Corporate Governance at Merck
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Case Details:
Case Code : CGOX004
Case Length : 12 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Merck
Industry : Pharmaceutical
Countries : Germany
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Overview of Corporate Governance
Merck had put in place various measures to ensure high standards of corporate governance. A system of committees helped the board in discharging its responsibilities. Audit Committee, Committee on Corporate Governance, Compensation and Benefits Committee, Executive Committee, Finance Committee, and Committee on Public Policy and Social Responsibility.
Board Committees and their Responsibilities
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The Audit Committee: Consisting of independent directors, this committee oversaw Merck's accounting, financial reporting process, internal controls and audits...
Board and Board Committee Meetings
In 2002, the Board met nine times. The Committee on Corporate Governance met nine times; Audit Committee, seven times; Compensation and Benefits Committee, three times; Committee on Public Policy and Social Responsibility, twice; and Finance Committee, once...
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Independence of Directors
The Board of Directors had determined that an independent director should not have a direct or indirect material relationship with the company. A material relationship was one which might impair or inhibit a director's exercise of critical and disinterested judgment on behalf of the company and its stockholders...
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Board's Role in Strategic Planning
The Board oversaw the affairs of the company and was expected to be kept informed about the company's business and strategies...
Compensation of Directors
Each director who was not a Merck employee was compensated for services as a director by an annual retainer of $45,000 and a fee of $1,200 for each Board and Committee meeting attended... |
Election of Board Members
The Merck Board believed that a staggered system for electing directors helped assure continuity and stability of the company's business strategies and policies and reinforced the company's commitment to its long-term point of view rather than short-term goals...
Exhibits
Exhibit I: Merck: Financial Highlights
Exhibit II: Members of the individual committees
Exhibit III: Merck: Security Ownership of Certain Beneficial Owners and Management
Exhibit IV: Merck: Summary Compensation Table
Exhibit V: Merck: Option/SAR Grants in Last Fiscal Year
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