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RHÖN-KLINIKUM AG | 06/02/2010

Current statement

RiskMetrics/ISS (RM) is an American company providing advisory services to shareholders on the exercise of their voting rights. RM has objected to agenda item 8.1 of the upcoming annual general meeting 2010 and has advised to vote against the proposed resolution.

Agenda item 8.1 relates to the re-election of the chairman of the supervisory board, Mr. Eugen Münch, to the supervisory board. Mr. Münch intends to run for the re-election as chairman of the supervisory board after his re-election as member of the supervisory board. The management board and the supervisory board as well as the major individual shareholders – also beyond the Münch family – support both projects.

RM criticizes that Mr. Münch has become a member of the supervisory board, and at the same time having been elected as its chairman, in 2005 immediately after leaving his office as chairman of the management board. RM claims that such a change of positions without respecting a five-year “cooling-off period” is not in line with the principles of good corporate governance, and is in any case not acceptable pursuant to RM’s standards.

The management board and the supervisory board vigorously reject this reasoning, knowing that many shareholders share their view. Mr. Münch has been the central figure in the business over the past forty years, and has transformed our company from its humble beginnings to one of the largest hospital operators in the world (by market capitalization). The experience he can offer as chairman of the supervisory board is a significant advantage for Rhön-Klinikum AG and its shareholders’.

 RM puts forward purely formalistic arguments without taking into account how beneficial Mr. Münch is for the company: A transition from chairmanship of the management board to chairmanship of the supervisory board is rejected by RM as a matter of principle.

Moreover, the behaviour of RM is also inconsistent on a formal level:

  1. Mr. Münch has transitioned to the supervisory board in the annual general meeting 2005, five years ago. RM had not issued any statements regarding this annual general meeting, and has in particular not advised to vote against Mr. Münch’s becoming chairman of the supervisory board.
  2. The German Corporate Governance Code provides for a two-year cooling-off period, not five years. Moreover, the relevant provision has been incorporated in the Code after Mr. Münch had become a member of the supervisory board.
  3. RM themselves have only begun to require a five-year cooling-off period about one year ago.
  4. Mr. Münch has always complied with the Corporate Governance Best Practice rules as applicable from tie to time. A retroactive application of certain provisions, as intended by RM, is not only unfair, but against basic rules of law.

The management board and the supervisory board ask all shareholders to not let RM’s advice on agenda item 8.1 influence them and to express their trust in Mr. Münch.