Approach adopted by the management and supervisory boards

CompuGROUP Holding AG is a company under German law, which also represents the basis of the GCGC. One of the fundamental principles of German stock corporation law is the dual management system involving two bodies, the Management Board and the Supervisory Board, each of which is vested with independent competences. CompuGROUP Holding AG’s Management Board and Supervisory Board cooperate closely and confiding in managing and monitoring the Company.

The Management Board is responsible for managing the enterprise. Its members are jointly accountable for the management of the enterprise. The Chairman of the Management Board coordinates the work of the Management Board and is also the group Chief Executive Officer (CEO). Underneath the CEO, the organizational design is a regional-functional matrix organization with senior executives reporting directly to the group CEO. This structure is supported by a detailed governance model that determines the way in which CompuGROUP operates. Two members of the Management Board are assigned to the regional line organization as Executive Vice Presidents and overall responsible for the regions of Central Europe and Southern Europe respectively. The remaining two Management Board members are assigned to the functional organization as Chief Financial Officer (CFO) and Chief Medical Officer (CMO). All members of the Management Board meet on a weekly basis to discuss a broad set of issues ranging from daily operations to the group strategy. The Management Board together with all regional managers compose the Strategic Management Group, which meets about 10 times per year to harmonize operations and ensure knowledge sharing across geographies and functions.

CompuGROUP supports the concept of an effective Supervisory Board in line with the company’s needs for expertise, capacity, balanced decision-making and ability to independently evaluate the company’s activities and the conduct of its management.

The Supervisory Board appoints, supervises and advises the members of the Management Board and is directly involved in decisions of fundamental importance to the enterprise. The chairman of the Supervisory Board coordinates the work of the Supervisory Board.

The duties of the Supervisory Board and its committees are regulated in the Articles of Association. In addition, the Supervisory Board has adopted terms of reference governing its work. The Supervisory Board does not comprise any former Management Board members. It comprises a sufficient number of independent members not maintaining any personal or business relationship with the Company or its Management Board.Supervisory board meetings are generally held 6 to 8 times per year, and during at least one of these meetings the corporate strategy is up for review. Every month, the Supervisory Board receives a financial review, management reports and forward-looking analysis. The Supervisory Board regularly reviews the efficiency of its work. The last efficiency review took place in November/December 2009. The efficiency of the Supervisory Board’s work, including its cooperation with the Management Board, was determined on the basis of a list of questions and a subsequent discussion at a Supervisory Board meeting.

The Supervisory Board has established one committee from among its members: The Audit Committee consists of the Chairman of the Supervisory Board, one shareholder representative, and one employee representative. The Supervisory Board has appointed its Chairman, Dr. Klaus Steffens, as the independent Audit Committee financial expert. The Audit Committee monitors the Company’s financial reporting process, discusses and examines annual consolidated financial statements and management reports prepared by the Management Board, as well as the quarterly financial reports. Based on the independent auditors’ report, the Audit Committee gives recommendations with respect to the approval of the annual financial statements and the consolidated financial statements by the Supervisory Board. Furthermore, the Audit Committee engages the independent auditors elected at the General Shareholders’ Meeting to audit the annual financial statements and the consolidated financial statements, determines the key audit areas, and is responsible for determining the independent auditors’ compensation.

The Management and Supervisory Board members are obliged to act in CompuGROUP Holding AG’s best interests. In the completed financial year, there were no conflicts of interest requiring immediate disclosure to the Supervisory Board. None of the Executive Board members of CompuGROUP Holding AG sat on more than three Supervisory Boards of listed non-Group companies.