Case 14-2 Daimler AG Harvard Case Solution & Analysis

Case 14-2 Daimler AG Case Solution

REPORT OF THE SUPERVISORY BOARD

Dear Shareholders,

            In 8 meetings during the 2009 financial year, the Supervisory Board diligently fulfilled its duties and responsibilities and dealt with the operational and strategic development of the Group. The members of the Supervisory Board representing the shareholders and the members representing the employees regularly prepared the meetings in separate preliminary discussions.

            The meetings held in 2009 focused not only on numerous special topics and issues requiring the consent of the Supervisory Board, but also on the effects of the financial and economic crisis and the resulting measures to be taken by the Group. In each meeting, the Supervisory Board discussed the business development of the company and its most important subsidiaries. It dealt in equal measure included the term, medium-term and long-term issues. The challenges of a more short-term nature included the decline in demand in all major sales markets that began in the second half of 2008 and worsened in the first half of 2009. The supervisory board, therefore, placed focus of its activities on the results of the efficiency, as a result enhancing actions that had been initiated as well as on the cost-reducing program and their effects on the employment situation.

The success of the measure taken by the Board which was followed by the Supervisory was particularly apparent in the 3rd and 4th quarters of 2009. Other issues regarding which the Board continually informed the Supervisory, along with the usual key figures, included: the group’s profitability and liquidity, the risk management system, the cost of credit risk, the development of raw-material prices, vehicles’ residual values, the situation of suppliers, the development of pension obligations and pension management, and the effects of the insolvency of Chrysler and General Motors according to Chapter 11 to the U.S Bankruptcy Code.

Equal emphasis was placed in the long-term protection of competitiveness and on the measures initiated to prepare the way for pioneering sustainable mobility. The Supervisory Board also dealt specifically with these topics collaboration with the Management and in particular detailed in a 2-day strategy workshop of the Supervisory Boards.

Cooperation between the Supervisory Board and Board of Management. In all of the meetings, there was an intensive and several opinions and information concerning the position of the Group, business and financial developments, fundamental issues of corporate policy and strategy, and development opportunities in important growth markets. The members of the Supervisory Board were prepared for the decisions requiring management’s consent and decisions on investments projects on the basis of documentation provided by the Management.All members of the Board of Management usually attended the meetings of the Supervisory Board. Furthermore, the Board of Management informed the Supervisory Board with the use of monthly reports about the important performance figures and submitted the interim reports to the Supervisory Board. The Supervisory Board was kept fully informed of specific matters as well between its meetings and as required in individual cases following consultation with the Chairman of the Supervisory Board, it was requested to pass its resolutions in writing. In addition, the Chairman of the Board of Management informed the Chairman of the Supervisory Board in regular discussions about all important developments and upcoming decisions.

Issues discussed at the meetings in 2009. In the meeting conducted on January 2009, the Supervisory Board dealt with the conditions for the termination of the investigations of the investigations being carried out since September 2004 by SEC and U.S DOJ. It was emphasized that the potential termination by settlement would not have any impact on the standards or tasks of Daimler´s established Compliance Organization. The challenge remains of securing the sustainability and of further developing activities whenever required in the coming years.....................

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