Daimlerchrysler Annual Report 2003

Corporate Governance at DaimlerChrysler
General conditions. DaimlerChrysler is a stock corporation with
its domicile in Germany. The legal framework for corporate
governance therefore derives from German Law, particularly the
Stock Corporation Law, the Codetermination Law, and legislation
concerning capital markets, and also from the Articles of
Incorporation of DaimlerChrysler AG.
As our shares are listed on stock exchanges outside Germany,
and in particular on the New York Stock Exchange, we also have to
adhere to those countries’ capital market legislation and the listing
regulations applicable to those stock exchanges. The Sarbanes-
Oxley Act of the United States of America has a special impact in
this respect. For this reason, we are in favor of the convergence of
international stock exchange regulations.
Shareholders and the Annual Meeting. The company’s
shareholders exercise their rights and cast their votes at the
Annual Meeting. Each share in DaimlerChrysler AG entitles its
owner to one vote. There are no shares with multiple voting rights,
no preferred or privileged stock, and no maximum voting rights.
Various important decisions can only be taken by the Annual
Meeting. These include the appropriation of distributable profits,
the ratification of the members of the Board of Management and
the Supervisory Board, the election of the independent auditors
and the election of members of the Supervisory Board. The Annual
Meeting also takes decisions on amendments to the Articles of
Incorporation, capital measures, and consent to certain intercompany
agreements.
The influence of the Annual Meeting on the management of the
company is limited by law, however. The Annual Meeting can only
take management decisions if it is requested to do so by the Board
of Management.
Dual management system. DaimlerChrysler AG is obliged by the
German Corporation Law to apply a dual management system.
With this system, the company’s Board of Management is
responsible for the executive functions, while the Supervisory
Board appoints, monitors and advises the Board of Management.
The members of the Board of Management bear shared
responsibility for managing the company, while the work of the
Board of Management is coordinated by the Chairman of the Board
of Management.
Corporate Governance | Supervisory Board | Report of the Supervisory Board | Corporate Governance at DaimlerChrysler
The Supervisory Board is involved in decisions of fundamental
importance, and the work of the Supervisory Board is coordinated
by the Chairman of the Supervisory Board. Half of the members of
the Supervisory Board are elected by the shareholders at the
Annual Meeting. The other half comprises members who are
elected by the company’s German employees. The members
representing the shareholders and the members representing the
employees are equally obliged by law to act in the company’s best
interests.
Supervisory Board. In accordance with the German
Codetermination Law, the Supervisory Board of DaimlerChrysler
AG comprises twenty members. The Supervisory Board has formed
three committees: the Presidential, the Audit and the Mediation
Committee.
The Presidential Committee has particular responsibility for the
contractual affairs of the Board of Management, and specifically
negotiates and determines on behalf of the company contracts
with them. It also 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 and risk
management. It discusses the interim and the year-end financial
statements, individual and consolidated, of DaimlerChrysler AG
and the DaimlerChrysler Group. The Audit Committee makes
recommendations concerning the selection of external auditors,
assesses such auditors’ suitability and independence, and, after a
company of auditors is elected by the Annual Meeting,
commissions it to conduct the annual audit, negotiates an audit fee
and determines the main focus of this audit. The Audit Committee
receives reports from the external auditors on any accounting
matters that might be regarded as critical and on any differences
of opinion with the Board of Management. In addition, it makes
recommendations to the Supervisory Board, for example,
concerning the use of unappropriate profit and capital measures.
Finally, the Audit Committee approves services provided by the
external auditors or affiliated companies to DaimlerChrysler AG or
to companies of the DaimlerChrysler Group which are not directly
related to the annual audit.
The Mediation Committee is formed solely to perform the
functions laid down in Section 31, Subsection 3 of the German
Codetermination Law. According to this stipulation, it has the task
of making proposals for the appointment of members of the Board
of Management if a previously proposed appointment did not
obtain the legally required majority of votes.