Corporate Governance

Introduction by the Chairman of the Board of Directors

Dear shareholders,

The Board of Directors and the Executive Committee of GF attach great importance to good Corporate Governance in the interest of shareholders, customers, business partners, and employees. In the year under review, we have made major efforts with Corporation’s compensation policy, held many discussions and deepened our understanding of our shareholders’ expectations. You can view the consequences of this in the Compensation Report and in the comments below.

Trust-based collaboration between Board of Directors, CEO and Executive Committee

GF has a strong, broadly supported, competent and independent Board of Directors. Another key success factor is the transparent and trust-based collaboration between the Board of Directors, CEO and Executive Committee. This is nurtured and put into practice in exemplary fashion at GF. This includes, above all, mutual respect as well as regular and open information of the Board of Directors by the Executive Committee. Joint visits to companies and markets, which provide time for in-depth encounters, are also very valuable.

Change of CEO and change in the Board of Directors

One of the most important tasks for any Board of Directors is succession planning. Our CEO Yves Serra has reached retirement age. The Board of Directors therefore began succession planning early with the additional support of a specialist consulting company. With the appointment of the present CFO Andreas Müller, as the new CEO, we were able to find an excellent internal solution that guarantees continuity. Andreas Müller will become new CEO after the Annual Shareholders’ Meeting on 17 April 2019.

There is also a change in the Board of Directors. We are proposing to appoint Yves Serra to replace Gerold Bührer, who is stepping down from the Board of Directors due to achieving the age limit of 70 years. His in-depth knowledge of all aspects of GF, his many years’ experience in Asia and strategic thinking will help the Board of Directors continue to overcome future challenges.

Two members have been on the Board for more than twelve years, namely Roman Boutellier (since 1999) and Zhiqiang Zhang (since 2005). As the former long-term Vice Chairman of the ETH Zurich, former Professor of Innovation and Technology Management at the ETH Zurich and former CEO of listed companies, Roman Boutellier has an excellent combination of technology and innovation expertise and operating management experience. Zhiqiang Zhang is a Chinese citizen and has held key positions in leading European corporations in China for many years. As GF generates around 20% of the Corporation’s revenue in China, his expertise in China and in-depth knowledge of European culture and its economy are extremely valuable. Therefore, the Board of Directors is proposing both for re-election.

At the end of 2018, one third of the Board of Directors had been on the Board for less than five years, another third between five and ten years, with the remainer more than ten years. This means that we have a balanced ratio of continuity and experience, and benefit from the widely spread experience and in-depth knowledge of all members of the Board.

Strategy 2020 well on track

In the year under review, GF made further progress in implementing Strategy 2020. This included expanding our presence in growth markets and stepping up involvement in markets for higher value businesses. With the divestment of two of the largest iron foundries in Germany, the start of precision casting and building up further production capacity for light metal parts in the USA, Romania and China, GF Casting Solutions (previously GF Automotive) in particular has fundamentally changed its portfolio.

Engagement with shareholders

GF sets great store on positive and trust-based collaboration with you, our shareholders. We were unhappy that the Compensation Report was only approved by a relatively narrow majority at the Annual Shareholders’ Meeting 2018. We held many discussions with shareholders and proxy advisors in the year under review. As a result, we have revised and newly adopted the long-term incentive plan (LTI) in the compensation system for the Executive Committee for 2019. We invite you to remain active and to let us know your views.

2018 was a significant and successful year, but there is still a great deal to do. The changing operating conditions also require a high level of commitment and flexibility from everyone. We are very confident that we will continue to make further progress with your support.

Andreas Koopmann

Chairman of the Board of Directors