Mercedes 2003 Annual Report Download - page 93
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Please find page 93 of the 2003 Mercedes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.DaimlerChrysler AG endeavors to staff its Supervisory Board with
prominent members of the community from Germany and abroad
who have extensive business experience, and the company may be
impeded in this aim if members of its Supervisory Board have to
accept far-reaching liability risks for potential negligence. The fact
that such a deductible is unusual in other countries makes this
even more of a problem. Nor does the D&O insurance of
DaimlerChrysler AG envisage any formal deductible for ordinary
and gross negligence on the part of members of the Board of
Management. However, in cases of grossly negligent breaches of
duty by a member of the Board of Management, the Presidential
Committee of the Supervisory Board, which is responsible for the
Board of Management’s service contracts, may agree to make a
percentage deduction from the variable portion of the
compensation of the member of the Board of Management
concerned. In terms of its overall financial result, this would have
the same effect as a deductible. In the view of DaimlerChrysler AG,
this rule enables individual cases to be judged more fairly on their
merits than the blanket approach of the Code (see Code Clause
3.8, Paragraph 2).
2. Individualized reporting of Board of Management
compensation. As in the past, the compensation for the members
of the Board of Management is not reported individually (see Code
Clause 4.2.4). The compensation of the members of the Board of
Management has been and will be reported, broken down into fixed
and variable elements and into components with a long-term
incentive effect (see page 169). This information is crucial for
assessing whether the division of such compensation between
fixed and performance-related components is appropriate and
whether the structure of such compensation provides adequate
incentives for the Board of Management. As the Board of
Management operates according to the principle of collective
responsibility, the incentives provided for the Board of
Management as a whole are the decisive factor, not those for each
individual member. Another factor is that listing these details
individually could lead to a leveling of performance-related and
task-related differences in compensation.
3. Approval of sideline activities. For reasons of practicality
relating to the way in which the Supervisory Board works, approval
of sideline activities by members of the Board of Management,
especially regarding positions held as members of supervisory
boards, has been and will be granted not by the whole Supervisory
Board, but by its Chairman. For the same reason, such approval is
required only in cases where the additional activity is a paid
position, but not, for example, for honorary positions on advisory
boards or boards of governors. The Presidential Committee of the
Supervisory Board will be informed of the decisions of the
Chairman of the Supervisory Board in this matter (see Code Clause
4.3.5).
4. Compensation of the Supervisory Board. In the Declaration
of Compliance, the Board of Management and the Supervisory
Board have stated that a decision will be taken at a later date on
performance-related compensation for the members of the
Supervisory Board (see Code Clause 5.4.5, Paragraph 2). A
proposal is to be put before the Annual Meeting on April 7, 2004
that a decision should be taken on amending the Articles of
Incorporation so that performance-related compensation can be
introduced for the Supervisory Board.
In the year 2004, the shareholder representatives will be elected to
the Supervisory Board. For this reason it seems appropriate as of
this year to make an individualized listing of compensation and
other advantages granted for services personally rendered by the
members of the Supervisory Board, particularly consulting and
brokering services; and until then to present compensation and
other advantages in a summarized form for all of the Supervisory
Board members in the notes to the consolidated financial
statements. Individualized details will therefore be reported
starting with the financial statements for the year 2004 (see Code
Clause 5.4.5 Paragraph 3).
5. List of third-party companies. No details were given of third-
party companies’ operating results in the past (see Code Clause
7.1.4). However, since disclosure of third-party companies’ details
is to be limited solely to non-consolidated companies, such details
are presented as supplementary information for the first time in
this Annual Report (see page 172 f).
Deviations from the Suggestions of the German Corporate
Governance Code.
1. Broadcast of the Annual Meeting. The Annual Meeting of
DaimlerChrysler AG will be broadcast on the Internet until the end
of the Board of Management’s report. Continuing the broadcast
after this point (see Code Clause 2.3.4), particularly the broadcast
of individual shareholders’ spoken contributions, could be
construed as interference in those shareholders’ privacy rights. For
this reason the company has decided not to broadcast this part of
the Annual Meeting.
2. Proxy voting at the Annual Meeting. As there is no
broadcasting of the Annual Meeting on the Internet, there will
therefore be no need to contact the voting representative
appointed by the company. Furthermore, with the currently
available communication equipment there is the possibility of
technical problems interrupting the availability of this
representative (see Code Clause 2.3.3).
3. Chairman of the Audit Committee. At DaimlerChrysler AG, the
Chairman of the Supervisory Board currently chairs the Audit
Committee. To avoid a reallocation of responsibilities during the
current term of office of the Supervisory Board, the Chairman of
the Supervisory Board will continue to chair the Audit Committee
until the new members of the Supervisory Board representing the
shareholders are elected in April 2004. Subsequently, the
Supervisory Board will again decide on the matter (see Code
Clause 5.2).
4. Election of Supervisory Board members. The company also
intends to introduce differing terms of office when the new
members representing the shareholders are elected to the
Supervisory Board in 2004, because to do otherwise would require
intervention in existing appointments (see Code Clause 5.4.4).
5. Compensation of the Supervisory Board. The comments on
Point 4 of the Deviations from the Recommendations of the
German Corporate Governance Code apply analogously to the
proposal to introduce performance-related compensation for the
members of the Supervisory Board including elements that depend
on the company’s long-term success (see Code Clause 5.4.5).
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