Corporate Governance

 

An effective Corporate Governance is crucial for the management of a company’s business affairs as well as for capital market communication. This has always been of utmost significance to Evotec. Our commitment to complying with high Corporate Governance standards is our chance to:

  • Demonstrate our dedication to well-balanced and transparent rules to the market participants and to
  • Internally emphasise the importance of our clearly defined management tools and responsibilities.

 

Declaration of Compliance by the Management Board and Supervisory Board with the German Corporate Governance Code for the year 2020 as required under sec. 161 of the German Stock Corporation Act (AktG)

The German Corporate Governance Code in its current version as of 16 December 2019 (the ‘Code’) contains principles, recommendations and suggestions for the Management Board and the Supervisory Board that are intended to ensure that the company is managed in its best interests. The Code highlights the obligation of Management Boards and Supervisory Boards – in line with the principles of the social market economy – to take into account the interests of the shareholders, the enterprise’s workforce and the other groups related to the enterprise (stakeholders) to ensure the continued existence of the enterprise and its sustainable value creation (the enterprise’s best interests). 

With the following exceptions, Evotec complies with all recommendations of the Code and the majority of the Code’s suggestions. In December 2020, Evotec’s Management Board and Supervisory Board declared in accordance with Section 161 of the German Stock Corporation Act (AktG):

“Evotec SE has complied in 2020 with the recommendations of the Governmental Commission on the German Corporate Governance Code (the “Code”) as published in the official section of the Federal Gazette and intends to comply in the future with the recommendations of the Code, with the following exceptions:

  • Pursuant to Section G of the Code, the monetary remuneration of the Management Board members comprises fixed and variable components. Variable remuneration components consist of a one-year variable remuneration determined by a bonus scheme and a long-term so-called Share Performance Plan scheme approved by the Annual General Meetings 2012, 2015 and 2017. The Share Performance Plans have a multiple-year assessment basis that has essentially forward-looking characteristics, whereas the bonus scheme is based on the achievement of certain strategic targets set by the Supervisory Board for a certain financial year.

  • The Share Performance Plans comply with the recommendations set forth in Section G of the Code. In particular, they refer to specific key performance indicators and define a “Maximum Target”. However, as the issuance of awards under the Share Performance Plans 2012 and 2015 after the four-year vesting period is effected in shares, there is a cap for the number of awards upon allocation, but no other cap for the value of the allocated shares. That value will only be determined by the share price at that time without a pay-out cap. The Share Performance Plan 2017 has introduced such a cap with a maximum level of 350% of the contractual issue value and therefore complies in all respects with the Code.

  • Stock options issued in existing stock option programmes before their replacement by the Share Performance Plans remain valid. While the exercise of options under these stock option programmes requires an increase of the share price, the exercise is not related to other relevant comparison parameters as recommended in Section G of the Code. This decision is based on the lack of relevant comparison benchmarks in the field of German Biotech at the time when the stock option programmes were created. “ 

Hamburg, December 2020

Management Board            Supervisory Board

German Corporate Governance Code

The German Corporate Governance Code (the “Code”) presents essential statutory regulations for the management and supervision (governance) of German listed companies and contains internationally and nationally recognised standards for good and responsible governance. The Code aims at making the German Corporate Governance system transparent and understandable. Its purpose is to promote the trust of international and national investors, customers, employees and the general public in the management and supervision of listed German stock corporations.

Declaration of Corporate Management for the financial year 2020

The actions of Evotec SE’s management and oversight bodies are determined by the principles of good and responsible Corporate Governance. In this declaration, the Management Board – also acting on behalf of the Supervisory Board – provides its report on corporate management in the Group pursuant to sections 289f, 315d of the German Commercial Code (HGB) and pursuant to the German Corporate Governance Code. Our aim is to present our corporate management principles as clearly and concisely as possible.

Definition of good Corporate Governance

Due to its shares’ listing on the Frankfurt Stock Exchange and its international shareholder base, Evotec recognises both German and international Corporate Governance standards. Good and transparent Corporate Governance ensures that the Company is managed and controlled in a responsible manner, with the objective of sustainable creation of value. The Management Board and Supervisory Board are convinced that compliance with high standards of Corporate Governance is a key factor of success. This also includes integrity in our dealings with employees, partners, shareholders and the public, which is demonstrated by the exemplary conduct of the Company’s management and controlling bodies. As a service provider and collaboration partner, Evotec depends on its ability to win and retain the trust of its partners and customers through impeccable behaviour. The objective is to be credible, solid and reliable and act accordingly. The Company’s Corporate Governance is therefore regularly reviewed and enhanced by the Management Board and the Supervisory Board.

As part of the management strategy, specific goals are defined and communicated on an annual basis. To accomplish these targets, we rely on the enterprise and initiative of our managers and employees. We achieve consensus on clearly defined objectives, and we regularly monitor how well we are meeting them. These agreements on targets are a key element of our leadership philosophy and an integral part of our remuneration system.

Declaration of compliance with the German Corporate Governance Code for the financial year 2020, pursuant to section 161 of the German Stock Corporation Act (AktG)

The German Corporate Governance Code (in its current version of 16 December 2019; the “Code”) contains principles, recommendations and suggestions for the Management Board and the Supervisory Board designed to help observe the Company’s best interests. Under the Code, the Management Board and the Supervisory Board are obliged to ensure the Company’s continued existence and the sustainable creation of value (the Company’s interests) in due consideration of the principles of the social market economy and the interests of its shareholders, staff and other associated parties (stakeholders). 

With the following exceptions, Evotec complies with all recommendations of the Code, and it also complies with the majority of the Code’s suggestions. As a result, in December 2020 Evotec’s Management Board and Supervisory Board declared in accordance with Section 161 of the German Stock Corporation Act (AktG):

“In 2020, Evotec SE complied with the recommendations of the German Corporate Governance Code as published in the official section of the Federal Gazette, and it intends to comply with these recommendations in the future, with the following exceptions:

  • Pursuant to section G of the Code, the monetary remuneration of the Management Board members comprises fixed and variable components. The variable remuneration components consist of a one-year variable remuneration determined by a bonus scheme and a long-term Share Performance Plan (SPP) scheme approved by the Annual General Meetings 2012, 2015 and 2017. Assessments under the Share Performance Plans span a period of several years and depend on future developments, whereas the bonus scheme is based on the achievement of specific targets set by the Supervisory Board for a specific financial year.
  • The Share Performance Plans comply with the recommendations set forth in section G of the Code. In particular, they refer to specific key performance indicators and define a “Maximum Target”. However, as the issuance of awards under the Share Performance Plans 2012 and 2015 after the four-year vesting period is effected in shares, there is a cap for the number of awards upon allocation, but no other cap for the value of the allocated shares. That value will be determined solely by the share price at the date of exercise without any ceiling. The Share Performance Plan 2017 introduced a cap with a maximum level of 350% of the contractual issue value and therefore complies in all respects with the Code.
  • Stock options issued in existing stock option programmes before their replacement by the Share Performance Plans remain valid. While the exercise of options under these stock option programmes requires an increase of the share price, the exercise is not related to other relevant comparison parameters as recommended in section G of the Code. This decision is based on the lack of relevant benchmark indices for German biotechnology stocks at the time when the stock option programmes were created.” 

The current Declaration of Compliance with the German Corporate Governance Code and the declarations of the past five years can be found on Evotec’s website at www.evotec.com/en/invest/corporate-governance

Composition and working methods of the Management Board and Supervisory Board  

Two-tier management and oversight system: Management Board and Supervisory Board 

The two-tier system with a clear separation of management and control is a fundamental characteristic of Evotec’s Corporate Governance structure. The Management Board is responsible for managing Evotec and representing the Company in its dealings with third parties, while the Supervisory Board appoints or dismisses and oversees the members of the Management Board. German law prohibits the Supervisory Board from making operational management decisions. The two boards, however, work closely together to secure long-term and sustainable growth for the Company and to create shareholder value. The Annual General Meeting is the Company’s body representing the interests of the shareholders.

The Management Board provides continuous and detailed updates to the Supervisory Board through verbal and written reports on the status of operations. The information provided includes written monthly management reports with extensive coverage of the Company’s financial figures for the previous month, accompanied by detailed comments and explanatory text. In addition, the Management Board must submit a budget for the following fiscal year and a plan for the medium term to the Supervisory Board. The Management Board is also required to report to the Supervisory Board in a timely fashion on any transactions that may be significant with respect to the profitability or liquidity of the Company in order to give the Supervisory Board an opportunity to express its opinion on such transactions prior to their implementation. 

Beyond this exchange of information and the discussions between the Boards, the Chairman of the Supervisory Board and the Chief Executive Officer as well as other members of the Management Board discuss current and ongoing topics whenever appropriate.

Management Board

The Management Board of Evotec SE is responsible for the management of the Company, and it represents Evotec SE in all business undertakings with third parties. In consultation with the Supervisory Board, the Management Board determines the Company’s strategic direction and ensures its implementation. Its actions and decisions are determined by the Company’s best interests. The Management Board is committed to the objective of sustainable value creation while observing the interests of the Company’s shareholders, employees and other stakeholders. The members of the Management Board are jointly responsible for the entire management and decide on the fundamental issues of business policy and corporate strategy as well as on the annual and multi-year planning.  

Aside from the Chief Executive Officer, the Management Board of Evotec SE has three more members. The Chief Executive Officer coordinates the activities of the Management Board. In accordance with Recommendation B.3 of the Code, new members are appointed to the Management Board for a maximum period of three years. However, contracts may be extended by up to five years, which has been agreed with the current Chief Executive Officer and the Chief Scientific Officer. Management Board members may be reappointed and may be dismissed with good cause prior to the termination of their terms of office. The members of Evotec’s Management Board may not accept more than three Supervisory Board mandates in non-Group listed companies or in supervisory bodies of companies with similar requirements. Information on the individual mandates and professional activities of the Management Board members can be found on page 138f of the Annual Report 2020.

With regards to diversity within the Management Board, the Supervisory Board selects Management Board members regardless of gender, nationality or age. Appointments are made based on qualification and work experience only. In accordance with section 111, paragraph 5 of the German Stock Corporation Act (AktG), the Supervisory Board of Evotec SE set a quota for women’s representation on the Management Board for the first time in 2015. As the Management Board is composed of four male members with running contracts, the quota was set at 0%. Given the terms of the contracts agreed with the current members and because there are no plans to make changes to the Management Board at this point, this quota was confirmed for another five years in 2017. The Supervisory Board also reserves the right to base its decision to extend the contracts of current Management Board members solely on the members’ qualification and performance, regardless of their gender or nationality. Two out of four members of the Management Board are non-German currently.

In accordance with Recommendation B.5 of the Code, Evotec has set an age limit for its Management Board members. Pursuant to section 1 paragraph 4 of the Rules of Procedure of the Supervisory Board of Evotec SE, the Supervisory Board must ensure that the age limit of 65 is observed when appointing new members to the Management Board. 

The assignment of duties within the Management Boards is based on functional aspects as laid down in the rules of procedure. The Chief Executive Officer is in charge of Strategic Corporate Development including M&A, Human Resources, Marketing, Investor Relations and Corporate Communications, and the Chief Financial Officer is responsible for Finance, Controlling, Risk Management, Information Technology & Business Applications, Legal & Compliance, Procurement & Logistics, Facility Management and Equity. The Chief Operating Officer is responsible for the EVT Execute segment, Alliance management, Business Development, global operations plus Quality and Environment, Health and Safety (EHS). The Chief Scientific Officer is in charge of the EVT Innovate segment, Evotec BRIDGEs and Intellectual Property/Patent Management. 

The individual members of the Management Board generally assume the duties of their respective functions under their own responsibility. For any measures or transactions which are of exceptional importance for the Company or which expose the Company to extraordinary risk, prior approval by the entire Management Board is required. Further details are laid down in the rules of procedure. 

Meetings of the Management Board shall be called by the Chief Executive Officer. Each member of the Management Board may request that an extraordinary meeting of the Management Board be called outside its regular meetings. The board meetings are chaired by the Chief Executive Officer, who also coordinates the areas of responsibility. Persons who are not board members can, if so resolved by the Management Board, be admitted to board meetings in a consultative capacity.

Brief minutes have to be made of material negotiations and resolutions. The Management Board generally approves resolutions at its meetings. Resolutions may also be approved in writing, by telex or by telephone without a meeting. The quorum for votes on resolutions is reached when the majority of the Management Board members participates in the vote. Resolutions of the Management Board are passed by a simple majority. In the event of a tie, the decision lies with the Chief Executive Officer. 

The Supervisory Board and the Management Board have agreed on a long-term succession plan. Aside from the requirements of the German Stock Corporation Act and the Corporate Governance Code, this plan takes account of the quota for women’s representation as well as the criteria for diversity on the Management Board as determined by the Supervisory Board. Based on the specific qualification requirements and the aforementioned criteria, the Nomination Committee of the Supervisory Board develops a profile for the ideal candidate which serves as a basis for a shortlist of available candidates. These candidates are then interviewed, and a recommendation is submitted to the Supervisory Board as a decision-making basis. External consultants may support the Supervisory Board and the Nomination Committee in developing job profiles and selecting candidates as needed.

Supervisory Board

As laid down in the current Articles of Association of Evote SE, the Supervisory Board consists of six members which are elected by the shareholders by simple majority vote at the Annual General Meeting. Five of the current members were elected at the Annual General Meeting 2019. Their tenure ends at the end of the Annual General Meeting 2024. After Michael Shalmi retired from the Supervisory Board with effect from the Annual General Meeting 2020, Kasim Kutay was elected to replace him. His tenure, too, ends at the end of the Annual General Meeting 2024. The beginning and the end of the terms of office are shown in the table below:

Tenure and committee membership on the Supervisory Board 

Initial appointment to the Supervisory Board
 
End of tenure
 
Audit and Compliance Committee
Renumeration and Nomination Committee
Prof Dr Wolfgang Plischke (Chairman of the Supervisory Board)
2014
2024
X (Chair)
Prof Dr Iris Löw-Friedrich (Vice Chairman of the Supervisory Board)
2014
2024
X
Kasim Kutay1)
2020
2024
X
Dr Mario Polywka
2019
2024
Roland Sackers
2019
2024
X (Chair)
X
Michael Shalmi2)
2017
2024
X
Dr Elaine Sullivan
2015
2024
X
Prof Dr Wolfgang Plischke (Chairman of the Supervisory Board)
Initial appointment to the Supervisory Board
 
2014
End of tenure
 
2024
Audit and Compliance Committee
Renumeration and Nomination Committee X (Chair)
Prof Dr Iris Löw-Friedrich (Vice Chairman of the Supervisory Board)
Initial appointment to the Supervisory Board
 
2014
End of tenure
 
2024
Audit and Compliance Committee X
Renumeration and Nomination Committee
Kasim Kutay1)
Initial appointment to the Supervisory Board
 
2020
End of tenure
 
2024
Audit and Compliance Committee
Renumeration and Nomination Committee X
Dr Mario Polywka
Initial appointment to the Supervisory Board
 
2019
End of tenure
 
2024
Audit and Compliance Committee
Renumeration and Nomination Committee
Roland Sackers
Initial appointment to the Supervisory Board
 
2019
End of tenure
 
2024
Audit and Compliance Committee X (Chair)
Renumeration and Nomination Committee X
Michael Shalmi2)
Initial appointment to the Supervisory Board
 
2017
End of tenure
 
2024
Audit and Compliance Committee
Renumeration and Nomination Committee X
Dr Elaine Sullivan
Initial appointment to the Supervisory Board
 
2015
End of tenure
 
2024
Audit and Compliance Committee X
Renumeration and Nomination Committee

1) Member of the Supervisory Board since the AGM in June 2020
2) Member of the Supervisory Board until the AGM in June 2020

In accordance with the Code’s recommendations, the members were appointed to the Supervisory Board regardless of gender, nationality or age based on the following criteria: qualification, work experience and competence, independence and diversity. However, the age limit set by the Supervisory Board determines that a candidate may not be older than 72 years at the time of the proposal. In addition, the Supervisory Board has agreed on two full terms as the regular limit of length of membership. Adequate female representation on the Supervisory Board is also intended with a gender quota requiring a minimum of 30% of men and women. 

Furthermore, the Supervisory Board has set specific targets for its composition and competencies and developed a Profile of Competencies and Expertise which reflects the company-specific situation. These targets and profiles provide that in consideration of the company-specific situation, the majority of the Supervisory Board members must have national and international experience in the following areas: (i) research and development, (ii) finance, capital markets, law, corporate governance, (iii) marketing, distribution and operations, and (iv) (public) health. In addition, thorough screening of candidates for the Supervisory Board early in the selection process is meant to avoid potential conflicts of interest. The Supervisory Board shall be composed in such a way that the majority of its members are independent and that its members as a group possess the knowledge, ability and expert experience required to properly complete its tasks.

Currently, the composition of Evotec’s Supervisory Board fulfils all those objectives: Five members are considered independent within the meaning of the German Corporate Governance Code. Two members are female, and two nationalities are represented on the Board. Only Dr Mario Polywka, who served as COO of Evotec until 31 December 2018 and who was elected to the Supervisory Board on the recommendations of a group of shareholders who together hold more than 25% of the total number of voting rights in the Company, is regarded as not independent. Prof Dr Wolfgang Plischke (member of the Supervisory Board of Bayer AG) is independent. Dual membership of two companies with business relations does not constitute a relationship of dependency, as the members of the Supervisory Board primarily have control and monitoring functions and are not involved in any operating activities. The situation could be different in individual cases if a member held a special position on the Supervisory Board, but this is not the case here. Prof Dr Iris Löw-Friedrich (Chief Medical Officer and Head of Development & Medical Practices of UCB S.A.) is also independent in the opinion of the Company. Her position on the Executive Board of UCB S.A., which has a business relationship with Evotec SE, does not constitute dependency. Business relationships constitute a material and prolonged conflict of interest only in exceptional cases. The Supervisory Board has no influence on the volume of orders or the continuation or expansion of business relationships. This is the responsibility of the Management Board of Evotec SE, which not only represents the Company (section 78 of the German Stock Corporation Act (AktG)), but also makes decisions on these matters under its own responsibility (section 76, paragraph 1 of the German Stock Corporation Act (AktG)). There is also no intersecting executive body position. Mr Kasim Kutay is to be considered an independent member of the Supervisory Board despite his position on the Management Board of Novo Holding A/S. Novo Holding A/S holds 10.58% of the voting shares in Evotec SE and is therefore not a controlling shareholder. A controlling position leading to the independence of the shareholder (and thus also of Mr Kutay) would be given if a control agreement had been concluded with the shareholder or if the shareholder held an absolute majority of the voting rights or at least a sustainable majority at the Annual General Meeting. A voting interest of only 10.58% does not constitute a sustainable majority of the voting rights in favour of Novo Holding A/S and therefore does not constitute a conflict of interest, especially since the number of validly cast votes at past general meetings regularly amounted to well over 40% of the share capital. Dr Elaine Sullivan (the former CEO of Carrick Therapeutics Ltd) is also independent. Evotec SE holds approximately 4.5% of the shares in Carrick Therapeutics Ltd., and it is not a significant partner of Carrick Therapeutics Ltd. at present. Therefore, there is no conflict of interest that could hinder the position of independence, for two reasons: (1) Evotec SE's participation rights in Carrick Therapeutics Ltd. are exercised by the Management Board of Evotec SE on its own responsibility pursuant to section 76 paragraph 1 of the German Stock Corporation Act (AktG). In particular, a member of the Supervisory Board has no influence on the voting on the resolutions of the shareholders of Carrick Therapeutics Ltd. (e.g. on any formal approval). (2) There is also no intersecting executive body position, nor are there any other significant connections to members of the company's Management Board through their involvement in other companies or organisations. Mr Roland Sackers (CFO of Qiagen N.V.) is independent. Qiagen N.V. has no significant business relationship with Evotec SE, and no other circumstances leading to dependency are apparent.

The current composition of the Supervisory Board fully represents the competence profile as set out above and last confirmed by the Supervisory Board at the by-election in 2020:

Research and Development
Finance, Capital Markets, Law, Corporate Governance
Marketing, Sale, Operating Business
(public) Health System
Nationality/ Age
Independence
Prof Dr Wolfgang Plischke (Chairmen of Supervisory Board)
X
X
1951
German
X
Prof Dr Iris Löw-Friedrich (Vice Chairman of the Supervisory Board)
X
X
1960
German
X
Dr Mario Polywka
X
X
1963
British
Roland Sackers
X
1968 
German
X
Kasim Kutay
X
X
1965
British
X
Dr Elaine Sullivan
X
X
1961
British
X
Prof Dr Wolfgang Plischke (Chairmen of Supervisory Board)
Research and Development
Finance, Capital Markets, Law, Corporate Governance
Marketing, Sale, Operating Business X
(public) Health System X
Nationality/ Age 1951
German
Independence X
Prof Dr Iris Löw-Friedrich (Vice Chairman of the Supervisory Board)
Research and Development X
Finance, Capital Markets, Law, Corporate Governance
Marketing, Sale, Operating Business
(public) Health System X
Nationality/ Age 1960
German
Independence X
Dr Mario Polywka
Research and Development X
Finance, Capital Markets, Law, Corporate Governance
Marketing, Sale, Operating Business X
(public) Health System
Nationality/ Age 1963
British
Independence
Roland Sackers
Research and Development
Finance, Capital Markets, Law, Corporate Governance X
Marketing, Sale, Operating Business
(public) Health System
Nationality/ Age 1968 
German
Independence X
Kasim Kutay
Research and Development
Finance, Capital Markets, Law, Corporate Governance X
Marketing, Sale, Operating Business X
(public) Health System
Nationality/ Age 1965
British
Independence X
Dr Elaine Sullivan
Research and Development X
Finance, Capital Markets, Law, Corporate Governance
Marketing, Sale, Operating Business X
(public) Health System
Nationality/ Age 1961
British
Independence X

The members of the Supervisory Board assume full responsibility for any training and educational measures required for their duties.

The Supervisory Board appoints a Chairman and a Vice Chairman from amongst its members. The Chairman of the Supervisory Board coordinates the work of the Supervisory Board and externally represents the concerns of the body. The Chairman is available to discuss issues pertaining to the Supervisory Board with investors upon request. 

The members of the Supervisory Board are elected for a period of five years and may be re-elected for a maximum of two full terms of office. 

The Supervisory Board appoints and dismisses the members of the Management Board and advises and oversees the Management Board in the management of the Company. The Management Board and the Supervisory Board maintain an open dialogue which is treated with confidentiality by both parties. The Supervisory Board, in particular the Chairman of the Supervisory Board, exchanges information with the Management Board on a regular basis. In numerous conference calls as needed, the Management Board continuously informed the Supervisory Board of the Company’s operational business and further current issues such as strategy, planning, risk management, and compliance management systems, providing in-depth analyses both orally and in writing.

Pursuant to Recommendation D.7 of the Code, the Supervisory Board held regular board meetings also without the attendance of the Management Board. 

In addition, the Supervisory Board is directly involved in fundamental decisions. The areas of fundamental importance which require prior approval by the Supervisory Board mainly include:

  • Matters which legally require the consent of the Supervisory Board
  • The strategic and operational direction of the Company
  • Annual budget targets and major deviations from related resolutions
  • Material changes to the development pipeline
  • Investments outside of the ordinary business exceeding € 5 m, including in-licensing transactions
  • The establishment or acquisition of companies or material changes in the corporate structure, either by +/- 5% of ownership or to the effect that control in such entity is assumed or lost
  • Business contracts outside the Company’s ordinary course of business that have significantly different risk profiles 
  • Out-licensing agreements with a total value exceeding € 300 m
  • The granting of loans, guarantees or liens and the issuance of bonds or other securities
  • The acquisition or disposal of land
  • The establishment of new business operations or material changes in existing business operations

The articles of association provide that resolutions by the Supervisory Board shall typically be passed in meetings. However, in individual cases and upon the Chairman’s instruction, resolutions can be passed and meetings held by written notice, by telephone, by telex, by fax or by other means of telecommunication. The articles of association further provide that more than half of the members of the Supervisory Board must participate in voting on a resolution, either in person or in writing or in another permissible form, to constitute a quorum. If such a quorum is not met, a new meeting shall be called with a notice period of two weeks, in which case three present board members constitute a quorum. Absent members may participate in a resolution by delivering a written vote to the Supervisory Board. Resolutions of the Supervisory Board are passed by a simple majority of the votes cast. The Supervisory Board has its own internal rules of procedure (see www.evotec.com; Invest section). 

It has been ensured that each member of the Supervisory Board has sufficient time to fulfil its duties. None of the members of the Supervisory Board have accepted more than five supervisory board mandates in listed companies outside the Group. Equally, of the members of the Supervisory Board who at the same time are members of the executive boards of listed companies, none have accepted more than two supervisory board mandates in listed group companies or similar functions, and none have accepted to chair the supervisory board of a listed company outside the Group. 

The Supervisory Board was not informed of any conflict of interest among its members in the course of 2020. 

The Supervisory Board report, which is published as part of the Annual Report in the Invest section of the Company’s website (www.evotec.com), provides an overview of the Board’s activities.

The members’ mandates and their professional relations with related parties are listed on page 138f and 132 of the Annual Report 2020.

The activities of the Supervisory Board comply with the Corporate Governance Code

A significant proportion of the Supervisory Board’s work is conducted in committees. From among its members, Evotec’s Supervisory Board has established, pursuant to the German Stock Corporation Act and the recommendations of the Code, an Audit and Compliance Committee as well as a Remuneration and Nomination Committee. Members of both committees are appointed in accordance with the Code.

Evotec’s Audit and Compliance Committee, comprising three members, supports the Supervisory Board in independently overseeing the Company’s financial reporting activities and in auditing reports. In particular, the Audit and Compliance Committee scrutinises the Company’s accounting processes, the effectiveness of the internal control systems, and the audit. In this context, it discusses the quarterly and half-year reports as well as the risk management and compliance management systems with the Management Board. Within the scope of the audit of the financial statements commissioned by the Supervisory Board, the Audit and Compliance Committee also discusses certain steps and procedures of the audit with the appointed auditing firm, including the auditors’ independence, the additional services rendered by the auditor, the issuing of the audit mandate to the auditing firm, the determination of auditing focal points, the fee agreement and compliance issues. The members of the Audit Committee possess the required skills and experience. As Chief Financial Officer, Roland Sackers is not only independent but also has the required specialist knowledge and experience in the application of accounting principles and internal control processes. Neither the Chairman of the Supervisory Board nor a former member of the Management Board may become Chairman of the Audit Committee. The Audit and Compliance Committee meets at least four times per year. The Audit Committee’s charter can be found on the company website at https://www.evotec.com/en/invest/corporate-governance.

The main duties and responsibilities of the Company’s Remuneration and Nomination Committee are to prepare the appointment of Management Board members and to prepare their remuneration system and Share Performance Plan. Decisions in this context are made by the full Supervisory Board. 

Members of committees are appointed in accordance with the Code. Detailed information on the composition of the Supervisory Board’s committees is shown in the table above.

Efficiency review

The Supervisory Board and its committees regularly examine their efficiency as recommended in the Corporate Governance Code. The required efficiency review was conducted internally by means of questionnaires. In 2020, the review led to the conclusion that the Supervisory Board is organised efficiently and that the Management Board and the Supervisory Board interact professionally and constructively. In their cooperation, the members of the Supervisory Board maintain a highly trusting and open relationship with each other and with the Management Board. In addition, the efficiency review confirms that the Management Board adequately provides information to the Supervisory Board. The Supervisory Board discussed the outcome of the efficiency review in its December meeting in 2020. It did not identify any need for fundamental changes. A few suggestions were adopted and implemented. The next review is planned for 2022.

Remuneration of Board members

Evotec complies with the recommendations of the German Corporate Governance Code to disclose details of the remuneration of each individual member of the Management Board and the Supervisory Board. Detailed information on the remuneration of Management Board members divided into fixed and variable compensation components as well as on any fringe benefits and on the remuneration of Supervisory Board members is reported in a separate section of the Management Report (“Remuneration Report”). The Management Report as part of the Annual Report is published in the Invest section of the company website at https://www.evotec.com/en/invest/financial-publications. In addition, the remuneration of Board members is also disclosed in the Invest section of the company website at www.evotec.com/en/invest/corporate-governance.

The remuneration system for the Management Board was last presented to the Annual General Meeting in 2019 and approved by a majority of 89% of votes.

Evotec procured directors and officers liability insurance cover for its Management and Supervisory Board members, its senior management and the directors of its subsidiaries. The costs of the insurance were assumed by the Company. An appropriately sized deductible was agreed upon for the members of the Supervisory Board. The deductible for the members of the Management Board is in line with the stipulations of the German law governing the appropriateness of board remunerations (VorstAG).

Directors’ Dealings

Under the European Market Abuse Regulation, the members of the Supervisory Board and the Management Board, senior management members as well as persons who have a close relationship with these persons are obligated to report trading in Evotec stock so far as the transactions exceed in aggregate € 5,000.00 (the de minimus threshold) per calendar year. In addition, Evotec has established an Insider Trading Policy (see www.evotec.com; Invest section) that sets standards for Board members’ and employees’ trading in Evotec shares and thus ensures transparency.

During 2020, the following Directors’ Dealings were reported:

Date
Name
Function
Type
No of items
Price
Total
15 Dec 2020
Cord Dohrmann
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
111.376
25,53 EUR
2.843.741,13 EUR
07 Dec 2020
Craig Johnstone
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
4.000
25,01 EUR 
100.058,40 EUR
 
26 Nov 2020
Cord Dohrmann
Member of the Management Board
Exercise against cash settlement (Stock Option Programme)
32.594
 
22,38 EUR
729.535,21 EUR
13 Nov 2020
Mario Polywka
Member of the Supervisory Board
Exercise against cash settlement (Share Performance Plan)
107.908
 
24,23 EUR
2.614.729,54 EUR
02 Sep 2020
Werner Lanthaler
Member of the Management Board
Purchase of shares by exercising stock options (Share Performance Plan)
11.576
22,01 EUR
254.787,76 EUR
02 Sep 2020
Werner Lanthaler
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
11.824
22,01 EUR
260.246,24 EUR
02 Sep 2020
Werner Lanthaler
Member of the Management Board
Purchase of shares by exercising stock options (Share Performance Plan)
8.244
21,8267 EUR
179.939,31 EUR
02 Sep 2020
Werner Lanthaler
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
 
8.356
21,8267 EUR 
182.383,91 EUR
31 Aug 2020
Werner Lanthaler
Member of the Management Board
Purchase of shares by exercising stock options (Share Performance Plan)
19.746
21,1379 EUR
417.769,46 EUR
31 Aug 2020
Werner Lanthaler
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
20.236
21,1379 EUR
427.746,54 EUR
28 Aug 2020
Werner Lanthaler
Member of the Management Board
Purchase of shares by exercising stock options (Share Performance Plan)
41.034
21,1122 EUR
866.318,01 EUR
28 Aug 2020
Werner Lanthaler
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
 
42.050
21,1122 EUR
887.768,01 EUR
28 Aug 2020
Cord Dohrmann
Member of the Management Board
Purchase of shares by exercising stock options (Share Performance Plan)
20.000
21,1122EUR
422.244,00 EUR
28 Aug 2020
Cord Dohrmann
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
31.215
21,1122 EUR
659.017,32 EUR
14 Aug 2020
Werner Lanthaler
Member of the Management Board
Purchase of shares by exercising stock options (Share Performance Plan)
20.000
21,7 EUR
434.000,00 EUR
22 Jun 2020
Werner Lanthaler
Member of the Management Board
Purchase of shares by exercising stock options (Share Performance Plan)
40.524
24,2403 EUR
982.313,92 EUR
22 Jun 2020
Werner Lanthaler
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
41.476
24,2403 EUR
1.005.390,68 EUR
03 Jun 2020
Cord Dohrmann
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
30.000
23,3362 EUR
700.086,00 EUR
21 Feb 2020
Cord Dohrmann
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
30.000
24,9126 EUR
747.378,00 EUR
29 Jan 2020
Craig Johnstone
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
1.250
24,6308 EUR
30.788,50 EUR
29 Jan 2020
Craig Johnstone
Member of the Management Board
Exercise against cash settlement (Share Performance Plan)
19.836
24,6308 EUR
488.576,55 EUR
10 Jan 2020
Mario Polywka
Member of the Supervisory Board
Exercise against cash settlement (Share Performance Plan)
127.155
22,7879 EUR
2.897.595,42 EUR
Date 15 Dec 2020
Name Cord Dohrmann
Function Member of the Management Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 111.376
Price 25,53 EUR
Total 2.843.741,13 EUR
Date 07 Dec 2020
Name Craig Johnstone
Function Member of the Management Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 4.000
Price
25,01 EUR 
Total 100.058,40 EUR
 
Date 26 Nov 2020
Name Cord Dohrmann
Function Member of the Management Board
Type Exercise against cash settlement (Stock Option Programme)
No of items
32.594
 
Price 22,38 EUR
Total 729.535,21 EUR
Date 13 Nov 2020
Name Mario Polywka
Function Member of the Supervisory Board
Type Exercise against cash settlement (Share Performance Plan)
No of items
107.908
 
Price 24,23 EUR
Total 2.614.729,54 EUR
Date 02 Sep 2020
Name Werner Lanthaler
Function Member of the Management Board
Type Purchase of shares by exercising stock options (Share Performance Plan)
No of items 11.576
Price 22,01 EUR
Total 254.787,76 EUR
Date 02 Sep 2020
Name Werner Lanthaler
Function Member of the Management Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 11.824
Price 22,01 EUR
Total 260.246,24 EUR
Date 02 Sep 2020
Name Werner Lanthaler
Function Member of the Management Board
Type Purchase of shares by exercising stock options (Share Performance Plan)
No of items 8.244
Price 21,8267 EUR
Total 179.939,31 EUR
Date 02 Sep 2020
Name Werner Lanthaler
Function Member of the Management Board
Type
Exercise against cash settlement (Share Performance Plan)
 
No of items 8.356
Price
21,8267 EUR 
Total 182.383,91 EUR
Date 31 Aug 2020
Name Werner Lanthaler
Function Member of the Management Board
Type Purchase of shares by exercising stock options (Share Performance Plan)
No of items 19.746
Price 21,1379 EUR
Total 417.769,46 EUR
Date 31 Aug 2020
Name Werner Lanthaler
Function Member of the Management Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 20.236
Price 21,1379 EUR
Total 427.746,54 EUR
Date 28 Aug 2020
Name Werner Lanthaler
Function Member of the Management Board
Type Purchase of shares by exercising stock options (Share Performance Plan)
No of items 41.034
Price 21,1122 EUR
Total 866.318,01 EUR
Date 28 Aug 2020
Name Werner Lanthaler
Function Member of the Management Board
Type
Exercise against cash settlement (Share Performance Plan)
 
No of items 42.050
Price 21,1122 EUR
Total 887.768,01 EUR
Date 28 Aug 2020
Name Cord Dohrmann
Function Member of the Management Board
Type Purchase of shares by exercising stock options (Share Performance Plan)
No of items 20.000
Price 21,1122EUR
Total 422.244,00 EUR
Date 28 Aug 2020
Name Cord Dohrmann
Function Member of the Management Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 31.215
Price 21,1122 EUR
Total 659.017,32 EUR
Date 14 Aug 2020
Name Werner Lanthaler
Function Member of the Management Board
Type Purchase of shares by exercising stock options (Share Performance Plan)
No of items 20.000
Price 21,7 EUR
Total 434.000,00 EUR
Date 22 Jun 2020
Name Werner Lanthaler
Function Member of the Management Board
Type Purchase of shares by exercising stock options (Share Performance Plan)
No of items 40.524
Price 24,2403 EUR
Total 982.313,92 EUR
Date 22 Jun 2020
Name Werner Lanthaler
Function Member of the Management Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 41.476
Price 24,2403 EUR
Total 1.005.390,68 EUR
Date 03 Jun 2020
Name Cord Dohrmann
Function Member of the Management Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 30.000
Price 23,3362 EUR
Total 700.086,00 EUR
Date 21 Feb 2020
Name Cord Dohrmann
Function Member of the Management Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 30.000
Price 24,9126 EUR
Total 747.378,00 EUR
Date 29 Jan 2020
Name Craig Johnstone
Function Member of the Management Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 1.250
Price 24,6308 EUR
Total 30.788,50 EUR
Date 29 Jan 2020
Name Craig Johnstone
Function Member of the Management Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 19.836
Price 24,6308 EUR
Total 488.576,55 EUR
Date 10 Jan 2020
Name Mario Polywka
Function Member of the Supervisory Board
Type Exercise against cash settlement (Share Performance Plan)
No of items 127.155
Price 22,7879 EUR
Total 2.897.595,42 EUR

Directors’ Shareholdings

As of 31 December 2020, the members of the Management Board and the Supervisory Board owned the following shares in the Company:

Shares
Stock options
Outstanding shares from vested SPAs
Granted unvested SPAs (total)
Management Board
Dr Werner Lanthaler
1.232.878
-
377.674
242.940
Enno Spillner
-
-
92.589
61.861
Dr Cord Dohrmann
165.991
-
-
74.965
Dr Craig Johnstone
-
-
16.115
41.870
Supervisory Board
Prof Dr Wolfgang Plischke
-
-
-
-
Prof Dr Iris Löw-Friedrich
-
-
-
-
Kasim Kutay
-
-
-
-
Dr Mario Polywka
-
-
-
45.393
Roland Sackers
-
-
-
-
Dr Elaine Sullivan
-
-
-
-
Management Board  
Shares
Stock options
Outstanding shares from vested SPAs
Granted unvested SPAs (total)
Dr Werner Lanthaler  
Shares 1.232.878
Stock options -
Outstanding shares from vested SPAs 377.674
Granted unvested SPAs (total) 242.940
Enno Spillner  
Shares -
Stock options -
Outstanding shares from vested SPAs 92.589
Granted unvested SPAs (total) 61.861
Dr Cord Dohrmann  
Shares 165.991
Stock options -
Outstanding shares from vested SPAs -
Granted unvested SPAs (total) 74.965
Dr Craig Johnstone  
Shares -
Stock options -
Outstanding shares from vested SPAs 16.115
Granted unvested SPAs (total) 41.870
 
Shares
Stock options
Outstanding shares from vested SPAs
Granted unvested SPAs (total)
Supervisory Board  
Shares
Stock options
Outstanding shares from vested SPAs
Granted unvested SPAs (total)
Prof Dr Wolfgang Plischke  
Shares -
Stock options -
Outstanding shares from vested SPAs -
Granted unvested SPAs (total) -
Prof Dr Iris Löw-Friedrich  
Shares -
Stock options -
Outstanding shares from vested SPAs -
Granted unvested SPAs (total) -
Kasim Kutay  
Shares -
Stock options -
Outstanding shares from vested SPAs -
Granted unvested SPAs (total) -
Dr Mario Polywka  
Shares -
Stock options -
Outstanding shares from vested SPAs -
Granted unvested SPAs (total) 45.393
Roland Sackers  
Shares -
Stock options -
Outstanding shares from vested SPAs -
Granted unvested SPAs (total) -
Dr Elaine Sullivan  
Shares -
Stock options -
Outstanding shares from vested SPAs -
Granted unvested SPAs (total) -

Changes in the directors’ shareholdings will be published in the Invest section of Evotec’s website at https://www.evotec.com/en/invest/corporate-governance.

Annual General Meeting

The shareholders exercise their rights, including their voting rights, at the Annual General Meeting. Each share confers the right to one vote. An audio-visual broadcast of the entire Annual General Meeting was provided online to all shareholders duly registered or to their proxies on 16 June 2020 from 10:00 CET in the password-protected section of the company website at https://www.evotec.com/en/invest/annual-general-meeting. All shareholders duly registered were sent personal access codes for the Company’s protected online service.  

Unregistered shareholders or other interested parties were able to follow the first part of the Annual General Meeting, in particular the Management Board presentation, via a special unrestricted link on the company website. The subsequent responses to questions submitted by shareholders prior to the event were not open to the public. 

Transparency

Evotec SE regularly and equally communicates with shareholders, financial analysts, the media and the public. In doing so, the Company complies with all requirements of the Code regarding transparency, timeliness, openness and equality. It is a prime concern of corporate communications that all relevant target groups receive the same information at the same time. For this reason, the disclosure of information is governed by the Company’s Disclosure Policy. Evotec provides all of its publications simultaneously in both English and German. The Company’s publications are available on its website at www.evotec.com in the Invest section.

This section of Evotec’s website maintains information such as news releases, the financial calendar containing the publication dates of the financial statements, the IR events calendar, annual and quarterly reports, other regulatory news and regularly updated corporate governance information. This also includes the Articles of Association, the Rules of Procedure of the Supervisory Board, the Audit Committee Charter, the Code of Conduct, the Insider Trading Policy and all declarations of compliance.

Moreover, the Company regularly communicates with analysts and investors and offers conference calls to discuss its quarterly results. Evotec precludes any preferential treatment of stakeholder groups in its communications. In 2020, Evotec management participated in various national and international investor conferences.

In addition, the company website at www.evotec.com provides comprehensive information on the Evotec Group and the Evotec share.

Accounting and auditing

Evotec regularly provides information to its shareholders and other interested parties by publishing its annual Consolidated Financial Statements, the half-year report and quarterly interim statements. As an incorporated company whose registered head office is located within the European Union, Evotec SE must prepare and publish Consolidated Financial Statements in accordance with the International Financial Reporting Standards (IFRS) whilst observing section 315a of the German Commercial Code (HGB). The consolidated and the individual financial statements are audited by the audit firm and by the Supervisory Board. The audit firm is appointed by the shareholders at the Annual General Meeting and commissioned by the Supervisory Board. It participates at the Supervisory Board’s deliberations on the financial statements and reports the most significant results of its audit. The Audit Committee uses this information as a guideline for its own evaluation of the statements and reports.

The disclosed financial statements and the management reports for Evotec SE, as well as the Consolidated Financial Statements together with the consolidated management report of the Evotec Group, are audited by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Hamburg. These audits also cover risk management and compliance with corporate governance reporting requirements pursuant to section 161 of the German Stock Corporation Act (AktG). Following its consultations, the Supervisory Board also approves the financial statements and the Consolidated Financial Statements.

Compliance organisation

Compliance and Code of Conduct

The Management Board ensures the observance of legal requirements and internal corporate guidelines, working to achieve compliance throughout the Group. Evotec’s corporate culture is committed to the highest standards of openness, integrity and accountability. Compliance is a key element of integrity, which means adherence to applicable laws and the Company’s internal policies. Evotec’s commitment to a compliance-oriented culture is reflected in the Company’s Code of Conduct, which stipulates fundamental ethical principles that apply to board members and other employees alike, such as integrity and professionalism.

The Code of Conduct mainly sets standards for:

  • Accounting and the permissible use of the Company’s funds and assets
  • Anti-money laundering principles
  • Compliance with insider trading laws and prevention of conflicts of interest
  • Compliance with antitrust legislation
  • Compliance with anti-corruption laws and associated internal guidelines
  • A work environment free of any form of discrimination and harassment
  • Occupational health & safety and environmental aspects
  • Animal welfare
  • Non-disclosure and protection of intellectual property and business secrets
  • Data protection and the use of personal data
  • Global trade
  • The duty to report upon the suspicion of an infringement of the Code of Conduct (whistle-blowing)

Evotec does not tolerate any violation of applicable laws or internal policies.

The Code of Conduct was revised in 2019 and is published on the Company’s website at www.evotec.com in the Invest section.

Compliance Office

The responsible management of compliance risks inherent in Evotec’s business activities requires a suitable and efficient compliance management system. The Compliance Programme of Evotec SE is overseen by the Company’s Compliance Officer, functioning as an independent and objective body that reviews and evaluates compliance issues within the organisation. In this context, group-wide electronic compliance training or face-to-face trainings tailored to the Company’s specific compliance issues and associated risks are organised on a regular basis. The aim is to maintain permanent compliance awareness within all areas of Evotec’s business to ensure that any decision is in line with Evotec’s compliance guidelines and to mitigate compliance risks. Said training is mandatory for all board members and other employees. The Company’s Compliance Officer monitors the participation in the training at regular intervals.

The Compliance Office helps to communicate the values underlying the Code of Conduct and anchor them firmly in the Group. It ensures group-wide implementation of the Compliance Programme.

Another important aspect of accountability and transparency is a mechanism to enable all Evotec employees and business partners to voice concerns in a responsible and effective manner. Suspected compliance violations can be reported to an employee’s responsible line manager, the Company’s Compliance Officer or may also be reported to a worldwide compliance (whistle-blowing) hotline which is available 24 hours a day, 7 days a week. In case that a suspected compliance violation would affect a member of the Management Board, such report would be addressed to the Supervisory Board. In 2020, five reports were registered via the central compliance hotline. Of these, three were related to the same situation and the other two to another situation. Therefore, the compliance hotline registered two cases of suspected violations in 2020, which were both solved and closed in 2020.

In addition, Evotec also complies with the statutory requirements of the capital market. An ad-hoc committee comprising the Chief Financial Officer, the head of Legal & Compliance, the heads of Investor Relations and Corporate Communications as well as the Management Board Assistant reviews the ad-hoc relevance of insider information and ensures it is managed in accordance with applicable law. The ad-hoc committee reports to the Chief Executive Officer.

Further information can be found in the Sustainability Report in accordance with section 289c and section 315c of the German Commercial Code (HGB). This report can be found in the Invest section of Evotec’s website under Financial Publications.

Sustainability

Sustainability is the underlying principle guiding our business. #researchneverstops – this truth will not change until effective treatments and cures have been found for every last one of more than 3,300 diseases that are undruggable today. Our mission to develop first-in-class or best-in-class treatments in an unbiased and efficient manner is at the core of our sustained corporate development.

The structural integration of sustainability management within Evotec has made visible progress. In line with the announcement made in the 2019 Non-financial Statement, Evotec created the new function Head of Global ESG in 2020, which reports directly to the CEO. For 2021, additional headcount is budgeted for the coordination of relevant ESG topics, and the position was filled shortly after the reference date of this report. In addition, we are expanding the infrastructure to support Evotec’s sustainability management within the Environmental, Health & Safety (EHS) division. We reviewed strategically important sustainability issues in a workshop in December 2020, and we intend to refine this process and our sustainability management in future.

Our corporate goals for 2021 now include a Sustainability Goal. In this context, each functional area of the organisation is required to define and implement specific scientific ESG goals that resonate with their respective sphere of influence. In 2021, the promotion and roll-out of a long-term diversity strategy will be in focus.

Our strategy addresses a broad range of sustainability factors. Aside from fostering education and efforts to create the most innovative environment (in-house and in collaboration with academia), we are pursuing a great variety of research approaches. This also includes the focus on molecular phenotypes. The use of patient-derived samples and induced pluripotent stem cells (iPSC) helps to dramatically reduce the number of animal models in the discovery process, and state-of-the-art technologies help to preserve resources. More specifically, they help to reduce waste and energy consumption, and protect employees by reducing contact with hazardous materials. In an environment where the protection of intellectual property is a key competitive factor, the Company’s good reputation will hinge upon the security, quality and integrity of its data. As a foundation for sustainable growth, it is therefore firmly anchored in our sustainability strategy.

Diversity

Our working environment is defined by respect, cooperation, openness and flexibility in the way we think and act. Whether in recruiting, staff development, promotion or pay – Evotec practices equality. In 2020, we launched a project to analyse our gender pay gap at the group level, including factors such as seniority, performance, position level, and others.   With this broad range of factors, the analysis is more comprehensive than legally required in some countries (UK, France), and it is still ongoing.

At the end of 2020, Evotec’s workforce represented 75 different nationalities (2019: 69 nationalities).  The average age of Evotec’s employees at the end of 2020 was 38.8 years. 1.2% of our employees have a recognised disability.

With regard to gender diversity, 54.1% of our global workforce were women in 2020. Our corporate gender goal for senior management below the board is a 30% proportion of women by 2022 (unchanged versus previous years). In 2020, the share of women in senior management amounted to 26.5% after 25.8% in 2019. 

In recent years, as part of our people development efforts and recruitment, we put our focus on developing the ratio of women on level 2.  With a proportion of 28 %, we have nearly reached our target rate. This will help us to feed a pipeline that will be ready to increase our ratio on level 1 in the coming years (18% currently).

Risk Management

The early identification of risks, in particular risks that could jeopardise the Company’s continued existence, and the systematic and responsible management of risks are fundamental elements of efficient corporate governance. Evotec’s risk and opportunity management is based on international standards (COSO – The Committee of Sponsoring Organizations) and allows the Management Board to identify and respond to material risks in a timely manner. The Management Board reports risk-related matters to the Supervisory Board. The Company’s risk and opportunity management is audited as part of the annual financial statements. Details can be found on page 58ff of the Annual Report 2020.

Directors' Dealings

Notification about Directors’ Dealings under article 19 European Market Abuse Regulation (MAR)

  • Information about the transaction with duty of notification
  • Description of the financial instrument: Share
  • ISIN of the financial instrument: DE0005664809
 

Directors' Shareholdings

as of 30 June 2021

Shares
Outstanding Shares from vested SPA's
Granted unvested SPA's (total)
Management Board
Dr Werner Lanthaler
1,232,878
377,674
242,940
Enno Spillner
-
92,589
61,861
Dr Cord Dohrmann
165,991
-
74,965
Dr Craig Johnstone
-
16,115
41,870
Supervisory Board
Prof. Dr Wolfgang Plischke
-
-
-
Prof. Dr Iris Löw-Friedrich
-
-
-
Dr Mario Polywka
-
-
45,393
Roland Sackers
-
-
-
Kasim Kutay
-
-
-
Dr Constanze Ulmer-Eilfort
-
-
-
Dr Elaine Sullivan
-
-
-
Management Board  
Shares
Outstanding Shares from vested SPA's
Granted unvested SPA's (total)
Dr Werner Lanthaler  
Shares 1,232,878
Outstanding Shares from vested SPA's 377,674
Granted unvested SPA's (total) 242,940
Enno Spillner  
Shares -
Outstanding Shares from vested SPA's 92,589
Granted unvested SPA's (total) 61,861
Dr Cord Dohrmann  
Shares 165,991
Outstanding Shares from vested SPA's -
Granted unvested SPA's (total) 74,965
Dr Craig Johnstone  
Shares -
Outstanding Shares from vested SPA's 16,115
Granted unvested SPA's (total) 41,870
 
Shares
Outstanding Shares from vested SPA's
Granted unvested SPA's (total)
Supervisory Board  
Shares
Outstanding Shares from vested SPA's
Granted unvested SPA's (total)
Prof. Dr Wolfgang Plischke  
Shares -
Outstanding Shares from vested SPA's -
Granted unvested SPA's (total) -
Prof. Dr Iris Löw-Friedrich  
Shares -
Outstanding Shares from vested SPA's -
Granted unvested SPA's (total) -
Dr Mario Polywka  
Shares -
Outstanding Shares from vested SPA's -
Granted unvested SPA's (total) 45,393
Roland Sackers  
Shares -
Outstanding Shares from vested SPA's -
Granted unvested SPA's (total) -
Kasim Kutay  
Shares -
Outstanding Shares from vested SPA's -
Granted unvested SPA's (total) -
Dr Constanze Ulmer-Eilfort  
Shares -
Outstanding Shares from vested SPA's -
Granted unvested SPA's (total) -
Dr Elaine Sullivan  
Shares -
Outstanding Shares from vested SPA's -
Granted unvested SPA's (total) -

For a detailed description of the stock option plans and Share Performance Awards for the directors and employees of Evotec Group, please refer to the latest financial reports.

Supervisory Board committees

 As of June 2021

Initially elected to the Company’s Supervisory Board
Audit and Compliance Committee
Remuneration and Nomination Committee
Prof. Dr Iris Löw-Friedrich (Chairperson)
2014
X (Chair)
Roland Sackers (Vice Chairman)
2019
X (Chair)
X
Kasim Kutay
2020
X
Dr Mario Polywka
2019
X
Dr Elaine Sullivan
2015
X
Dr Constanze Ulmer-Eilfort1
2021
X
Prof. Dr Iris Löw-Friedrich (Chairperson)  
Initially elected to the Company’s Supervisory Board 2014
Audit and Compliance Committee
Remuneration and Nomination Committee X (Chair)
Roland Sackers (Vice Chairman)  
Initially elected to the Company’s Supervisory Board 2019
Audit and Compliance Committee X (Chair)
Remuneration and Nomination Committee X
Kasim Kutay  
Initially elected to the Company’s Supervisory Board 2020
Audit and Compliance Committee
Remuneration and Nomination Committee X
Dr Mario Polywka  
Initially elected to the Company’s Supervisory Board 2019
Audit and Compliance Committee X
Remuneration and Nomination Committee
Dr Elaine Sullivan  
Initially elected to the Company’s Supervisory Board 2015
Audit and Compliance Committee
Remuneration and Nomination Committee X
Dr Constanze Ulmer-Eilfort1  
Initially elected to the Company’s Supervisory Board 2021
Audit and Compliance Committee X
Remuneration and Nomination Committee

1) In the Supervisory Board since AGM in June 2021

Attendance at meetings of the Supervisory Board and its Comittees 2020

Supervisory Board member
Number of Supervisory Board and committee meetings 
Participation
Presence*
Prof. Dr Wolfgang Plischke (Chairman)
4+4
4+4
100%
Prof. Dr Iris Löw-Friedrich (Vice Chairperson)
4+6
4+6
100%
Dr Mario Polywka
4+0
4+0
100%
Kasim Kutay1
2+2
2+2
100%
Roland Sackers
4+8
4+8
100%
Dr Michael Shalmi2
2+2
2+2
100%
Dr Elaine Sullivan
4+4
4+4
100%
Supervisory Board member Prof. Dr Wolfgang Plischke (Chairman)
Number of Supervisory Board and committee meetings  4+4
Participation 4+4
Presence* 100%
Supervisory Board member Prof. Dr Iris Löw-Friedrich (Vice Chairperson)
Number of Supervisory Board and committee meetings  4+6
Participation 4+6
Presence* 100%
Supervisory Board member Dr Mario Polywka
Number of Supervisory Board and committee meetings  4+0
Participation 4+0
Presence* 100%
Supervisory Board member Kasim Kutay1
Number of Supervisory Board and committee meetings  2+2
Participation 2+2
Presence* 100%
Supervisory Board member Roland Sackers
Number of Supervisory Board and committee meetings  4+8
Participation 4+8
Presence* 100%
Supervisory Board member Dr Michael Shalmi2
Number of Supervisory Board and committee meetings  2+2
Participation 2+2
Presence* 100%
Supervisory Board member Dr Elaine Sullivan
Number of Supervisory Board and committee meetings  4+4
Participation 4+4
Presence* 100%

* Commercially rounded
1 In the Supervisory Board since AGM in June 2020
2 In the Supervisory Board until AGM in June 2020

Remuneration of Management and Supervisory Board 2021

Documents remuneration Management and Supervisory Board

Remuneration report 2020

The remuneration report summarizes the principles used to determine the total remuneration of the members of the Management Board of Evotec SE and explains the structure and amount of the remuneration paid to the members of the Management Board. It also describes the principles and amount of the remuneration paid to the members of the Supervisory Board. The remuneration report is based on the recommendations of the German Corporate Governance Code (GCGC) and includes the disclosures required by the Handelsgesetzbuch (HGB – German Commercial Code), Aktiengesetz (AktG – German Stock Corporation Act), German accounting standards (GAS) and International Financial Reporting Standards (IFRS). The remuneration report is part of the combined Management Report.

Remuneration System for the members of the Management Board

The remuneration system for Evotec’s Management Board is established by the Supervisory Board, based on a proposal by the Remuneration and Nomination Committee. After approval by the Supervisory Board, the remuneration system is submitted to the Annual Shareholders’ meeting for endorsement (“say on pay”). The current system of Management Board remuneration was endorsed at the Annual Shareholders’s Meeting on 19 June 2019, by a majority of about 89%. Following the rules of the German Act Implementing the Second Shareholder Rights Directive (ARUG II) and the recommendations of the revised GCGC, a revised system will be presented to the Annual Shareholders’ meeting for approval in June 2021.

The current Management Board remuneration is based on the following principles:

  • Focus on sustainable growth of Evotec: Management Board members are expected to make a long-term commitment to and on behalf of the Company. As a result, they can benefit from a sustained increase in the Company’s value. For this reason, a substantial portion of their total remuneration is linked to the long-term performance of the Evotec share in the form of Share Performance Awards (“SPAs”, as outlined below).
  • Compensation linked to performance: Evotec’s size and economic position is also to be reflected in Management Board remuneration. Exceptional achievements are to be adequately rewarded, while falling short of targets results in an appreciable reduction in remuneration.
  • Ensuring competitiveness: Evotec wants to attract outstanding candidates for the Management Board and retain members for the long term. Remuneration should be attractive compared to similar companies.

Following these principles, the Supervisory Board determines the structure of the remuneration system, the weighting of the compensation components, the individual target compensation and the monetary caps for both the variable compensation elements and the total compensation.

Regular review by the Supervisory Board ensures that the remuneration system and the compensation levels are appropriate. Several criteria are applied for this purpose:

  • Situation of the Company: The Supervisory Board takes the economic situation as well as Evotec’s success and prospects into consideration when deciding on the structure and assessment of remuneration.
  • Strategic alignment: The performance targets for the Management Board are set in line with Evotec’s business strategy and the medium-term budget plans.
  • Market practice: The Supervisory Board observes the remuneration levels for Management Board members in comparable companies. The peer group includes German and international biotech and pharmaceutical companies of similar size and complexity to fairly reflect Evotec’s global presence and the potential markets to recruit Management Board members. 
  • Senior Management and Staff remuneration: When reviewing the Management Board remuneration, the Supervisory Boards considers the development of Management Board remuneration over time in relation to the compensation paid to Evotec’s workforce in Germany. In this vertical comparison, the Supervisory Board determines the ratios of Management Board remuneration to the compensation paid to Evotec’ senior management and to the remaining staff.
  • Responsibilities and achievements: The criteria for determining the individual remuneration include the tasks and responsibilities of the members of the Management Board and their individual performance.
  • Corporate Governance best practices: The Supervisory Board considers Corporate Governance best practices when revising the remuneration system. If needed, advice is obtained from independent external remuneration experts.

Structure and components of the Management Board remuneration

The Management Board remuneration comprises both non-performance-based and performance-based components and is divided into three main elements: base compensation, short-term variable compensation, and long-term share-based compensation. Fringe benefits and pension allowances are also part of the remuneration system.

Remuneration Structure

Overall target and maximum Management Board remuneration

Considering the remuneration levels in the peer group and the development of the compensation for the top management tier and overall staff as well as corresponding thoughts on appropriateness, the Supervisory Board determined the total target compensation in fiscal year 2020 for the individual members of the Management Board as shown further below in the “Remuneration Granted” table.

The minimum and maximum remuneration amounts of a Management Board member for fiscal year 2020 are also shown in the table. The maximum possible remuneration constitutes the maximum expenditure of Evotec SE for each member of the Management Board for 2020. The amounts were calculated as the total of all components of the remuneration for the Management Board in the event of minimum and maximum target achievement, respectively. Please note that the maximum pay-out for 2020 is 100% of target value for the short-term variable compensation and 350% of target value for the long-term variable compensation.

Non-Performance-based Remuneration

Non-Performance-based remuneration comprises fixed base compensation paid in 12 monthly instalments at the end of each month and fringe benefits such as pension allowances, contribution to commuting expenses, contributions to certain premiums for insurance policies as well as the benefit derived from the private use of a company car or a car allowance. In addition to the aforementioned remuneration, business-related private payments, expenditures, and expenses are reimbursed.

Performance-based Remuneration

With reference to the principles mentioned above, Management Board remuneration is linked to company performance and sustainable growth of the company. Consequently, the Management Board remuneration comprises both a short-term and a long-term performance-based element: A short-term variable compensation (“Bonus”) and a long-term share-based compensation (“Share Performance Plan”), which was approved by the AGMs 2015 and 2017. The pay-out amount of these two components depend on the extent predefined goals were attained. In case these goals were not met, the pay-out amount of the performance-based components may be reduced to zero. If, however, the targets were significantly exceeded, the pay-out amount is subject to a ceiling or “cap”.

Short-term variable compensation (Bonus)

The Bonus is determined based on the attainment of certain targets specified by the Remuneration and Nomination Committee of the Supervisory Board and subsequently approved by the Supervisory Board for each financial year.

The STI bonus scheme for the Management Board is based on the achievement of clearly measurable corporate objectives equally set for each Management member by the Supervisory Board rather than individual objectives. Such corporate objectives are geared to support the mid- and long-term growth strategy of the Company. They generally relate to financial objectives, such as growth in total revenues, adjusted EBITDA and total deal value from new partnerships and alliances, as set in accordance with the relevant guidance for that specific financial year, as well as additional operational, strategic, cultural and sustainability objectives. In its March meeting after a financial year, the Supervisory Board reviews the achievement of these corporate objectives and approves the respective bonus pay-outs.

The target bonuses for the one-year variable compensation amount to 100% of the fixed remuneration for the Chief Executive Officer (2019: 100%) and to 70% of the fixed remuneration for all other members of the Management Board (2019: 70%). Currently, the remuneration system does not account for over-achievement of corporate objectives. As a result, the pay-out amount cannot exceed the target value. However, the Supervisory Board plans to allow for up to 150% pay-out of the target values in case of success as part of the revised Management Board remuneration system.

Long-term variable compensation (Share Performance Plan)

In addition to the one-year variable compensation, the members of the Management Board are eligible for an annual grant of Share Performance Awards (SPAs) under Evotec’s Share Performance Plan 2017. The Evotec Share Performance Plan is an important step in supporting the interests of the Company’s shareholders and in establishing an attractive state-of-the-art long-term compensation that is in line with remuneration and corporate governance standards as well as the German Corporate Governance Code.

The number of granted SPAs is determined by dividing a defined percentage of the Board member’s total direct compensation (base salary, target annual bonus and target long-term incentives) by the applicable fair market value of an SPA. The percentage amounts to 50% of total direct compensation for the Chief Executive Officer (2019: 50%) and to 35% of total direct compensation for all other members of the Management Board (2019: 35%). To provide for a more concise approach to calculate target values, the Supervisory Board plans to show the target value as percentage of base salary instead of percentage of total direct compensation beginning in 2021 (200% of base salary for CEO and 91.5% of base salary for other members of Management Board).

The Share Performance Plans are based on a forward-looking, multi-year assessment period. For each annual award of SPAs, a Performance Measurement Period of four consecutive calendar years applies. Two equally weighted Key Performance Indicators (KPIs) have been set forth by the Annual General Meeting 2017 oriented on long-term value creation and consisting of “Share Price” (Aktienkurs) and “Relative Total Shareholder Return” (relative Aktienrendite). Relative Total Shareholder Return is a measure to determine the performance of an investment in the shares of the Company compared to the TecDAX. Relative Total Shareholder Return measures the return on a share investment over time, including dividends as well as share price performance (positive and negative) and adjusted for any equity issues or share-splits. The KPIs are measured for each year of the Performance Measurement Period. The achieved performance for a year is locked-in for the remaining Vesting Period.

For each of the two KPIs there is a “Minimum Target”, which has to be reached for Share Performance Awards to be exercised (partially), and a “Maximum Target”, which, once it is met, allows for all Share Performance Awards for the respective KPI (100%) to be exercised to the full amount, once the Vesting Period has expired (one Share Performance Award entitles the holder to subscribe to no more than two shares of Evotec SE).

100% of the KPI “Share Price” (the “Target Share Price”) is achieved for a calendar year if the average share price of the Company stock in the closing auction of XETRA trading (or a corresponding successor system) on the last thirty (30) trading days in the respective performance period, i.e. a calendar year (the “Closing Price”) exceeds by 8% the average share price of the Company stock in the closing auction of XETRA trading (or a corresponding successor system) on the last thirty (30) trading days before the start of the respective performance period (the “Opening Price”). The Minimum Target for the KPI “Share Price” is reached if the Closing Price is higher than the Opening Price. The Maximum Target for the KPI “Share Price”, which entitles all Share Performance Awards for this KPI to be exercised for the respective performance period, is reached if the Closing Price is 16% or more above the Opening Price.

100% of the KPI “Relative Total Shareholder Return” is achieved for a calendar year (the “Target Relative Total Shareholder Return”), if the Total Shareholder Return for the shares of the Company (average share price of the Company at the closing auction of XETRA trading, or a successor system, on the 30 trading days prior to the relevant date plus dividends, and adjusted for any equity issuance or share-splits), matches the Total Shareholder Return of the German TecDAX index during the same period. The Minimum Target for the KPI “Relative Total Shareholder Return” is achieved when the annual Total Shareholder Return for the shares of the Company is 10%-points below the Total Shareholder Return of the TecDAX during the respective performance period (i.e. each calendar year). The Maximum Target, at which all the Share Performance Awards for the KPI “Relative Total Shareholder Return” can be exercised, is achieved when the annual Total Shareholder Return for the shares of the Company is at least 10%-points above the average Total Shareholder Return of the TecDAX during the respective performance period. Relevant values of the Total Shareholder Return of the Company and of the Total Shareholder Return of the TecDAX will be calculated annually and based on the average TecDAX (Total Return Index) during the 30 trading days prior to the relevant date.

The right to exercise awards from the Share Performance Plan arises only on expiry of the Vesting Period. Depending on the achievement of the Key Performance Indicators for each of the four years, each Share Performance Award entitles the participant to the subscription of up to a maximum of two Company shares (200% cap). After each of the four performance periods (i.e. each calendar year) for a tranche of Share Performance Awards has ended, the target achievement for the two KPIs is determined for the respective calendar year and the corresponding numbers of subscription rights are calculated and provisionally set. At the end of all the four performance periods, i.e. the four calendar years of one tranche, the subscription rights determined for each year are added and represent the total number of exercisable subscription rights.

Each participant is required to make a payment of the nominal amount of € 1 (one Euro) per share to Evotec upon exercising, independent from the trading price of the Evotec share at that point in time. The new shares received are not subject to any specific lock-up; they are freely tradable immediately subject to insider trading rules which are the sole responsibility of each participant.

The Supervisory Board reserves the right at its sole discretion to replace the shares to be allocated to the participants with a cash payment and/or Evotec shares kept in treasury by the Company. The value of the shares to be used in calculating the cash payment shall be the average share price during the 30 day trading period immediately before the Vesting date.

While the Share Performance Plan 2017 includes a monetary cap with a maximum pay-out of 350% of the initial target value, the preceding Share Performance Plan 2015 defines a maximum regarding the number of share-based awards (SPA) upon allocation. The monetary value of the allocated shares under these plans is primarily determined by the market price at execution and not capped.

Exceptional Developments

The criteria for the assessment of the performance-related compensation and the annual targets set at the beginning of a fiscal year by the Supervisory Board do not change over the fiscal year. Any retroactive amendment of the target figures or the comparison parameters is excluded.

Exceptional developments, whose effects substantially distort the actual target achievement may be appropriately taken into consideration by the Supervisory Board for the target assessment in justified and rare exceptional cases. This may result in an increase or decrease of the STI pay-out amount (Bonus). Possible exceptional developments during the year include, for example, exceptional changes in the economic situation (for example, due to an economic crisis, healthcare crisis with an impact on the global economy) because of which the original corporate targets become irrelevant, provided that they were unforeseeable. Generally unfavourable market developments are not considered exceptional intra-year developments. Should exceptional developments requiring an adjustment emerge, the Company will report on them in detail and with transparency. The Supervisory Board may also take appropriate account of such exceptional developments in justified and rare exceptional cases by limiting the content and the extent of the subscription rights granted under LTI. 

If justified, the Supervisory Board may retain or reclaim variable remuneration components (clawback). Such clawback provisions are included in the actual service contracts with all Management Board members.

Remuneration Report of the Management Board

The Management Board compensation for 2020 was carried out in full compliance with the Company’s Remuneration System as approved by the AGM and the monetary caps for both the total compensation and the respective compensation components.

The 2020 corporate objectives related to financial objectives, such as growth in total revenues, adjusted EBITDA and total deal value from new partnerships and alliances. This was, among other things, to be achieved by executing significant integrated collaboration in EVT Execute and EVT Innovate with a total volume of more than €100 million in transaction value. Further targets included building at least two new academic BRIDGEs and preparing the Company for sustainable growth. The individual Corporate Objectives for 2020 are set out in the following table:

 

The bonus for the financial year 2020 will be paid out to the Management Board members in March 2021. Based on the actual achievement of the Corporate Objectives 2020 the total bonus for the members of the Management Board for the financial year 2020 amounts to T€ 1,211 (for 2019: T€ 1,157), thereof T€ 476 for Dr Werner Lanthaler (for 2019: T€ 470), T€ 277 for Dr Cord Dohrmann (2019: T€ 252), T€ 236 for Craig Johnstone (for 2019: T€ 238) and T€ 222 for Enno Spillner (for 2019: T€ 197). 

In addition to their one-year variable compensation, the members of the Management Board received a total of 77,214 SPAs in January 2020 (2019: 86,283) under the Company’s Share Performance Plan, thereof 38,400 SPAs for Dr Werner Lanthaler, 14,647 SPAs for Dr Cord Dohrmann, 12,450 SPAs for Craig Johnstone and 11,717 SPAs for Enno Spillner. The fair value of all SPAs granted as multi-year variable compensation amounted to T€ 1,930 on the day of calculation on 1 January 2020. The reduced amount of SPAs in 2020 compared to 2019 is due to the increased fair market value recognised per SPA. The SPAs that were granted in January 2020 vest and become exercisable after four years in January 2024. The SPAs can be exercised either by selling the respective shares that were granted pursuant to the achievement of the relevant KPIs on the open market or by lodging the shares into a personal share account.

The first SPA grant under the current Share Performance Plan 2017 occurred after the Annual General Meeting on 14 June 2017. Given a vesting period of four years, these SPAs will vest in September 2021 and will be reported on in the remuneration report 2021.

Remuneration tables

For 2020, the performance-unrelated and one-year variable compensation of the active members of the Management Board totalled T€ 3,079 of which the variable part amounted to T€ 1,311. 

The following tables present for each Management Board member:

  • The remuneration granted in the year under review including fringe benefits (such as pension allowances, contribution to commuting expenses, contributions to certain premiums for insurance policies as well as the benefit derived from the private use of a company car or a car allowance) and including the maximum and minimum amounts for variable compensation components
  • The allocation of fixed compensation, fringe benefits, short-term variable compensation and long-term variable compensation in the year under review, broken down into the relevant reference years
Term of contract and early termination clauses

In accordance with the Code, new members of the Management Board are appointed for three years. Prolongations of existing contracts might be up to five years as has been agreed with the Chief Executive Officer and with the Chief Scientific Officer.

The contracts of the Management Board members contain a change-of-control clause, which allows them to terminate their current contracts in the event of a change of control. Should members of the Management Board make use of their right to terminate their contracts in the event of a change of control, they are entitled to severance payments determined as follows: for Dr Werner Lanthaler, the severance payment shall be equal to 24 times his monthly base salary (changed to 18 months of base salary plus target bonuses for this period of timein new contract starting March 2021); and for Dr Cord Dohrmann, Dr Craig Johnstone and Enno Spillner, the payment shall be equal to 18 times their monthly base salary plus target bonuses for this period of time. In no case shall the respective severance payment be higher than the total compensation due for the remaining term of the respective Management Board member’s contract.

In accordance with the Code, in case of an early termination of their respective service agreement in the absence of a change-of-control situation, payments to the members of the Management Board shall not exceed the amount of two annual remunerations and shall not exceed the amount of remuneration that would be due until the expiration date of the service agreement.

Remuneration paid to Management Board for other board mandates

Members of the Management Board do not receive any remuneration for intra-group director or board roles. If Supervisory Board mandates are assumed at non-group entities, the Supervisory Board decided that such remuneration received for non-group supervisory board or board of director mandates shall not be offset.

Pension provisions for former Management Board members

The Company has made a provision for a pension for one former Management Board member amounting to T€ 205 (2019: T€ 190). No such further provisions are due for other former Management Board members or their surviving dependants.

Remuneration of the Supervisory Board

The remuneration of the members of the Supervisory Board is prescribed in the Company’s Articles of Association.

According to section 113 AktG, Supervisory Board remuneration is to be appropriate to the task of the Supervisory Board members and the situation of the Company. The personal requirements of Supervisory Board members, especially of the Chairman of the Supervisory Board, regarding qualification and the amount of time have increased significantly in recent years. Evotec SE expects this trend to continue in the future, which is accompanied by an increasing risk exposure and higher liability risks of Supervisory Board members. 

The members of Evotec’s Supervisory Board are entitled to fixed payments as well as out-of-pocket expenses. In accordance with the recommendations of the Code, the Chairman and the Vice Chairman positions on the Supervisory Board as well as the Chair positions and memberships in committees are considered when determining the remuneration of individual members. Consequently, following the approval of the AGM 2019, the fixed compensation is T€ 50 per Supervisory Board member. The Chairman of the Supervisory Board is paid T€ 125, and the Vice Chairman is paid T€ 60. Supervisory Board members serving on its committees shall be paid T€ 10 per committee membership; the Chairman of a committee shall be paid T€ 25.

For their contributions in 2020, the individual members of the Evotec Supervisory Board received the following compensation in 2020:

Remuneration of the Supervisory Board 2020

Total remuneration in T€1)
Prof. Dr Wolfgang Plischke
150
Prof. Dr Iris Löw-Friedrich
70
Kasim Kutay**
32.5
Dr Mario Polywka
50
Roland Sackers
85
Michael Shalmi*
27.5
Dr Elaine Sullivan
60
Total
475
Prof. Dr Wolfgang Plischke
Total remuneration in T€1) 150
Prof. Dr Iris Löw-Friedrich
Total remuneration in T€1) 70
Kasim Kutay**
Total remuneration in T€1) 32.5
Dr Mario Polywka
Total remuneration in T€1) 50
Roland Sackers
Total remuneration in T€1) 85
Michael Shalmi*
Total remuneration in T€1) 27.5
Dr Elaine Sullivan
Total remuneration in T€1) 60
Total
Total remuneration in T€1) 475

 1) Cash remuneration
* Tenure ended at AGM 2020
** Tenure started at AGM 2020

There are currently no consultancy agreements in place between Evotec and current or former members of the Supervisory Board.

Directors’ and Officers’ Liability Insurance (D&O Insurance)*

Evotec procured directors’ and officers’ liability insurance cover for its Management and Supervisory Board members, its senior management and the directors of its subsidiaries at a cost to the Company of T€ 139 (2019: T€ 132). An appropriately sized deductible was agreed upon for the members of the Supervisory Board. The deductible agreed upon for the members of the Management Board is in line with the stipulations of the legal provisions of the VorstAG.

*This section of the management report is not subject to audit

Share Performance Plan

To incentivise executives via variable long-term incentive compensation, the 2012, 2015 and 2017 Annual General Meetings approved the contingent capital necessary to support the so-called Share Performance Plans (SPP 2012, SPP 2015 and SPP 2017). SPP 2017 is replacing SPP 2012 and SPP 2015. However, this does not affect subscription rights issued before 14 June 2017.

The concrete design of the Share Performance Plans 2012, 2015 and 2017 lean on the concept of a share performance programme. They are characterised by the fact that participating executives are entitled to a variable remuneration in shares, when attaining a demanding target. In contrast to a common stock option programme, when attaining a target, shares are not issued in an amount that at least corresponds to the market rate of the company stock at the time of granting the subscription rights, but at the respectively lowest issue amount of currently € 1.00. The essential reason for this lies in the fact that in a Share Performance Programme, the value of the respective stock takes the place of cash compensation, so that stocks ideally should be issued without counter performance. A special economic advantage, compared to a common stock option programme, does not result for the participants as at the time the subscription rights are granted, and therefore at the outset, it is taken into consideration that the participants receive the total value of the shares (minus the respectively lowest issue amount of currently € 1.00), and not only, as in regular stock option plans, the difference between the market rate when granting subscription rights and the market rate at issue of the shares. The determination of an issue amount of currently € 1.00 is imperative from a corporate law perspective, as the issue of new shares under the respective pro-rata amount of the share capital is not permitted.

Under these plans, Share Performance Awards may be granted to a level that may result in in a total of up to 13,000,000 (4,000,000 for SPP 2012, 3,000,000 for SPP 2015 and 6,000,000 for SPP 2017) bearer shares of the Company being issued at maturity to members of the Management Board and other key employees. During the fourth quarter of 2016, a total of 793,903 SPAs (2015: 796,617 awards) were granted to the Management Board and key employees. These awards could result in a maximum of 1,587,806 bearer shares (2015: 1,593,234) being issued at maturity. This is because each Share Performance Award grants up to two subscription rights to Company shares, each of which in turn entitle the holder to the subscription of one Company share. Previous awards can be found the respective annual financial reports. The holder has to contribute € 1.00 per share at the date of issue. Share Performance Awards can only be exercised, if, when and to the extent that key performance indicators are achieved. Key performance indicators of SPP 2012 and 2015 are “Group Revenues”, “Operating Income Before Impairments”, “Net Cash Generated by Operating Activities” and “Share Price” upon which the Supervisory Board had to determine at least two per grant and define their weighting. SPP 2015 also includes the key performance indicator of “Total Shareholder Return”. Equally weighted key performance indicators of SPP 2017 are only “Share Price” and “Total Shareholder Return”.

Key parameters of the Company’s Share Performance Plan 2017 are depicted in the graphic below.

Detailed information on the Company’s current SPP 2017 as well as previous Share Performance Plans 2012 and 2015 can be found below.

Expiration of stock option schemes

SPP 2012, SPP 2015 and SPP 2017 were implemented to replace the stock option programme as the Company’s long-term incentive compensation scheme for executives. Stock options issued in existing stock option schemes I to VII remain valid.

Date of the Ordinary Annual General Meeting
Programme
07 June 1999
Programme I
26 June 2000
Programme II
18 June 2001
Programme III
07 June 2005
Programme IV
30 May 2007
Programme V
28 August 2008
Programme VI
16 June 2011
Programme VII
Date of the Ordinary Annual General Meeting 07 June 1999
Programme Programme I
Date of the Ordinary Annual General Meeting 26 June 2000
Programme Programme II
Date of the Ordinary Annual General Meeting 18 June 2001
Programme Programme III
Date of the Ordinary Annual General Meeting 07 June 2005
Programme Programme IV
Date of the Ordinary Annual General Meeting 30 May 2007
Programme Programme V
Date of the Ordinary Annual General Meeting 28 August 2008
Programme Programme VI
Date of the Ordinary Annual General Meeting 16 June 2011
Programme Programme VII

Detailed information duration of the Company’s previous stock option programmes and exercising of options can be found below.

Policies and Charters

Charters

 

Policies

Reporting Compliance Concerns

The Evotec Group provides employees and external stakeholders with EVOwhistle as a channel to report compliance-related concerns such as suspected or observed misconduct, violations of the Evotec Code of Conduct or other legal violations. EVOwhistle is Evotec Group´s dedicated and secure website hosted outside the Evotec Group´s network. It aims to create a trusted system with protection for a Whistleblower and the person, which may be subject of an addressed concern. The link to website is https://evotecgroup.integrityline.org.

Auditors

On 15 June 2021, the Annual General Meeting elected Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft to audit the financial statements and the consolidated financial statements for the fiscal year ending 31 December 2021. Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft has been serving as the Company’s auditor since 2014.

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