E.ON SE (EOAN) Earnings Call Transcript & Summary

Ladies and gentlemen, I hereby open the ordinary General Meeting of Shareholders for 2021 of E.ON SE. And on behalf of the Board of Management and the Supervisory Board, I'd like to welcome you most heartily. My welcome applies to our shareholders and those who represent shareholders and the press. We're delighted that you have followed our invitation to attend this general meeting. Given the continuing pandemic, we've been obliged this year, once again, to hold this general meeting without the physical presence of shareholders and their proxies as a purely virtual meeting. From the Supervisory Board, I have alongside me, Mr. Christoph Schmitz as Deputy Chair of the Supervisory Board. You can see here, Andreas Schmitz, who is the Chair of our Audit and Risk Committee. He's here, too. And then -- now we can see Christoph Schmitz, there we go. And in the foreground, you can see the Head, Mr. Birnbaum, who is here as a member of the Board of Management, indeed the Chair of it. We also have Mr. Spieker, our CFO. All other members of the Supervisory Board are following the meeting on audio and video transmission so they are cabled in. Also in the room, we have our notary, Dr. Ulrich Irriger, who will be minuting the negotiations and the resolutions. Before we move into the agenda today, I'd like to draw your attention to some changes on the Board of Management and Supervisory Board since the last general meeting. At the end of March, our former CEO, Johannes Teyssen left us. On behalf of the entire Supervisory Board, I'd like to thank Mr. Teyssen for the work that he did on the Board of Management of E.ON SE. Over recent decades, he has guided the E.ON Group through a really turbulent phase, with the spinoff of Uniper and the takeover of Innogy. Everything's been restructured and weatherproofed for the future. Johannes Teyssen set his stump on E.ON, and he has laid the foundations for the successful future of the company, and we're very grateful to him for all of that. Leon Birnbaum has been appointed as the new CEO. And to you, Mr. Leon -- Mr. Birnbaum, I wish you every success and fortunate hand over the tasks ahead. There will be many of them, but we know that you will manage E.ON, develop E.ON successfully in the interest of our shareholders, our employees and everyone else. So best of luck to you. The new Board of Management team also includes Ms. Victoria Ossadnik since April. Like the other members of the Board of Management, she is following this general meeting virtually. Victoria Ossadnik is responsible in future for digital issues at E.ON. And I also wish her, on behalf of the Supervisory Board, every success in her new role. At yesterday's meeting, the Supervisory Board agreed to end the mandate of Mr. Wildberger ahead of term, at the latest by the end of July. And Mr. Lammers, currently CEO of Essent, who has been responsible for coordinating the customer business between Western and Eastern Europe, to succeed him from the 1st of August. We thank Karsten Wildberger for his successful and intense hard work. He has got a lot moving in this company for the better, and he has also contributed to a new culture, which is geared to our contemporary times. We thank him very much and wish him all the best for the future. Our good wishes, of course, also apply to Mr. Lammers, who has taken on a big role. And we are certain that he will continue to move things in this direction that we have established. At the end of the last AGM, 2020, Mr. Andreas Schmitz left the Supervisory Board, and Mr. Miroslav Pelouch was appointed to it. At the last General meeting, I said farewell to Mr. [ Siegert ], and we thanked him, and we introduced you to Mr. Pelouch. Mr. Christoph Schmitz, you've already seen him on camera, was following the last general meeting last year, elected as Deputy Chair of the Supervisory Board. When today's general meeting closes, the mandates end of Mr. Erich Clementi, Mr. Andreas Schmitz and Mr. Ewald Woste under Item 8, we have proposed their reelection. Now I have to run you through some formalities. If you know me, you'll be aware how fond I am of these. I shall try to keep them brief. The notary, as usual, is watching to make sure I'm not too brief. The general meeting was announced on the 6th of April 2021 in the Federal Gazette in compliance with the requirements relating to form and deadline. The agenda and the proposed resolutions from the administration Items 2 to 9 were also published. Also, there were a number of rules changed last year, which means that statutory recipients have changed slightly, but all of these have been met accordingly and the invitation brochure no longer has to be sent out in print, but it can be downloaded from the website. I will be announcing figures on attendance. And as they are available, you can also follow this on the online service. Because we are in a virtual format, that means that the plenary debate won't take place live. People have the opportunity to send in their questions in written form or as videos prior to that, and all of this has been seen and will be prepared, and you made rigorous use of your right to do that. We will be answering all the questions that have been submitted. Once the questions and answers begin, you'll be able to not only follow the answers on the online service but put up to 2 follow-up questions per shareholder but they must relate to your original questions. Might I please request that you make use of the time to put the questions as fast as possible. You will have up to 10 minutes to put those questions, those follow-up questions, after the last answer has been read. After all the questions have been answered, we will move on to vote on the items of the agenda and then adopt resolutions. The -- it will also be possible for proxies to vote and postal voting will be taken into account, of course. Please start to make use of the time that you have available so that we can receive all of these on time because when you're working with live stream, there can be delay. So we don't want that to happen. Please make use of your time. The online service means that we will be broadcasting the initial part of the proceedings for the public. And once we enter the question-and-answer phase, that will still be available on the online service. You are not allowed to record our online transmission. Ladies and gentlemen, let's come on to the agenda. The Board of Management is, first of all, going to explain agenda Item 1. Mr. Birnbaum, you have the floor.

Dear shareholders, ladies and gentlemen, progress often results from the need to adapt. In the era of COVID-19 and climate change, this is truer than ever. I see this as an opportunity for Germany and Europe, for E.ON and for you as shareholders. One opportunity is the digital new normal. I would have liked to have seen you in person today because that would have meant that the pandemic is behind us. Second, virtual Annual General Meeting will thus make a virtue of necessity. This format however offers considerable advantages in terms of shareholder friendliness. There are no spatial barriers. Participation rates are significantly higher than at the Annual General Meeting held in person before the pandemic. The logistics are much simpler and the time commitment much lower for all of us. In addition, having more time to process your presubmitted questions improves the quality of our answers. And you can, of course, also ask follow-up questions as just announced. Our virtual format has many advantages, therefore, without any noteworthy disadvantages. I also see significant opportunities for us in the area of sustainability. Europe intends to be completely decarbonized by 2050. This objective is not jeopardized by European elections, not by Germany's upcoming Bundestag collections, not even by the coronavirus crisis. On the contrary, sustainability will play the key role in rebuilding Europe's economy. Europe is now gathering speed for a comprehensive transformation. E.ON enables this transformation because we provide the necessary infrastructure: for the ongoing expansion of renewables, for the accelerated rollout of e-mobility, for sector coupling of industry and heat. And E.ON benefits from this transformation, which will require massive investments in energy infrastructure for years to come. The energy industry is facing decades of growth. I'm firmly determined to seize this opportunity, together with a strong team. I want to exploit our company's full potential of our E.ON for our company and for you, its shareholders. I look forward to answering your questions today in my new role as CEO. Before I come to that, however, I'd like to say a few words of thanks, first to my predecessor, Johannes Teyssen; and second, to my employees. In recent years, E.ON has never been better positioned, never had prospects being better and that's also due to Johannes Teyssen. He was on the management board for 17 years, for 11 of which he was our CEO. He led E.ON through difficult times out of nuclear power, out of coal and into an era of sustainable energy. Dear, Johannes, at an Annual General Meeting held in person, you would have received well-deserved applauds now. Today, we must express our sincere thanks virtually and thank you very much. Everyone is replaceable, but not everyone leaves the mark. You left your mark on E.ON, and that's something you can be proud of. We, at E.ON, will make -- we'll do whatever we can, too, so that you can enjoy watching us from a distance. The integration of Innogy is the culmination of E.ON's comprehensive realignment. It strengthens us financially by yielding EUR 780 million in recurring savings by 2024, but it also strengthens operationally. The new E.ON isn't just a, it is the sustainable infrastructure company. We've made decarbonization our core competency, and we shape and propel the energy transition. This means that we now have all the levers for our business success in our own hands. Our success now depends solely on delivering results, and that's what we're doing even in the difficult environment of the coronavirus pandemic. Despite all the constraints we've been able to carry out all our infrastructure investments in the past few years -- in the past year. We've continued to propel the energy transition and will continue to do so in the future. At the same time, we're helping stabilize the economy and secure jobs. Before the pandemic, the reliability of Germany's energy supply had reached its highest level on record. And the energy supply remained reliable at all times, including during the crisis. Behind these achievements is our employees' extraordinary dedication in Germany and in Europe. I'd also like to say thank you for this as well and give you a few examples. Thanks to our team in Italy. Italy was the first to be affected by a lockdown. Thanks to swift and creative solutions all our plants for industrial customers remained operational. Thanks to our team in Hungary. Staff in our network control centers, there worked in shifts to maintain reliable energy supply. They alternated one week in isolation at work and one week of quarantine at home. Thanks to our team in Romania, where employees likewise worked in weekly isolation shifts away from their families to ensure network operation, even during holidays. Thanks to our team in the U.K. where the long-awaited turnaround in our retail business was achieved largely by employees working from home. Thanks to our team in Slovakia. Countless volunteers tested an average of around 2,000 of their colleagues and family members per week this year. This helped ensure an uninterrupted energy supply even during the strictest phase of the lockdown. Thanks to our team in Germany. In a very short period of time, we created home office options for thousands of employees whose work permits this. We also quickly found ways for even our large construction projects where hundreds of employees work in a confined space to move forward without any on-site transmission of the virus. These are just a few examples. Performance of our teams in the Netherlands, Sweden, Poland, The Czech Republic and Turkey was no less impressive. E.ON could make another important contribution towards containing the pandemic at any time. Already vaccinated parts of our workforce at many of our locations outside Germany, and we'd like to finally begin vaccinating in-house in Germany as well because we're also prepared for this. We have our procedures under control. Our protection plan is working. We can track COVID infections, which, of course, also existed very precisely. This shows that there was practically no transmission within our company. And when there was, we were able to limit immediately. As a result, our infection rates have been well below the national average in the countries where we operate. As I said, this is achieved by the entire E.ON team. I'd like to thank them for this very much indeed. And considering this achievement, allow me to state quite candidly that it really annoys me when some policymakers try to divert attention from their own mistakes by claiming that employers are the problem and then over burdening us with superfluous obligations. We could make swifter progress if everyone focused on their own area of responsibility. We've done our homework. People's dedication and expertise are also reflected in our strong business performance. This applies to both of the new E.ON's business segments, both Energy Networks and Customer Solutions. Our operating earnings totaled EUR 3.8 billion in 2020. Regulatory mechanisms will ensure that about EUR 200 million in weather and pandemic-related sales declines at our network business will be fully recovered in subsequent years. Overall, our results were, therefore, within the target range we had forecasted prior to the pandemic. But not only E.ON has remained robust, we become stronger and more predictable. That is precisely what we promised in the context of our realignment. The innogy integration is on track, and we have addressed a whole range of issues and achieved a success that will strengthen us in the long term. We reached an agreement with the German government that enables us to make a clean break with nuclear power. We now finally have financial clarity, where we can concentrate fully on the businesses of the future relating to sustainable energy. We quickly achieved the all-important turnaround in our U.K. business. After a worrying period, in 2021, this business has returned to profitability, and we've even revised our earnings forecast upward. And finally, we've strengthened our balance sheet. Following the innogy acquisition, despite the crisis, we were able to keep our debt manageable and recently even reduced it. We narrowed the target range for our debt factor, and it's highly likely that we will achieve this year, which is earlier than anticipated. As promised, E.ON is becoming stronger and more predictable. This gives us confidence, and it gives you a owner security even in these turbulent times. Against this backdrop, we -- today, we're proposing for you a dividend of EUR 0.47 per share for the 2020 fiscal year. We, therefore, keeping our promise of rising dividends this year as well without going too far out on a limb amid the current economic crisis. At the same time, we're extending our dividend promise by another year. We now intend to increase our dividend per share by up to 5% annually, including the dividend for 2023. I do this, by the way, with a clear conscience because E.ON's positive coals has continued into the current fiscal year. Our first quarter results were fully in line with our expectations. We, therefore, continue to expect solid adjusted EBIT of EUR 3.8 billion to EUR 4 billion for the full year 2021. Don't forget the integration phase after the takeover of innogy is still underway. The resulting synergies and E.ON's new strength are gradually starting to be reflected in our earnings. This is shown by looking beyond the current fiscal year. We aim to increase adjusted EBIT by an average of 8% to 10% per year through 2023. As you know, income from our nuclear power business, which is being phased out, will decline during this period. We, therefore, might ought to be even clearer why our future business consisting of networks and customer solutions makes us optimistic. You can count on us, especially in future. Your investment in our infrastructure company will pay off and not just in dividends. The new E.ON is fully aligned with the growth opportunities of the energy transition, and E.ON is itself a sustainable investment that's set standards. Ladies and gentlemen, in the early phase of the energy transition, growth and sustainability, we're often portraited as mutually exclusive. Today, it is clear that environment and economic opportunities for the future go hand-in-hand, especially in the energy industry. In the future, there will be no sustainability without growth. And that's good for E.ON because in Germany alone, over 50% of renewables facilities are connected to our grids. The integration of more renewable capacity will require billions of euros in investment. The same applies to decarbonization of industry, transport and heating. The new E.ON has more than 50 million customers and will, therefore, benefit significantly from the Europe-wide demand for climate protection technologies. Households, municipalities and companies all want and need to reduce their carbon emissions, and we will be helping them. At the energy transition -- as the energy transition advances, our regulated network grows with -- at the same time, by 4% to 5% a year to 2023. During this period, 90% of our investment will go toward building and installing customer-centric infrastructure for the energy transition. This is value-enhancing growth for our business. But there's -- there will not only be no sustainability in the future without growth. There will also be no growth without sustainability. This, too, is good for our E.ON. The market environment of energy cabinets across Europe, indeed, the market environment for every company, will be shifting entirely towards sustainability. The Green Deal has placed a focus on industry, transport and space heating as well. This year alone, a veritable avalanche of legislation and programs is being unleashed. In addition, billions in subsidies will be expended for sustainability as part of the post-coronavirus recovery. Ultimately, however, customers and financial markets are the ones demanding sustainability. Many European countries have instituted carbon pricing for sectors not covered by the EU Emissions Trading Scheme. Some countries will need to take action. Nevertheless, carbon now has a price almost everywhere, and carbon can become expensive and will become expensive. Conversely, reducing our carbon emissions and helping others do the same is a promising business model. Shareholders like you appreciate sustainability. On capital markets, this is reflected by change in investment behavior. It's also reflected by the change in our shareholders' profile, which is a higher proportion of sustainability oriented funds. You are electing -- sorry, you are backing a business model entirely devoted to propelling a comparative transition toward a carbon-neutral society. You're also backing a company that plays a leading role in corporate sustainability, as has been recognized by CDP, a global nonprofit organization. We're also well positioned in all major sustainability ratings. You're also backing a company whose management is not satisfied with his achievements. That's why we're now going even further. We are making sustainability as the guiding principle for managing E.ON. We intend for our own operations to be carbon neutral by 2040 and to achieve this value and supply chain by 2050. We've committed to having these targets validated by means of scientific criteria, that's why we've now joined the science-based target initiative. And I promise you that in the future, we will continue to emphasize transparency, outside expertise and dialogue. E.ON, a pacesetter of the energy transition, is investing in sustainable infrastructure. We're living up to our responsibilities as a reliable energy supplier, and we're spurring economic growth. Over the medium term, we'll invest around EUR 14 billion, much of it in customer-oriented energy infrastructure, about 70% -- 75% in our networks. Around 80% to 85% of our investments in 2021 already meet the EU taxonomy's sustainability criteria. This year, we're raising our ambitions in this area as well. Our recently revised Green Bond Framework is the first in Europe to be fully aligned with the EU taxonomy. This will make financing of our investment, increasing the green. E.ON's EUR 5.35 billion green bonds outstanding already makes us Germany's largest issuer and one of the largest in Europe. From the current fiscal year onward, we intend to use green bonds to meet more than half of our annual funding requirements. Let me, therefore, state clearly, E.ON doesn't have a sustainability strategy. We have a sustainable corporate strategy. Sustainability is our strategy. And for us, sustainability is more than just climate protection. We explicitly include social aspects, such as promoting diversity and our employees' health and safety. This is also reflected in the proposal for the Management Board's new compensation plan, which will be voted on today. We're placing sustainability criteria at the core of our corporate governance. This is how our performance is assessed in the future and how we will assess ourselves in the future. For E.ON, sustainability isn’t a fig leaf, it's our core competency. That's why we also look at the big picture. We are positioning E.ON as a comprehensive partner for green spaces. A great example of this is sustainable pathway management. Our network business encounters communities that want to become more sustainable, in harmony with nature and their residents needs. Power line pathways are part of this environment and consequently how we manage vegetation along these pathways is not only aimed at ensuring a reliable electricity supply, it's fully geared towards biodiversity and setting new standards. This approach is creating 100,000 soccer fields in which biodiversity will be significantly higher than in the surrounding terrain. Accordingly, this year, E.ON has become a partner of the United Nations Environment Program. Ladies and gentlemen, those who don't operate sustainably, soon won't be able to operate at all. And the same only will soon apply to those whose operations are fully digital. Digitalization is both an obligation and an opportunity for E.ON. E.ON has -- it sees as an area with great potential. We determined to fully use this potential. This already is demonstrated by the creation of a management board role for digitalization and the appointment of a top executive to fill. Victoria Ossadnik will help E.ON move forward, and I look forward to working with her in the future. It's also demonstrated by the example of our sales business in the U.K., where E.ON U.K. and npower presented us with 2 difficult situations at once in the wake of the energy takeover. Now we've turned both around, which is a digitalization success story. Effective as of the end of April last year, all innogy -- all npower customers have been migrated to our E.ON Next digital platform. The result is lower cost and higher customer satisfaction. The migration of our E.ON U.K. customers is scheduled to be completed by the end of June 2022. This serves as a paradigm for our core E.ON brand. By the end of the current financial year, we aim to migrate 6.5 million German customer contracts to a digital platform by 2022, figure will surpass 8 million. Digitalization helps us optimize our processes in both our Customer Solutions and also network business. It also enables us to create new products for our customers and new business prospects in both business segments. Digitalization is critical to success, including for the energy transition in general. Consequently, our capital base not only grows when we connect new generating capacity. It also grows because every new electric car, every heat pump and battery store system increases the energy system's complexity, that's why there is no alternative to investing in digital, largely automated control. We can't control tomorrow's energy world with yesterday's methods. The energy industry needs a completely new digital operating system, and I want E.ON to build such a platform, for itself and for all of our current as well as future partners. We're working on this together with the best in the digital economy, Microsoft, Google, SAP, but also with smaller companies and startups. We're embracing our responsibility for the energy transition, especially here in Germany. And I, therefore, believe it's also our responsibility to point out risks, specifically, currently seeing 2 risks for Digitalization, and thus, for the energy transition. First, Germany's regulatory framework, which isn't innovation friendly and aspects of which aren't really competitive. Germany needs to become more refractive for international investors, and Germany must invest much more heavily in network infrastructure today. Otherwise, it will be heading into an economic cost trap. Germany has so far been able to manage the energy transition because it's been able to build on good infrastructure and historical achievements. Such achievements are now needed again. Country needs to create the basis today for the transformation of tomorrow. Second, Germany's legal and administrative procedures. Germany is administering itself to death. Germany finally needs to pick up speed and the entire permitting prices must be streamlined instead of just exceptions being added, and it needs to be bold enough to harness the potential digitalization for the energy transition. And the pathetic rollout of smart meters is particularly discouraging, as an example. Why? Data are the basis for understanding the condition of technical systems. Data are the basis for an efficient overall system. Data are the basis for attractive offers to be made to our customers. A large scale transition of the heating and transfer sectors toward a low-carbon future can only be succeeded if we are able to control the system flexibly. Ultimately, data enables us to strike the balance between sustainability and cost effectiveness. And this is the balance the energy transition needs to strike. A successful energy transition will require powerful digital infrastructure. It needs smart metering systems that can transmit and process metering data in real time. It needs to be able to remotely controlled, distribute generating units and provide large customers with the highest degree of supply reliability. But it also needs simple solutions that enable residential customers to continually monitor their consumption. E.ON has 30,000 smart meters in operation in Germany, giving the most experience in the industry. But E.ON also has experienced from other European countries, many of which have already completely converted. While in Sweden, we currently installed 7,000 smart meters every week, i.e., more than what we've installed in Germany overall. So other countries have already switched to intelligent systems completely and are far ahead of us. Germany must reduce bureaucracy to become faster. One example, at each update, it's operating system needs to be certified in Germany. It also requires elaborate approval procedures under its calibration laws, typically several times a year. If such requirements applied to your smartphone, it's software would virtually always be out of date, and it's no different with smart meters. Germany, therefore, needs to review its technical hurdles and regulatory requirements. It needs to provide a stable legal and regulatory environment that needs to avoid excessive costs for things that yield few benefits to customers. E.ON has specific proposals that will enable Germany's rollout of smart meters to be a success after all. I call on all those responsible, "Let's work together so that the digitalization of Germany's energy transition gets on the right track." As you can see, there's no lack of challenges, but we can cope with them in a strong team. I very much regret that after about 5 years, here, with us Karsten Wildberger is seizing a new career opportunity to become CEO of Ceconomy. He has made a major contribution to E.ON's development in recent years. Karsten, we wish you the best of luck in your new role, and we know that you won't lose sight of us. And I'd like to thank you personally for our time together in the past few years. The new appointment further enhances the Management Board's diversity. We have exactly the right blend of leadership personalities to unlock E.ON's full potential. In Patrick Lammers and Victoria Ossadnik, we have 2 new Management Board members who have gained extensive experience outside the energy industry in international contexts and at the same time have already made important contributions to E.ON in recent years. And with Thomas König and Marc Spieker, on the other hand, we have 2 management board members who have spent their careers in the energy industry, and at E.ON, they have decades of specialist knowledge about our industry. This blend is diversity in the best sense. With this team, I'll dedicate myself to the greatest social transformation of our age, and we'll make sustainable energy available always and everywhere, and we'll pave the way to a carbon-neutral future. Let me a bit reiterate, progress often results from the need to adapt, and that's exactly what the new E.ON has done. We have reinvented ourselves. And under my leadership, change will continue. We'll make sustainability and digitalization part of E.ON's DNA, and we will leverage E.ON's full potential as a result. The new E.ON is the stable and reliable company that we promised to you. Together, with you, we look ahead of -- to decades of sustainable growth, and I look forward to it. Thank you very much.

Thank you, Mr. Birnbaum. Ladies and gentlemen, now complementary to what you can read on Pages 6 to 11 of the annual report, I'd like to give you a brief summary of the work we've been doing on the Supervisory Board over the last financial year. Last year, altogether, we had 5 meetings of the Supervisory Board. The Executive Committee met 12x, the other committees altogether 10x. The reports of these committees were dealt with in-depth in meetings of the Supervisory Board, and you can find a summary of all this on Page 9 of the annual report, along with the attendance figures. 2020 was very much influenced for E.ON by 2 events, the coronavirus pandemic and the integration of Innogy SE. The executive committee regularly coordinated with the Board of Management from March 2020 on managing the COVID risks above all, looking at the operating risks and the financial developments but also risks and countermeasures. All of this was discussed in-depth with the Board management. We also address the macroeconomic impacts and the political decision-making scenarios, and occasionally, that brought a surprise or 2 to deal with. But of course, every crisis implies not only risks but also opportunities. And part of our work is to look at both the opportunities and the risks for our business. The Board of management attended the meetings of the Supervisory Board and the executive committee to inform us about progress with the integration of Innogy SE and the squeeze out. We also had a number of informal contacts with them on the matter. And in that context, the Supervisory Board also read briefings on progress with regard to the remedies of the EU commission, that is the conditions, we had to meet. And we took resolutions on this, too. The Board was very much involved in preparing for personnel developments above all the departure of Johannes Teyssen, the designation of Leonhard Birnbaum and the appointment of Victoria Ossadnik to the Board of Management. This meant rearranging the responsibilities on the Board of Management, which we discussed and resolved. It included extending the appointments of Thomas König and Karsten Wildberger. The fact that Mr. Wildberger was going to leave us, quite so soon, was not envisaged at the time, of course. One priority in our work was to establish the new compensation system for the Board of Management, which we are putting to the meeting today for approval. A central issue, with the political and regulatory developments in countries where E.ON is active, the situation in Turkey played a part here and we addressed that with a particularly critical eye. We also looked at the consequences of the COVID-19 pandemic, consequences of the EU recovery plan, what all this means for E.ON's business. We also addressed the other conditions affecting the business of E.ON, including the low interest environment, the commercial environment, international and national energy markets and currencies. We also addressed the asset, financial and earnings situation, dividend policy, employment, jobs, opportunities and risks for earnings at E.ON SE and the group. We talked in-depth with the Board of Management about medium-term planning from 2021 to 2023; developments in health, safety and the environment; trends in the key incident parameters; and COVID-19 infections in the group but also the development on customer numbers, customer satisfaction, trainees. At the beginning, the major capital market story was the dividend strategy. At the end of the year, together with the Board of Management, we formulated our annual declaration of compliance. All the recommendations of the German Corporate Governance Code have been adopted. We address the German GAAP financial statements, the IFRS group statements and the combined management report of E.ON SE, including the appropriation of profit, bearing in mind the comments of our auditor. So there are 2 pillars there. There's appropriation of profit and there is bearing in mind the auditor's report. It doesn't make it any simpler. We also audited, reviewed and approved the nonfinancial report. That extended, of course, to the financial statements of E.ON SE and the group, consolidated financial statements, all of which have now been not only approved but adopted. We approved of the combined management report and the proposal from the Board of Management for the appropriation of profit, which the Supervisory Board endorsed. At this point, I would particularly like to thank management and all the employees of this amazing company. There were tremendous challenges to meet in 2020. We did that. It required great personal efforts for many people, and I'd like to say, in this context, a big thank you from the Supervisory Board to all our employees, which I hope all our shareholders out there will support. I'm going to come now to the system for compensating members of the Board of Management, which was adopted by the Supervisory Board in its meeting on 23rd of March 2021, which we're putting to you for approval under Item 6. In this system, we reflect the major success factors for E.ON, that is promoting and routing a strong performance culture; continuous sustainable growth in the dividend, a distinct focus on customers; social responsibility by establishing a sustainable culture at E.ON. We've presented this system today. And of course, it bears in mind all the statutory requirements, the previous system, expectations from investors, trends in the market, how other companies are compensating their Boards. We've addressed all these things systematically. I'll mention the major changes -- and let me just mention that it will come into effect from the 1st of January 2022 for members of the Board of Management who have been appointed by then. So it doesn't apply this year. What are the major changes? First of all, we are routing the principles underlying E.ON sustainability strategy in the long-term variable payment. And for that, we have the newly developed E.ON sustainability index, which reflects the 4 top ESG factors for E.ON. At the moment, those are climate change, diversity and integration, health and safety and E.ON's position in external ESG ratings. Secondly, we're strengthening the reference to our business and the selected indicators are going to be reflected more strongly in long-term and short-term variable compensation. At the same time, we are reducing discretionary elements and have abolished special bonuses. Thirdly, we are reinforcing the orientation to the capital markets by obliging members of the Board of Management to maintain their share packages for an additional 2 years after leaving the Board of management. Fourthly, we've integrated malus and clawback rules, which means that if any variable payment that has not been paid out under certain circumstances can be reduced to 0. I'm quite sure with this Board of management that won't be necessary. Fifthly, instead of the old pension system, we're introducing individual contracts for pension payments for members of the Board of Management. Sixthly, we have a cap on remuneration for the CEO and for the other members of the Board of Management in accordance with the Stock Corporation Act here in Germany. With this new system, we are, of course, complying with statutory requirements and other requirements? I personally regret the trend to an increasing law and mathematics-based approach to compensation for leadership in companies because leadership means more than reaching quantitative targets. Leadership means leading people above all. This is about attitude, integrity, listening, discourse and many other factors, which, this arithmetic of agreed targets, doesn't necessarily reflect. Now I know that at the moment, the trends are not my friend. But I expect, as with so many management fashions, one day, we will see a reversal of this trend and will return to discretionary components in compensation systems. The new compensation system within this defined framework sets incentives for management of the company and binds members of the Board of management to the short-term and long-term aims of E.ON. If you want more details, I would refer you to the brochure, which accompany the invitation. I don't want to say something briefly about Items 5 and 8. In 2021, we need to change our auditor and the proposals for the elections of an auditor under Item 5 respect this requirement. There has, of course, been a statutory selection procedure. And according to this, we envisage KPMG AG Wirtschaftsprüfungsgesellschaft as our new auditor. Under Item 8, we are proposing that Erich Clementi, Andrea Schmitz and Ewald Woste are reelected as members of the Supervisory Board. The idea is to harmonize the duration of mandates on the Supervisory Board and also limit the mandate period. The reason is that in 2023, our statutes envisage that we will have to elect a smaller Supervisory Board, and we want to respond to that requirement in good time. By reelecting the candidates we've proposed, we will be meeting all the statutory and other requirements of the composition of the Supervisory Board. All of these candidates is well qualified, both in personal terms and in terms of professional experience for membership of the Supervisory Board of our company. And they have demonstrated this again and again in the work they are doing in our committees and our own Supervisory Board. The proposals for the Supervisory Board that we have made reflect our targets for composition and the mandate of the Supervisory Board, the profile of competence, skills that we require overall. And I think that Mr. Birnbaum is going to tell you a little more about some other items on the agenda.

Ladies and gentlemen, agenda Item 7 meets the new legal requirements according to which this year's AGM will have to resolve on the remuneration of Supervisory Board members. We propose that the remuneration of supervisory members as defined in Article 15 of the Articles of Association unity, and which has been unchanged since 2011 and the underlying system should be confirmed. Under Item 9, we ask for your approval with regard to the conclusion of nomination and profit and loss transfer agreements of E.ON SE with 2 wholly-owned subsidiaries. The contracts will conclude on the 24th of March 2021. They need the approval of the AGM of E.ON SE to be effective, and they need to be entered in the commercial registers of the subsidiaries as the shareholders' meetings have already approved the contracts. The content of the contracts is included in the invitation of the AGM. Further details can be seen in the detailed reports of the Board of Management, these documents and also the nomination and profit and loss transfer agreements were published on the website of the E.ON SE and can be inspected there today. Two subsidiaries or so-called shelf companies that have no business activities yet, but that can -- will be at our disposal, if needed. The 2 contracts are in keeping with usual standards since all the shares of the 2 companies are within the hands of E.ON SE. Rules on compensation and settlement for outside shareholders are not required. For this reason, an evaluation of the company is concerned and also an audit of the contracts could be waived. And based on the contracts, the results of the E.ON 45th Verwaltungs GmbH and the E.ON 46th Verwaltungs GmbH could be taken over by E.ON, and aside to it, it purposes so much on our agenda today.

Thank you, Mr. Birnbaum. I can now give you the figures for attendance at today's general meeting. This is an updated form. Here, on the left, you see equity in non-PAR shares. The notary tells me that it's on the screen. Do I have to read it anyway, Mr. Notary? I'm sorry. We cannot spare you the misery of this. So the figures are equity, 2,641,318,800 registered and represented non-PAR shares, 1,327,082,327. That is 50.24% of the equity. The written votes that we've received, postal votes, account for 421,345,536 non-PAR shares. If we take the 2 together, we have 66.20% of the equity represented at this meeting in one form or another. These figures will be on the online service, too. Now we're going to move on to the questions and answers, which means, at this point, we put an end into our public broadcast. We will continue in the online service to live stream the answers to the questions. But please stay loyal to us, those of you who are leaving at this point. Good to have you with us.