BMW 2009 Annual Report Download - page 10

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In regular reports, the Board of Management kept us informed of sales volume performance in the Automobiles
and Motorcycles segments, new business developments in the Financial Services segment and vehicle residual
values in key markets. We were also regularly informed about measures to bring production capacities into line
with current demand and about important changes in the area of human resources. The Board of Management
also reported on other current events such as the sale of the Formula One racing team. Key projects, such as the
expansion of production capacities in China undertaken to strengthen competitiveness and open up potential
opportunities for growth, were also explained. One Supervisory Board meeting was held at the BMW plant in
Dingolfing, Lower Bavaria, where the BMW 5 Series, 6 Series, 7 Series, 5 Series Gran Turismo and a wide range
of components are produced. The central parts distribution centre is also located at this site. During our visit to
the plant we were shown how profitability has been significantly improved through rigorous application of the
principles of value-added production.
In 2009 the Personnel Committee and the Supervisory Board carried out an in-depth review of the structure and
level of the Board of Management’s compensation, and deliberated on the new pension arrangements for mem-
bers of the Board of Management. A detailed Compensation Report is included in the Corporate Governance
Report section of the Annual Report. Tasks dealing with issues relating to the Board of Management’s compensa-
tion were reallocated between the Personnel Committee and the Supervisory Board as a result of the German
Act on the Appropriateness of Management Board Compensation (VorstAG). With effect from the date on which
that law came into force, the Supervisory Board has been responsible for determining and regularly reviewing the
Board of Management’s compensation. The Personnel Committee now plays a preparatory role in this process.
The Supervisory Board’s terms of reference were adapted to take account of the change in allocation of tasks be-
tween the Personnel Committee and the full Supervisory Board. The Personnel Committee and the Supervisory
Board also took an in-depth look at the requirements of the VorstAG and the recommendations of the German
Corporate Governance Code relating to the structure of board compensation. Further information is provided in
the detailed Compensation Report.
Corporate Governance and Declaration of Compliance At a joint meeting in December 2009, the Supervisory
Board and the Board of Management examined whether the corporate governance principles laid down in the
previous year had been applied during the financial year 2009 and also deliberated in detail on future corporate
governance developments within the BMW Group. The two boards issued a joint Declaration of Compliance with
the German Corporate Governance Code (GCGC) pursuant to § 161 AktG and had it posted to the BMW Group’s
website. The recommendations of the Government Commission on the German Corporate Governance Code (draft
from 18 June 2009) contained in the revised code issued on 5 August 2009 will be complied with in the future
with one exception, namely the level of an appropriate excess amount of directors’ and officers’ (D & O) liability in-
surance for Supervisory Board members. In view of the different financial circumstances of Supervisory Board
members, both boards consider it appropriate that a differentiation should be made in the level of the D & O insur-
ance excess amount applicable for members of the Board of Management on the one hand and members of the
Supervisory Board on the other, and are of the opinion that the levels of insurance excess already agreed for mem-
bers of the Supervisory Board remain appropriate. The Board of Management and the Supervisory Board decided
to comply with all other recommendations. This includes the code’s recommendations to take diversity into ac-
count when making proposals for elections to the Supervisory Board and in the composition of the Board of Man-
agement. In their assess ment of individuals for posts on the Board of Management or for proposed election to the
Supervisory Board, the Personnel Committee, Nomination Committee and the full Supervisory Board will take
even more care to ensure that the process is impartial and also pays due attention to diversity. The full Declaration
of Compliance is also shown in the Corporate Governance Report (part of the Annual Report). The BMW Group
Corporate Governance Code was updated on the basis of resolutions taken by the Board of Management and the
Supervisory Board. This code, which sets out the principles of good corporate governance applied within the
BMW Group, is available to shareholders and the general public via the Group’s website. Examining and improving
the efficiency of the Supervisory Board’s work is seen as an ongoing task, one key element of which is to engage
in open and constructive dialogue within the Supervisory Board and in dealings with the Board of Management.
The efficiency examination was also the subject of a separate discussion by the full Supervisory Board. Our prepa-
rations
for this were based on the results of a questionnaire previously devised and distributed by the members