Corporate Governance at Bayerische Motoren Werke
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Case Code: CGOX014 Case Length: 11 Pages Period: 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.300 Organization: Bayerische Motoren Werke (BMW) Industry: Automobile Countries: Europe Themes: - |
Abstract Case Intro 1 Excerpts
Excerpts
Background Note
In 1913, Karl Rapp opened an aircraft-engine design shop near Munich. He named it Bayerische Motoren Werke (BMW) in 1917. The end of WWI brought German aircraft production to a halt. BMW shifted to making railway brakes until the 1930s. BMW introduced its first motorcycle, the R32, in 1923. The company began making automobiles in 1928 after buying a small-car company Fahrzeugwerke Eisenach. In 1933, BMW launched a line of larger cars. The company built aircraft engines for Hitler's Luftwaffe in the 1930s and stopped all auto and motorcycle production in 1941. Under the Nazis (period of emergency of Nazism in Germany), BMW operated in occupied countries, built rockets, and developed the world's first production jet engine. With its factories dismantled after WWII, BMW survived by making kitchen and garden equipment...
The Board of Management and Supervisory Board
Like other German companies, BMW had two boards, the Board of Management (BOM) and the Supervisory Board (SB). The BOM managed the group's operations, coordinated the group's strategic approach with the SB and, at regular intervals, discussed the current state of strategy implementation with the SB...
Board of Management
Tasks and Responsibilities
The BOM was responsible for independently managing the enterprise, in the enterprise's best interests. The BOM developed the enterprise's strategy, coordinated it with the SB and ensured its implementation...
Composition and Compensation
On the basis of various performance criteria, the SB determined the compensation of the members of the BOM...
Conflicts of Interest
During their period of employment, members of the BOM were subject to comprehensive obligations...
The Supervisory Board
Tasks and Responsibilities
The SB advised regularly and supervised the BOM. The SB was also involved in all major strategic decisions. The SB appointed the members of the BOM. Together with the BOM, it facilitated long-term succession planning...
Formation of Committees
The SB set up committees with sufficient expertise based on the specific requirements of the Group...
Composition and Compensation
Care was taken to ensure that the SB consisted, at all times, of members who had the required knowledge, abilities, expertise and experience to complete their tasks properly and who were sufficiently independent...
Conflicts of Interest
Each member of the SB was expected to act in the company's interests...
Transparency
The BOM was expected to disclose without delay any new facts which had arisen within BMW's field of activity and which were not known publicly, if such facts could substantially influence BMW's stock price...
Exhibits
Exhibit I: BMW Group: Figures
Exhibit II: Board of Directors
Exhibit III: Supervisory Board
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