Mercedes 2008 Annual Report Download - page 132

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Section 161 of the German Stock Corporation Act (AktG) requires
the Board of Management and the Supervisory Board of a listed
stock corporation to declare each year that the recommendations
of the “German Corporate Governance Code Government Com-
mission” as published by the Federal Ministry of Justice in the
official section of the electronic Federal Gazette have been and
are being met or, if not, which recommendations have not been
or are not being applied. Shareholders must be given permanent
access to such declaration.
The German Corporate Governance Code (“Code”) contains rules
with varying binding effects. Apart from outlining aspects of the
current German Stock Corporation Act, it contains recommenda-
tions from which companies are permitted to deviate. However,
if they do so, they must disclose this each year. The Code also
contains suggestions which can be ignored without giving rise
to any disclosure requirement.
The Board of Management and the Supervisory Board of Daimler
AG have decided to disclose not only deviations from the Code’s
recommendations (see I.) but also – without being legally obliged
to do so – deviations from its suggestions (see II.).
For the period from December 2007 until August 7, 2008, the fol-
lowing declaration refers to the Code as amended on June 14,
2007. For the corporate governance practice of Daimler AG since
August 8, 2008, this declaration refers to the requirements of
the Code as amended on June 6, 2008 and published in the elec-
tronic Federal Gazette on August 8, 2008.
The Board of Management and the Supervisory Board of Daimler
AG declare that as a rule both the recommendations and the
suggestions of the “German Corporate Governance Code Govern-
ment Commission” have been and are being met. The Board of
Management and the Supervisory Board also intend to follow the
recommendations and suggestions of the German Corporate
Governance Code in the future. The following recommendations
and suggestions are the only ones that have not been and are
not being applied:
I. Deviations from the recommendations of the German Cor-
porate Governance Code
1. Deductible with the D&O insurance (Code Clause 3.8,
Paragraph 2) The directors’ and officers’ liability insurance (D&O
insurance) obtained by Daimler AG excludes coverage for inten-
tional acts and omissions and for breaches of duty knowingly
committed by members of the Board of Management and the
Supervisory Board. As a result, the question of whether or not
a deductible is advisable arises only in the context of negligent
breaches of duty.
We do not believe it is advisable to have a deductible for cases
of negligence by members of the Supervisory Board because it
could impede the company’s ability to staff its Supervisory Board
with prominent members of the community from Germany and
abroad with extensive business experience. Qualified candidates
could be deterred by having to accept far-reaching liability risks
for potential negligence. The fact that a deductible is fairly unusual
in other countries makes this even more of a problem.
The D&O insurance of Daimler AG does provide for a deductible
in cases of ordinary or gross negligence by members of the
Board of Management. Moreover, in cases of gross negligence,
the Presidential Committee of the Supervisory Board (which is
responsible for the Board of Management members’ service con-
tracts) may decide to make a percentage deduction from the
variable portion of the remuneration of the member of the Board
of Management concerned. In terms of its overall financial result,
this would have the effect of an additional deductible. In the view
of Daimler AG, this rule enables individual cases to be judged
more fairly on their merits than the blanket approach of the Code.
Declaration of Compliance with the
German Corporate Governance Code