration of the executive bodies of the subsidiaries covered by the PCGK on an individual basis in the Corporate Governance report. Publishing the remuneration awarded to the respective members of management bodies, especially without their consent, would be questionable with regard to data protection. With the exception of the DB Group Management Board and the Chief Executive Officer of DB InfraGO AG, no such consents have been contractually agreed for the members of the management bodies. DB AG intends to systematize and then disclose the remuneration structures of the Group’s stock corporations.

The recommendation that neither the first mandate of a selected auditor or audit firm nor this mandate in combination with renewed mandates should exceed the maximum term of ten years was not complied with in the reporting period. The mandate with the auditor had already existed beyond the recommended ten-year period in 2023. A change of auditor will take place with effect from the 2024 financial year.

Taking into account the reporting period, the audit partners responsible for the audit of the financial statements were already responsible for the audit beyond the five-year period recommended for the first time in the version of the PCGK dated December 13, 2023. The version of the PCGK dated December 13, 2023, also recommends for the first time that no services should be agreed with the auditor that would not be allowed to be provided to public-interest entities under Article 5 (1) subparagraph 2 point (a) of Regulation No. 537/2014/EU. The auditor for the reporting period provided a small number of tax advisory services for companies in DB Group in accordance with the statutory provisions and the recommendations of the PCGK until the new revised version was issued during the business year. A change of auditor and therefore a change of both the audit firm and the responsible audit partner will take place with effect from the 2024 financial year.