Annual General Meeting
Agenda
Deutsche Post AG
Bonn
German Securities Code (WKN) 555 200
ISIN DE0005552004
Invitation to the Annual General Meeting
The shareholders of our Company are invited to attend the
Annual General Meeting
To be held at the Kölnarena, Willy-Brandt-Platz 1, 50679 Köln, Germany, on Tuesday, May 8, 2007, starting at 10:00 am.
Agenda
1. Presentation of the adopted annual financial statements and approved consolidated financial statements, of the management reports for the Company and the Group, the report by the Supervisory Board and the report by the Management Board on the information in accordance with sections 289 (4), 315 (4) HGB (Handelsgesetzbuch – German Commercial Code) for fiscal year 2006.
2. Resolution on the appropriation of available net earnings
3. Resolution on the approval of the actions of the members of the Board of Management
4. Resolution on the approval of the actions of the members of the Supervisory Board
5. Resolution on the appointment of the auditors for fiscal year 2007 and the auditors for the audit review of the half-year interim report
6. Resolution on the authorization to purchase own shares as provided for under Section 71 (1) No. 8 of the Aktiengesetz (German Stock Corporation Act)
7. Authorization to issue bonds with warrants, convertible bonds and/or participating bonds (or combinations of these instruments) and to exclude subscription rights whilst at the same time granting contingent capital and amending the Articles of Association
8. Supervisory Board Elections
Agenda
1.
Presentation of the adopted annual financial statements and approved consolidated financial statements, of the management reports for the Company and the Group, the report by the Supervisory Board and the report by the Management Board on the information in accordance with sections 289 (4), 315 (4) HGB (Handelsgesetzbuch – German Commercial Code) for fiscal year 2006.
Presentation of the adopted annual financial statements and approved consolidated financial statements, of the management reports for the Company and the Group, the report by the Supervisory Board and the report by the Management Board on the information in accordance with sections 289 (4), 315 (4) HGB (Handelsgesetzbuch – German Commercial Code) for fiscal year 2006.
2.
Resolution on the appropriation of available net earnings
The Board of Management and the Supervisory Board propose that the available net earnings (Bilanzgewinn) of 1,262,208,021.89 Euro for fiscal year 2006 be appropriated as follows:
| Distribution of a dividend of 0.75 Euro per no-par value share bearing dividend | 902,859,272.25 Euro |
| Appropriation to other earnings reserves | 359,348,749.64 Euro |
In the event that the number of no-par value shares bearing dividend changes prior to the Annual General Meeting, an appropriate distribution proposal shall be submitted to the Annual General Meeting.
3.
Resolution on the approval of the actions of the members of the Board of Management
The Board of Management and the Supervisory Board propose that the actions of the members of the Board of Management in fiscal year 2006 be approved.
4.
Resolution on the approval of the actions of the members of the Supervisory Board
The Board of Management and the Supervisory Board propose that the actions of the members of the Supervisory Board in fiscal year 2006 be approved.
5.
Resolution on the appointment of the auditors for fiscal year 2007 and the auditors for the audit review of the half-year interim report
The Supervisory Board recommends the appointment of PricewaterhouseCoopers AG, Wirtschaftsprüfungsgesellschaft, Düsseldorf, as auditors of the Company and the Group for fiscal year 2007 and as auditors for the audit review of the abbreviated financial statements and the interim management report of the half-year interim report.
6.
Resolution on the authorization to purchase own shares as provided for under Section 71 (1) No. 8 of the Aktiengesetz (German Stock Corporation Act)
The Board of Management and the Supervisory Board propose adoption of the following resolution:
- The Company is authorized to acquire own shares amounting to up to a total of 10% of the share capital existing at the date the resolution is adopted. However, at no time may the number of shares purchased under this resolution together with other shares of the Company, which the Company has already purchased and still holds, exceed 10% of the share capital. The authorization may be exercised in whole or in part on one or more occasions. It takes effect upon closing of the Annual General Meeting on May 8, 2007 and is valid until October 31, 2008. The resolution on the authorization to purchase own shares adopted by the Annual General Meeting of Deutsche Post AG on May 10, 2006 and valid until October 31, 2007 shall be cancelled upon effectiveness of the new authorization.
-
In the event of a purchase on a stock exchange, the purchase price (excluding incidental transaction costs) may not deviate by more than 10% from the arithmetic average of the closing price of the shares of the Company in XETRA trading (or a comparable successor system) of the Frankfurt Stock Exchange on the last 5 consecutive trading days prior to purchase or the date of entering into a commitment to purchase.
In the event of a purchase by means of a public tender offer to all shareholders or by other means in compliance with Section 53a Aktiengesetz, the purchase price paid to the shareholders (excluding incidental transaction costs) may not deviate by more than 20% from the arithmetic average of the shares of the Company in XETRA trading (or a comparable successor system) of the Frankfurt Stock Exchange on the 5 consecutive trading days prior to the publication of the offer or, if purchased by other means, prior to the purchase date.
If the shares offered for sale by the shareholders exceed the total amount of the public tender offer of the Company, they will be accepted at a ratio of the total amount of the public tender offer to the total shares offered for sale by the shareholders. It may be provided, however, that smaller lots of up to 50 shares per shareholder be accepted on a preferential basis.
- The authorization may be exercised for any purpose permitted by law, and in particular to pursue one or more of the objectives set out in d) below.
-
With the consent of the Supervisory Board, the Board of Management is authorized to redeem own shares purchased on the basis of this or a prior authorization pursuant to Section 71 (1) No. 8 Aktiengesetz in whole or in part without an additional resolution by the Annual General Meeting, or, with the consent of the Supervisory Board, to sell such shares other than by sale on a stock exchange or offer to all shareholders, excluding the subscription rights of the shareholders for the following purposes:
aa) sale against payment in kind, to the extent this is done for the purpose of purchasing companies, parts of companies or shareholdings in companies (including increasing existing shareholdings) or of implementing corporate mergers; for the purposes of this provision sale is also the granting of conversion or subscription rights and call options;
or
bb) sale against cash consideration, to the extent that the price paid is not substantially less than the stock exchange price of the shares of the Company at the time of the sale. This authorization is restricted to a maximum of 10% of the existing share capital or - to the extent less - of the share capital existing at the time this authorization is exercised, taking into account other shares and subscription rights for shares which, excluding subscription rights with respect thereto pursuant to or analogous to Section 186 (3) sentence 4 Aktiengesetz, have been issued, sold or granted since the adoption of this authorization,
or
cc) fulfillment of conversion rights or obligations from convertible bonds, bonds with warrants and/or participating bonds issued by the Company or group companies of the Company;
or
dd) issuance of shares to members of the Board of Management of the Company and to members of the Board of Management and executive officers of affiliated companies in Germany and abroad in which Deutsche Post AG, either directly or indirectly, holds a majority interest, as well as to other executives of the Company and affiliated companies in Germany and abroad to satisfy obligations of the Company resulting from the Deutsche Post Stock Option Plans 2000 and 2003, as authorized by the Annual General Meeting resolutions dated September 27, 2000, and June 5, 2003. To the extent that own shares are transferred to the Board of Management, the Supervisory Board of the Company decides.
In the event of the sale of own shares by a tender offer made to all shareholders, the Board of Management is authorized, with the Supervisory Board’s consent, to also grant to holders or creditors of bonds with warrants and/or convertible bonds issued by the Deutsche Post AG or its group companies a subscription right to own shares to the extent to which they would be entitled as shareholders after exercising the warrant or conversion rights granted to them and can be offered to them subject to the bond or warrant terms for the purpose of dilution protection.
The above authorizations in this subsection d) can be exercised on one or more occasions, in whole or in part, individually or jointly, and also by dependent or majority-owned enterprises of the Company or by third parties acting on their behalf or on behalf of the Company.
Report by the Board of Management to the Annual General Meeting pursuant to Section 71 (1) No. 8 in conjunction with Section 186 (4) sentence 2 Aktiengesetz (German Stock Corporation Act) on Item 6 of the Agenda
Due to the fact that the authorization passed at the last Annual General Meeting regarding the purchase of own shares will expire by rotation in October of this year, the Board of Management shall be authorized to purchase own shares as in previous years. The purpose of the authorization is to enable the Company to purchase an aggregate of 10% of the current share capital on the stock exchange or by means of a public tender offer or other means in compliance with Section 53a Aktiengesetz. However, at no time may the number of shares purchased under this authorization together with other shares of the Company, which the Company has already purchased and still holds, exceed 10% of the share capital. The own shares purchased by the Company may be redeemed without an additional resolution by the Annual General Meeting, or may be sold on a stock exchange or by a public tender offer to all shareholders.
Another objective of the authorizations is to enable the Company to offer the own shares purchased as non-cash consideration for corporate mergers, the acquisition of companies or parts of companies or for shareholdings in companies (which includes increasing existing shareholdings). The proposed authorization is designed to give the Company the necessary freedom to take advantage of opportunities to acquire other companies or parts of companies quickly and efficiently. This is also the purpose behind the exclusion of the subscription rights. In determining the valuation ratios, the Board of Management will ensure that the interests of the shareholders are adequately safeguarded. As a rule, in determining the value of the shares to be offered as consideration, the Board of Management will take into account the market price of the shares of Deutsche Post AG. There are no plans for systematically using the market price as a point of reference, in particular to avoid that the results of negotiations be called into question by fluctuations in the quoted market price.
In addition, the Company may also sell the purchased own shares off a stock exchange to certain investors without a public tender offer to all shareholders provided that the share price is not substantially lower than the market price at the time of the sale of the shares. This authorization makes use of the option for simplified exclusion of subscription rights provided by Section 71 (1) No. 8 Aktiengesetz and analogous application of Section 186 (3) sentence 4 Aktiengesetz. In the interests of expanding the Company's shareholder base, this authorization is designed in particular to enable the Board of Management to offer shares of the Company to institutional investors in Germany and abroad. The financial and voting power interests of the shareholders will be adequately safeguarded. The authorization to exclude subscription rights for the sale of own shares pursuant to Section 186 (3) sentence 4 Aktiengesetz is limited to an aggregate of 10% of the share capital of the Company. This authorization may only be exercised up to 10% of the share capital, including the use of any other authorizations to issue shares and excluding subscription rights with respect thereto pursuant to Section 186 (3) sentence 4 Aktiengesetz. The shareholders will be protected against dilution of their interests by the fact that the shares may only be sold at a price that is not substantially lower than the applicable market price. The final sales price for the own shares will be determined in due time prior to the sale of the shares. The Board of Management will endeavor to keep any discount to the market price as small as possible, taking into account current market conditions. In addition, shareholders are able to maintain their level of interest in the share capital of the Company by purchasing shares on the stock exchange.
The authorization also provides that own shares can be used to fulfill conversion rights of holders of convertible bonds, bonds with warrants and/or participating bonds issued by the Company or its group companies to the exclusion of the subscription rights of shareholders. Instead of issuing new shares from a (contingent) capital increase, it may be advisable to assign own shares in whole or in part to fulfill conversion rights.
Furthermore, this resolution is intended to allow the Company to use the own shares to satisfy the subscription rights issued based on the Stock Option Plans 2000 and 2003 of Deutsche Post AG. The Board of Management and Supervisory Board have been authorized to issue stock options to executive members of Deutsche Post AG and affiliated companies of Deutsche Post AG (Deutsche Post Stock Option Plans 2000 and 2003) by the Extraordinary General Meeting of Deutsche Post AG of September 27, 2000 and the Annual General Meeting of Deutsche Post AG of June 5, 2003. The stock options outstanding currently entitle their holders to subscribe up to 20.1 million shares of Deutsche Post AG. According to both stock option plans new stock options can no longer be issued.
The Company is able to satisfy the outstanding stock options fully by issuing new Deutsche Post AG shares from its existing conditional capital (Section 5 (3) and (4) of the Articles of Association). The stock option plans provide, however, that the Company may also grant own shares or a cash settlement instead of new Deutsche Post AG shares. The proposed exclusion of the subscription rights is intended to establish the legal requirements for using the own shares purchased pursuant to the authorization to satisfy the issued stock options. As a result, the Company is in a position to determine flexibly, whether it will, upon exercise of the stock options, grant new shares from the conditional capital or own shares purchased pursuant to the proposed authorization or a cash settlement. The Company does not incur any expenses issuing new shares as it is the case when purchasing own shares or when paying a cash settlement, however, by issuing new shares, the share capital of the Company is increased. A dilution of interests, such as it occurs when new shares are issued, does not occur upon delivery of own shares. If and to what extent the authorization for use of own shares upon exercise of stock options will be used, or if new shares from the capital authorized by the Annual General Meeting in 2000 and 2003 will be issued, or a cash settlement be granted, will be decided by the Company taking into account market conditions and its liquidity situation in the interest of the shareholders and the Company. Also, the other alternatives for use of purchased own shares will be taken into consideration.
Finally, in the event of a sale of own shares by a tender offer made to all shareholders, the authorization provides the possibility of excluding subscription rights so that a subscription right to own shares can be granted not only to shareholders of the Company but also to holders or creditors of bonds with warrants and/or convertible bonds issued by Deutsche Post AG or its group companies to the extent to which they would be entitled as shareholders after exercising the warrant or conversion rights granted to them and can be offered to them subject to the bond or warrant terms for the purpose of dilution protection. This enables the Board of Management to also implement any dilution protection provided for in the bond or warrant terms in favor of holders or creditors of the warrant or conversion rights without making any compensatory payments or reducing the conversion or warrant price.
7.
Authorization to issue bonds with warrants, convertible bonds and/or participating bonds (or combinations of these instruments) and to exclude subscription rights whilst at the same time granting contingent capital and amending the Articles of Association
The authorization of the Board of Management of May 6, 2004 to issue bonds with warrants and/or convertible bonds, with the Supervisory Board’s consent, expires on May 5, 2007. For this reason, a proposal will be submitted to the Annual General Meeting that a new authorization to issue bonds with warrants, convertible bonds and/or participating bonds (or a combination of these instruments) be granted and new contingent capital be resolved.
The Board of Management and the Supervisory Board propose adoption of the following resolution:
-
Authorization to issue bonds with warrants, convertible bonds and/or participating bonds
Subject to the Supervisory Board’s consent, the Board of Management is authorized to issue bonds with warrants, convertible bonds and/or participating bonds in bearer or registered form (jointly referred to below as “bonds with warrants and/or convertible bonds“) on one or more occasions up until May 7, 2012 for a total nominal amount of up to 1,000,000,000 Euro with maturity not to exceed 20 years and to grant holders of bonds with warrants warrant rights and holders of convertible bonds conversion rights to new registered shares of the Company at a portion of the share capital up to a maximum of 56,000,000 Euros subject to the terms of the bonds with warrants or convertible bonds.
In addition to euros, the bonds with warrants and/or convertible bonds can be issued in the legal tender of an OECD country – restricted to the respective equivalent amount in euros. They can also be issued by a wholly owned direct or indirect subsidiary of Deutsche Post AG. In this case the Board of Management is authorized to assume the warrant for bonds with warrants and/or convertible bonds on behalf of the Company, with the Supervisory Board’s consent, and to grant the holders of bonds with warrants and/or convertible bonds, warrant and/or conversion rights to new registered shares of Deutsche Post AG. The bonds with warrants and/or convertible bonds can also be issued for payment in kind.
The bonds with warrants and/or convertible bonds are to be offered to shareholders for subscription. They can also be taken over by a bank or a banking syndicate provided that they offer them to shareholders for subscription. Companies operating in accordance with Section 53 (1) sent. 1 or Section 53b (1) sent. 1 or (7) of the German Banking Act (Gesetz über das Kreditwesen) have the same status as banks. If bonds with warrants and/or convertible bonds are issued by a wholly owned indirect or direct subsidiary, the Company must ensure that the statutory subscription right is granted to shareholders of Deutsche Post AG subject to the sentences set out above. Subject to the Supervisory Board’s consent, the Board of Management is, however, authorized
- to exempt fractional residual amounts from the subscription right of shareholders and to exclude the subscription rights as far as necessary to ensure that holders of previously issued warrant or conversion rights can be granted a subscription right to new bonds with warrants or convertible bonds to the extent to which they would be entitled as a shareholder after exercising their warrant or conversion rights;
- to exclude the subscription rights of shareholders for all bonds with warrants and/or convertible bonds with a warrant or conversion right or a warrant or conversion obligation for shares if the issue price of the convertible bonds or bonds with warrants does not fall significantly below the theoretical market value of the bond calculated in accordance with recognized financial mathematical methods; in this case only conversion and/or warrant rights to shares of up to 10 percent of the share capital may be granted for the bonds with warrants and/or convertible bonds issued excluding the subscription rights of shareholders; all shares issued on the basis of other existing authorizations or authorizations adopted by this Annual General Meeting to issue shares of the Company excluding the subscription rights pursuant to or in analogous application of Section 186 (3) sent. 4 of the Aktiengesetz must be offset against the above maximum amount;
- to exclude the subscription rights of shareholders if and to the extent to which the convertible bonds or bonds with warrants are issued for a non-cash contribution to acquire companies, parts of companies or shareholdings in companies (which includes increasing the shareholding) or to implement corporate mergers.
The above authorizations to decide on the exclusion of the subscription rights of shareholders are granted irrespective of one another. Moreover, they do not affect the authorization to issue bonds with warrants and/or convertible bonds granting a subscription right to shareholders or to issue them to a bank or a banking syndicate with the obligation that they offer them to shareholders for subscription.
In the event that bonds with warrants are issued, one or more warrants shall be attached to each bond which entitle the holder to subscribe to new, no-par value registered shares of Deutsche Post AG subject to the warrant terms to be stipulated by the Board of Management. For bonds with warrants issued in euros by Deutsche Post AG or a wholly owned direct or indirect subsidiary, the warrant terms may stipulate that the warrant price may also be provided through the transfer of bonds and, if appropriate, an additional cash payment. In this case the portion of the share capital accruing to the shares to be subscribed to for each bond may not exceed the nominal amount of the bonds. The price at which the new shares may be purchased must be equivalent to 95 percent of the arithmetic average of the closing prices of the shares of the Company in XETRA trading (or a comparable successor system) on the five consecutive trading days prior to the resolution adopted by the Board of Management on the establishment of the warrant price. If fractions of new shares result, it may be stipulated that these fractional shares can be added together for subscription to whole shares, if applicable for an additional payment, subject to the warrant and bond terms.
In the event of the issue of convertible bonds the holders receive the irrevocable right to exchange their bonds for new, no-par value registered shares of Deutsche Post AG in compliance with the terms stipulated for convertible bonds. The exchange ratio is calculated by dividing the nominal amount of a bond or the amount for which a bond is issued below the nominal amount by the fixed conversion price for a share of the Company and can be rounded up or down to achieve a round figure; in addition, it is possible to state that an additional cash payment is made and a combination is carried out or compensation provided for non-convertible fractions. The conversion price must equal 95 percent of the arithmetic average of the closing prices of the shares of the Company in XETRA trading (or a comparable successor system) on the five consecutive trading days prior to the resolution adopted by the Board of Management on the fixing of the conversion price.
Notwithstanding Section 9 (1) Aktiengesetz the warrant or conversion price can be reduced as provided for in the terms on convertible bonds or bonds with warrants based on a dilution protection clause if, by granting an exclusive subscription right to its shareholders or by increasing the capital from corporate funds, the Company increases the share capital or issues further bonds with warrants or convertible bonds or grants or guarantees warrant or conversion rights or obligations during the warrant or conversion period, and the holders of existing warrant or conversion rights or obligations are not granted a subscription right to these which they would be entitled to after exercising their warrant or conversion right or after fulfilling their warrant or conversion obligation. The reduction of the warrant or conversion price can also be effected by means of a cash payment when the warrant or conversion right is exercised or the warrant or conversion obligation is fulfilled or by reducing the additional payment. Furthermore, the terms of the warrant rights or obligations or bonds with warrants or convertible bonds can stipulate that an adjustment is made to the warrant or conversion rights or warrant or conversion obligations in the event of a capital reduction, restructuring, exceptionally high dividends, control gained by third parties or similar measures. In all these cases the adjustment is effected on the basis of Section 216 (3) Aktiengesetz such that after the adjustment the economic value of the conversion and/or warrant rights and/or obligations are essentially equivalent to the economic value of the conversion and/or warrant rights and/or obligations immediately before the measure leading to the adjustment. If control is gained by third parties, it is possible to provide for a customary adjustment of the warrant and/or conversion price.
The bond and warrant terms can stipulate that the Company has a right not to grant new shares in the event of conversion or the exercise of warrants but instead to pay a sum of money which, for the number of shares otherwise to be supplied, is equivalent to the non-volume-weighted average closing price of the shares of the Deutsche Post AG in XETRA trading of the Frankfurt Stock Exchange or a comparable successor system on the last ten consecutive trading days prior to declaring the conversion or the exercise of the warrant. The bond or warrant terms may also stipulate that the bond with warrants or the convertible bond can be converted to existing shares of the Company instead of new shares from contingent capital at the Company’s option or the warrant right or warrant obligation can be fulfilled by supplying shares such as these.
The bond or warrant terms may also stipulate a conversion or warrant obligation at the end of the maturity or on another date or that the Company has the right upon bullet maturity of the bond with warrants or convertible bond to grant shares of the Company in whole or in part to the bond creditors instead of paying the sum of money due. In the latter case the warrant or conversion price can be equivalent to the non-volume-weighted average closing price of the share of the Deutsche Post AG in the closing auction in electronic trading at the Frankfurt Stock Exchange on the last five consecutive trading days prior to bullet maturity as provided for in the warrant and bond terms. Compliance with Section 9 (1) in conjunction with Section 199 (2) Aktiengesetz is required.
The interest paid on the bond with warrants and/or convertible bond can be variable. It can also depend on the profit ratios of the Company and/or the Group (including the available net earnings or the dividend paid for shares of Deutsche Post AG determined by the resolution on the appropriation of available net earnings). In this case the bonds are not required to be provided with a conversion and/or warrant right. In addition, a subsequent payment can be stipulated for payments omitted in prior years.
Subject to approval by the Supervisory Board, the Board of Management is authorized to determine further details on the issue and terms of the bonds with warrants and/or convertible bonds, in particular the rate of interest, issuing price, maturity and denomination, dilution protection provisions, warrant and/or conversion period and the warrant and conversion price or to stipulate these in agreement with the executive bodies of the subsidiary of Deutsche Post AG issuing the bond with warrants and/or convertible bond.
-
Contingent capital
The share capital is contingently increased up to 56,000,000 Euro by issuing a maximum of 56,000,000 new, no-par value registered shares at a portion of the share capital of 1 Euro.
The contingent capital increase serves to grant warrant rights or warrant obligations to holders of warrants under bonds with warrants subject to the warrant terms or conversion rights or obligations to holders of convertible bonds subject to the terms of convertible bonds which are issued up until May 7, 2012 by the Company or a direct or indirect wholly owned subsidiary based on the resolution granting authorization adopted by the Annual General Meeting of May 8, 2007. New shares are issued at the warrant or conversion price to be determined accordingly in compliance with the resolution granting authorization named above.
The contingent capital increase shall be carried out only if bonds with warrants or convertible bonds are issued and only to the extent that the holders of the warrants or convertible bonds exercise their warrant or conversion rights or holders of bonds obliged to convert or exercise warrants fulfill their obligation to convert/exercise their warrants and the contingent capital is required subject to the terms of bonds with warrants and/or convertible bonds.
New shares issued due to the exercise of the warrant or conversion rights participate in the profits from the commencement of the fiscal year in which they have come into existence.
The Board of Management is authorized, with the Supervisory Board’s consent, to determine further details concerning the execution of the contingent capital increase.
The Supervisory Board is authorized to revise § 5 of the Articles of Association in accordance with the respective issue of shares offered under subscription and all other related amendments of the Articles of Association which only affect the wording. This applies with the necessary modifications in the event that the authorization to issue bonds with warrants or convertible bonds is not exercised after the expiry of the authorization period and in the event that the contingent capital is not used after the expiry of the periods for the exercise of warrant or conversion rights.
-
Amendment to the Articles of Association
§ 5 paragraph 5 of the Articles of Association (Share Capital) will be revised as follows:
“The share capital is further conditionally increased by up to 56,000,000 Euro divided into up to 56,000,000 new, no-par value registered shares (Contingent Capital III). The contingent capital increase shall be implemented only to the extent that the holders of warrant or conversion rights or the persons obliged to exercise their warrant or conversion rights under bonds with warrants or convertible bonds, which have been issued or warranted by the Company or a direct or indirect wholly owned subsidiary pursuant to the resolution of the Annual General Meeting of Shareholders held on May 8, 2007 by no later than May 7, 2012 exercise their warrant or conversion rights or, to the extent they are obliged to exercise their conversion or warrant rights, fulfill such obligations. The new shares shall be issued at a warrant or conversion price to be determined in accordance with the afore-said resolution of the Annual General Meeting of Shareholders. The new shares shall have dividend rights from the commencement of the fiscal year in which they have come into existence due to the exercise of warrant or conversion rights or the fulfillment of obligations to exercise warrant or conversion rights. Subject to the Supervisory Board’s consent, the Management Board may determine further details of the execution of the contingent capital increase.”
Report by the Board of Management to the Annual General Meeting pursuant to Section 221 (4) sentence 2, Section 186 (4) sentence 2 Aktiengesetz (German Stock Corporation Act) on Item 7 of the Agenda
By way of a resolution adopted by the Annual General Meeting of May 6, 2004, the Board of Management was authorized under agenda item 7, with the Supervisory Board’s consent, to issue bonds with conversion or warrant rights to registered shares of the Company with a maturity of up to 20 years on one or more occasions up to May 5, 2007. Through the proposed renewal of the authorization to issue bonds with warrants and/or convertible bonds (which includes participating bonds or a combination of these instruments) for a total nominal amount of up to 1,000,000,000 Euro and to renew the related contingent capital of up to 56,000,000 Euro Deutsche Post AG is to be given greater opportunity to finance its activities so that if favorable capital market conditions arise, the Board of Management, with the consent of the Supervisory Board, can take advantage of flexible and rapid finance which is in the interests of the Company. In particular, the authorization to issue profit-dependent or profit-related instruments (participating bonds) widens the possibilities of Deutsche Post AG existing under the authorization to date to boost its funding by issuing what are referred to as hybrid financing instruments. For this reason a proposal will be submitted to the Annual General Meeting that a new authorization be granted to issue convertible bonds, bonds with warrants and/or participating bonds (or a combination of these instruments). The revised wording proposed is designed to cater for current market practice and achieve greater flexibility. All in all, it should be possible to issue bonds up to a total nominal amount of 1,000,000,000 Euro which entitle subscription to a maximum of 56,000,000 no-par value registered shares of Deutsche Post AG. Reference is made to the resolution proposed by the Board of Management and Supervisory Board under agenda item 7 for details on the authorization.
Shareholders are basically entitled to the statutory subscription right to bonds with warrants and/or convertible bonds (Section 221 (4) in conjunction with Section 186 (1) Aktiengesetz). To facilitate processing, it is possible to issue the bonds with warrants and/or convertible bonds to a bank or a banking syndicate in line with customary practice in corporate finance on the condition that the bonds are offered to shareholders in accordance with their subscription right (indirect subscription right within the meaning of Section 186 (5) Aktiengesetz). The exclusion of the subscription rights for fractional amounts enables the depiction of a practical subscription ratio in relation to the total amount of the convertible bonds and/or bonds with warrants issued in each case. Without the exclusion of the subscription rights for fractional amounts the technical execution of the issuance and the exercise of the subscription rights would be considerably more complicated especially if bonds were issued in round figures. The exclusion of the subscription rights in favor of holders of convertible bonds and bonds with warrants already issued has the advantage that the conversion or warrant price for the conversion or warrant rights already issued does not need to be reduced which thus enables a higher inflow of funds overall. Hence, both cases involving the exclusion of subscription rights are in the interest of the Company and its shareholders.
In addition, the Board of Management is authorized, with the consent of the Supervisory Board, to completely exclude the subscription rights of shareholders if the bonds with warrants and/or convertible bonds are issued at a price which is not substantially lower than the market price of the bonds. This enables the Company to exploit favorable market situations swiftly at very short notice and, by stipulating market-oriented terms, to achieve better conditions when fixing the interest rate, warrant or conversion price and issue price of the bonds with warrants and/or convertible bonds. If the subscription rights were preserved, market-oriented pricing and a smooth placement would be possible only to a limited extent. Although Section 186 (2) Aktiengesetz does not permit the subscription price to be published (and thus the bond terms for convertible bonds and bonds with warrants) until three days before the end of the subscription period. This would entail a market risk for several days, particularly in the light of the increased volatility on stock markets, which would result in safety margins deducted when stipulating bond conditions and thus not ensure terms in line with general market conditions. In addition, the existence of a subscription right would endanger the successful placement with third parties or entail additional expenses on account of the uncertainty as to whether the subscription rights are going to be exercised. Finally, if subscription rights are granted it is not possible to respond rapidly to favorable market conditions due to the length of the subscription period. For such an exclusion of the subscription rights, the provision set out in Section 186 (3) sentence 4 Aktiengesetz applies analogously pursuant to Section 221 (4) sentence 2 Aktiengesetz. The contents of the resolution remains far below the limit of 10% of the share capital stipulated in these provisions for the exclusion of subscription rights. The amount of contingent capital of 56,000,000 Euro is equivalent to approximately 4.65% of the current share capital of the Company. Furthermore, Section 186 (3) sentence 4 Aktiengesetz states that the issue price may not be substantially lower than the stock market price. This serves to ensure that the economic value of the shares is not significantly diluted. Whether such a dilution effect arises when convertible bonds or bonds with warrants without subscription rights are issued can be determined by calculating the hypothetical stock market price of the convertible bond or bond with warrants based on recognized financial mathematical methods and compared with the issue price. If the issue price is not substantially lower than the hypothetical stock market price at the time when the convertible bonds or bonds with warrants are issued, it is possible to exclude subscription rights on account of the insignificant deduction according to the spirit and purpose of the provision under Section 186 (3) sent. 4 Aktiengesetz. Thus the arithmetic market value of a subscription right would fall to almost zero which means that it is not possible for the shareholders to suffer a significant economic disadvantage by subscription rights being excluded. If the Board of Management deems it appropriate to obtain expert advice in the respective situation, it may obtain support from third parties. Hence the banking syndicate managing the issuance can assure the Board of Management in a suitable manner that a significant dilution of the value of the shares is not to be expected. This can also be confirmed by an independent bank or expert. Irrespective of this examination by the Board of Management, market-oriented pricing and thus the avoidance of a significant dilution is ensured if a book-building procedure is implemented. With this procedure the bonds with warrants and/or convertible bonds are not offered at a fixed issue price, instead the issue price or individual terms for the bonds with warrants or convertible bonds (e.g. rate of interest and conversion and warrant price) are stipulated on the basis of the purchase offers submitted by investors. When availing itself of this possibility to exclude subscription rights, the management will keep any deduction on the terms of issue as small as possible compared to the established market value and restrict it to a maximum of 5 percent. All of this will ensure that no significant dilution of the value of the shares will occur on account of subscription rights being excluded.
Furthermore, the shareholders can maintain their share in the share capital of the Company at any time by buying additional shares via the stock exchange even after the exercise of conversion rights or warrants.
Another objective of the authorizations is to enable the Company to offer the bonds with warrants and/or convertible bonds as non-cash consideration for corporate mergers, the acquisition of companies or parts of companies or for shareholdings in companies (including increasing existing shareholdings) instead of offering cash payments as consideration. The proposed authorization is designed to give the Company the necessary freedom to take advantage of opportunities to acquire other companies, shareholdings or parts of companies and for company mergers in international competition quickly and efficiently. This is also taken into account when proposing the exclusion of subscription rights. In determining the warrant or conversion terms, the Board of Management will ensure that the interests of the shareholders are adequately safeguarded. As a rule, the Board of Management will take into account the stock exchange price of the shares of Deutsche Post AG and comply with the requirements of the authorization for the determination of the issue price of the bonds with warrants or convertible bonds. There are no plans for systematically using the market price as a point of reference, in particular to avoid that the results of negotiations be called into question by fluctuations in the quoted market price. Including the authorization to exclude the subscription rights under § 5 paragraph 2 of the Articles of Association of the Company (Authorized Capital 2005), the authorization to exclude subscription rights for corporate mergers or for the acquisition of companies or parts of companies or shareholdings in companies (which includes increasing the existing shareholding) refers to less than 20% of the share capital of the Company.
8.
Supervisory Board Elections
The local court (Amtsgericht) in Bonn appointed Mrs. Ingrid Matthäus-Maier to the Supervisory Board on October 12, 2006. In accordance with the recommendation of the German Corporate Governance Code (No. 5.4.3 of the Code as amended on June 12,2006) Mrs. Matthäus-Maier is now to be elected to the Supervisory Board as a shareholder representative by resolution adopted by the Annual General Meeting for the time until the end of the Annual General Meeting which resolves the approval of actions of members of the Supervisory Board for the fiscal year 2011.
The Supervisory Board thus recommends that
Mrs. Ingrid Matthäus-Maier, 53757 Sankt Augustin, Germany, spokeswoman of the Board of Management of the KfW Bankengruppe,
be appointed to the Supervisory Board for the term of office that expires at the close of the Annual General Meeting which will resolve the approval of actions of the members of the Supervisory Board for the fourth fiscal year after the commencement of the term of office. The fiscal year in which such term of office commences shall not be taken into account.
The Supervisory Board of Deutsche Post AG is composed of ten shareholder representatives and ten employee representatives in accordance with Section 96 (1) and Section 101 (1) of the German Stock Corporation Act (Aktiengesetz), Section 7 (1) sentence 1 no. 3 of the German Co-Determination Act (Gesetz über die Mitbestimmung der Arbeitnehmer) of May 4, 1976 and Section 10 (1) of the Articles of Association. The Annual General Meeting is not bound by nominations for the election of shareholder representatives on the Supervisory Board.
Information on agenda item 8 in accordance with Section 125 (1) sentence 3 of the Aktiengesetz (German Stock Corporation Act):
Mrs. Ingrid Matthäus-Maier – recommended under agenda item 8 for election to the Supervisory Board – is a member of a supervisory board to be constituted in accordance with the German law for the companies listed below:
- Deutsche Telekom AG, Bonn, Germany
- RAG Aktiengesellschaft, Essen, Germany
- RAG Beteiligungs-AG, Essen, Germany
- Salzgitter Mannesmann Handel GmbH, Düsseldorf, Germany
Attendance at the Annual General Meeting and exercise of voting rights
The total 1,203,812,363 no-par value shares of the Company all carry attendance and voting rights on the date this Annual General Meeting is convened. The shareholders of the Company who are registered in the Company's share register on the date of the Annual General Meeting and have notified the Company of their intention to attend by the close of April 30, 2007 either
in writing to Deutsche Post AG, HV-Service, 69938 Mannheim, Germany,
by fax to fax no. +49 (0)69 913 39080
or electronically under the Internet address
are entitled to attend and to exercise their voting rights at the Annual General Meeting.
Shareholders registered in the share register may also appoint a proxy, for example a bank, or shareholders' association, to vote on their behalf. In this case, too, shareholders or proxies must notify the Company by the stated date of their intention to attend the Annual General Meeting.
If a bank is registered in the share register, it may only exercise voting rights for shares not held by the bank itself if so authorized by the shareholder concerned.
Forms for written registration, including the option for granting proxy and voting instructions, a stamped and addressed envelope, and Internet user code and personal access number required to access the personal Internet service will be sent to the shareholders together with the invitation documents.
We also offer our shareholders the opportunity to be represented by employees of the Company at the Annual General Meeting. The proxy for and voting instructions to the designated proxies of the Company may be submitted in writing, by fax to fax no. +49 (0)69 913 39080 or via the Internet and must be received by the Company by the close of April 30, 2007. Please read the instructions and notes in this respect contained in the documents sent to the shareholders, or on the Internet website stated above.
The adopted annual financial statements and the approved consolidated financial statements, the management reports for the Company and the Group, the report by the Supervisory Board for fiscal year 2006, the report by the Management Board on the information in accordance with sections 289 (4), 315 (4) HGB (Handelsgesetzbuch – German Commercial Code), the proposal by the Board of Management on the appropriation of available net earnings, the report by the Board of Management on item 6 of the Agenda, the report of the Board of Management on item 7 of the Agenda and the information on item 8 of the Agenda will be available to you on the Company’s website at http://investors.dpwn.com from the date on which the Annual General Meeting is convened. Additionally, on convening of the Annual General Meeting, the documents will be open to inspection at the business premises of the Company, Charles-de-Gaulle-Str. 20, 53113 Bonn, Germany as well as at the Annual General Meeting. On request, shareholders will be provided with a duplicate, without delay and at no charge.
The Annual General Meeting will be broadcast on the Internet under http://investors.dpwn.com until the commencement of the shareholders’ debate.
Shareholders are asked to address all document requests and motions solely to:
Deutsche Post AG
Headquarters
Investor Relations
Attn: Annual General Meeting
53250 Bonn
Germany
Fax no. +49 (0)228 182 63199
E-mail address: hauptversammlung@deutschepost.de
We will publish counter-motions received from shareholders in due time that have to be made available to other shareholders immediately on the Internet under: http://investors.dpwn.com
Bonn, March 2007
Deutsche Post AG
The Board of Management
Disclosures in accordance with Section 128 (2) of the Aktiengesetz
Sentence 7
Banks that were members of a syndicate which has purchased the most recent issue of the Company's securities within a period of 5 years:
Exchangeable bond 2004
Deutsche Bank AG
Morgan Stanley Bank AG