BMW 2010 Annual Report Download - page 10

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about improved transparency in the Financial Services segment, driven progress in product strategy and electromobility
and encouraged new, positive approaches to marketing.
We also deliberated with the Board of Management on the BMW Group’s situation and positioning in the areas of
personnel marketing, programmes for new recruits, further training and vocational training. We fully agree with the
Board of Management that, even though BMW is generally seen as a highly attractive employer, it is imperative that we
continue to build up and maintain expertise and acknowledge the importance of further training. These issues repre-
sent a major challenge for the future, not least because of the demographic aging of society. The Board of Management
also presented and explained its diversity concept for the BMW Group to the Supervisory Board.
We carefully considered the annual budget for the fi nancial year 2011 and discussed earnings opportunities and
risks with the Board of Management. The underlying plans give good reason to believe it will be possible, at the very
least, to achieve the targets set in conjunction with Strategy Number ONE, despite the intervening fi nancial crisis.
As part of a special review, the Board of Management presented an in-depth report on the activities, organisational
structure and strategic direction of the board portfolio “Purchasing and Supplier Network”. This network was set up in
2007 as a result of Strategy Number ONE and aims to create the world’s most e cient car manufacturer supply chain in
terms of quality, innovation, compliance with deadlines and cost. The presentation also included an explanation of the
instruments with which the BMW Group intends to compensate for benefi ts of scale enjoyed by larger-scale manufacturers.
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 on
key markets as well as developments in earnings and profi tability during the year. The Board of Management and the
Supervisory Board use the reports to keep abreast of and discuss current issues a ecting the automobile sector. In this
context, the Board of Management provided information to the Supervisory Board on a number of issues, including
BMW internal rules and processes relating to quality assurance and the management of product defects, should they arise.
The Board of Management also addressed major developments in China of signifi cance for the BMW Group, such as
theprogress being made in expanding production capacities at the Tiexi and Dadong sites in Shenyang and the BMW
Group’s involvement in the joint venture with Brilliance.
The Supervisory Board again conducted a thorough review of the structure and level of Board of Management com-
pensation in 2010. For this purpose, advice was obtained from an independent external fi rm of compensation consultants.
In July – after the Board of Management’s decision to approve payment of a special bonus to employees of BMW AG –
the Supervisory Board decided to approve a special bonus for members of the Board of Management, based on the prin-
ciple of consistency and taking into account senior management compensation (below board level). The payment
wasmade in recognition of the fact that the Board of Management had undertaken structural measures that helped the
BMW Group overcome the fi nancial crisis. In December the Supervisory Board decided to add a stock-based compen-
sation element to the Board of Management’s compensation system for fi nancial years commencing after 1January 2011.
Further information on this matter is included in the detailed Compensation Report within the Corporate Governance
Report section of the Annual Report (pages 154 et seq.).
Corporate governance and Declaration of Compliance In their joint meeting in December, the two boards delib-
erated on corporate governance within the BMW Group and took a number of decisions on ways in which it could be
further improved. The joint Declaration of Compliance and other explanatory comments can be found in the Corporate
Governance Report. The recommendations of the Government Commission on German Corporate Governance con-
tained in the revised Code issued on 2 July 2010 (Code version dated 26 May 2010) will be complied with without
exception in the future. This also includes recommendations on succession planning for the Board of Management.
Together with the Board of Management, the Personnel Committee and full Supervisory Board will ensure that long-
term succession planning is in place. In their assessment of candidates for a post on the Board of Management, the
underlying criteria applied by the Supervisory Board for determining the suitability of candidates are their professional
expertise in the relevant area of board responsibility, outstanding leadership qualities, a proven track record and a pro-
found understanding of the BMW Group’s business. We also take diversity into account when assessing, on balance,
which individual will best complement the Board of Management as a representative body. In the context of the decision
process, we understand “diversity” to encompass various complementary individual profi les, work and life experience,
at both national and international levels, as well as appropriate representation of both sexes. When making new
appointments, our aim in the medium and long term is to achieve an appropriate representation of women on the Board
of Management of BMW AG. The Board of Management will accordingly report to the Personnel Committee – at regular
intervals and, on request, prior to personnel decisions being taken by the Supervisory Board – on the proportion of, and