Merck 2014 Annual Report Download - page 169

164 CORPORATE GOVERNANCE → Objectives of the Supervisory Board with respect to its composition
OBJECTIVES OF THE SUPERVISORY BOARD WITH RESPECT
TO ITS COMPOSITION
Initial situation
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 ac-
tivities of the enterprise, potential conflicts of interest, the number
of independent Supervisory Board members, an age limit to be
specified for the members of the Supervisory Board, and diversity.
General notes on the composition of the Supervisory
Board
The Supervisory Board of Merck KGaA, Darmstadt, Germany, cur-
rently consists of 16 members, eight of whom represent the share-
holders and a further eight who represent the employees. The eight
employee representative members are elected by employee dele-
gates pursuant to the provisions of the German Co-determination
Act (Mitbestimmungsgesetz “MitbestG”). These consist of six com-
pany 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 represen-
tatives. Owing to a delegation right of E.Merck Beteili gungen KG,
Darmstadt, Germany, 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 representative members
of the Supervisory Board. The next scheduled election to the
Supervisory Board shall take place at the 2019 General Meeting.
The General Meeting is not required to follow the election pro-
pos als. The appointment objectives that the Supervisory Board
sets forth below therefore do not represent requirements to be met
by those eligible to elect or to delegate members. Instead, they are
intended to express the objectives pursued by the Supervisory
Board in office with regard to its advisory and monitoring func-
tions.
Objectives of the Supervisory Board with respect to its
composition
In accordance with section 5.4.1 (2) of the German Corporate
Governance Code, the Supervisory Board has specified the follow-
ing objectives with respect to its composition and reports on the
status of their implementation below.
Expertise and diversity
Professional qualifications and personal expertise are the two
most important prerequisites for appointments to seats on the
S
upervisory Board. When proposing Supervisory Board candidates
f
or election or delegation, the Supervisory Board will always give
top priority to these prerequisites, which are essential for fulfilling
its legal duties.
Overall, the Supervisory Board’s policy is to optimally meet its
monitoring and advisory duties by having a diversity of members.
Diversity includes, in particular, internationality as well as differ-
ent 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 repre-
sentation of both genders can benefit the work of the Supervisory
Board. Additionally, the Supervisory Board shall support the Exec-
utive Board in its efforts to increase diversity within the company.
In-depth knowledge of the fields relevant to the company
The Supervisory Board shall have at least four members with
in-depth knowledge and experience of fields that are important to
the company, including at least one expert in pharmaceuticals
and
one in chemicals.
The company is currently meeting this objective for the
compo sition of the Supervisory Board. At present, the Supervisory
Board has more than four members who have in-depth knowledge
and experience of the pharmaceutical and chemical industries.
More than four Supervisory Board members also have executive
experience in companies that operate specifically in the pharma-
ceutical and/or chemical sectors.
Management experience
The Supervisory Board shall have at least three members who
have experience in managing or supervising a medium or large-
sized company.
The Supervisory Board has more than three members who have
the corresponding experience. This includes both Supervisory
Board members who were or still are management board members
or directors in such companies, as well as Supervisory Board
members who have gained experience in supervisory bodies of
German and/or foreign companies of this size.