The role of the administrative, management and supervisory bodies (GOV-1)

The following table shows the composition and diversity of members of the administrative, management and supervisory bodies. In our company, these include the Executive Board and Supervisory Board of Merck KGaA, Darmstadt, Germany, and the Board of Partners of E. Merck KG, Darmstadt, Germany: Owing to the special characteristics of our corporate structure at Merck KGaA, Darmstadt, Germany, the relevant boards do not have executive and non-executive members but only members as such. They all have similar rights and obligations. The Board’s gender diversity ratio reflects the average ratio of female to male members.

The following table shows the share of members of Executive Board and Supervisory Board of Merck KGaA, Darmstadt, Germany, and the Board of Partners of E. Merck KG, Darmstadt, Germany, broken down by gender:

The following table shows the share of members of Executive Board and Supervisory Board of Merck KGaA, Darmstadt, Germany, and the Board of Partners of E. Merck KG, Darmstadt, Germany, broken down by age group:

Supervisory Board and the associated Audit Committee

Our Supervisory Board currently comprises 16 members and performs a monitoring function. It consists of eight shareholder representatives and eight employee representatives.

The Audit Committee is composed of three shareholder representatives and three employee representatives who are responsible for monitoring the impacts, risks and opportunities (IRO). The Audit Committee is generally responsible for accounting and auditing matters. Its other tasks include auditing the Annual Financial Statements, the Consolidated Financial Statements and the respective reports of the auditor as well as the half-yearly financial report and the quarterly financial statements. Its duties also include monitoring the sustainability reporting.

The Audit Committee is informed about the risk report at least once a year and about the status report on risk management at least twice a year. In addition, the committee informs the Supervisory Board about the Sustainability Statement at least once a year. Further meetings are convened as and when necessary.

Regular updates and reports should show the status quo and any progress made based on trend descriptions and comparative values. In this way, the Supervisory Board and/or Audit Committee monitors sustainability goals and the achievement thereof.

The Supervisory Board aims to optimally fulfill its monitoring function through the diversity of its members. Their expertise covers aspects including various sustainability topics and is determined bi-annually through a self-assessment of relevant criteria for Supervisory Board members using a qualification matrix. The latest self-assessment revealed that 14 members of the Supervisory Board have sustainability-related expertise. In the self-assessment, five members indicated having good to very good knowledge in the field of sustainability, which is based mainly on training, memberships in relevant associations and substantive practical experience in committees and boards that deal with sustainability matters. These members possess specific expertise in topics such as climate change, social issues and corporate governance. This indicates that the Supervisory Board as a body has the appropriate skills and expertise to monitor sustainability matters.

Executive Board

The Executive Board is made up of six members, whose areas of responsibility are listed in detail in the responsibility distribution plan. The members of the Executive Board are jointly responsible for the entire corporate governance. They work together as specialists and regularly brief one another on important matters in their areas of responsibility. This shared responsibility applies in particular to the areas of sustainability and risk management. Within the scope of the individual management responsibilities specified in the responsibility distribution plan, the sustainability matters of the company are allocated to the Chief People Officer as of March 2025. The Chief Financial Officer is responsible for the risk management of the company and the sustainability reporting.

The Executive Board provides the Supervisory Board and its Audit Committee with regular, up-to-date and comprehensive reports about all company-relevant issues concerning strategy, planning, business development, the risk situation, risk management, and compliance. The rules of procedure of the Executive Board and of the Supervisory Board govern the further details and ensure that the Supervisory Board is kept adequately informed by the Executive Board.

Our Diversity Policy stipulates that the Executive Board should demonstrate internationality through leadership experience or background, relative to our key sales markets or those locations that are organizationally and culturally relevant to our employee development efforts. For both criteria, Europe, North America and Asia-Pacific are currently the key regions.

The Executive Board meets this objective with management experience in the aforementioned regions, and especially in the following countries: Belgium, China, France, India, Israel, Italy, Japan, Malaysia, Singapore, Spain, Switzerland, the United Kingdom, and the United States. In addition, 67% of Executive Board members are not of German origin.

Detailed reporting obligations exist below the Executive Board level for senior executives who are specifically responsible for governance processes, controls and procedures.

The Executive Board exchanges information in regular meetings. At least once per year, members are briefed about the work of the Human Rights Officer and the results of the human rights risk analysis. They also meet once per year to approve the Group-wide policy statement on respecting human rights. Regular reporting monitors our goals and the achievement of the goals.

When identifying potential candidates for the Executive Board and when they are subsequently appointed by E. Merck KG, Darmstadt, Germany, we take sustainability-related capabilities and specialist knowledge into account. This includes in-depth expertise and experience related to the requirements for the transformation toward climate-neutral business models as well as industry-specific knowledge.

Board of Partners

The Board of Partners of E. Merck KG, Darmstadt, Germany, complements the competencies and activities of the Supervisory Board and, like the Supervisory Board, fulfills an independent advisory and monitoring role vis-à-vis the Executive Board. It has three committees, to which individual tasks can be delegated: the Personnel Committee, the Finance Committee and the Research and Development Committee. The whole Board of Partners is involved in the annual corporate planning, including the corporate strategy, where sustainability plays an important role and IROs are considered.

At our company, in contrast to German stock corporations, it is not the Supervisory Board but rather the Board of Partners of E. Merck KG, Darmstadt, Germany, that is responsible for designing and reviewing the compensation system and for the amount and composition of compensation received by Executive Board members. The Board of Partners has assigned this task to its Personnel Committee. Moreover, the Board of Partners has to monitor the Executive Board in its management of the company. It informs itself about the affairs of Merck KGaA, Darmstadt, Germany, and may inspect and examine the company’s accounts, other business documents and assets for this purpose.

By providing regular updates and reporting, including presenting the status quo, the Board of Partners monitors progress toward goals and the achievement thereof.

When appointing members of the Board of Partners, the Family Board of E. Merck KG, Darmstadt, Germany, takes into account capabilities and expertise in relation to sustainability matters. With regard to the current members of the Board of Partners, expertise is largely based on internal and external training courses on sustainability matters as well as long-term experience from membership of relevant boards and committees.

With regard to industry and product knowledge, the Board of Partners complements the expertise, experience and activities of the Supervisory Board with members who have in-depth expertise and experience in the Life Science, Healthcare and Electronics business sectors as well as strong management and leadership skills.

When selecting the administrative, management and supervisory bodies described above, we take into account sustainability-related expertise and competencies that are relevant to our identified IROs. Their expertise in relation to this is made available to the Group via knowledge transfer in the form of discussions, training and expert meetings.

More information on the various boards can be found under Statement on Corporate Governance (content is not audited).