BMW 2006 Annual Report Download - page 121

120 Corporate Governance
116 Corporate Governance
116 Members of the Supervisory Board
119 Members of the Board of Management
120 Corporate Governance in the
BMW Group
121 Compensation Report
124 Directors’ Dealings
124 Shareholdings of members of the Board
of Management and Supervisory Board
125 Declaration of the Board of Manage-
ment and of the Supervisory Board
pursuant to §161 AktG
Corporate Governance in the BMW Group
For the BMW Group, corporate governance is an
all-embracing issue which affects all areas of the
enterprise. Transparent reporting and a policy of
corporate governance aimed at the interests of
stakeholders are well-established traditions within
the BMW Group. Cooperation between the Board
of Management and the Supervisory Board, in an
atmosphere of commonly shared trust and respon-
sibility, have long been the basis for managing the
affairs of the BMW Group. The underlying corporate
culture at BMW is founded upon the principles of
transparency, placing trust in others and taking re-
sponsibility for one’s own actions.
Declaration of Compliance and the BMW Group
Corporate Governance Code
Management and supervisory boards of companies
listed in Germany are required by law (§161 German
Stock Corporation Act) to report once a year whether
the officially published and relevant recommenda-
tions issued by the “Government Commission of the
German Corporate Governance Code”, as valid at
the date of the declaration, have been, and are be-
ing, complied with. Companies affected are also
required to state which of the recommendations of
the Code have not been or are not being applied.
The Board of Management and Supervisory
Board of Bayerische Motoren Werke Aktiengesell-
schaft believe that the recommendations and sug-
gestions contained the German Corporate Gover-
nance Code (GCGC) help to enhance the financial
markets in Germany, in particular for international
investors. At the joint meeting held on 5 December
2006, the Board of Management and Supervisory
Board of BMW AG issued the Declaration of Compli-
ance with the new version of the German Corporate
Governance Code valid from 24 July 2006. With
the
effect from that meeting , BMW AG complies
with the recommendations of the GCGC with one
exception only, namely that the discussion and regu-
lar review of the structure of the compensation sys-
tem of the Board of Management is performed by
the Personnel Committee.The Chairman of that
committee informs the members of the Supervisory
Board at its next meeting. All other recommendations
are complied with. Moreover, the Board of Manage-
ment and Supervisory Board have, in the past, de-
veloped the
BMW Group’s own corporate governance
code which
is based on the GCGC and takes account
of the specific circumstances of the BMW Group.
The aim is to provide shareholders and other stake-
holders with a comprehensive, stand-alone docu-
ment covering the corporate governance practices
applied by the BMW Group. The BMW Group’s Cor-
porate Governance Code has been revised in con-
junction with the new version of the GCGC. A copy of
it can be obtained, along with other shareholder in-
formation, such as notifications pursuant to §15a of
theGermanTrade Securities Act (Directors’ Dealings)
from the BMW Group website. Interested parties
can also find other general information about the
Group, up-to-date analysts’ reports and all financial
publications of the Group at www.bmwgroup.com/ir.
A coordinator responsible for all corporate
governance issues regular reports to the Board of
Management and Supervisory Board.
Good corporate governance requires efficient
mechanisms, capable of preventing breaches of law,
and a system of regular review.
Additional measures were taken in 2006 within
the purchasing function to reduce the risk of irregular-
ities. Furthermore, in addition to the guidelines and
training measures already in place, an open letter was
sent to all employees working within the purchasing
function and to 600 suppliers specifically addressing
the issue of “Accepting gifts or other benefits and
participating in non-business events”. Systematic job
rotation is required within the purchasing function,
supported by measures taken by the Human Re-
sources department. It was again made absolutely
clear that all employees must act with integrity and
that any breaches of rules will be dealt with rigorously.
In the interest of investor protection and in
order to ensure that the BMW Group complies with
regulations relating to potential insider information,
the Board of Management has appointed an Ad-hoc
Committee made up of representatives from various
specialist departments; its members examine the
relevance of issues for ad-hoc disclosure purposes.
The procedures and decision-taking process applied
by this committee, which has been in place since
1994, have been brought into line with the revised
requirements of the Investors’ Protection Improve-
ment Act. All persons working on behalf of the enter-
prise with access to insider information are entered
into a special register and advised of their legal obli-
gations with regard to insider rules.
Fair treatment and mutual respect of others,
equal opportunities and a clear stance against dis-
crimination are core principles, which have been
anchored for many years in the BMW Group’s “Long-
Term Personnel Policies”. In 2005, these principles
were underlined in a “Joint Declaration of Human
Rights and Working Conditions in the BMW Group”
signed by the group’s management, the EURO Works
Council and the International Metalworkers Federation.
All employees in Germany are kept informed via the
Corporate Governance