BASF Report 2021 Corporate Governance – Corporate Governance Report 169 According to Article 59(1) of the SE Council Regulation, amend- contingent capital increase serves to grant shares to the holders of An exceptional change of control compensation awarded to out- ments to the Statutes of BASF SE require a resolution of the Annual convertible bonds or warrants attached to bonds with warrants of going members of the Board of Executive Directors has not existed Shareholders’ Meeting adopted with at least a two-thirds majority of BASF SE or a subsidiary, which the Board of Executive Directors is since January 1, 2020, as of the introduction of the amended com- the votes cast, provided that the legal provisions applicable to Ger- authorized to issue up to May 11, 2022, by way of a resolution of the pensation system for the Board of Executive Directors, which was man stock corporations under the German Stock Corporation Act Annual Shareholders’ Meeting on May 12, 2017. A right to subscribe approved by the Annual Shareholders’ Meeting on June 18, 2020. do not stipulate or allow for larger majority requirements. In the case to the bonds shall be granted to shareholders. The Board of Execu- The general rule for severance payments granted for premature of amendments to the Statutes, section 179(2) of the German Stock tive Directors is authorized to exclude the shareholders’ subscription terminations of appointments to the Board of Executive Directors Corporation Act requires a majority of at least three-quarters of the right in certain exceptional cases – as defined in Article 5(9) of the applies, which states that the maximum severance payment may subscribed capital represented. Pursuant to Article 12(6) of the BASF SE Statutes. not exceed the amount of two years’ compensation; however, this Statutes of BASF SE, the Supervisory Board is authorized to resolve may not exceed the compensation for the remaining period of the on amendments to the Statutes that merely concern their wording. At the Annual Shareholders’ Meeting on May 12, 2017, the Board of contract. This applies in particular to the adjustment of the share capital and Executive Directors was authorized to purchase up to 10% of the the number of shares after the redemption of repurchased BASF shares in issue at the time of the resolution (10% of the company’s By contrast, employees of BASF SE and its subsidiaries who are shares and after an issue of shares from authorized capital. share capital) until May 11, 2022. At the discretion of the Board of classed as senior executives will still receive a severance payment if Executive Directors, the purchase can take place on the stock their contract of employment is terminated by BASF within By way of a resolution of the Annual Shareholders’ Meeting on exchange or by way of a public purchase offer directed to all share- 18 months of a change of control event, provided the employee has May 3, 2019, the Board of Executive Directors is authorized, with holders. The Board of Executive Directors is authorized to sell the not given cause for the termination. The employee whose service the consent of the Supervisory Board, to increase, until May 2, repurchased company shares (a) through a stock exchange, contract has been terminated in such a case will receive a maximum 2024, on a one-off basis or in portions on a number of occasions, (b) through a public offer directed to all shareholders and – with the severance payment of 1.5 times the annual salary (fixed component) the company’s share capital by a total of up to €470 million by issu- approval of the Supervisory Board – to third parties, (c) for a cash depending on the number of months that have passed since the ing new shares against contributions in cash or in kind (authorized payment that is not significantly lower than the stock exchange price change of control event. A change of control is assumed when a capital). A right to subscribe to the new shares shall be granted to at the time of sale and (d) for contributions in kind, particularly in shareholder informs BASF of a shareholding of at least 25% or the shareholders. This can also be achieved by a credit institution connection with the acquisition of companies, parts of companies increase of such a holding. The remaining specifications stipulated acquiring the new shares with the obligation to offer these to share- or shares in companies or in connection with mergers. In the cases in section 315a HGB refer to situations that are not applicable to holders (indirect subscription right). The Board of Executive Directors specified under (c) and (d), the shareholders’ subscription right is BASF SE. is authorized to exclude the statutory subscription right of share- excluded. The Board of Executive Directors is furthermore autho- For more information on bonds issued by BASF SE, see basf.com/bonds holders to a maximum amount of a total of 10% of share capital in rized to retire the shares bought back and to reduce the share capital certain exceptional cases that are defined in Article 5(8) of the by the proportion of the share capital accounted for by the retired BASF SE Statutes. This applies in particular if, for capital increases shares. Directors’ and officers’ liability insurance in return for cash contributions, the issue price of the new shares is not substantially lower than the stock market price of BASF shares Bonds issued by BASF SE and its subsidiaries grant the bearer the BASF SE has taken out liability insurance that covers the activities of and the total number of shares issued under this authorization does right to request early repayment of the bonds at nominal value if, members of the Board of Executive Directors and the Supervisory not exceed 10% of the shares currently in issue or, in eligible indi- after the date of issue of the bond, one person – or several persons Board (directors’ and officers’ liability insurance). This policy pro- vidual cases, to acquire companies or shares in companies in acting together – hold or acquire a volume of BASF SE shares that vides for the level of deductibles for the Board of Executive Directors exchange for surrendering BASF shares. corresponds to more than 50% of the voting rights (change of con- as prescribed by section 93(2) sentence 3 AktG (10% of damages trol), and one of the rating agencies named in the bond’s terms and up to 1.5 times the fixed annual compensation). By way of a resolution of the Annual Shareholders’ Meeting on conditions withdraws its rating of BASF SE or the bond, or reduces May 12, 2017, the share capital was increased conditionally by up it to a noninvestment grade rating within 120 days of the change of to €117,565,184 by issuing up to 91,847,800 new shares. The control event.