The main principles applied in our corporate governance
German Corporate Governance Code
Beyond the legal requirements of German securities, codetermination and capital market legislation, Daimler AG has followed and continues to follow the recommendations of the German Corporate Covernance Code (“Code”) with the exceptions disclosed and justified in the declaration of compliance. Daimler AG has also followed and continues to follow the suggestions of the Code with just one exception: Deviating from the suggestion in Clause 2.3.3, which stipulates that companies should enable shareholders to view the Shareholders’ Meeting with modern communications media such as the Internet, the Shareholders’ Meeting is not transmitted in its entirety on the Internet, but only until the end of the report by the Board of Management, in order to protect the character of the Shareholders’ Meeting as a meeting attended by our shareholders in person. An additional factor is that continuing the broadcast after that point, in particular broadcasting comments made by individual shareholders, could impair the discussion between shareholders and management.
The principles guiding our conduct
Our business conduct is based on Group-wide standards that go beyond the requirements of relevant legislation and the German Corporate Governance Code. These standards are based on the four corporate values integrity, respect, passion and discipline. In order to achieve viable and thus sustainable business success on this basis, our goal is to ensure that our activities are in harmony with the environment and society. This is due to the fact that we as one of the world’s leading automakers also strive to be a leader in sustainability. We have defined the most important principles in our Integrity Code, which serves as a frame of reference for compliant and ethical conduct in everyday activities for all employees at Daimler AG and the Group.
Our Integrity Code is based on a shared understanding of values, which we developed together with our employees. The Code defines our principles of behavior in daily business. This applies to interpersonal conduct within the company as well as conduct toward customers and business partners. The key principles here include fairness and responsibility on the basis of compliance with applicable laws. In addition to general principles of behavior, the Code includes requirements and regulations concerning respect for and the protection of human rights and the handling of conflicts of interest. It also prohibits all forms of corruption. The Integrity Code applies to all employees at Daimler AG and the Group. The Integrity Code is available on the Internet at daimler.com/dai/caag.
We have also reached agreement on “Principles of Social Responsibility” with the World Employee Committee. These principles apply throughout Daimler AG and the entire Group. In the Principles of Social Responsibility, Daimler commits itself to the principles of the UN Global Compact and thus to internationally recognized human and workers’ rights, the proscription of child labor and forced labor, freedom of association and sustainable protection of the environment. Daimler also commits itself to guaranteeing equal opportunities and adhering to the principle of “equal pay for equal work.”
Expectations for our business partners
We also require our business partners to adhere to compliance stipulations because we regard our business partners’ integrity and behavior in conformity with regulations as an indispensable prerequisite for trusting cooperation. When selecting our direct business partners, we therefore pay close attention that they comply with the law, follow ethical principles and do the same themselves towards other partners in the supply chain. For the expectations we place on our business partners, see also daimler.com/sus/obr.
Risk management at the Group
Daimler has a risk management system commensurate with its size and position as a company with global operations (See Risk- and Opportunity management system). The risk management system is one component of the overall planning, controlling and reporting process. Its goal is to enable the company’s management to recognize significant risks at an early stage and to initiate appropriate countermeasures in a timely manner. At least once a year, the Audit Committee discusses the effectiveness and functionality of the risk management system with the Board of Management. The Chairman of the Audit Committee reports to the Supervisory Board on the committee’s work at the latest in the meeting of the Supervisory Board following each committee meeting. The Supervisory Board also deals with the risk management system on the occasion of the approval of the operational planning and the audit of the annual company and consolidated financial statements. In addition, the Board of Management regularly informs the Audit Committee and the Supervisory Board of the most important risks facing the company and the Group as a whole. The Chairman of the Supervisory Board has regular contacts between Supervisory Board meetings with the Board of Management, and in particular with the Chairman of the Board of Management, to discuss not only the Group’s strategy and business development but also the issue of risk management. The Internal Auditing department monitors adherence to the legal framework and to Group standards by means of targeted audits and initiates appropriate actions as required.
Accounting and the external audit
Daimler prepares its consolidated financial statements and interim financial reports in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union. The annual financial statements of Daimler AG are prepared in accordance with the accounting standards of the German Commercial Code (HGB). Daimler prepares both half-yearly and quarterly financial reports. The annual financial statements and consolidated financial statements of Daimler AG are audited by the external auditor; interim financial reports are also reviewed by an external auditor. The consolidated financial statements and the Group management report shall be made publicly accessible via the Company’s website within 90 days from the end of the reporting year; the interim financial reports shall be made publicly accessible in the same manner within 45 days from the end of the reporting period.
Based on the recommendation of the Audit Committee, the Supervisory Board submits a decision proposal to the Shareholders’ Meeting for the election of the external auditors for the annual financial statements, the external auditors for the consolidated financial statements and the auditors for the external auditors’ review of interim financial reports. At the Shareholders’ Meeting on March 29, 2017, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin was elected to conduct the audit of the annual financial statements and the consolidated financial statements, and the external auditors’ review of interim financial reports, for the financial year 2017, as well as the external auditors’ review of interim financial reports for the financial year 2018 in the period leading up to the Shareholders’ Meeting in 2018. Since 2014, the responsible auditor commissioned to carry out the external audit has been Dr. Axel Thümler. KPMG AG Wirtschaftsprüfungsgesellschaft has been conducting the audit of the annual financial statements and the annual consolidated financial statements of Daimler AG since the 1998 financial year.
Prior to issuing its recommendation to the Shareholders’ Meeting, the Audit Committee of the Supervisory Board obtained a declaration from the external auditor under consideration. The external auditor was requested to state whether any business, financial, personal or other relationships existed between the external auditor and its bodies and audit managers on the one hand, and the Company and the members of its bodies on the other, which could justify concerns regarding a conflict of interest. Further, the external auditor was asked to describe the nature of any such relationships that may have in fact existed. This statement also described the extent to which other services were performed for the Daimler Group in the previous year or had been contractually agreed upon for the following year.
The Audit Committee instructed the external auditor to immediately inform the Committee Chairman of any indications of partiality or grounds for exclusion uncovered during the audit or the auditors’ review of interim financial statements, and of all key findings and events relevant to the tasks of the Supervisory Board, particularly findings or events related to suspected irregularities in accounting. The Audit Committee also reached an agreement with the external auditor stipulating that the external auditor would inform the Audit Committee, and make a note in the audit report, of any facts uncovered during the annual audit that would reveal inaccuracies in the Board of Management’s and the Supervisory Board’s declaration of compliance with the German Corporate Governance Code.