Related parties in respect of the Merck Group are E. Merck OHG as well as the companies Emanuel Merck Vermögens KG and E. Merck Beteiligungen OHG. In principle, direct or indirect subsidiaries of Merck KGaA, associates and joint ventures of the Merck Group as well as pension funds that are classified as funded defined benefit plans in accordance with IAS 19, are also related parties within the meaning of IAS 24. Members of the Executive Board and the Supervisory Board of Merck KGaA, the Board of Management and the Board of Partners of E. Merck OHG as well as close members of their families are also related parties.
As of December 31, 2007, there were liabilities by Merck KGaA and Merck & Cie KG, Altdorf, to Merck OHG in the amount of €626.6 million (2006: €224.5 million). In addition, Merck KGaA was owed receivables in the amount of €20.8 million (2006: €37.6 million) by E. Merck OHG as of December 31, 2007. The balances result mainly from the profit transfers by Merck & Cie to E. Merck OHG, the reciprocal profit transfers between Merck KGaA and E. Merck OHG, as well as the extension of loans by E. Merck OHG to Merck KGaA as well as the extension of loans by Merck KGaA to E. Merck OHG. These financial payables of €93.5 million (2006: receivables of €22.6 million) are subject to standard market interest rates. In 2007, Merck KGaA performed services for E. Merck OHG with a value of €1.1 million (2006: €0.9 million). In exchange, E. Merck OHG performed services for Merck KGaA with a value of €0.5 million (2006: €0.5 million). As of December 31, 2007, Merck KGaA had receivables from E. Merck Beteiligungen OHG in the amount of €5.8 million (2006: €6.7 million). In 2007, Merck KGaA performed services for E. Merck Beteiligungen OHG with a value of €0.3 million (2006: €0.5 million). In addition, Merck KGaA performed services for Emanuel Merck Vermögens KG with a value of €0.1 million (2006: €0.1 million).
Business transactions with major subsidiaries have been eliminated during consolidation and are not disclosed further in the Notes. Information on pension funds that are classified as funded defined-benefit plans in accordance with IAS 19 can be found in Note [31]. There were no further material transactions with these pension funds.
During the fiscal year, companies of the Merck Group supplied goods with a value of €3.9 million (2006: €4.3 million) to associates. During the same period, associates provided services to companies of the Merck Group with a value of €5.2 million (2006: €0.0 million). There were no further material transactions with associates in 2007.
The remuneration of the Executive Board of Merck KGaA is largely paid by the general partner, E. Merck OHG, and recorded as an expense in its income statement. For January to December 2007, fixed salaries of €3.0 million (2006: €3.0 million) and variable compensation of €21.9 million (2006: €10.5 million) were recorded for Members of the Executive Board of Merck KGaA. Variable compensation is in principle based on the three-year rolling average of profit after tax of the E. Merck Group. Due to the one-time effects of the reporting period, a special agreement was made. Furthermore, additions to pension provisions of E. Merck OHG include current service cost of €2.0 million (2006: €0.9 million) and in the previous year past service cost of €8.0 million for members of the Executive Board of Merck KGaA.
Subject to the approval of the Annual General Meeting on the proposed distribution of a €1.20 dividend per share plus a bonus of €2.00 per share, the remuneration of the Supervisory Board amounting to €964 thousand (2006: €350 thousand) consists of a fixed portion of €95 thousand (2006: €95 thousand) and a variable portion of €869 thousand (2006: €255 thousand).
Further material transactions, for example the provision of services or the extension of loans, between companies of the Merck Group and members of the Executive Board and the Supervisory Board of Merck KGaA, the Board of Management and the Board of Partners of E. Merck OHG or close members of their families did not take place in 2007.
