Board of Executive Directors

ESRS 2 GOV-1, ESRS 2 GOV-2

Direction and management by the Board of Executive Directors

The Board of Executive Directors is responsible for managing the company and represents BASF SE in business undertakings with third parties. BASF’s Board of Executive Directors is strictly separated from the Supervisory Board, which monitors the Board of Executive Directors’ activities and decides on its composition: A member of the Board of Executive Directors cannot simultaneously be a member of the Supervisory Board. As the central duty of company management, the Board of Executive Directors defines the corporate goals and strategic direction of the BASF Group as well as its individual business areas, including the sustainability strategy. In doing so, the Board ensures that the opportunities and risks associated with social and environmental factors for our company (outside-in perspective) as well as the ecological and societal impacts of BASF’s corporate activities (inside-out perspective) are systematically identified and evaluated. In addition to long-term economic goals, the corporate strategy appropriately takes environmental and social objectives into account, too. The corporate planning defined on this basis comprises financial and sustainability-related goals.

Furthermore, the Board of Executive Directors determines the company’s internal organization and decides on the composition of management positions on the levels below the Board. It also manages and monitors BASF Group business by planning and setting the corporate budget, allocating resources and management capacities, monitoring and making decisions on significant individual measures, and supervising operational management.

The Board’s actions and decisions are geared toward the company’s best interests. It is committed to the goal of sustainably increasing the company’s value and developing the company over the long term, taking into account environmental and social goals as well as economic targets. The Board’s responsibilities include the preparation of the Consolidated and Separate Financial Statements of BASF SE and reporting on the company’s financial and nonfinancial performance as well as half-year and quarterly reporting. Furthermore, it must ensure that the company’s activities comply with the applicable legislation and regulatory requirements as well as internal corporate requirements (compliance). This includes the establishment of appropriate systems for control, compliance and risk management as well as embedding a company-wide compliance culture with undisputed standards (see G1 Business Conduct).

Decisions that are reserved for the Board as a whole by law, through the Board of Executive Directors’ Rules of Procedure or through resolutions adopted by the Board, are made and all important matters of the company are discussed at regularly held Board meetings called by the chair of the Board of Executive Directors. Board decisions are based on detailed information and analyses provided by the operating divisions and Corporate Center units as well the service and research units and, if deemed necessary, by external consultants. The chair of the Board of Executive Directors leads the Board meetings. Board decisions can generally be made via a simple majority. In the case of a tied vote, the chair of the Board of Executive Directors gives the casting vote. However, the chair of the Board of Executive Directors cannot enforce a decision against the Board of Executive Directors’ majority vote. The chair of the Board also does not have the right to veto. Outside of matters that are assigned to the entire Board for consultation and decision-making, all members of the Board of Executive Directors are authorized to make decisions individually in their designated areas of responsibility.

The Board of Executive Directors can set up Board committees to consult and decide on individual issues such as proposed material acquisition or divestiture projects or to prepare decisions to be made by the entire Board. These committees must include at least three members of the Board of Executive Directors. For the preparation of important decisions, such as those on acquisitions, divestitures, investments and personnel, the Board has various commissions at the level below the Board. With the support of the Corporate Center units and the service and research units and independently of the affected operating division, these committees thoroughly assess the planned measures and evaluate the associated opportunities and risks. Based on this information, they report and make recommendations to the Board.

The Board of Executive Directors informs the Supervisory Board regularly, without delay and comprehensively, of all issues important to the company with regard to planning, business development, the risk situation, risk management and compliance. Furthermore, the Board of Executive Directors coordinates the company’s strategic orientation with the Supervisory Board (for additional information on risk management, see the forecast report in section Opportunities and Risks). The Statutes of BASF SE and the Supervisory Board have defined certain transactions that require the Board of Executive Directors to obtain the Supervisory Board’s approval prior to their conclusion. Such cases that require approval include the acquisition of enterprises and disposal of parts of enterprises, as well as the issue of bonds or comparable financial instruments. However, this is only necessary if the acquisition or disposal price or the amount of the issue in an individual case exceeds 3% of the equity reported in the most recent approved Consolidated Financial Statements of the BASF Group.

The members of the Board of Executive Directors, including their areas of responsibility and memberships in the supervisory bodies of other companies, are listed in section Management and Supervisory Boards.

• Additional information on the compensation of the Board of Executive Directors can be found in the Compensation Report
• Rules of Procedure for the Board of Executive Directors

Competence profile, diversity concept and succession planning for the Board of Executive Directors

The Supervisory Board works hand in hand with the Board of Executive Directors to ensure long-term succession planning for the composition of the Board of Executive Directors. BASF aims to fill most Board positions with leaders from within the company. It is the task of the Board of Executive Directors to propose a sufficient number of suitable individuals to the Supervisory Board.

BASF SE’s two-tier management system

Long-term succession planning is guided by the corporate strategy. It is based on systematic management development characterized by the following:

• Early identification of suitable leaders of different professional backgrounds, nationalities and genders
• Systematic development of leaders through the successful assumption of tasks with increasing responsibility, where possible in different business areas, regions and functions
• Desire to shape strategic and operational decisions and proven success in doing so, as well as leadership skills, especially under challenging business conditions
• Role model function in putting corporate values into practice

The aim of systematic management development is to enable the Supervisory Board to ensure a reasonable level of diversity with respect to education and professional experience, cultural background, international representation, gender and age when appointing members of the Board of Executive Directors. Irrespective of these individual criteria, a holistic approach will determine a person’s suitability for appointment to the Board of Executive Directors of BASF SE. Both systematic succession planning and the selection process aim to ensure that the Board of Executive Directors as a whole has the following profile, which serves as a diversity concept:

• Many years of leadership experience in scientific, technical and commercial fields
• International experience based on background and/or professional experience
• At least one female Board member
• A balanced age distribution to ensure the continuity of the Board’s work and enable seamless succession planning

The first appointment of members of the Board of Executive Directors is for a term of no more than three years. The standard age limit for members of the Board of Executive Directors is 63. The Supervisory Board determines the number of members on the Board of Executive Directors. It is guided by the concept of BASF as a company comprising core businesses and standalone businesses and is determined by the needs arising from cooperation within the Board of Executive Directors. The Supervisory Board considers six to be an appropriate number of Board members given the current business composition, future development tasks and the fundamental organizational structure of the BASF Group.

Implementation of the competence profile and the diversity concept for the Board of Executive Directors

The current composition of the Board of Executive Directors meets the competence profile and the requirements of the diversity concept in full. On account of the different educational backgrounds and management experience of its members – in scientific, technical and commercial fields – the Board of Executive Directors as a whole covers the required spectrum of specialist and management expertise and also possesses many years of international experience. In accordance with section 76 (3a) of the German Stock Corporation Act (AktG), one woman sits on the Board of Executive Directors, with suitable consideration of women forming an integral component of succession planning for the Board of Executive Directors. In its current composition, the Board of Executive Directors exhibits a balanced age structure and has an age range of seven years, meaning that sufficient continuity is assured in the work of the Board of Executive Directors. Likewise, no member of the Board of Executive Directors exceeds the standard age limit of 63 years.

For details, please see the matrix below: