The year 2008 marked the start for BASF in its new legal form as a Societas Europaea or SE. The conversion was, and is, connected with significant changes to the corporate governance system at BASF. Since January 14, 2008, the Supervisory Board comprises 12 instead of 20 members, consisting in equal parts of shareholder representatives – elected by the Annual Meeting – and employee representatives. In place of the German Codetermination Act, the Employee Participation Agreement concluded between the company’s management and employee representatives forms the tailor-made legal basis for employee participation in the Supervisory Board and for the new BASF Europa Betriebsrat. This means that employee participation in fundamental corporate decisions is no longer exclusively limited to employees in Germany, but also includes other European employees. The Supervisory Board is convinced that these structural changes have further improved the quality and efficiency of the Supervisory Board’s activities and that the monitoring of and the strategic advice provided to, the Board of Executive Directors has been intensified.
The Supervisory Board attaches the utmost importance to guaranteeing good corporate governance: The Supervisory Board and the Board of Executive Directors therefore decided to comply in the future with all recommendations of the German Corporate Governance Code in the version passed by the Code Commission on June 6, 2008.
From an economic point of view, 2008 was dominated by the existing crisis in the financial markets and the economic crisis that became more apparent over the course of the year, significantly impacting BASF in the last two months of the year. The crisis will continue into 2009, and at the moment it is not possible to forecast a turnaround. The fourth quarter of 2008 shows that great economic success and record results can be quickly followed by a slump in business. Nevertheless, the current situation also makes clear that BASF was right to pursue its strategy, with a broad spectrum of business fields and a forward looking orientation towards strongly growing and innovative markets in the field of chemistry itself and fields closely related to chemistry. BASF aims to continue on this path and further expand next-generation business fields. This includes the acquisition of Ciba, which strengthens BASF’s position in very attractive product lines. In the opinion of the Supervisory Board, the response of the company to the developments at the end of 2008 shows: BASF has a determined management team and highly motivated and qualified employees. They will ensure that BASF emerges even stronger from the current economic crisis. At the first indications of the crisis, the Board of Executive Directors rapidly adopted a balanced set of timely, consistent and highly flexible measures, limiting the negative consequences as far as possible. The Board of Executive Directors enjoyed the full support of the entire Supervisory Board for these measures.