Mercedes 2006 Annual Report Download - page 129

Corporate Governance | Corporate Governance Report | 113
Supervisory Board. In accordance with the German Codetermi-
nation Act, the Supervisory Board of DaimlerChrysler AG com-
prises 20 members. Half of them are elected by the shareholders
at the Annual Meeting. The other half comprises members who
are elected by the company’s employees who work in Germany.
The members representing the shareholders and the members
representing the employees are equally obliged by law to act in
the company’s best interests. According to a decision by the
Supervisory Board, more than half of the members of the Super-
visory Board representing the shareholders are to be indepen-
dent in order to ensure that the Board of Management is advised
and monitored independently. The Supervisory Board of Daimler-
Chrysler AG fulfills this criterion in its present composition.
The Supervisory Board monitors and advises the Board of
Management in its management of the company. Its duties also
include appointing and recalling members of the Board of Man-
agement, as well as deciding on their compensation, whereby the
details of the compensation of the Board of Management’s
members are delegated to the Presidential Committee. However,
the Supervisory Board reviews and advises on the structure
of the system of compensation whenever this is necessary. It also
reviews the individual and consolidated annual financial
statements and reports to the Annual Meeting on the results of
its review.
The work of the Supervisory Board is coordinated by its chairman.
The Supervisory Board has formed three committees:
the Presidential Committee, the Audit Committee and the
Mediation Committee.
The Presidential Committee has particular responsibility for the
contractual affairs of the members of the Board of Management
and for determining their compensation. It advises and decides on
questions of corporate governance, on which it also makes
recommendations to the Supervisory Board. In addition, the
Presidential Committee supports and advises the Chairman of
the Supervisory Board and his deputy, and prepares the meetings
of the Supervisory Board.
The Audit Committee deals with questions of accounting, risk
management and the annual audit. It discusses the effectiveness
of the internal control systems and the risk-management system,
and regularly receives reports on the work of the Corporate Audit
department. In addition, the Audit Committee has established
procedures for dealing with complaints about accounting and the
internal control systems, and receives regular reports about
such complaints and how they are dealt with. It also discusses the
interim financial statements and reviews the annual financial
statements, individual and consolidated, of DaimlerChrysler AG.
The Audit Committee is informed by the Board of Management
about the Group’s financial disclosure and discusses this matter.
It makes recommendations concerning the selection of inde-
pendent auditors, assess such auditors’ suitability and indepen-
dence, and, after the independent auditors are elected by the
Annual Meeting, commissions them to conduct the annual audit
of the individual and consolidated financial statements, negoti-
ates an audit fee and determines the focuses of that audit. The
Audit Committee receives reports from the independent audi-
tors on any accounting matters that might be regarded as critical
and on any differences of opinion with the Board of Manage-
ment. In addition, it makes recommendations to the Supervisory
Board, concerning for example the appropriation of distrib-
utable profits and capital measures. Finally, the Audit Commit-
tee approves services provided to DaimlerChrysler AG or com-
panies of the DaimlerChrysler Group by the company of indepen-
dent auditors or its affiliates that are not directly related to the
annual audit.
The Supervisory Board is convinced of the independence of
the members of Audit Committee representing the shareholders.
The Chairman of the Audit Committee, Mr. Bernhard Walter, has
special expertise and experience in the application of accounting
principles and internal monitoring systems. Therefore, the
Supervisory Board has appointed Mr. Walter as Financial Expert.