The Supervisory Board again properly executed its duties in 2015 in accordance with the law as well as the company’s Articles of Association and rules of procedure. In particular, the Supervisory Board monitored the work of the Executive Board diligently and regularly.
The cooperation with the Executive Board was characterized by intensive, trustworthy exchange. During fiscal 2015, the Executive Board provided the Supervisory Board with regular written and verbal reports on the business development of Merck KGaA and the Merck Group. In particular, the Supervisory Board was informed about the market and sales situation of the company against the background of macroeconomic development, the financial position of the company and its subsidiaries, along with their earnings development, as well as corporate planning. Within the scope of quarterly reporting, the sales and operating results were presented for the Merck Group as a whole, and broken down by business sector. Aside from the Supervisory Board meetings, the Chairman of the Supervisory Board also maintained and continues to maintain a regular exchange of information with the Chairman of the Executive Board.
Four Supervisory Board meetings were held in fiscal 2015. At these meetings, the Supervisory Board discussed the reports of the Executive Board in detail and discussed company developments and strategic issues together with the Executive Board.
At the meeting held on February 27, 2015, the Executive Board first reported on business performance during 2014. In addition, the Supervisory Board intensively addressed the annual financial statements and consolidated financial statements for 2014 and the corresponding management reports. The auditor explained the audit report. The Executive Board reported on the financial statements. Furthermore, the Supervisory Board resolved upon the Statement of Compliance with the German Corporate Governance Code as well as the Statement on Corporate Governance, which simultaneously includes the joint report on Corporate Governance of the Executive Board and Supervisory Board. The Supervisory Board also approved the proposals to be made to the General Meeting. The Executive Board presented the plans for fiscal 2015. Further topics were the report of Group Internal Auditing and the status of the Sigma-Aldrich acquisition.
The meeting held on May 13, 2015 focused on current business developments in the first quarter of 2015. The report of the Research and Development Committee Life Science / Performance Materials of the Board of Partners of E. Merck KG was a further focus of the meeting. The Supervisory Board also dealt with the report of the Group Compliance Officer, the report of the Group Data Privacy Officer and a report on ERP strategy.
At its meeting on July 29, 2015, the Supervisory Board focused intensively on the report of the Executive Board on business performance in the second quarter of 2015. In addition, KPMG explained the half-year financial report. Risk management within the company was a further topic. The Head of Risk Management presented the status report for the first half of 2015. No risks that threaten the continued existence of the company were identified.
At its fourth meeting on November 10, 2015, the Supervisory Board discussed the results of the efficiency examination that took place in 2015. Furthermore, the Supervisory Board dealt with the report of the Executive Board on the third quarter of 2015. Additional topics of focus were the 2015 status reports of Group Internal Auditing and on compliance and data protection as well as the report of the Research and Development Committee Healthcare. Furthermore, the Group Executive Conference and Merck’s current strategic direction were reported on and discussed.
In addition, on October 13, 2015, the Supervisory Board members were informed by telephone of Mr. Oschmann’s appointment as successor to Mr. Kley as Chairman of the Executive Board on April 30, 2016 as well as the launch of the new Merck branding.
The annual financial statements of Merck KGaA, the consolidated financial statements of the Merck Group, and the combined management report for Merck KGaA and the Merck Group, including the accounts, were audited by KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin. The auditors issued an unqualified audit opinion on the annual financial statements of Merck KGaA in accordance with German Auditing Standards. For the consolidated financial statements prepared in accordance with International Financial Reporting Standards, as well as the combined management report, the auditors issued the unqualified auditor’s report reproduced in the Annual Report of the Merck Group. In addition, the auditor audited the calculation of Merck KGaA’s participation in the profits of E. Merck KG in accordance with Art. 27 (2) of the Articles of Association. The annual financial statements of Merck KGaA, the consolidated financial statements of the Merck Group, the combined management report for Merck KGaA and the Merck Group, and the proposal by the Executive Board for the appropriation of the net retained profit were presented and distributed to the Supervisory Board, together with the auditor’s reports.
In accordance with Art. 14 (2) of the Articles of Association, the Supervisory Board also examined the annual financial statements of Merck KGaA, the proposal for the appropriation of net retained profit and the auditor’s report presented in accordance with Article 27 (2) of the Articles of Association. It also examined the consolidated financial statements of the Merck Group as well as the combined management report for Merck KGaA and the Merck Group, and took note of the auditor’s report of KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin.
The discussion of the relevant agenda item at the Supervisory Board’s meeting on March 4, 2016 to approve the financial statements was also attended by the auditors who sign the audit opinion on the annual financial statements of Merck KGaA and the consolidated financial statements of the Merck Group. These auditors furthermore reported on their audit at this meeting.
The Supervisory Board took note of and approved the results of the audit. On completion of its examination, the Supervisory Board raised no objections and thus approved the annual financial statements for Merck KGaA, the consolidated financial statements of the Merck Group and the combined management report of Merck KGaA and the Merck Group prepared by the Executive Board, as well as the report presented by the auditor in accordance with Article 27 (2) of the Articles of Association. Following its own examination of the situation, the Supervisory Board gave its consent to the proposal of the Executive Board for the appropriation of net retained profit.
Corporate governance is a topic of high priority for the Supervisory Board. In its own estimation, the Supervisory Board has an adequate number of independent members. There were no conflicts of interest, as defined by the German Corporate Governance Code, involving Supervisory Board members during 2015. After addressing corporate governance topics in detail, the Executive Board and Supervisory Board resolved to adopt and issue the updated Statement of Compliance on February 18, 2016 (Executive Board) and on March 4, 2016 (Supervisory Board) and jointly issued it on March 4, 2016 in accordance with section 161 of the German Stock Corporation Act. The statement is permanently available on the website of Merck KGaA (www.merckgroup.com > Investors > Corporate Governance). More information about corporate governance at Merck KGaA, including the compensation of the Executive Board and Supervisory Board, is given in the Statement of Compliance of the Annual Report.
Apart from the Nomination Committee, the Supervisory Board of Merck KGaA currently has no further committees on account of the special features that apply to the Supervisory Board of a corporation with general partners (KGaA) under German company law and because a corresponding need for this has not emerged to date. The members of the Nomination Committee newly elected on November 11, 2014 did not convene in fiscal 2015. No report is given on the work of further committees.
With the exception of Edeltraud Glänzer, who was absent from the meeting on November 10, 2015, all the Supervisory Board members attended all the Supervisory Board meetings. There were no changes in the composition of the Supervisory Board in 2015.
Darmstadt, March 4, 2016
The Supervisory Board of Merck KGaA