Overview
The Company
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Investor Relations
The Company
Creating value for the future
Health care, nutrition and high-tech materials are our core competencies. In all three areas Bayer pursues a clear goal: to help people through innovative products, to provide society with high value-added and to create corporate value – for the benefit of our stockholders, our employees and the community in every country in which we operate.
Our commercial success
2007 was Bayer’s most successful year yet: we generated sales of €32.4 billion with our roughly 5,000 products, and Group net income (the after-tax income attributable to the stockholders of Bayer AG) increased from €1.7 billion in 2006 to €4.7 billion 
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* not directly allocable to the subgroups, e. g. sales of the service companies
Our stock
Bayer stock again developed very well in 2007, its price gaining 53.8 percent on the year. Including the dividend of €1.00 per share for fiscal 2006, paid in May 2007, the overall performance of our stock was 56.8 percent, putting Bayer in fourth place among the DAX 30 companies. The stockholders’ equity of the Bayer Group as of December 31, 2007 was €16.8 billion, of which €16.7 billion was attributable to Bayer AG stockholders.
Our stockholder structure reflects Bayer’s importance in international financial centers. According to a recent survey of the Bayer stock held by institutional investors, those based outside Germany hold 78 percent of the identified capital, including U.S.-based institutions with 47 percent and U.K. institutional investors with 11 percent. German institutions own 22 percent of the stock. Last year, our Board of Management and experts from the Investor Relations Department spoke with investors at more than 20 financial centers in the course of over 60 roadshows and investor meetings. In addition, we conduct a regular dialogue with our stockholders at the Annual Stockholders’ Meetings.
Bayer shares were delisted from the New York Stock Exchange (NYSE) on September 27, 2007. Although we are therefore no longer required to comply with U.S. capital market laws and regulations, our current Annual Report still contains some information that we were previously obligated to provide under U.S. regulations.
Our stockholder structure reflects Bayer’s importance in international financial centers. According to a recent survey of the Bayer stock held by institutional investors, those based outside Germany hold 78 percent of the identified capital, including U.S.-based institutions with 47 percent and U.K. institutional investors with 11 percent. German institutions own 22 percent of the stock. Last year, our Board of Management and experts from the Investor Relations Department spoke with investors at more than 20 financial centers in the course of over 60 roadshows and investor meetings. In addition, we conduct a regular dialogue with our stockholders at the Annual Stockholders’ Meetings.
Bayer shares were delisted from the New York Stock Exchange (NYSE) on September 27, 2007. Although we are therefore no longer required to comply with U.S. capital market laws and regulations, our current Annual Report still contains some information that we were previously obligated to provide under U.S. regulations.
Our acquisitions in 2007
In 2007 Bayer HealthCare acquired a production facility for biotechnological products in Emeryville, California, United States, from Novartis for €137 million. Schering has been a fully consolidated subsidiary since June 23, 2006. As of December 31, 2007, Bayer Schering GmbH held 96.3 percent of the shares of Bayer Schering Pharma AG.
Bayer CropScience acquired the U.S. cotton seed producer Stoneville Pedigreed Seed Company, which was fully consolidated effective June 1, 2007. The provisional purchase price including ancillary acquisition costs was €232 million.
On July 1, 2007, Bayer MaterialScience completed the acquisition of the Ure-Tech Group of Taiwan, a major producer of thermoplastic polyurethanes.
Bayer CropScience acquired the U.S. cotton seed producer Stoneville Pedigreed Seed Company, which was fully consolidated effective June 1, 2007. The provisional purchase price including ancillary acquisition costs was €232 million.
On July 1, 2007, Bayer MaterialScience completed the acquisition of the Ure-Tech Group of Taiwan, a major producer of thermoplastic polyurethanes.
Our corporate structure
Bayer was founded in Wuppertal in 1863 and has been headquartered in Leverkusen since 1912. Today, the Group comprises around 320 companies on five continents. The Bayer Group is led by a management holding company. This sets the strategic framework for the subgroups and service companies, which operate as separate legal entities. The operational business is divided among the three subgroups: Bayer HealthCare AG, Bayer CropScience AG and Bayer MaterialScience AG. Our three service companies – Bayer Business Services GmbH, Bayer Technology Services GmbH and Currenta GmbH & Co. OHG (formerly Bayer Industry Services) – provide services for both internal and external customers.
Our corporate governance
Under the German Co-Determination Act, the Supervisory Board of the holding company Bayer AG comprises 10 representatives of the stockholders and 10 representatives of the workforce. In compliance with its statutory obligations, in 2007 the Supervisory Board fulfilled its role of advising and overseeing the Board of Management. Elections to the Supervisory Board were held in 2007. Three stockholder representatives and two employee representatives did not stand for reelection and new members were therefore elected to replace them.
The ongoing development of corporate governance at Bayer and the changes enacted to the German Corporate Governance Code in June 2007 were among the central issues discussed by the Supervisory Board in 2007. In December the Board of Management and Supervisory Board renewed their declaration that Bayer AG fully complies with the recommendations of the German Corporate Governance Code.
The ongoing development of corporate governance at Bayer and the changes enacted to the German Corporate Governance Code in June 2007 were among the central issues discussed by the Supervisory Board in 2007. In December the Board of Management and Supervisory Board renewed their declaration that Bayer AG fully complies with the recommendations of the German Corporate Governance Code.
Our principles of compensation
The compensation of the Board of Management basically comprises four components: a fixed annual salary, a short-term incentive award on a yearly basis in relation to a target amount, a long-term incentive award for a three-year period in relation to a target amount, and a company pension plan conferring pension entitlements that increase with years of service. Remuneration in kind and other benefits are also provided, such as the use of a company car for private purposes or reimbursement of the cost of health screening examinations. The fixed salary consists of two parts: a base salary and a fixed supplement. The variable bonus for 2007 is calculated partly according to the Group’s EBITDA margin before special items, and partly according to the weighted average target attainment of the HealthCare, CropScience and MaterialScience subgroups. The latter is based mainly on the subgroups’ target attainment measured by EBITDA before special items as well as on a qualitative appraisal in relation to the market and competitors. In addition, the variable bonus for 2007 includes a special one-time individual bonus linked to outstanding achievements in connection with the restructuring of the Bayer Group.
The compensation of the Supervisory Board is based on the provisions of the Articles of Incorporation, the current version of which was adopted by the stockholders at the Annual Stockholders’ Meeting on April 29, 2005. This provides that, in addition to reimbursement of their expenses, the members of the Supervisory Board receive fixed annual remuneration of €60,000 and a variable annual remuneration component. The variable remuneration component is based on corporate performance in terms of the gross cash flow reported in the Group financial statements for the fiscal year. The members of the Supervisory Board receive €2,000 for every €50,000,000 or part thereof by which the gross cash flow exceeds €3,100,000,000, but the variable component for each member may not exceed €30,000.
In accordance with the provisions of the German Corporate Governance Code, additional remuneration is paid to the Chairman and Vice Chairman of the Supervisory Board and for chairing and membership of committees. The Chairman of the Supervisory Board receives three times the basic remuneration, while the Vice Chairman receives one-and-a-half times the basic remuneration. Members of the Supervisory Board who are also members of a committee receive an additional one quarter of the amount, with those chairing a committee receiving a further quarter. However, no member of the Supervisory Board may receive total remuneration exceeding three times the basic remuneration. Details of the remuneration received by individual members of the Board of Management and Supervisory Board are disclosed in our Annual Report.
In order to link the variable remuneration of Bayer executives directly to success in the sustainability arena, we have also started to include sustainability criteria in their annual personal performance targets. Our aim is to ensure a close link between sustainability targets and variable compensation components throughout the Group.
The compensation of the Supervisory Board is based on the provisions of the Articles of Incorporation, the current version of which was adopted by the stockholders at the Annual Stockholders’ Meeting on April 29, 2005. This provides that, in addition to reimbursement of their expenses, the members of the Supervisory Board receive fixed annual remuneration of €60,000 and a variable annual remuneration component. The variable remuneration component is based on corporate performance in terms of the gross cash flow reported in the Group financial statements for the fiscal year. The members of the Supervisory Board receive €2,000 for every €50,000,000 or part thereof by which the gross cash flow exceeds €3,100,000,000, but the variable component for each member may not exceed €30,000.
In accordance with the provisions of the German Corporate Governance Code, additional remuneration is paid to the Chairman and Vice Chairman of the Supervisory Board and for chairing and membership of committees. The Chairman of the Supervisory Board receives three times the basic remuneration, while the Vice Chairman receives one-and-a-half times the basic remuneration. Members of the Supervisory Board who are also members of a committee receive an additional one quarter of the amount, with those chairing a committee receiving a further quarter. However, no member of the Supervisory Board may receive total remuneration exceeding three times the basic remuneration. Details of the remuneration received by individual members of the Board of Management and Supervisory Board are disclosed in our Annual Report.
In order to link the variable remuneration of Bayer executives directly to success in the sustainability arena, we have also started to include sustainability criteria in their annual personal performance targets. Our aim is to ensure a close link between sustainability targets and variable compensation components throughout the Group.
Our global workforce
Bayer’s success is based on the daily commitment of our 106,200 employees around the world, 36.8 percent of whom work at our sites in Germany. Globally, 76.5 percent of our employees are in countries that belong to the Organisation for Economic Co-operation and Development (OECD). Some 23.5 percent (24,874 employees) work in a total of 43 non-OECD countries. The largest of these is China, where we have 5,582 employees, followed by Brazil (3,072) and India (3,000).
The Bayer Group
Bayer is a global enterprise with companies all over the world. The map shows some of our most important locations.
The Bayer Group in figures
| North America | Latin America/ Africa/ Middle East |
Europe | Asia-Pacific | Total | |
| Sales (in € million) | 8,161 |
4,660 |
14.353 |
5.211 |
32.385 |
| Employees | 16,800 |
14,300 |
56.200 |
18.900 |
106.200 |
| R&D spending (in € million) | 581 |
35 |
1.836 |
126 |
2.578 |
| Number of consolidated companies | 47 |
51 |
168 |
60 |
326 |
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