Merck 2010 Annual Report Download - page 135



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According to section 5.4.1 (2) and (3) of the German Corporate Governance Code, the Supervisory
Board shall specify concrete objectives regarding its composition which, while considering
the specifics of the enterprise, take into account the international activities of the enterprise,
potential conflicts of interest, an age limit to be specified for the members of the Supervisory
Board, and diversity.

The Supervisory Board of Merck KGaA consists of 16 members, eight of whom represent
the shareholders and a further eight who represent the employees. The eight employee
representative members are elected by employee delegates pursuant to the provisions of
the German Co-determination Act (Mitbestimmungsgesetz – “MitbestG”). These include six
company employees, including a senior executive, as well as two union representatives. The
Supervisory Board has no statutory proposal right with respect to electing the delegates or
employee representatives. Owing to a delegation right of E. Merck Beteiligungen KG, two of the
eight shareholder representatives are specified. The Supervisory Board likewise has no statutory
proposal right with respect to exercising this delegation right. The remaining six shareholder
representatives are elected by the General Meeting. In accordance with section 124 (3) sentence
1 AktG, the Supervisory Board shall propose to the General Meeting Supervisory Board
members for election. These proposals require a majority of the votes of the shareholder repre-
sentative members of the Supervisory Board. The General Meeting is not required to follow
the election proposals. The appointment objectives that the Supervisory Board applies as set
forth below therefore do not represent requirements to be met by those eligible to elect or to
delegate members, respectively. Instead, they are intended to express the objectives pursued
by the Supervisory Board in office with regard to its advisory and monitoring functions.

In accordance with section 5.4.1 of the German Corporate Governance Code, the Supervisory
Board specifies the following objectives with respect to its composition:
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Professional qualifications and personal expertise are the two most important prerequisites
for appointments to seats on the Supervisory Board. When proposing Supervisory Board can-
didates for election or delegation, the Supervisory Board will always give top priority to these
prerequisites, which are essential for fulfilling its legal duties.
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Overall, the Supervisory Board’s objective is to optimally meet its monitoring and advisory
duties by having a diversity of members. Diversity includes, in particular, internationality as
well as different experience backgrounds and career paths. The proportion of women on the
Supervisory Board is also considered to be an aspect of diversity. When preparing proposals
for election or delegation, due consideration shall be given in individual cases to the extent to
which different, yet complementary professional profiles, career and life experiences as well
as appropriate representation of both genders can benefit the work of the Supervisory Board.
Company 131Consolidated Financial Statements More informationManagement Report Corporate governance
Statement on corporate governance
Objectives of the Supervisory Board
with respect to its composition