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Report of the Supervisory Board

Ladies and gentlemen,

In 2021, the health protection measures imposed in response to the pandemic once again had a significant impact on how we live as a society. The working world was also subject to considerable restrictions. The innovative strength shown by several pharmaceutical companies at once boosted confidence, as they succeeded in developing vaccines to combat serious illness caused by the coronavirus.

Tackling the issues of the future with an entrepreneurial mindset and allowing innovations that are relevant to society to emerge in the process – time and again, this approach also served as an important guiding principle in our joint strategic consultation sessions with the Management Board.

The advent of vaccinations fueled mounting hopes among society at large of a return to “normal” life. Despite an increasing number of vaccinated people, contact restrictions remained in place, meaning that people tended to stay at home, many of them also working from home. At the same time, they increasingly treated their homes as their main place of retreat.

In this environment, the provision of affordable housing, particularly in major cities, moved into the social spotlight – and, as a result, also into the spotlight of political action. Social pressure on policymakers and the housing industry increased considerably. In Berlin, the critical housing situation sparked an intensive public debate that led to a referendum on the drafting of a bill for the socialization of residential real estate companies. The company Deutsche Wohnen became a target.

We supported the Management Board with its considerations about pooling resources within an expanded housing company in Berlin and joining forces with politicians to be a responsible part of the solution. With the successful takeover offer for the shareholders of Deutsche Wohnen SE, Vonovia SE became its majority shareholder. This now enables an orchestrated approach on the tense Berlin housing market.

This transaction, the biggest executed by Vonovia SE to date, played an important role in the work of both the Management Board and the Supervisory Board in the 2021 fiscal year. This did not interfere with the company’s operational management at any time. Business developments in the 2021 fiscal year were in line with expectations in all key respects.

The Management Board and Vonovia’s employees worked tirelessly to take responsibility for tenants, even when faced with difficult conditions. They maintained the infrastructure in Vonovia’s residential complexes, provided customers with services and supported them in difficult situations.

In the previous year of the pandemic, the Management Board once again lived up to its responsibility for the health of Vonovia’s employees at all times. Health protection for high-risk groups and for those employees working on-site in customers’ homes or in the corporate headquarters and offices continued to be a top priority at all times. In order to reduce the risk of infection, Vonovia allowed employees to work from home, wherever possible, from the very start of the pandemic. The coronavirus task force – which had already been established back in 2020 – set up an internal vaccination center at corporate headquarters at the direction of the Management Board, where company doctors offered coronavirus vaccinations to employees. The Management Board provided information about the impact of the pandemic as part of its regular reporting.

In the 2021 fiscal year, the Supervisory Board continuously monitored the Management Board’s management activities and provided the Management Board with regular advice concerning the running of the company. We were able at all times to establish that their actions were lawful, expedient and regular. The Management Board notified us regularly, promptly and comprehensively, both in writing and verbally, of all circumstances and measures that were relevant to the company. The Management Board fulfilled its information obligations to an appropriate extent at all times.

At our plenary meetings and in our committees, we always had ample opportunity to critically appraise the reports and proposals submitted by the Management Board and to contribute our own suggestions. We discussed and tested the plausibility of all business occurrences of significance to the company, as communicated to us by the Management Board in written and verbal reports, in detail. Where required by law or the Articles of Association, we granted our consent to individual business transactions.

Meetings of Supervisory Board and Committees in the fiscal year

Meetings of Supervisory Board and Committees in the 2021 Fiscal Year

Member

Supervisory Board

Audit Committee

Executive and Nomination Committee

Finance Committee

Participation rate in %

Jürgen Fitschen

13/13

5/5

6/6

100

Burkhard Ulrich Drescher

13/13

5/6

95

Vitus Eckert

13/13

6/6

100

Prof. Dr. Edgar Ernst

13/13

6/6

100

Dr. Florian Funck

13/13

6/6

100

Dr. Ute Geipel-Faber

13/13

6/6

100

Daniel F. Just

12/13

6/6

95

Hildegard Müller

13/13

5/5

100

Prof. Dr. Klaus Rauscher

13/13

5/5

100

Dr. Ariane Reinhart

12/13

5/5

94

Clara-Christina Streit

12/13

5/5

6/6

96

Christian Ulbrich

13/13

6/6

100

Cooperation Between the Management Board and the Supervisory Board

In the last fiscal year, our Supervisory Board consisted of twelve members. We were on hand to support the Management Board in the various meetings held and also in its key decisions. We also kept a close eye on the company’s business development outside of meetings. The Management Board regularly informed us about key events and the company’s strategic direction as part of a collaboration based on trust.

As Chairman of the Supervisory Board, I maintained regular and close dialogue with the Chairman of the Management Board in particular, but also with the other Management Board members, even outside of the Supervisory Board meetings. The employee representative bodies were involved in communications on key company matters via the Management Board. The Chairman of the Management Board informed me on company-related topics emerging from the Management Board’s discussions with representatives of the Group works council, going into an appropriate level of detail. The Chairman of the Management Board also reported on the continued very good and constructive cooperation between the works council and the Management Board in dealing with the challenges created by the coronavirus pandemic. Other members of the Supervisory Board were notified of any important findings promptly, or at the latest by the next board meeting. In the fiscal year, there were no conflicts of interest of Management Board or Supervisory Board members, which are to be reported immediately to the Supervisory Board.

Main Remit

In line with the duties assigned to the Supervisory Board by law, the Articles of Association and the rules of procedure, we once again closely scrutinized the Group’s operational, economic and strategic progress in the 2021 fiscal year. The key focal points were investments in residential real estate portfolios in light of the impact of the pandemic, neighborhood development and the undertaking of investments in new homes, the exploitation of opportunities resulting from digitalization, the portfolio strategy, internationalization and the evaluation and provision of support with regard to opportunities for further portfolio expansion, which, in particular, was achieved through the Deutsche Wohnen transaction.

We also engage with current governance topics. At a further training session held on December 8, 2021 we addressed the new regulatory requirements for the preparation of the remuneration report pursuant to Section 162 of the German Stock Corporation Act (AktG). They came into force under German law in the course of the implementation of the Second European Shareholders’ Rights Directive (ARUG II). Alongside legal aspects, we also considered the expectations of investors.

In addition, we took an in-depth look at the future management structure and the succession plan for the Management Board. The personnel changes in the Management and Supervisory Boards, as stipulated in the business combination agreement (BCA) between Vonovia and Deutsche Wohnen, were the subject of detailed discussions on the continued development of these bodies.

Meetings

The pandemic meant that only one meeting of the Supervisory Board was held as a face-to-face event in the 2021 fiscal year. All other meetings were held via video conference.

The Supervisory Board met a total of thirteen times to consult and pass resolutions – once in a face-to-face meeting in September and twelve times by means of video conference (March, April, May, July, August, September, November and December). The Supervisory Board made decisions in a written procedure on eight occasions (January, July, August and December). Any individual members absent from the thirteen meetings had always been excused.

Participation in the thirteen Supervisory Board meetings averaged 98% in the 2021 fiscal year. No member of the Supervisory Board took part in less than half of the meetings during their term of office. The same applies to the committees. In preparation for the meetings, the Management Board submitted timely, comprehensive and valid written reports and resolution proposals to us.

Information on the Individual Meetings and Their Content as well as Written Resolutions

Given the risks associated with coronavirus infections, the Supervisory Board approved the Management Board’s decision to hold the Annual General Meeting as a virtual event on April 16, 2021 in order to protect all attendees in a written procedure on January 22, 2021.

On March 3, 2021 the Supervisory Board met to adopt the balance sheet. It approved the company’s annual and consolidated financial statements as of December 31, 2020. The agenda and the resolution proposals for the Annual General Meeting were discussed and adopted. The Supervisory Board approved the proposal for the appropriation of profit to be made to the Annual General Meeting as well as the proposal that the dividend be paid either in cash or in the form of shares. Furthermore, the Supervisory Board approved the Non-financial Declaration and decided to engage KPMG to review the NFE Report for the 2021 fiscal year, as well as the 2021 ESG reporting and the 2021 Sustainability Report. The consultations continued to focus on the reports submitted by the Management Board members on the course of business in individual segments.

Under the “HR-related matters” agenda item, the Supervisory Board discussed remuneration issues relating to the Management Board (including target agreements, short-term and long-term incentive plans, the target achievement level under the 2020 short-term incentive plan, payment of the 2017 long-term incentive plan tranche) and passed corresponding resolutions. The Supervisory Board also examined the remuneration system for the Management and Supervisory Boards, focusing in particular on the structure of the targets for the Management Board. Once decided upon, the remuneration system was submitted to the Annual General Meeting in April 2021, where it was approved.

In a video conference held on April 15, 2021 the Supervisory Board approved the fundamental resolution of the Management Board on the partial use of authorized capital 2018 in connection with the scrip dividend and transferred to the Finance Committee the powers required to take further steps. The Management Board continued to provide information on the impact of the ruling of the German Federal Constitutional Court on the invalidity of the Berlin rent freeze and, in this context, the waiving of rental back payments granted to Vonovia tenants by the Management Board. We consulted with the Management Board on potential measures to support the dialogue with various stakeholders in Berlin.

At a video conference held on May 21, 2021 the Management Board informed the Supervisory Board of its intention to start negotiations with the Management Board of Deutsche Wohnen SE concerning the possible submission of a takeover offer to the shareholders of Deutsche Wohnen SE. The Management Board presented the options for a potential transaction against the backdrop of the political, social and legal conditions in Berlin. Following an in-depth discussion with the Management Board members taking into account the risks and opportunities of such a transaction, as well as internal consultations, the Supervisory Board approved the measures proposed by the Management Board regarding the preparation of the transaction under consideration. The potential personnel changes arising from the transaction under consideration were discussed, along with changes to Management Board responsibilities, in separate consultations within the Supervisory Board.

In a video conference on May 24, 2021 the Management Board reported on the negotiations conducted with the senior management of Deutsche Wohnen SE in Berlin over the Pentecost weekend relating to the proposed takeover offer to Deutsche Wohnen SE shareholders. Detailed discussions were held within the Supervisory Board on the underlying structures of the transaction, the conditions prevailing in the political environment and, in the context of a takeover of the real estate company Deutsche Wohnen, the agreement discussed with the Governing Mayor of Berlin concerning the possible purchase of 20,000 thousand residential units by the State of Berlin. The consultations also centered on the main issues of the transaction as agreed in a business combination agreement (BCA). The personnel changes relevant to the composition of the Management and Supervisory Boards were discussed separately by the Supervisory Board.

Following extensive discussions, the Supervisory Board granted consent to the Management Board to carry out the proposed measures that were required for the conclusion of the BCA and the preparation of the takeover offer to the shareholders of Deutsche Wohnen. The Supervisory Board transferred the power to grant consent to further measures to the Finance Committee.

On the recommendation of the Executive and Nomination Committee on July 9, 2021 the Supervisory Board decided via a written procedure on July 16, 2021 to reappoint Mr. Arnd Fittkau as a member of the Management Board effective as of the end of the 2022 Annual General Meeting and until May 31, 2027.

In another written procedure on July 16, 2021 the Supervisory Board also approved a credit line increase to € 3 billion and a three-year extension of the term, as well as an increase in the Commercial Paper Program to € 3 billion.

In a video conference on July 25, 2021 the Management Board informed us of the background factors that led to the 50% acceptance rate of Deutsche Wohnen shareholders not being met. In particular, discussions focused on the influence of hedge funds with significant investments in Deutsche Wohnen, as well as on index funds, which could only accept the offer once the closing condition had been met. The Supervisory Board resolved to authorize the Management Board to purchase shares and/or instruments in Deutsche Wohnen up to a total shareholding of less than 30% and a purchase price that does not exceed € 52.00 per share. In addition, it granted approval for the taking out of bridge financing up to € 1.5 billion.

In the video conference on July 30, 2021 the Supervisory Board considered the alternative scenarios proposed by the Management Board with respect to the intended Deutsche Wohnen transaction and discussed, within the Supervisory Board, the strategic options in detail. We also consented to the Management Board starting negotiations with the senior management of Deutsche Wohnen with a view to concluding a BCA and submitting a new takeover offer to the shareholders of Deutsche Wohnen.

As the final decisions were subject to the approval of the Supervisory Board, the Management Board informed us of the results of the final negotiations in a video conference on August 1, 2021. Our extensive consultations resulted in the approval of the Supervisory Board for the resolution drafted by the Management Board on the conclusion of the BCA and the initiation of a voluntary public takeover offer to the shareholders of Deutsche Wohnen, as well as all measures necessary to implement the transaction.

In a written procedure on August 4, 2021 we approved the Management Board resolution on the integration of the Vonovia new construction department and the urban development and land management department within the Development division, thereby transferring responsibility from the CEO executive division to the CDO executive division.

We approved the issuance of up to € 5 billion as part of the EMTN program, with a weighted average maturity of at least eight years, by way of a written procedure on August 22, 2021.

The Management and Supervisory Boards consulted on the corporate strategy at a face-to-face meeting on September 2, 2021. We discussed the trend areas and future theories derived from societal megatrends and encouraged the Management Board to continue pursuing the key areas for action identified in order to safeguard the adaptability and innovative ability of the company going forward and to safeguard a stable future for Vonovia. The Management Board continued to keep us updated on the status of the Deutsche Wohnen transaction. We delegated necessary Supervisory Board approvals in the context of further implementation-related measures to the Finance Committee. The Supervisory Board also discussed personnel matters relating to the Management and Supervisory Boards.

In the video conference held on November 21, 2021 we approved the Management Board’s capital increase resolution of November 21, 2021 in connection with the Deutsche Wohnen transaction following extensive consultation and careful consideration. This resolution proposed that the share capital be increased by € 201,304,062 and that the new shares be offered to shareholders in a ratio of 20:7 and at a subscription price of € 40 per share.

In a written procedure on December 1, 2021 the Supervisory Board determined that the Declaration of Conformity published in the previous year remained accurate and should be issued again in this version.

In a video conference on December 8, 2021 we discussed the 2022 budget. Following detailed consultations, we approved the Management Board’s budget planning for the 2022 fiscal year and also discussed the five-year planning. The Management Board informed us of the operating business performance in the individual segments, financial performance and capital market performance.

We followed the recommendation of the Audit Committee by deciding to nominate the auditors PricewaterhouseCoopers GmbH (PwC) to the Annual General Meeting for election as the auditors of the annual and consolidated financial statements for the 2023 fiscal year.

In our consultations on personnel matters, we decided on the corporate targets for the 2022 fiscal year within the short-term incentive plan (STIP) component of Management Board remuneration and set the targets for Management Board members in the 2022–2025 performance period of the long-term incentive plan (LTIP). In our deliberations on Management Board remuneration, we determined that the amounts concerned are in line with standard market levels and therefore appropriate.

We discussed in detail the Management Board appointments and executive division modifications stated in the BCA and appointed Helene von Roeder as a Management Board member (for the Digitalization & Innovation executive divisions) for three years starting on January 1, 2022. We appointed Philip Grosse as a Management Board member (CFO, Chief Financial Officer) with effect from January 1, 2022, for a period of three years. The Supervisory Board offered the CEO of Deutsche Wohnen SE, Michael Zahn, the position of Deputy CEO of Vonovia SE; he did not accept the offer.

We conducted more detailed deliberations on the transaction-related changes in the Management and Supervisory Boards in the video conferences on December 10, 2021 and December 20, 2021 and took decisions on individual personnel matters in circular resolutions on December 10, 2021 and December 12, 2021. In these deliberations, we also closely examined the structures within the governing bodies, the executive department responsibilities, the skill sets of individual members and the further development and succession planning for the Management and Supervisory Boards.

With respect to the appropriateness of Supervisory Board remuneration, deliberations within the Supervisory Board, taking into account a market analysis carried out by an independent remuneration consultant, came to the conclusion that this remuneration, which had not been adjusted since 2013, no longer reflects the increased demands placed on Supervisory Board members. With a view to ensuring that highly qualified candidates can still be attracted to the Supervisory Board in the future, it is intended that an adjustment commensurate with the market be proposed to the Annual General Meeting on the basis of a remuneration proposal.

Duties of the Committees

The Supervisory Board made use of the existing committees (Audit Committee, Finance Committee and Executive and Nomination Committee) to effectively perform its work. The committees prepare subjects which are to be discussed and/or resolved by the Supervisory Board. In addition, the committees passed further resolutions that we had delegated to them instead of passing them on the Supervisory Board as a whole.

In addition to regular dialogue between the Audit Committee and the auditors at the quarterly meeting, there is also regular communication between the Chairman of the Audit Committee and the auditors, particularly before the quarterly meetings of the Audit Committee.

Audit Committee

The Audit Committee had four members in the reporting year. The Chairman was Prof. Dr. Edgar Ernst. The other members were Burkhard Drescher, Vitus Eckert and Dr. Florian Funck. In 2021, the Audit Committee met five times (March, May, August, November and December). The Audit Committee made decisions using the written procedure in two cases (August and October).

At the video conference held on March 3, 2021 the Committee reviewed the annual and consolidated financial statements as of December 31, 2020, as well as the combined management report for the 2020 fiscal year. The Committee’s review took account of both the company’s reports and the reports prepared by the auditor KPMG. The auditor considered the main points of the audit of the consolidated financial statements to be the valuation of investment properties located in Germany and Austria and the value of goodwill. The Audit Committee drew up a proposal for the appropriation of profit and developed a recommendation for a resolution to be submitted to the Supervisory Board regarding the adoption of the annual financial statements. The Committee developed a proposal for the selection of an auditor for the 2021 fiscal year and for this auditor’s appointment as the auditor responsible for the audit of the condensed consolidated interim financial statements and interim Group management reports. KPMG provided information on the audit certificate issued for the Non-financial Declaration (NFD). The Committee also examined the 2020 annual report of Internal Audit. The Committee recommended that the Supervisory Board approve the Non-financial Declaration. Other topics of discussion included the compliance report and the Internal Audit status report, which confirmed the effectiveness of the internal control system (ICS), among other things.

In a conference call on May 3, 2021 the Audit Committee looked at the condensed consolidated interim financial statements as of March 31, 2021. It discussed the company’s report and the auditor’s report. Against the backdrop of legal regulations concerning the maximum tenure of the auditors, the Audit Committee decided to launch a public call for tenders with respect to the audit of the annual and consolidated financial statements for the 2023 fiscal year and initiate a selection procedure. The Management Board has been tasked with planning and carrying out the selection procedure. The Committee also took an in-depth look at the risk management and compliance reports, as well as the Internal Audit status report. The consultations also considered the report on the company’s tax position and the status of the ongoing company audits.

At its video conference held on August 5, 2021 the Committee approved the consolidated interim financial statements as of June 30, 2021 and passed a resolution on the commissioning of KPMG AG Wirtschaftsprüfungsgesellschaft to audit the annual and consolidated financial statements as of December 31, 2021. Other topics included the Internal Audit and compliance management status reports. The Audit Committee also discussed relevant provisions of the German Financial Market Integrity Strengthening Act (FISG).

In a written procedure on August 13, 2021 the Audit Committee approved the tender process, selection criteria and time procedure for selecting an auditor as proposed by the Management Board, as well as the corresponding guidelines.

In a written procedure on October 25, 2021 the Audit Committee approved non-audit processes following the introduction of the multi-stage PIE group.

In the video conference held on November 3, 2021 the Audit Committee discussed the condensed consolidated interim financial statements as of September 30, 2021 along with the corresponding reports prepared by the company and the auditor. It looked at the preliminary results of the property valuation, risk management, the compliance report and the report on the major legal disputes. It also discussed the report prepared by the Internal Audit department on the status of its audits and set the audit plan for the Internal Audit department for the 2022 fiscal year.

On November 16, 2021 a face-to-face meeting of the Audit Committee was held as part of the auditor selection process. Two audit firms presented their services and the terms of engagement. In a video conference on December 3, 2021 the members of the Audit Committee discussed the results of the selection procedure and took the decision to recommend the audit firm PricewaterhouseCoopers GmbH (PwC) to the Supervisory Board for nomination to the Annual General Meeting as the auditors for 2023.

Finance Committee

In 2021, the Finance Committee consisted of five members. The Chairperson was Clara-Christina Streit. The other members were Jürgen Fitschen, Dr. Ute Geipel-Faber, Daniel Just and Christian Ulbrich. In the reporting year, the Finance Committee met six times by video conference (March, April, May, July and November) and took decisions by written procedure on three occasions (May, July, September). The Finance Committee had been previously authorized by the Supervisory Board to make all decisions on matters outside the scope of the topics for which it is generally responsible.

In the video conference on March 3, 2021 the Management Board provided information on the current financing status of the company. Following a detailed discussion of the RCF (revolving credit facility) and the commercial paper program, the Finance Committee decided to recommend to the Supervisory Board that it approve an increase in the (RCF) credit line to € 2 billion and an increase in the volume of the commercial paper program to € 2 billion.

In a video conference on April 16, 2021 the Finance Committee approved the fundamental resolution of the Management Board on the partial use of authorized capital 2018 in connection with the 2021 scrip dividend and, by written procedure on May 14, 2021 granted its consent to the Management Board’s more detailed resolution on the performance of the non-cash capital increase.

In a video conference on May 12, 2021 the Management Board informed the Finance Committee of its fundamental and current considerations regarding the ongoing development of the company in terms of consolidation opportunities and acquisition opportunities on the residential property market.

In a video conference on May 21, 2021 the Management Board informed the Finance Committee of its intention to prepare a potential takeover offer for the shareholders of Deutsche Wohnen SE. The Management Board presented the options for a possible transaction. Following an extensive discussion of the underlying economic, tax-related and financing conditions, as well as an evaluation of the risks and opportunities, the Finance Committee decided to recommend to the Supervisory Board that it approve the preparatory measures outlined by the Management Board with respect to the transaction under consideration.

By way of a written procedure, the Finance Committee recommended on July 8, 2021 that the RCF credit line and the volume of the commercial paper program both be increased to € 3 billion in the context of the Deutsche Wohnen transaction.

In a video conference on July 25, 2021 the Management Board outlined to the Finance Committee the reasons why the acceptance threshold of 50% of Deutsche Wohnen shares was not reached. The discussions focused not only on the shareholder structure of Deutsche Wohnen, but also the requirements of the index funds concerning the timing of a potential takeover bid. The Finance Committee approved the recommendation to the Supervisory Board to authorize the Management Board to acquire Deutsche Wohnen shares and to conclude bridge financing of up to € 1.5 billion.

In a written procedure on September 13, 2021 the Finance Committee approved the proposed Management Board resolution of September 8, 2021 regarding the sale of a residential real estate portfolio to public housing companies of the State of Berlin as part of the “Future and Social Pact for Housing,” agreed in connection with the Deutsche Wohnen transaction.

In a video conference on November 16, 2021 the Management Board provided the Finance Committee with an update on the current financing status of the company.

Executive and Nomination Committee

In the fiscal year under review, the Executive and Nomination Committee consisted of five members. The Committee was headed up by Jürgen Fitschen as Chairman of the Supervisory Board. The other members were Hildegard Müller, Prof. Dr. Klaus Rauscher, Dr. Ariane Reinhart and Clara-Christina Streit. The Executive and Nomination Committee met four times by video conference in 2021 (February, July, November and December). The Committee made one decision by written procedure.

In a video conference on February 23, 2021 the Committee discussed and approved the target attainment of the 2020 short-term incentive plan and the payout of the long-term incentive plan tranche 2017 and recommended to the Supervisory Board that it pay out the amounts calculated. The Executive Committee also discussed the structure of the individual targets within the short-term incentive plan (STI) and recommended an amended regulation within the Management Board remuneration system.

In a written procedure, the Executive Committee approved the membership of Rolf Buch in the Supervisory Board and Shareholder Board of Apleona GmbH on May 10, 2021.

In a video conference on July 9, 2021 the members of the Executive Committee discussed Management and Supervisory Board personnel matters in connection with the Deutsche Wohnen transaction. The Executive Committee also recommended to the Supervisory Board that it reappoint Arnd Fittkau as a member of the Management Board.

In the video conference held on November 15, 2021 the Executive Committee considered the review of the appropriateness of Management Board remuneration and, considering market data, concluded that this remuneration is appropriate. A recommendation to this effect was then submitted to the Supervisory Board for confirmation.

In the video conference held by the Executive Committee on December 6, 2021 the Committee members discussed the setting of corporate targets within the 2022 short-term incentive plan (STIP) and the long-term incentive plan (LTIP 2022–2025), issuing recommendations to the Supervisory Board. The Committee also discussed and made recommendations regarding Management Board appointments and the allocation of executive responsibility following completion of the Deutsche Wohnen transaction. The Committee also deliberated on governance-related topics, including diversity within governing bodies.

In a video conference on December 19, 2021 the Executive Committee drew up a proposal on the adjustment of Supervisory Board remuneration, the aim being to safeguard the expected quality within the Supervisory Board in the future. Resolutions were also recommended with respect to formal Management Board issues. The Supervisory Board members also discussed the options for implementing the inclusion of two members in the Supervisory Board, as stipulated in the BCA.

Corporate Governance

The Management Board and Supervisory Board of Vonovia SE are committed to the principles of good corporate governance. As a result, the members of the Supervisory Board once again looked at the German Corporate Governance Code in the reporting year. On December 1, 2021 the Management Board and the Supervisory Board issued a Declaration of Conformity pursuant to Section 161 of the German Stock Corporation Act (AktG). The Management Board also reports, including on behalf of the Supervisory Board, on corporate governance at Vonovia in the declaration on corporate governance. Both declarations will be permanently published by the company on its website for perusal.

Audit

After being appointed at the Annual General Meeting on April 16, 2021 to audit financial statements for the 2021 fiscal year, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, has duly audited the annual financial statements and consolidated financial statements of Vonovia SE as of December 31, 2021 and the combined management report for the 2021 fiscal year and has expressed an unqualified opinion thereon. In accordance with German statutory law, the Non-financial Declaration, which is included in a separate section of the combined management report, was not reviewed by the auditor. In accordance with Section 317 (4) of the German Commercial Code (HGB), KPMG also assessed the risk early warning system of Vonovia SE.

The auditor has affirmed its independence to the Chairman of the Audit Committee and duly declared that no circumstances exist that could give grounds for assuming a lack of impartiality on its part. The audit assignment was awarded to KPMG AG Wirtschaftsprüfungsgesellschaft by the Chairman of the Audit Committee in line with the Committee’s resolution and the choice of auditor made by the shareholders at the Annual General Meeting.

The annual financial statements were prepared by the Management Board in accordance with the German commercial law and stock corporation law provisions, including the generally accepted accounting practice. The consolidated financial statements were prepared by the Management Board in accordance with the International Financial Reporting Standards (IFRS), as applied in the European Union, as well as the supplementary provisions applicable pursuant to Section 315e (1) HGB.

For the annual financial statements and the consolidated financial statements, Vonovia SE prepared a combined management report based on the requirements set out in Sections 315, 298 (2) HGB.

Every member of the Supervisory Board received copies of the annual financial statements, the consolidated financial statements, the combined management report and the auditor’s report in good time. On the basis of the preliminary examination and assessment by the Audit Committee, about which the Audit Committee Chairman reported to the Supervisory Board, the Supervisory Board has scrutinized in detail the annual financial statements, consolidated financial statements and combined management report of Vonovia SE for the 2021 fiscal year, and also considered the Management Board’s proposal for the appropriation of profit. With regard to the Non-financial Declaration to be published pursuant to the CSR Directive Implementation Act, the Supervisory Board complied with its review obligation.

At the joint meeting on March 17, 2022 with the Audit Committee, and at the subsequent Supervisory Board meeting held on the same day, the auditors reported both on their findings including the strategic audit objectives and key audit matters. The strategic audit objectives and the key audit matters set out in the auditor’s report had been defined by the auditor within the context of his independent mandate in the second half of 2021, and had already been discussed and agreed upon with the Audit Committee in advance.

In the 2021 fiscal year, with regard to the consolidated financial statements, particularly key audit matters included the value of goodwill and the valuation of investment properties.

The auditors gave detailed answers to our questions. After an in-depth review of all documentation, we found no grounds for objection. As a result, we concurred with the auditors’ findings. On March 17, 2022, we followed the Audit Committee’s recommendation and approved the annual financial statements and consolidated financial statements of Vonovia SE, as well as the combined management report. The annual financial statements are thus duly adopted.

Dividend

The Supervisory Board considered the Management Board’s proposal for the appropriation of profit. It gave particular consideration to the liquidity of the company / the Group, tax-related aspects and financial and investment planning. Following its audit, the Supervisory Board agrees with the proposal set out by the Management Board to be made to the Annual General Meeting, namely the proposal that, from the profit for the 2021 fiscal year, a dividend of € 1.66 per share or € 1,289,151,665.74 in total on the shares of the share capital as of December 31, 2021 be paid to the shareholders, and the remaining amount be carried forward to the new account or be used for other dividends on shares carrying dividend rights at the time of the Annual General Meeting that go beyond those as of December 31, 2021.

The dividend will be paid either in cash or in the form of shares in the company. The shareholders’ right to opt for a scrip dividend paid out in shares is communicated separately in a timely manner together with other information, particularly on the number and type of shares.

Personnel

Apart from the reappointment of Helene von Roeder as Management Board member, with new responsibility for Digitalization & Innovation, and the appointment of Philip Grosse as Management Board member (CFO), both with effect from January 1, 2022, there were no staff changes within the company’s management team during the reporting period.

Concluding Remarks

We would like to thank the Management Board for its successful management of the company in the challenging pandemic year of 2021. We also want to thank the company’s employees for the particular commitment shown by them in difficult pandemic conditions. We would like to thank the employee representative bodies for another year of constructive collaboration.

Bochum, Germany, March 17, 2022

On behalf of the Supervisory Board

Jürgen Fitschen