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RWE AG’s subscribed capital remained unchanged, consisting of 523,405,000 no-par-value common shares in the name of the bearer (93.1 % of the subscribed capital) and 39,000,000 no-par-value preferred shares in the name of the bearer without voting rights (6.9 % of the subscribed capital). The remaining rights and obligations are determined by the German Stock Corporation Act. Holders of non-voting preferred shares have a right to a preferred share of profits of €0.13 per share when the distributable profit is distributed. The composition of subscribed capital and, above all, the legal definition of the non-voting preferred shares issued by RWE are in compliance with the provisions of the law and of the Articles of Incorporation.
In compliance with Sec. 21, Para. 1 of the German Securities Trading Act (WpHG), on December 21, 2007, RW Energie-Beteiligungsgesellschaft mbH & Co. KG, Dortmund, informed us that it held 16.089 % of RWE Aktiengesellschaft’s voting stock at the time.
Executive Board members are appointed and dismissed in accordance with Secs. 84 et seq. of the German Stock Corporation Act (AktG) in connection with Sec. 31 of the German Co-Determination Act (MitbestG). Amendments to the Articles of Incorporation are made pursuant to Secs. 179 et seqq. in connection with Sec. 16, Para. 5 of the Articles of Incorporation of RWE Aktiengesellschaft. According to Sec. 16, Para. 5 of the Articles of Incorporation, unless otherwise provided for by law or in the Articles of Incorporation, the General Meeting shall adopt all resolutions with a simple majority of the votes cast; in so far as a majority of the capital stock represented is required, the simple majority shall suffice. We therefore made use of the legal possibility of determining a different capital majority for amendments to the Articles of Incorporation than prescribed by law. Amendments to the Articles of Incorporation that only concern the wording, without changing content, may be decided upon by the Supervisory Board (Sec. 10, Para. 9 of the Articles of Incorporation).
Pursuant to the resolution passed by the Annual General Meeting on April 17, 2008, the Executive Board was authorized to purchase shares of any class in RWE until October 16, 2009, totalling up to 10 % of the share capital. The purchase may be limited to shares of a single class. It is at the Executive Board’s discretion to purchase the shares on the stock market or by making a public call for shares. They may then be called in, transferred to third parties within the scope of mergers or acquisitions, or sold in another manner, as long as the sale is made in exchange for cash and at a price that is not significantly lower than the price quoted for common shares bearing the same rights at the time of sale. The authorization may be exercised in part or in full.
Pursuant to Sec. 4, Para. 2 of the Articles of Incorporation, the Executive Board is authorized to increase the company’s capital stock with the Supervisory Board’s approval by up to €287,951,360.00 until April 16, 2013, either at once or in several increments through the issuance of no-par-value common shares in the name of the bearer in exchange for contributions in cash or in kind (authorized capital). The shareholders’ subscription rights can be waived with the Supervisory Board’s approval, in order to avoid allocation of fractions of shares. The subscription rights can also be waived in order to issue shares in exchange for contributions in kind within the scope of mergers or for the purpose of acquiring stakes in companies. Subscription rights can also be waived in the event of a cash capital increase if the price at which the new shares are issued is not significantly lower than the price at which shares outstanding are traded on the stock market and the portion of the capital stock accounted for by the new shares, for which subscription rights are waived, does not exceed 10 % in total. The Executive Board shall be empowered, subject to the consent of the Supervisory Board, to determine the further details and conditions of the share issuance.
RWE AG’s syndicated credit lines have a change of control clause. It is a contractual provision which grants a contracting party certain rights (most importantly the right to termination) in the event of a change of either control or the majority shareholder at the other contracting party.
Executive Board members have a special right of termination in the event of a change of control. On execution of the special right of termination, Executive Board members receive a one-off payment in the amount of the compensation due until the end of the duration of the contract originally agreed, which shall not be less than twice their total contractual annual compensation and shall not be more than three times their total contractual annual compensation. Since Dr. Jürgen Großmann was granted this special right of termination before the last amendment to the German Corporate Governance Code, on exercise of his special right of termination, he shall receive a one-time payment that covers all of the remuneration due until the expiry of his employment contract, including the amount contractually agreed instead of a pension commitment.
The 2005 long-term incentive plan (Beat) for the Executive Board and executives of RWE AG and of affiliated companies includes a provision for a change of control. In such events, all holders of performance shares Glossary under the Beat programme receive a compensatory payment. The amount of the compensatory payment is determined by multiplying the price paid for RWE shares as part of the takeover by the final number of performance shares. The latter is determined when the takeover offer is made, in line with the plan conditions.
The authorization to conduct share buybacks, the authorized capital, the provision governing changes of control over the syndicated credit lines, the provisions effective in the event of a change of control in the Executive Board members’ contracts, and the compensation regulations for the 2005 long-term incentive plan (Beat) that prescribe compensation for performance shares in the event of a change of control, are in line with the generally accepted German capital market standards.
