Merck 2014 Annual Report Download - page 170

165CORPORATE GOVERNANCE → Objectives of the Supervisory Board with respect to its composition
Family company
The Supervisory Board shall have at least one member who has
experience in managing medium- or large-sized family-owned
companies.
The Supervisory Board currently has multiple members who
have the appropriate management experience in family-owned
companies of this size.
Internationality
The Supervisory Board shall have at least three members with
business experience in the main sales markets of Merck KGaA,
Darmstadt, Germany. Currently, the main sales markets of Merck
KGaA, Darmstadt, Germany, are Europe, North and Latin America,
and Asia-Pacific.
The present composition of the Supervisory Board satisfies
this objective. More than three Supervisory Board members have
entrepreneurial experience in Europe, covering a wide range of
countries. More than three Supervisory Board members have ex-
perience in management positions in companies that operate
globally.
Women on the Supervisory Board
Six women are currently members of the Supervisory Board of
Merck KGaA, Darmstadt, Germany. This corresponds to 37.5 % of
the Supervisory Board. When nominating candidates for election
to the Supervisory Board or making proposals for delegation, the
Supervisory Board shall examine whether the percentage of wom-
en can be increased by suitable candidates.
The Supervisory Board currently consists of 37.5 % women,
which it considers a satisfactory percentage. This is based on both
the percentage of women in management positions at the company,
as well as the fact that the supervisory boards of other companies
have a comparable percentage of women.
Number of independent members/no material conflicts of
interest
The Supervisory Board is to have an adequate number of indepen-
dent members. Assuming that the status of being an employee
representative per se does not justify doubts with respect to the
independence criteria within the meaning of section5.4.2 of the
German Corporate Governance Code, normally all employee rep-
resentatives should be independent within the meaning of the
Code. In any case, at least four of the shareholder representatives
on the Supervisory Board should be independent. According to the
Articles of Association of Merck KGaA, Darmstadt, Germany, six
members representing the shareholders are to be elected by the
General Meeting and two members are to be delegated. Taking this
into account, the Supervisory Board considers four shareholder
representatives to be an appropriate number of independent mem-
bers. In the Supervisory Board’s estimation, the objectives concern-
ing independent members are currently met. In particular, the
Supervisory Board does not believe that membership of the Board
of Partners of E. Merck KG, Darmstadt, Germany, conflicts with
independence. The Board of Partners exists complementary to the
competencies and the activities of the Supervisory Board. It is not
to be expected that this will lead to material and not merely tem-
porary conflicts of interest. It should also be taken into account
that due to its substantial capital investment and unlimited per-
sonal liability, E. Merck KG, Darmstadt, Germany, has a
strong
interest in the businesses of
Merck KGaA, Darmstadt, Germany,
operating effi ciently and in com pliance with procedures, counter-
acting from the outset conflicts of interest between E. Merck KG,
Darmstadt, Germany, and Merck KGaA, Darmstadt, Germany, an
d
thus also corresponding conflicts of interest between the mem-
bers of the
respective corporate bodies.
Moreover, no one shall be proposed for election to the Super-
visory Board who simultaneously serves on a body of or advises a
major competitor of the company, or owing to another function,
e.g. advisor to major contract partners of the company, could po-
tentially become involved in a conflict of interest. No Supervisory
Board member serves on a body of or advises a major competitor,
or provides consultancy services thereto. No Supervisory Board
member performs a function that could lead to a lasting conflict
of interest.
No age limit
An age limit for Supervisory Board members is not specified since
age is not a criterion for qualifications and expertise. Moreover,
we do not wish to forego the many years of experience of Super-
visory Board members.
The achievement of the aforementioned objectives shall be
pursued initially until 2015, taking into account applicable law
within the scope of elections and reelections, delegations as well
as court appointments of replacement members if these become
necessary. All Supervisory Board members will correspondingly
influence those eligible to elect or delegate. Taking into consider-
ation the aforementioned criteria and in accordance with its duties
under German stock corporation law, the Supervisory Board pro-
poses to the General Meeting the candidates it believes to be best
suited in each case and will continue to do so in the future.
Every year, the Supervisory Board will provide information in
the Annual Report on the status of implementing its objectives.