Merck 2008 Annual Report Download - page 71

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66 | Merck Annual Report 2008
E. Merck KG appoints and dismisses the Executive Board. In addition, E. Merck KG has
created bodies – complementing the expertise and activities of the Supervisory Board
– to ensure that the Executive Board is monitored and advised. This applies primarily
to the Board of Partners of E. Merck KG. Based on the provisions of the German Stock
Corporation Act, the Articles of Association of Merck KGaA and the rules of procedure
of the various committees, Merck KGaA has a set of regulations for the Executive
Board and its supervision that meet the requirements of the Code. The investors, who
bear the entrepreneurial risk, are protected as foreseen by the Code.
This is illustrated by the following chart:
Total capital Merck KGaA
€ 565,211,241.95
Share capital
€ 168,014,927.60
Equity interest
€ 397,196,314.35
Limited liability shareholders General partner
E. Merck KG* (with equity interest)
Annual General Meeting
Supervisory Board
16 members (Sections 1, 7 MitbestG**)
Board of Partners E. Merck KG*; 9 members
Human Resources Committee, Finance
Committee, R&D Committee
General partners with no equity interest
(with power of management and representation)
= Executive Board Merck KGaA
* Until and including December 31, 2008: E. Merck OHG
** German Co-Determination Act
Deviations from the German Corporate Governance Code:
1. In accordance with 2.3.2, the company shall send notification of the convening of the
General Meeting together with the convention documents to all domestic and foreign
financial services providers, shareholders and shareholders’ associations by elec-
tronic means if the approval requirements are fulfilled. Since Merck KGaA has issued
bearer shares, it relies on the cooperation of the depositary banks for electronic
transmissions. Past experience has shown that we reach far more shareholders via
post than electronically, which is why we have previously refrained from establish-
ing the approval requirements. In order to comply with the Code in the future, the
approval requirements will be established at the next Annual General Meeting.
2. Contrary to section 3.8 (2), the Directors & Officers (D&O) liability insurance policy,
which Merck KGaA maintains for its committee members, does not include a deduct-
ible. The company has dispensed with a deductible because D&O insurance policies
with the required deductible are not actively offered by the insurance sector and the
individual agreement on a deductible is not countered by a substantial reduction in
the premium.
Rules for Merck KGaA meet
the requirements of the Code.