CompuGroup Medical : Corporate Govenance Document (Download)

Corporate Governance Statement

The principles of responsible and good corporate governance govern the actions of the management and supervisory bodies of CompuGroup Medical SE & Co. KGaA (hereinafter referred to as "CompuGroup Medical" or "company", and jointly with its dependent associated companies, "CompuGroup Medical Group"). The Managing Directors of the company's general partner, CompuGroup Medical Management SE, and the Supervisory Board of CompuGroup Medical provide the following information about the company's corporate governance as of December 31, 2023 (Date of Statement) in accordance with Principle 23 of the German Corporate Governance Code (GCGC) and as per sections 289 et seq., 315d German Commercial Code (HGB).

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1. Declaration of Compliance with the German Corporate Governance Code

CompuGroup Medical SE & Co. KGaA

Declaration of the general partner and the Supervisory Board of

CompuGroup Medical SE & Co. KGaA

on the recommendations of the

Government Commission on the German Corporate Governance Code

as per section 161 German Stock Corporation Act (AktG)

1. Preliminary remarks
   The Managing Directors of the general partner and the Supervisory Board of CompuGroup Med- ical SE & Co. KGaA last issued a Declaration of Compliance on December 12, 2022 as per sec- tion 161 (1) German Stock Corporation Act (AktG).
   The German Corporate Governance Code (GCGC) is tailored to companies organized as a Ger- man stock corporation (Aktiengesellschaft, AG) or a European stock corporation (SE) and does not consider aspects particular to a partnership limited by shares (Kommanditgesellschaft auf Aktien, KGaA). This means that many of the Code's recommendations need to be modified be- fore they can be applied to CompuGroup Medical SE & Co. KGaA, if at all. The following matters must be considered here:

1. Management
   Many of the Code's recommendations pertain to the Management Board. However, in contrast to an AG or a dualistically structured SE, a KGaA does not have Management Board. In a KGaA, it is the general partner who is responsible for the tasks incumbent upon the Management Board. The sole general partner of CompuGroup Medical SE & Co. KGaA is CompuGroup Medical Management SE, which manages the business of and represents CompuGroup Medical SE & Co. KGaA. CompuGroup Medical Management SE has a one-tier governance structure, which means here that the SE is managed by a single (one-tiered) board, the Administrative Board. The Ad- ministrative Board governs CompuGroup Medical Management SE, determines the parameters of its business activity and monitors the implementation thereof through the Managing Direc- tors. The Managing Directors manage the business of the SE, as well as representing it both in and out of court. This means that the Managing Directors also manage the business of CompuG- roup Medical SE & Co. KGaA.
2. Supervisory Board
   Similarly, a number of the Code's recommendations pertaining to the Supervisory Board do not consider the legal particularities of a KGaA. For example, in contrast to the supervisory board of an AG and a dualistically structured SE, the supervisory board of a KGaA does not have any au-

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thority over the Management in terms of appointments and compensation. Moreover, the supervisory board of a KGaA cannot constrain the Management by stipulating transactions requiring approval.

3. Annual General Meeting

1. The Annual General Meeting of a KGaA generally has the same rights as the Annual General

   Meeting of an AG. It also decides on the adoption of the company's annual financial statements.

   In contrast to the legal form of an AG, some resolutions of the annual general meeting (e.g. the adoption of the annual financial statements) require the consent of the general partner.

2. Declaration of Compliance:
   The Managing Directors of the general partner and the Supervisory Board of CompuGroup Med- ical SE & Co. KGaA declare continued compliance with the recommendations of the German Corporate Governance Code (GCGC 2022) as amended on April 28, 2022, and published by the Federal Ministry of Justice on June 27, 2022, in the official section of the Federal Gazette, taking into account the structural particularities of a partnership limited by shares (KGaA), with the exception of the recommendations specified below for the reasons provided in each case:
3. 1. Recommendations B.1 to B.5
      Recommendations B.1 to B.5 concern the composition of the Management Board and the criteria that the Supervisory Board should consider when appointing members to the Management Board. However, the law states that the management of a partnership lim- ited by shares (KGaA) is the responsibility of the general partner. Given its lack of person- nel authority, the Supervisory Board of the KGaA is unable to influence who the general partner appoints as members to the Soard. The Supervisory Board does not appoint the Managing Directors or the Administrative Board members. Rather, the Managing Direc- tors are appointed by the general partner's Administrative Board. The Administrative Board members are in turn appointed by the general partner's Annual General Meeting.
      As a result, recommendations B.1 to B.5 are not applicable to CompuGroup Medical SE & Co. KGaA. It is merely for the sake of caution that we draw attention to the fact that the company deviates from this recommendation.
   2. Recommendation C.2
      Recommendation C.2 states that an age limit shall be specified for members of the Super- visory Board and disclosed in the Corporate Governance Statement. The company does not believe that specifying a fixed age limit when selecting members of the Supervisory Board is a suitable criterion. Instead, the company considers the age of an individual when selecting suitable candidates and assessing their skills, experience and ability to perform. The diversity concept also states that at least 30 % of the members of the Supervisory Board should be under the age of 60.

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1. Recommendation C.5
   Recommendation C.5 states that members of the management board of a listed company shall not accept the chairmanship of a supervisory board in a non-group listed company. The Managing Director and CEO, Michael Rauch, is also the chairman of the supervisory board of the listed company edding AG, Ahrensburg. We are of the opinion, however, that in view of what is stated in Section C. "Composition of the Supervisory Board", recom- mendation C.5 is only directed at the company at which the chairmanship of a supervisory board is held (edding AG in this case). We do not believe, therefore, that recommendation C.5 applies to the company in respect of Michael Rauch holding the position of chairman of the supervisory board at edding AG. It is merely for the sake of caution that we draw attention to the fact that the company deviates from this recommendation. We firmly believe that Michael Rauch's position as chairman of the supervisory board at edding AG does not in any way negatively impact his ability to perform his duties in a due and diligent manner as Managing Director and CEO of the company.
2. Recommendation D.4
   Recommendation D.4 states that the Supervisory Board shall form a Nomination Commit- tee, composed exclusively of shareholder representatives, which names suitable candi- dates to the Supervisory Board for its proposals to the Annual General Meeting. The cur- rent shareholder representatives have each been appointed until the end of the Annual General Meeting that resolves on the formal approval of the activities of the members of the Supervisory Board for the 2024 financial year. This means that the Supervisory Board does not currently see any need to form a Nomination Committee. The Supervisory Board is considering the ad hoc formation of a temporary nomination committee as regards fu- ture vacancies.
3. Recommendation E.3
   Recommendation E.3 states that members of the Management Board shall only assume sideline activities, especially supervisory board mandates outside the enterprise, with the approval of the Supervisory Board. Die CompuGroup Medical SE & Co. KGaA does not have a Management Board. In the interest of ensuring compliance to the greatest extent pos- sible with the Code's recommendations, it is however stipulated that Managing Directors may only pursue sideline activities, in particular taking up positions on non-group super- visory boards, with the approval of the general partner's Administrative Board.
4. Recommendations on the remuneration of the Management Board (G.1 to G.13, G.15 and G.16)
   As regards the recommendations on the remuneration of the Management Board, we continue to believe that these do not apply in view of the structural particularities of Com- puGroup Medical SE & Co. KGaA, specifically because the general partner is responsible for the KGaA's management and the KGaA's Supervisory Board does not have any author- ity to set the remuneration of members of the general partner's bodies. With this and good corporate governance in mind, It is only for the sake of caution that we draw atten- tion to the fact that the company complies with the recommendations G.1 to G.13, G.15 and G.16 with the following deviations:

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Recommendation G.10

Recommendation G.10 states that variable remuneration amounts of Management Board members shall be invested predominantly in company shares by the respective Management Board member or shall be granted as share-based remuneration. Granted long-term variable remuneration components shall be accessible to Management Board members only after a period of four years.

Recommendation G.10 should not be complied with. We take the view that having flexibility in how Managing Directors are remunerated is justified. This means that both share- based and non-share-based components may be suitable as forms of long-term variable remuneration. This applies in particular to Managing Directors with clear responsibility for a business unit, as the degree to which they are successful may not perhaps be as clearly depicted in the share price as it may be in the business figures of the business area in question. The share price may even be heavily influenced by factors that an individual Managing Director has little or no ability to influence. This means that there are times when it can be in the company's interest to have incentives in place for Managing Directors that are based on individual performance targets, rather than having variable remuneration that is largely either share-based or to be invested in shares.

Recommendation G.11

Recommendation G.11 states that the Supervisory Board shall have the possibility to account for extraordinary developments to an appropriate extent. It shall be permitted to retain or reclaim variable remuneration if justified.

The company's remuneration system and the contracts of employment concluded with Managing Directors provide a range of such options for the individual variable remuneration components. In our view, being able to adjust the amount of remuneration in the event of extraordinary developments beyond what is possible under the law is particularly necessary in the case of share-based variable remuneration. In the case of variable remuneration components based instead on other performance targets, in particular key performance indicators of the company or a business unit, it is less likely that remuneration will be decoupled from the performance of Managing Directors as a result of extraordinary developments. Consequently, there should be no need for explicit contractual stipulations to adjust remuneration beyond the options outlined in the remuneration system. Should this be considered a deviation from recommendation G.11, a deviation from the recommendation is hereby declared by way of caution.

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Koblenz, December 11, 2023

__________________________	__________________________
signed by Michael Rauch	signed by Dr. Ulrich Thomé
CEO & CFO	Managing Director
For the general partner's Managing Director

__________________________

signed by Philipp von Ilberg (Chairman of the Supervisory Board)

For the Supervisory Board of CompuGroup Medical SE & Co. KGaA

I.

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2. Reference to the company's website

The remuneration report for the past financial year and the independent auditor's report as per section 162 German Stock Corporation Act (AktG) as well as the most recent resolution regarding remuneration as per section 113 (3) AktG are published on the company's website at www.cgm.com/ir. The provision in section 87a AktG on the establishment of a management board remuneration system does not apply directly to CompuGroup Medical due to its legal form as a partnership limited by shares (KGaA). However, for reasons of good corporate governance and transparency, the company decided to voluntarily base its remuneration system for the Managing Directors on section 87a AktG. This remuneration system is also published on the company's website at www.cgm.com/ir.

3. Relevant disclosures on corporate governance practices

CompuGroup Medical is aware of its important role as a responsible member of society. Since 1987, today's CompuGroup Medical has been developing the advantages of a digitalized healthcare system and sees itself as forerunners in digitization in medical care. Inspired by the vision of our founder Frank Gotthardt - "Nobody should suffer or die just because at some point medical information was missing" - we help healthcare professionals and patients use medical information any time, anywhere for the benefit of everyone involved. Our products and solutions ensure a perfect working environment for our customers. We confront the daily challenges that arise in the healthcare sector by applying our products, platforms and many years of market experience, while ensuring the constant availability of medical and administrative data with the aim of providing the most efficient and best possible care and support for patients and their relatives. At the same time, we observe high standards of data protection and fail-safety for the systems we provide. Our products and solutions comply not only with applicable laws and regulations but also with our commitment to ethical and social responsibility. Ethical guidelines are firmly anchored in our corporate culture and our Code of Ethics and apply to all employees of the CompuGroup Medical Group as well as to business partners acting on behalf of the company. We also expect our suppliers and partners to adhere to a code of ethics that is consistent with our ethical values. The Code of Ethics of the CompuGroup Medical Group is available on our corporate website at www.cgm.com/ir.

4. Description of the operations of CompuGroup Medical Management SE, including its Managing Directors and Administrative Board

CompuGroup Medical's legal form is a German partnership limited by shares (Kommanditgesellschaft auf Aktien, KGaA). One of the core principles of German company law is that organizations usually have a two-tier management system, with a management body and a Supervisory board as the monitoring body. The legal form of a KGaA differs here as its business activities are managed by a general partner. At CompuGroup Medical, CompuGroup Medical Management SE assumes the role of the management body as general partner in accordance with the Articles of Association. The Supervisory Board of CompuGroup Medical supervises the management of the general partner in accordance with the powers assigned to it by law and the Articles of Association. CompuGroup Medical has also established an additional voluntary corporate body in the form of a Joint Committee ("Joint Committee"). Half of this committee consists of members of the Supervisory Board of CompuGroup Medical, and the other half is composed of members nominated by CompuGroup Medical Management SE.

CompuGroup Medical Management SE is a European stock corporation (SE) with a one-tier structure. CompuGroup Medical Management SE is represented by the Annual General Meeting, the Administrative Board and the Managing Directors. CompuGroup Medical Management SE - represented by its Managing Directors - carries out the business activities of CompuGroup Medical with the due care and diligence of a prudent and conscientious manager and is committed to the corporate interests of CompuGroup Medical.

The sole shareholder of CompuGroup Medical Management SE is GT 1 Vermögensverwaltung GmbH, with its registered office in Koblenz. The share capital of GT 1 Vermögensverwaltung GmbH is held by Frank Gotthardt (99.36 %) and Professor Dr. Daniel Gotthardt (0.64 %). Both are also members of the Administrative Board of CompuGroup Medical Management SE.

In its function as general partner, CompuGroup Medical Management SE does not hold an equity interest in CompuGroup Medical and does not participate in the earnings and assets of the company. The general partner is reimbursed by CompuGroup Medical for all expenses incurred in connection with the management of the company's business activities, including the remuneration of the members of its corporate bodies. As stipulated by the Articles of Association of CompuGroup Medical, the company pays the general partner an annual remuneration in the amount of 4 % of its share capital, which is independent of the company's profits and losses, in addition to reimbursing its expenses for the management of the company and the assumption of liability. This remuneration

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reflects in particular the liability risk assumed by CompuGroup Medical Management SE as the general partner of CompuGroup Medical.

a. The Managing Directors of CompuGroup Medical Management SE

The Managing Directors manage the business activities of CompuGroup Medical Management SE and, by virtue of their capacity as general partner of CompuGroup Medical, thus indirectly also the business of the company. In this capacity, they implement the general guidelines and requirements set up by the Administrative Board. The Managing Directors manage the business activities with the due care and diligence of a prudent and conscientious manager in accordance with applicable law, the German Corporate Governance Code (to the extent the general partner and the Supervisory Board have decided to comply with the individual recommendations), the Articles of Association, the Rules of Procedure for the Managing Directors and the Directives of the Administrative Board.

In accordance with the Rules of Procedure, the following allocation of responsibilities applies to the Managing Directors:

• Michael Rauch (CEO & CFO):

The CEO is responsible for coordinating all business units led by the Managing Directors. It is his responsibility to ensure that all business units of the CGM group are uniformly aligned to the objectives determined by the Administrative Board. The CEO defines the strategy required to achieve this in line with the company's long-term objectives, vision and orientation. He represents the company and the CGM group to the public.

The CEO is responsible for the cooperation with the Administrative Board and the Supervisory Board. He informs the Administrative Board without undue delay of any extraordinary events of particular significance that occur at the company, CompuGroup Medical SE & Co. KGaA or the CGM group. In particular, the CEO is responsible for the business performance of the CGM Group, whereby the independent and locally managed business unit in the USA is integrated in the CGM group via the CEO as representative of the German parent company. He also heads the CGM Group's Legal & Compliance department, the Global Human Resources department of the CGM group, including human resources development, cultural work, responsibility for sustainability and corporate social responsibility, as well as central services, and is thus the head of the CGM group's Labor and Social Affairs department. The CEO is also responsible for the communications of the CGM group, in particular conveying messages and announcements in internal and external communications, which go beyond the immediate area of responsibility of the directors and relate to the Group as a whole. The CEO is responsible for the CGM group's financial market communication and can transfer this responsibility, in full or in part, to the Chief Financial Officer.

The CEO also oversees defining, introducing and maintaining optimal, efficient business processes and the associated IT systems within the other functional areas of the CGM group by ensuring state-of-the-art efficiency and process management in line with the OneGroup approach and the organizational development objectives. The SVP Operational Excellence reports to him for this purpose. Together with his team, he advises and trains the top management levels of the CMG group regarding the continuous optimization of processes and measures to increase efficiency.

The CEO also oversees defining, introducing and maintaining optimal, efficient business processes and the associated IT systems within the other functional areas of the CGM group by ensuring state-of-the-art efficiency and process management in line with the OneGroup approach and the organizational development objectives. The SVP Operational Excellence reports to him for this purpose. Together with his team, he advises and trains the top management levels of the CMG group regarding the continuous optimization of processes and measures to increase efficiency. The SVP Operational Excellence also manages the Group IT and Information Security units.

The CEO is also responsible for revenues and earnings in the INSIGHT Health business unit. This means he is also responsible for further developing said unit, including developing and marketing associated services and products. The CFO is in charge of managing accounting, controlling, internal and external audits, liquidity planning, taxes, purchasing and M&A transactions in the CGM group. The CEO can also transfer responsibility for investor relations to the CFO. He/she is responsible for preparing all required financial reports and for meeting the related disclosure obligations. His/her tasks also include coordinating the budget planning. In addition, the CFO is in charge of requesting and assessing profitability analyses for capital spending programs, as well as requesting and assessing the related budgets. In order to be able to carry out these tasks, the CFO has the relevant information rights and direct access to R&D Controlling. Managing Director Ms Daniela Hommel will assume responsibility for CFO tasks as of February 1, 2024.

• Dr. Ulrich Thomé (Director AIS DACH)

The Director is responsible for the CGM Group's revenues and earnings in the Ambulatory Information Systems segment in the DACH region and the Telematics Infrastructure segment in Germany. As a result, he is also in charge

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of the advancement of the above-mentioned areas, including the development and marketing of related services and products. In addition, he is responsible for CLICKDOC (including CLICKDOC Pro, CLICKDOC Consumer & CLICKDOC Video Consultation, CLICKDOC E-Prescription and CLICKDOC Consumer Marketing), Group marketing and brand management.

The Director is also responsible for revenues and earnings in the Consumer & Health Management Information Services (CHS) segment in the DACH region (except INSIGHT Health); this includes developing and marketing associated services. He also oversees the political communications of the CGM group and the Group Product Technology segment. He coordinates in advance with the CEO on conveying messages of overriding importance. The Group Product Technology segment cuts across all business units and defines the overarching technological framework, while also supporting the business units by providing definitions and instructions, carrying out audits, and giving advice and training on development processes and tools, as well as on the development organization. The objective of the segment is to optimize product development throughout the CGM group and provide suitable near and offshore development services.

• Emmanuele Mugnani (Director AIS Europe):

The Director is responsible for the CompuGroup Medical group's revenues and earnings in the Ambulatory Information Systems segment in Africa and Europe, excluding the DACH region, and the CompuGroup Medical group's pharmacies and dental information systems worldwide.

This means that the Director is also responsible for revenues and earnings in the Consumer & Health Management Information Services (CHS) segment in Europe, except for the DACH region.

As a result, he is also in charge of the advancement of the above-mentioned areas, including the development and marketing of related services and products.

• Dr. Eckart Pech (Director Consumer & Health Management Information Services (CHS)):

The Director was responsible for revenues and earnings from the CompuGroup Medical Group's Consumer & Health Management Information Services (CHS). This segment comprised the population and data management business as well as the health connectivity services, the LIFE platform, DIGA platform development and platform marketing to partners, along with the global development of eHealth platforms for connectivity and communication, as well as the development and marketing of related services. As a result, he was also responsible for the advancement of the above-mentioned business units of the CompuGroup Medical Group on a global scale, including the development and marketing of related services and products.

The mandate of the Managing Director Dr. Eckart Pech will end on March 31, 2024. In accordance with an agreement with the Administrative Board, Dr. Pech has been released from his duties and responsibilities as Managing Director since November 1, 2023. His duties have been distributed to the other Managing Directors until further notice.

• Hannes Reichl (Director Clinical & Social Care):

The Director is responsible for revenues and earnings in the CompuGroup Medical Group's Hospital Information Systems segment (comprising information systems for hospitals and care facilities, solutions for rehabilitation facilities and laboratory information systems). This means that he is also in charge of the advancement of the above segment on a global scale, including the development and marketing of related services and products.

The Managing Directors have established a Disclosure Committee and an M&A Committee. The Disclosure Committee currently consists of three members: the CEO & CFO (Chairman), the Global General Counsel and the Head of Investor Relations. The Disclosure Committee is responsible for reviewing and complying with disclosure requirements under capital market law, in particular for reviewing potential inside information issues and publication requirements, reviewing potential postponements of publications and deciding on such postponements, as well as preparing the required documentation. The M&A committee, which includes the Spokesman for the CEO & CFO (Chairman) and the Global General Counsel, reviews the proposals for investment prepared by the relevant business units, in particular including the assessment of economic conditions and the contract documentation submitted, and proposes investment projects to the Managing Directors.

Regardless of the division of responsibilities described above, the principle of overall responsibility for the management of CompuGroup Medical's business applies to the Managing Directors.

In regular meetings (usually once a week), the Managing Directors jointly discuss and decide on a broad spectrum of topics from day-to-day business to strategic alignment.

In accordance with the Rules of Procedure for the Managing Directors, certain transactions or measures - such as major acquisitions or the determination of the annual budget - require the prior approval of the Administrative

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Board of CompuGroup Medical Management SE. In addition, the Articles of Association of CompuGroup Medical stipulate that transactions with a major impact as well as decisions regarding annual corporate, investment and financial master plans require the approval of the Joint Committee of the company.

The Rules of Procedure also provide detailed specifications with regard to general cooperation and coordination with the Administrative Board as well as communication from the Managing Directors to the Administrative Board, sideline activities of Managing Directors that require approval by the Administrative Board as well as regulations concerning the handling of conflicts of interest and the passing of resolutions. Conflicts of interest must be disclosed without undue delay to the Administrative Board, and the remaining Managing Directors must be informed thereof. Resolutions of the Managing Directors are passed by a simple majority of the votes cast, unless otherwise stipulated by law or the Articles of Association. If there is a tied vote, the CEO has the casting vote.

There is currently no age limit for Managing Directors. The age of the Managing Directors currently ranges between 47 and 54 years, with an average of 51 years.

b. The Administrative Board of CompuGroup Medical Management SE

CompuGroup Medical Management SE has a one-tier structure with an Administrative Board, which comprises five members as stipulated by the Articles of Association. The members of the Administrative Board are Frank Gotthardt (Chairman), Dr. Klaus Esser (Vice Chairman), Stefanie Peters, Professor Dr. Daniel Gotthardt and Michael Rauch. Michael Rauch is both the CEO & CFO of CompuGroup Medical Management SE.

The members of the Administrative Board are elected by the Annual General Meeting of CompuGroup Medical Management SE. The Administrative Board has not currently set a rigid age limit for its members. The age of the members of the Administrative Board currently ranges between 50 and 76 years, with an average of 61 years.

The Administrative Board manages CompuGroup Medical Management SE in accordance with the legal provisions, the Articles of Association of CompuGroup Medical Management SE and its Rules of Procedure. It sets the general course of CompuGroup Medical Management SE's business activities and supervises their implementation. The Administrative Board appoints and supervises the Managing Directors and has adopted Rules of Procedure governing their actions (article 7 (2) of the Articles of Association of CompuGroup Medical Management SE). The Rules of Procedure for the Administrative Board of CompuGroup Medical Management SE contain detailed provisions on meetings of the Administrative Board; these are presided over by the Chairman or, if the Chairman is unable to attend, by the Vice Chairman, and must be recorded in minutes. The Rules of Procedure also provide that the Administrative Board is represented by its Chairman.

The Managing Directors, represented by the CEO, inform the Administrative Board at regular intervals and in a timely manner about the relevant issues of business development, the risk situation as well as significant deviations from budget planning and from the targets of CompuGroup Medical and the CompuGroup Medical Group. The Administrative Board is informed in a timely manner of any extraordinary events that are of significance for CompuGroup Medical Management SE and/or the CompuGroup Medical Group.

The Administrative Board convenes at least once a quarter for its regular meeting. So far, the Administrative Board has not yet made use of its option to form committees.

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