Corporate Governance

Declaration of Conformity to the German Corporate Governance Code for the Financial Year 2006/2007

With the enactment of the German Corporate Governance Code ("Code") on 26 February 2002, the competent Government Commission completed an important step in advancing the law governing corporate management and control. The Management Board and Supervisory Board support and welcome the sound and responsible corporate management principle as memorialised in the Code. Except for only a few of the recommendations set forth below, MAGIX AG complied and still complies with the current version of the Code dated 14 June 2007:

• Age limits for management board members (Code, Section 5.1.2). Given the current ages of the members of MAGIX AG's Management Board, this provision is deemed unnecessary at this time.

• Creation of Supervisory Board committees (Code, Sections 5.3.1, 5.3.2 of the Code). Since the MAGIX AG Supervisory Board consists of three members, the creation of committees is not possible.

• Establishment of a performance-linked remuneration scheme for the Supervisory Board (Code, Section 5.4.7). The Company believes that the Supervisory Board will better discharge its statutory role as an independent supervisory body if its compensation is not linked to the Company's success since the Board's impartiality will be better guaranteed by not linking performance and remuneration.

• Publication of the consolidated financial statements and interim reports within the time periods set forth in the Code (Code, Section 7.1.2). The Company shall initially publish unaudited quarterly and annual results within the deadline periods stated in the Code. The Company believes, however, that with respect to the consolidated financial statements and interim reports, the requirements for enterprises listed on the Prime Standard are adequate.

On this page you will also find information on the Stock currently held by board members, the Transactions by members of the Management Board of MAGIX AG subject to notification, the salary of the Management Board and the Supervisory Board as well as information regarding the Stock Option Plan.

The current version of the German Corporate Governance Code can be found here.

Stock held by members of the Management and Supervisory Boards

The stock held by members of the Management and Supervisory Boards did not change compared to fiscal year 2005/2006.

Amount of stock held (share shown as %)

* Jürgen Jaron and Dieter Rein each hold 50% of the limited partnership capital of Presto Capital Management GmbH & Co. KG. Accordingly, Jürgen Jaron and Dieter Rein collectively hold, either directly or indirectly, approximately 46.57 % of the voting rights in the Company.

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Transactions conducted by the Board members of MAGIX AG and subject to reporting since 30 September 2006:

There were no transactions conducted by Board members of MAGIX AG and subject to reporting during the reporting period.

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Remuneration of the Management Board

The Management Board members are paid an annual remuneration package, which consists of non-performance-linked, performance-linked and long-term-performance-linked components.

The Management Board members are paid a fixed salary, plus fringe benefits, which are not linked to or based on the Company's performance. These fringe benefits include, above all, use of a company car, travel cost indemnification and telephone cost reimbursement. The Supervisory Board in its own discretion sets the bonus, which is based on the Company's business performance. Where there has been extraordinary performance, the Supervisory Board may also approve the payment of a reasonable special bonus. Long-term performance-linked remuneration takes the form of options that are granted in accordance with the stock option plan approved by the shareholders. Details about this component are explained in the section entitled "Stock Option Plan".

Total remuneration to the Executive Board members in fiscal year 2006/2007 was TEUR 444. Non-performance-linked components totalled TEUR 444 (fixed salary: TEUR 421, fringe benefits: TEUR 23). No bonuses (TEUR 0) were paid out. During the reporting period, 5,000 stock options were granted to Management Board members. The same applied to loans and similar payments. In addition, third party payments were neither approved nor granted to Management Board members with respect to their work on the Management Board.

The remuneration is allocated as follows:

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Remuneration of the Supervisory Board

Pursuant to § 13 (1) of the MAGIX AG Articles and Memorandum of Association approved by the Shareholders' Meeting, the Company's Supervisory Board is paid fixed remuneration each fiscal year, which is determined by the Shareholders' Meeting. In addition, Supervisory Board members will also be reimbursed the out-of-pocket expenditures which they incur. This also includes the value added tax (VAT) charged on any remuneration, to the extent the Supervisory Board member is entitled to separately invoice value added tax. Furthermore, the Company may at its own expense purchase reasonable liability insurance (D&O insurance) for members of the Supervisory Board.

The Supervisory Board members are paid the following remuneration:

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Stock option plan

71,000 stock options were granted to employees of MAGIX AG according to the following model in May 2007: 

One third of the options can be exercised for the first time after a period of two years, a further third after a period of three years, and the final third after four years. The right to exercise the options shall exist for a period of three years after expiry of the waiting period. 

Furthermore, issue of the shares is linked to the development of the share price. 

Exercise shall only be possible in the event of an increase of the share price by 0.8% per month on average during the period from the day of issue of the options to the day the options are exercised. Exercise shall be effected by purchasing shares of MAGIX AG at the issue price. In the event that an employer cannot or does not want to invest the sum required for purchasing the stocks, it will also be possible to pay him/her the difference between the issue price and the share price at the time of exercising the option.