On November 19th, 2003, KTM Power Sports AG declared its explicit endorsement of the Austrian Corporate Governance Codex. The company again commits itself to the Austrian Corporate Governance Codex in its version issued in June 2007 and has voluntarily implemented in the past business year the greatest part of the amended requirements of the Austrian Corporate Governance Codex, which will become valid for it only beginning with the business year 2007/08.
KTM Power Sports AG shall conform to the comply-or-explain regulations of the Austrian Corporate Governance Codex, in the version issued in June 2007, with the following restrictions:
C Rule 18(internal auditing as a separate functional unit reporting to the Management Board) Because the company is not large enough, it does not comply with the rule of setting up a separate internal auditing functional unit.
C Rules 39, 41, 43 (setting up of expert committees, such as audit, nomination and compensation committees) With the exception of an audit committee (L Rule 40), no other committees have been set up because the Supervisory Board only consists of four shareholders and two board representatives, and setting up additional committees would not improve the efficiency of the Supervisory Board’s work.
C Rule 49(disclosure of contracts with companies in which a Supervisory Board member has a financial interest) The company and its subsidiaries are advised on legal matters by Saxinger Chalupsky & Partner Rechtsanwälte GmbH (SCWP) and by the agency Kiska GmbH in the areas of product development, design, marketing and advertising. Ernst Chalupsky is an attorney, general manager and partner in SCWP. Gerald Kiska is a general manager and partner in Kiska GmbH.
C Rule 51(remuneration scheme for Supervisory Board members) The members of the Supervisory Board receive compensation for the expenses they incur in carrying out their duties. In addition, the Shareholders’ Meeting may pass a resolution granting them remuneration of a level defined by the Shareholders’ Meeting taking Article 98 Stock Corporation Law (AktG) into consideration. The company shall pay the applicable taxes for Supervisory Board remuneration.
C Rule 53(independence of Supervisory Board meeting) Concerning the criteria for independence, the Supervisory Board of KTM Power Sports AG complies with the guidelines given in the Corporate Governance Code, Annex 1. Under these guidelines, all Members of the Supervisory Board of KTM Power Sports AG except Rudolf Knünz and Gerald Kiska can be deemed independent.
C Rule 80(auditor’s assessment of the effectiveness of the company’s risk management) This rule is not complied with because company-specific risk management is geared to the interest and investment level and, given the holding function, investment-specific risk management is any case part of participation management.
