Board of Management and Supervisory Board

Composition and mode of operation of the Board of Management and the Supervisory Board (See graphic D.01)

D.01 Governance Structure

Daimler AG is obliged by the German Stock Corporation Act (AktG) to apply a dual management system featuring strict personal and functional separation between the Board of Management and the Supervisory Board (two-tier board). Accordingly, the Board of Management manages the company while the Supervisory Board monitors and advises the Board of Management. No person may be a member of the two boards at the same time.

Board of Management

In accordance with the Articles of Incorporation of Daimler AG, the Board of Management has at least two members. The precise number of Board of Management members is determined by the Supervisory Board. The Board of Management had eight members on December 31, 2015. In accordance with the German law requiring women and men to be equally represented in executive positions, the Supervisory Board has defined a target for the proportion of women on the Board of Management as well as a deadline when this target must be met. 

Information on the areas of responsibility and curricula vitae of the Board of Management members are posted on our website at daimler.com/dai/bom. The members of the Board of Management and their areas of responsibility are also listed in the chapter To Our Shareholders of this Annual Report. No member of the Board of Management is a member of more than three supervisory boards of listed companies outside the Daimler Group or of similar boards or committees with comparable requirements of companies outside the Daimler Group. The Board of Management manages Daimler AG and the Daimler Group. With the consent of the Supervisory Board, the Board of Management determines the Group’s strategic focus, defines the corporate goals and makes decisions concerning operational planning issues.

The members of the Board of Management must represent the interests of the Company and share responsibility for managing the Group’s entire business. Irrespective of this overall responsibility, the individual members of the Board of Management manage their allocated areas on their own responsibility and within the framework of the instructions approved by the entire Board of Management. Affairs of fundamental or great importance that affect the areas of responsibility of several Board of Management members are dealt with by the Board as a whole, which must approve all related decisions. The Chairman of the Board of Management coordinates the work of the Board of Management.

The Board of Management prepares the Group’s interim reports, the annual company financial statements of Daimler AG, the annual consolidated financial statements, and the combined management report of the Company and the Group. It ensures that the provisions of applicable law, official regulations and the Group’s internal guidelines are adhered to, and works to make sure that the companies of the Group comply with those rules and regulations. The tasks of the Board of Management also include establishing and monitoring an appropriate and efficient risk management system.

For certain types of transaction of fundamental importance as defined by the Supervisory Board, the Board of Management requires the consent of the Supervisory Board. At regular intervals, the Board of Management reports to the Supervisory Board on corporate strategy, corporate planning, profitability, business development and the situation of the Group, as well as on the internal control system, the risk management system and compliance. The Supervisory Board has specified the information and reporting duties of the Board of Management.

The Board of Management has also given itself a set of rules of procedure, which can be viewed on our website at daimler.com/dai/rop. Those rules describe, for example, the procedure to be observed when passing resolutions and ways to avoid conflicts of interest.

The Board of Management has not formed any committees.

The Board of Management has committed to diversity management as a strategic factor of success that safeguards the future of the company, with the signed statement: “Promote diversity. Create links. Shape the future.”

The targeted advancement of women had been a key area of action of Daimler’s diversity management even before Germany’s law on the equal participation of women and men in executive positions came into force. Among other things, the Company promotes this goal with flexible working-time arrangements, company-owned daycare centers and special mentoring programs. To meet the new legal requirements, the Board of Management has defined targets and deadlines for the proportion of women at the two management levels below the Board of Management. The details are described in a separate section. Independently of the legal requirements, Daimler continues to affirm the goal it already set itself in 2006 of increasing the proportion of women in executive positions at the Group to 20 % by 2020. At the end of 2015, this proportion amounted to about 15 % (2014: 14.1 %).

When making appointments to executive positions at the Group, the Board of Management also gives due consideration to age and internationality. The management of teams with a varied makeup requires a conscious approach to the teams’ inherent diversity. A key element of our approach here is therefore to make executives more aware of the importance of diversity. For this purpose, we also use mentoring programs, communication activities, conferences, workshops and e-learning tools. By continually addressing diversity management issues, we help to further develop our corporate culture.

Supervisory Board

In accordance with the German Codetermination Act (MitbestG), the Supervisory Board of Daimler AG comprises 20 members. Half of them are elected by the shareholders at the Annual Shareholders’ 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.

Information on the individual members of the Supervisory Board is available on the Internet at daimler.com/dai/supervisoryboard and in the chapter The Supervisory Board of this Annual Report.

The Supervisory Board is to be composed so that its members together dispose of the knowledge, skills and specialist experience that are required for the proper execution of their tasks. Proposals by the Supervisory Board of candidates for election by the Annual Shareholders’ Meeting as members representing the shareholders of Daimler AG, for which the Nomination Committee makes recommendations, take into consideration not only the requirements of applicable law, the Articles of Incorporation and the German Corporate Governance Code, but also a list of criteria of qualifications and experience. They include, for example, market knowledge in the regions particularly important to Daimler, expertise in the management of technologies and experience in certain management functions. Other important conditions for productive work in the Supervisory Board and for being able to properly supervise and advise the Board of Management are the members’ personality and integrity, as well as individual diversity with regard to age, internationality, gender and other personal characteristics.

In addition to Germany’s new legal requirements for equal participation by women and men in executive positions, the Supervisory Board has also taken the recommendations of the German Corporate Governance Code into account with regard to the Board’s composition and has therefore set itself the following goals:

  • In order to ensure sufficient internationality, for example through many years of international experience, the Supervisory Board has set a target of a proportion of at least 30 % of international members representing the shareholders, and the resulting proportion of the entire Supervisory Board of at least 15 %. Irrespective of the many years of international experience of a great majority of the members representing the shareholders, this target is currently significantly overachieved due to the international origins of Dr. Paul Achleitner, Sari Baldauf, Petraea Heynike and Andrea Jung on the shareholders’ side (40 %) and Valter Sanches on the employees’ side, resulting in an international proportion of 25 % for the entire Supervisory Board.
  • At least half of the members of the Supervisory Board representing the shareholders should have
    • neither an advisory nor a board function for a customer, supplier, creditor, or other third party nor
    • a business or personal relationship to the Company or its boards 
    whose specific details could cause a conflict of interests. During the reporting period, there were no instances of an actual or a potential conflict of interest that might have affected a shareholder representative on the Supervisory Board.
  • In order to ensure the independent advice and supervision of the Board of Management by the Supervisory Board, the rules of procedure of the Supervisory Board already stipulate that more than half of the members of the Supervisory Board representing the shareholders are to be independent as defined by the German Corporate Governance Code and that no person may be a member of the Supervisory Board who is a member of a board of, or advises, a significant competitor of the Daimler Group. At present, there are no indications for any of the members of the Supervisory Board representing the shareholders that relevant relationships or circumstances exist that would compromise their independence. In particular, this is not the case with their relationships or circumstances vis-a-vis the Company, the Board of Management or other Supervisory Board members. No member of the Supervisory Board is a member of a board of, or advises, a significant competitor.
  • The rules of procedure of the Supervisory Board stipulate that candidates for election as members of the Supervisory Board who are to hold the position for a full period of office should generally not be over the age of 72 at the time of their election. In specifying this age limit, the Supervisory Board has intentionally refrained from stipulating a strict upper age limit and instead decided in favor of a flexible general limit that ensures each individual case is appropriately assessed, the range of potential Supervisory Board candidates is sufficiently broad and members can be reelected. After careful consideration, the Supervisory Board took advantage of its decision-making freedom to nominate Dr. Manfred Bischoff to be elected for another full term to the Supervisory Board at the Annual Shareholders’ Meeting in 2016. This decision was based on a number of factors, including the very positive assessment of Dr. Bischoff’s dedicated service by the other members of the Supervisory Board as well as his successful and constructively critical cooperation with the Board of Management and the fact that his nomination would signalize stability and continuity at Daimler. In addition, the nomination aims to maintain the different areas of expertise of the Supervisory Board’s members and ensure that the body has a balanced age structure. None of the other members of the Supervisory Board exceeded the applicable general age limit at the time of his or her election. This applies to Petraea Heynike as well, who is also nominated for reelection to the Supervisory Board for a full term at the Annual Shareholders’ Meeting in 2016.
  • In accordance with the new recommendation of the German Corporate Governance Code as revised on May 5, 2015, the Supervisory Board decided on December 9, 2015, to impose a general limit on the length of time a person can be a member of the Board. As a result, only candidates who have not yet been members of the Supervisory Board for three full terms of office at the time of their election should generally be nominated for membership of the Supervisory Board for a full term of office. This general length of service on the Supervisory Board has not been exceeded by Dr. Manfred Bischoff and Petraea Heynike, are nominated for reelection at the Annual Shareholders’ Meeting in 2016.

In accordance with another new recommendation of the Code as revised on May 5, 2015, the Supervisory Board made sure when it nominated Dr. Manfred Bischoff and Petraea Heynike for reelection that they will be able to continue to devote the time required as known to them from their previous mandate in the Supervisory Board.

The Chairman of the Supervisory Board, Dr. Manfred Bischoff, is a former member of the Board of Management. After stepping down from the Board of Management in December 2003, he was first elected to the Supervisory Board after a cooling-off period of more than two years in April 2006, and was first elected as the Chairman of the Supervisory Board after a cooling-off period of more than three years in April 2007. One member of the Supervisory Board is a member of the board of management of a listed company. Excluding his membership of that company’s board of management, he is a member of no more than three supervisory boards of listed companies or similar company boards or committees with comparable requirements, including his membership of the Supervisory Board of Daimler AG. No member of the Supervisory Board is a member of a board of, or advises, a significant competitor. The members of the Supervisory Board attend on their own responsibility such courses of training and further training as might be necessary for the performance of their tasks and are supported by the Company in doing so. Daimler AG offers courses of further training to the members of its Supervisory Board as required. Possible contents of such courses include the subjects technological and economic developments, accounting and financial reporting, internal control and risk management systems, compliance, corporate governance, new legislation and board of management remuneration.

The Supervisory Board monitors and advises the Board of Management with regard to its management of the Company. At regular intervals, the Board of Management reports to the Supervisory Board on corporate strategy, corporate planning, profitability, business development and the situation of the Group, as well as on the internal control system, the risk management system and compliance. The Supervisory Board has retained the right of approval for transactions of fundamental importance. Furthermore, the Supervisory Board has specified the information and reporting duties of the Board of Management to the Supervisory Board, to the Audit Committee and — between the meetings of the Supervisory Board — to the Chairman of the Supervisory Board.

The Supervisory Board’s duties include appointing and recalling the members of the Board of Management. Initial appointments are usually made for a period of three years. In connection with the composition of the Board of Management, the Supervisory Board pays attention not only to the members’ appropriate specialist qualifications, with due consideration of the Group’s international operations, but also to diversity. This applies in particular to age, nationality and other personal characteristics.

In accordance with German law requiring women and men to be equally represented in executive positions, the Supervisory Board has defined a target for the proportion of women in the Board of Management as well as a deadline when this target must be met. The details are described in a separate section.

The Supervisory Board also decides on the system of remuneration for the Board of Management, reviews it regularly and determines the individual remuneration of each member of the Board of Management with consideration of the ratio of Board of Management remuneration to the remuneration of the senior executives and the workforce as a whole, also with regard to development over time. For this comparison, the Supervisory Board has defined the senior executives by applying Daimler’s internal terminology for the hierarchical levels and has defined the workforce of Daimler AG in Germany as the relevant workforce. For the individual Board of Management remuneration in total and with regard to its variable components, the Supervisory Board has set upper limits taking effect as of January 1, 2014. Further information on Board of Management remuneration can be found in the Remuneration Report of this Annual Report.

The Supervisory Board reviews the annual company financial statements, the annual consolidated financial statements and the combined management report of the Company and the Group, as well as the proposal for the appropriation of distributable profits. Following discussions with the external auditors and taking into consideration the audit reports of the external auditors and the results of the review by the Audit Committee, the Supervisory Board states whether, after the final results of its own review, any objections are to be raised. If that is not the case, the Supervisory Board approves the financial statements and the combined management report. Upon being approved, the annual company financial statements are adopted. The Supervisory Board reports to the Annual Shareholders’ Meeting on the results of its own review and on the manner and scope of its supervision of the Board of Management during the previous financial year. The Report of the Supervisory Board for the year 2015 is available in the Report of the Supervisory Board of this Annual Report and on the Internet at daimler.com/dai/supervisoryboard.

The Supervisory Board has given itself a set of rules of procedure, which regulate not only its duties and responsibilities and the personal requirements placed upon its members, but above all the convening and preparation of its meetings and the procedure of passing resolutions. The rules of procedure of the Supervisory Board can be viewed on our website at daimler.com/dai/rop.

Meetings of the Supervisory Board are regularly prepared in separate discussions of the members representing the employees and of the members representing the shareholders with the members of the Board of Management. Each Supervisory Board meeting includes an executive session for discussions of the Supervisory Board in the absence of the members of the Board of Management. The Supervisory Board members can also take part in the meetings by means of conference calls or video conferences. However, this is generally not the case.

Composition and mode of operation of the committees of the Supervisory Board

The Supervisory Board has formed four committees, which perform to the extent legally permissible the tasks assigned to them in the name of and on behalf of the entire Supervisory Board: the Presidential Committee, the Nomination Committee, the Audit Committee and the Mediation Committee. The committee chairpersons report to the entire Supervisory Board on the committees’ work at the latest in the meeting of the Supervisory Board following each committee meeting. The Supervisory Board has issued rules of procedure for each of its committees. These rules of procedure can be viewed on our website at daimler.com/dai/rop. Information on the current composition of these committees can be viewed at daimler.com/dai/sbc and is also available on The Supervisory Board of this Annual Report.

Presidential Committee

The Presidential Committee is composed of the Chairman of the Supervisory Board, his Deputy and two other members, who are elected by a majority of the votes cast on the relevant resolution of the Supervisory Board.

The Presidential Committee makes recommendations to the Supervisory Board on the appointment of members of the Board of Management, whereby it especially takes into account the requirements of the position to be filled as well as the Supervisory Board’s target for the proportion of women in the Board of Management. It submits proposals to the Supervisory Board on the design of the remuneration system for the Board of Management and on the appropriate total individual remuneration of its members. In this context, it follows the relevant recommendations of the German Corporate Governance Code. The Presidential Committee is also responsible for the Board of Management members’ contractual affairs. In addition, it decides on the granting of approval for sideline activities of the members of the Board of Management, reports to the Supervisory Board regularly and without delay on consents it has issued and once a year submits to the Supervisory Board for its approval a complete list of the sideline activities of each member of the Board of Management.

In addition, the Presidential Committee decides on questions of corporate governance, on which it also makes recommendations to the Supervisory Board. It supports and advises the Chairman of the Supervisory Board and his Deputy, and prepares the meetings of the Supervisory Board within the limits of its responsibilities.

Nomination Committee

The Nomination Committee is composed of at least three members, who are elected by a majority of the votes cast by the members of the Supervisory Board representing the shareholders. It is the only Supervisory Board Committee that consists solely of members representing the shareholders, and makes recommendations to the Supervisory Board concerning persons to be proposed for election as members of the Supervisory Board representing the shareholders at the Annual Shareholders’ Meeting. In doing so, the Nomination Committee takes into consideration the requirements of the new German law regulating equal participation of women and men in executive positions, the German Corporate Governance Code and the rules of procedure of the Supervisory Board, as well as the specific goals that the Supervisory Board has set for its own composition. Furthermore, it defines the requirements for each specific position to be occupied.

Audit Committee

The Audit Committee is composed of four members, who are elected by a majority of the votes cast on the relevant resolution of the Supervisory Board. The Chairman of the Supervisory Board is not simultaneously the Chairman of the Audit Committee.

Both the Chairman of the Audit Committee, Dr. Clemens Börsig, and the other shareholder representative on the Audit Committee, Joe Kaeser, fulfill the criteria for independence and have expertise in the field of financial reporting, as well as special knowledge and experience in the application of accounting principles and methods of internal control.

The Audit Committee deals with the supervision of the accounting process and the annual external audit. At least once a year, it discusses with the Board of Management the effectiveness and functionality of the risk management system, the internal control and auditing system and the compliance management system. It regularly receives reports on the work of the Internal Auditing department and the Compliance Organization. At least four times a year, the Audit Committee receives a report from the Business Practices Office on complaints and information about any breaches of regulations or guidelines by high-level executives. It regularly receives information about the handling of these complaints and notifications.

The Audit Committee discusses with the Board of Management the interim reports on the first quarter, first half and first nine months of the year before they are published. On the basis of the report of the external auditors, the Audit Committee reviews the annual company financial statements and the annual consolidated financial statements, as well as the combined management report of the Company and the Group, and discusses them with the external auditors. Since 2014, the responsible auditor at KPMG AG Wirtschaftsprüfungsgesellschaft, the company of auditors commissioned to carry out the external audit 2015, has been Dr. Axel Thümler. The Audit Committee makes a proposal to the Supervisory Board on the adoption of the annual company financial statements of Daimler AG, on the approval of the annual consolidated financial statements and on the appropriation of profits. The Committee also makes recommendations for the proposal on the election of external auditors, assesses those auditors’ suitability and independence, and, after the external auditors are elected by the Annual Shareholders’ Meeting, it engages them to conduct the annual audit of the company and consolidated financial statements and to review the interim reports, negotiates an audit fee and determines the focus of the annual audit. The external auditors report to the Audit Committee on all accounting matters that might be regarded as critical and on any material weaknesses of the internal control and risk management system with regard to accounting that might be discovered during the audit.

Finally, the Audit Committee approves services that are not directly related to the annual audit and which are provided by the firm of external auditors or its affiliates to Daimler AG or to companies of the Daimler Group.

Mediation Committee

The Mediation Committee is composed of the Chairman of the Supervisory Board and his Deputy, as well as one member of the Supervisory Board representing the employees and one member of the Supervisory Board representing the shareholders, each elected with a majority of the votes cast. It is formed solely to perform the functions laid down in Section 31 Subsection 3 of the German Codetermination Act (MitbestG). Accordingly, the Mediation Committee has the task of making proposals on the appointment of members of the Board of Management if in the first vote the majority required for the appointment of a Board of Management member of two thirds of the members of the Supervisory Board is not achieved. As in previous years, the Mediation Committee did not have to take any action in financial year 2015.

Germany’s law on the equal participation of women and men in executive positions

Germany’s law on the equal participation of women and men in executive positions went into effect on May 1, 2015. According to this law, the supervisory boards of listed companies or companies subject to Germany’s system of codetermination have to set a target for the proportion of women in the board of management. The board of management of such a company has to set a target for the proportion of women at the two management levels below that of the board of management. If the proportions of women at the time when these targets are set by the board of management and the supervisory board are below 30 %, the targets may not be lower than the proportions already reached. At the same time that the targets are set, the boards have to set periods for their achievement, which may not be longer than five years. In the first step, targets had to be set by no later than September 30, 2015, and deadlines fixed for no later than June 30, 2017.

To meet these legal requirements, the Supervisory Board of Daimler AG passed a resolution on April 28, 2015 that the target figure for the proportion of women in the Board of Management of Daimler AG would be 12.5 % (the same as the status quo at the time when the resolution was passed), while the deadline would be December 31, 2016. Dr. Christine Hohmann-Dennhardt stepped down from the Board of Management at the end of December 31, 2015. She was succeeded on January 1, 2016, by Renata Jungo Brüngger. As a result, women continue to account for 12.5 % of the Board of Management members.

On June 23, 2015, the Board of Management passed a resolution stipulating a target of 6.5 % women for the first management level below the Board of Management of Daimler AG (the actual proportion was 5.3 % at the time of the resolution) and of 10.0 % for the second management level below the Board of Management (the actual proportion was 9.9 % at the time of the resolution). The Board of Management also set December 31, 2016 as the deadline for both of these targets.

For companies such as Daimler AG that have supervisory boards in which shareholders and employees are equally represented, the new law on the equal participation of women and men in executive positions stipulates a proportion of women of at least 30 % when vacant supervisory board positions are filled, beginning in 2016. This requirement has to be fulfilled by the Supervisory Board as a whole. If the side of the Supervisory Board representing the shareholders or the side representing the employees objects to the Chairman of the Supervisory Board about the application of the ratio to the entire Supervisory Board, the minimum ratio is to apply separately to the shareholders’ side and to the employees’ side for that election.

On December 31, 2015, 30 % of the shareholder representatives in the Supervisory Board of Daimler AG were women (Sari Baldauf, Andrea Jung and Petraea Heynike). On that date, 20 % of the employee representatives on the Supervisory Board were women (Dr. Sabine Maaßen and Elke Tönjes-Werner). In its meeting on October 1, 2015, the Supervisory Board considered its nominations for the election at the Annual Shareholders’ Meeting 2016 and came to the conclusion that the shareholders and employees should achieve the legally required share of women board members separately. This step became necessary because the shareholder representatives declared that they object to the Supervisory Board’s combined compliance with the legally required gender ratio. Thereafter, the Supervisory Board decided to nominate Dr. Manfred Bischoff and Petraea Heynike for reelection to the Supervisory Board during the Annual Shareholders’ Meeting 2016. If they are reelected, the shareholder side will continue to fulfill the legally required gender ratio. The next election of employee representatives to the Supervisory Board will take place in 2018.

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