These documents can be inspected as components of the annual reports of
Munich Reinsurance Company and the Munich Re Group at the Company's head office
at Königinstrasse 107, 80802 München, and on the internet at
www.munichre.com/agm. They will be sent to shareholders on request.
The Supervisory Board and the Board of Management propose that the balance sheet
profit of €459,160,466 be utilised as follows:
Payment of a dividend of €2.00
on each share entitled to dividend | €457,038,814 |
| Carried forward to new account | €2,121,652 |
| Balance sheet profit | €459,160,466 |
The proposal for the appropriation of the profit takes into account own
shares held directly or indirectly by the Company, which as per Section 71b of
the German Stock Companies Act are not entitled to dividend. Up to the Annual
General Meeting, the number of shares entitled to dividend may decrease or
increase through the further acquisition or sale of own shares. In this case, a
suitably modified proposal for the appropriation of the profit, with an
unchanged dividend of €2.00 per share entitled to dividend, will be made to the
Annual General Meeting.
The Supervisory Board and the Board of Management propose that approval for
the actions of the members of the Board of Management be given.
The Supervisory Board and the Board of Management propose that approval for
the actions of the members of the Supervisory Board be given.
The authorisation granted to the Board of Management by the AGM on 26 May
2004 to buy back shares in accordance with Section 71 para. 1 item 8 of the
German Stock Companies Act expires on 25 November 2005 and therefore needs to be
renewed.
The Supervisory Board and the Board of Management propose that the following
resolutions be adopted:
a) The Company shall be authorised to buy back its own shares up to a
total amount of 10% of the current share capital. The authorisation may be
exercised as a whole or in part amounts, on one or more occasions and for one or
more purposes by the Company, but also by dependent Group companies or
enterprises in which the Company has a majority shareholding, or by third
parties for its or their account. The shares acquired plus other own shares in
the possession of the Company or attributable to the Company in accordance with
Sections 71a ff. of the German Stock Companies Act shall at no time amount to
more than 10% of the share capital. The authorisation may not be used for
trading in own shares.
It shall run until 27 October 2006. The authorisation to buy back shares
granted by the AGM on 26 May 2004 shall be cancelled as from the moment this new
authorisation comes into effect.
b) In accordance with the requirement of equal treatment (Section 53a
of the German Stock Companies Act), the shares will be acquired by the Board of
Management aa) via the stock exchange or bb) via a public purchase offer to all
shareholders, or cc) via a public offer to all shareholders to exchange Munich
Re shares for shares in another listed company as defined in Section 3 para. 2
of the German Stock Companies Act. In the event of bb) and cc), the provisions
of the German Securities Acquisition and Takeover Act shall be observed where
applicable. The acquisition may dd) also be made using put and call options on
the Company's shares if the shares to be delivered to the Company on exercise of
the put or call options have previously been acquired, in keeping with the legal
requirement of equal treatment, via the stock exchange at the current share
price in Xetra trading (or a comparable successor system) on the Frankfurt stock
exchange.
aa) If the shares are bought back via the stock exchange, the purchase price
(excluding incidental expenses) may not exceed by more than 10% or undercut by
more than 20% the price determined for Company shares with the same securities
reference number in the opening auction in Xetra trading (or a comparable
successor system) on the Frankfurt stock exchange.
bb) If the shares are bought back via a public purchase offer, the purchase
price per share or the upper and lower limits of the price range (excluding
incidental expenses) may not exceed or undercut by more than 20% the arithmetic
mean of the closing price for Company shares with the same securities reference
number in the closing auction in Xetra trading (or a comparable successor
system) on the Frankfurt stock exchange on the fifth, fourth and third trading
day before the date on which the offer is published. If after a public purchase
offer there are significant deviations in the relevant share price, the offer
may be adjusted. In this case, the basis for the adjustment will be the
arithmetic mean closing price in Xetra trading (or a comparable successor
system) on the Frankfurt stock exchange on the fifth, fourth and third trading
day before the public announcement of the adjustment. The volume may be
restricted. If the offer is oversubscribed, acceptance shall be based on quotas.
For this, the Company may provide for preferred acceptance of small lots of
shares (up to 100 shares tendered per shareholder). The purchase offer may
provide for further conditions.
cc) In the case of a public offer to exchange Munich Re shares for shares in
another listed company ("exchange shares") as defined in Section 3 para. 2 of
the German Stock Companies Act, a certain exchange ratio may be specified or
also determined by way of an auction procedure. A cash benefit may also be
provided for as an additional payment to the exchange offered or as compensation
for any fractional shares. In each of these procedures for the exchange of
shares, the exchange price or the applicable top and bottom end of the price
range in the form of one or more exchange shares and calculated fractional
amounts, including any cash or fractional amounts (excluding incidental
expenses), may not exceed or undercut by more than 20% the relevant value of
Munich Re shares.
The basis for calculating the relevant value of each Munich Re share and of
each exchange share shall be the respective arithmetic mean closing price in
Xetra trading (or a comparable successor system) on the Frankfurt stock exchange
on the fifth, fourth and third trading day before the date on which the exchange
offer is published. If the exchange shares are not traded in the Xetra trading
system on the Frankfurt stock exchange, the basis will be the closing prices
quoted on the stock exchange having the highest average trading volume in
respect of the exchange shares in the course of the preceding calendar year. If
after a public exchange offer there are significant deviations in the relevant
share price, the offer may be adjusted. In this case, the basis for the
adjustment will be the arithmetic mean closing price on the fifth, fourth and
third trading day before the date of the public announcement of the adjustment.
The volume may be restricted. If the exchange offer is oversubscribed,
acceptance shall be based on quotas. For this, the Company may provide for
preferred acceptance of small lots of shares (up to 100 shares tendered per
shareholder). The exchange offer may provide for further conditions.
dd) If the shares are bought back using put or call options, the exercise
price per share may not exceed by more than 10% or undercut by more than 20% the
price determined for Company shares with the same securities reference number in
the opening auction in Xetra trading (or a comparable successor system) on the
Frankfurt stock exchange on the day the option contract is concluded. If shares
are bought back using put or call options, the acquisition price payable by the
Company for the shares corresponds to the exercise price agreed on in the
financial instrument. The acquisition price paid by the Company for options may
not lie above, nor the sale price collected by the Company for options below,
the theoretical market value of the respective options determined according to
recognised principles of financial mathematics, the calculation of such market
value considering among other things the agreed exercise price. If options are
used to buy back shares, taking due account of the preceding sentences,
shareholders shall not have a claim to conclude such option contracts with the
Company; shareholders shall have a right to offer their Company shares only
insofar as the Company is obligated to purchase shares from them.
c) The Board of Management shall be empowered to use shares acquired
on the basis of the aforementioned authorisation for all legally admissible
purposes, and in particular as follows:
aa) They may be used for launching the Company's shares on foreign stock
exchanges where they are not yet listed.
bb) They may be sold in return for non–cash payment, in particular as part of
offers to third parties in connection with mergers, acquisitions of companies or
parts of companies, shareholdings or assets connected with such investments.
Selling in this connection may also include the granting of conversion or
subscription rights or of warrants and the transferring of shares in conjunction
with securities lending.
cc) They may be sold to third parties for cash other than via the stock
exchange or via an offer to all shareholders.
dd) They may be offered for subscription to the holders of conversion rights
or warrants issued by the Company or one of its dependent Group companies.
ee) They may be offered as employee shares to staff of the Company or of
enterprises affiliated with the Company within the meaning of Section 15 ff. of
the German Stock Companies Act.
ff) They may be retired without a further resolution of the AGM being
required. They may also be retired in a simplified process, without reducing the
share capital, by adjusting the proportion of the Company's share capital
represented by each of the remaining no–par–value shares. Any retirement may be
limited to a portion of the bought–back shares. If the shares are retired in a
simplified process, the Board of Management shall be authorised to adjust the
number of no–par–value shares in the Articles of Association.
d) The price at which the shares are launched on other stock exchanges
in accordance with item c) aa) or sold in accordance with item c) cc) may not
significantly undercut the stock price determined for Company shares with the
same securities number in the opening auction in Xetra trading (or a comparable
successor system) on the Frankfurt stock exchange (excluding incidental costs)
on the day the shares are launched or the binding agreement with the third party
is concluded. In addition, in these cases the sum of the shares sold, together
with any shares that may be issued or sold during the term of this authorisation
by excluding the shareholders' subscription rights, directly or indirectly
pursuant to Section 186 para. 3 sentence 4 of the German Stock Companies Act,
may not exceed a total of 10% of the share capital at the time the shares are
issued or sold or are to be issued.
e) The authorisations in accordance with item c) above may be utilised
one or more times, partially or wholly, individually or jointly; the
authorisations in accordance with item c) bb), cc), dd) or ee) may also be
utilised by dependent Group companies or enterprises in which the Company has a
majority shareholding, or utilised for its or their account by third parties.
The authorisations shall also include the use of shares of the Company acquired
on the basis of earlier authorisations in accordance with Section 71 para. 1
item 8 of the German Stock Companies Act and – with the exception of item c) ff)
above – the use of shares acquired in accordance with Section 71d sentence 5 of
the German Stock Companies Act.
f) Shareholders' subscription rights in respect of these bought–back
shares shall be excluded insofar as the shares are used in accordance with the
authorisations in items c) aa), bb), cc), dd) or ee). Beyond this, if
bought–back shares are sold via an offer to the shareholders, the Board of
Management shall be entitled to exclude shareholders' subscription rights
insofar as this is necessary to grant subscription rights to the bearers of
Company or Group–company convertible bonds or bonds with warrants to the extent
to which such bearers would be entitled as shareholders after exercising their
warrants or after the conversion requirements from such bonds have been
satisfied.
By resolution of the AGM of 11 June 2003, under agenda item 8, the Board of
Management was authorised to issue convertible bonds and/or bonds with warrants
with a term of up to 20 years, subject to the consent of the Supervisory Board.
Convertible bonds and bonds with warrants of unlimited duration (perpetual
bonds) have meanwhile established themselves on the capital markets. The removal
of the maturity limit will enable the Company to make use of such financial
instruments. Therefore a new authorisation is proposed by means of which
perpetual convertible bonds and/or bonds with warrants may be issued, and also a
new contingent capital be created (Contingent Capital Increase 2005). The
authorisation scope of €3bn and the contingent capital of €100m envisaged for
this are not to be increased. As soon as this resolution becomes effective, the
previous authorisation and Contingent Capital Increase 2003 II related thereto
will be cancelled.
The Supervisory Board and the Board of Management propose that the following
resolutions be adopted:
a) Cancellation of the authorisation of 11 June 2003
The authorisation granted by the AGM on 11 June 2003 concerning the issue of
convertible bonds and/or bonds with warrants, and the Contingent Capital
Increase 2003 II amounting to €100m, shall be cancelled. The cancellation of the
authorisation and the contingent capital shall not become effective until the
authorisation proposed under the resolution on b) and the new contingent capital
proposed under the resolution on c) have been adopted.
b) Authorisation
aa) Nominal amount, period of authorisation, number of shares, maturity
period
The Board of Management shall be authorised, with the consent of the
Supervisory Board, to issue convertible bonds or bonds with warrants (referred
to in the following as "bonds") on one or more occasions up to 27 April 2010 for
a maximum nominal amount of €3bn with a limited or unlimited maturity period and
to grant the creditors of such bonds conversion or exercise rights in respect of
new shares issued by the Company up to a maximum amount of €100m of the share
capital, in accordance with the respective bond or warrant conditions. Bonds may
also be issued against non–cash payment insofar as the value of the non–cash
payment accords with the issue price and the latter does not significantly
undercut the bonds' market value determined in accordance with item bb) (3) of
this resolution. The bonds may be denominated in the legal currency of another
OECD country as well as in euros, provided the equivalent amounts to those
stated above in euros are not exceeded. They may also be issued by dependent
Group companies; in this case, the Board of Management shall be authorised to
guarantee the bonds on behalf of the Company and to grant the creditors of such
bonds conversion or exercise rights on the Company's shares.
bb) Subscription rights, exclusion of subscription rights
Shareholders shall generally be granted a subscription right to subscribe for
the bonds. The bonds may also be underwritten by one or more banks subject to
the obligation that they offer these to the shareholders for subscription.
However, the Board of Management shall be authorised, with the consent of the
Supervisory Board, to exclude the shareholders' subscription rights in the
following cases:
(1) for fractional amounts;
(2) insofar as it is necessary to grant the bearers of warrants or
conversion rights in respect of shares of the Company, or creditors of
convertible bonds with conversion requirements, pre–emptive rights to subscribe
for new shares to the extent to which they would be entitled as shareholders
after exercising these rights or after the conversion requirements of such bonds
have been satisfied;
(3) if the bonds are issued against cash and the issue price is not
significantly below the bonds' theoretical market value determined according to
recognised principles of financial mathematics. However, this authorisation to
exclude subscription rights shall apply only to the extent that the shares
issued to cover the related conversion rights and/or warrants do not represent
more than 10% of the share capital, either with respect to the date on which the
authorisation becomes effective or the date on which such authorisation is
exercised. This restriction shall also include own shares insofar as they are
sold within the term of this authorisation by excluding subscription rights
pursuant to Article 186 para. 3 sentence 4 of the German Stock Companies Act.
Furthermore, this restriction shall also include shares that are issued within
the term of this authorisation from capital authorised for the purpose by
excluding subscription rights pursuant to Article 186 para. 3 sentence 4 of the
German Stock Companies Act;
(4) insofar they are issued against non–cash payment and the exclusion
of subscription rights is in the interests of the Company.
cc) Conversion right, conversion requirement
In the event of the issue of bonds with conversion rights, the creditors may
exchange their bonds into Company shares in accordance with the bond conditions.
The proportional amount of share capital represented by the shares to be issued
as a result of the conversion may not exceed the nominal amount of the
convertible bond. The exchange ratio is determined by dividing the nominal
amount of one convertible bond by the conversion price fixed for obtaining one
Company share. The exchange ratio may also be determined by dividing a
convertible bond issue price that lies below the nominal amount by the fixed
conversion price for obtaining one Company share. The exchange ratio may be
rounded up or down to a whole figure; in addition, a supplementary cash payment
may be specified. Furthermore, the conditions may provide for fractional amounts
to be combined and/or compensated for in cash. The bond conditions may also
provide for a variable exchange ratio; they may additionally provide for a
conversion requirement. In this case, the Company shall be entitled to
compensate fully or partially in cash any difference between the nominal amount
of the convertible bonds and the result obtained from multiplying a market price
for the shares at the time of the mandatory exchange (such price to be more
closely defined in the terms and conditions of the bonds, but to amount to at
least 80% of the share price relevant for the lower conversion price limit
pursuant to ee) below) and the exchange ratio.
dd)Warrants
In the event of a warrants issue, one or more warrants will be attached to
each bond which entitle the bearer to subscribe for Company shares in accordance
with the warrant conditions. The proportional amount of the share capital to be
subscribed for per bond may not exceed the nominal value of the bond.
ee) Exercise or conversion price, protection against dilution
The exercise or conversion price fixed in each case for one share must be
either at least 80% of the mean closing price of Company shares in Xetra trading
(or a comparable successor system) on the Frankfurt stock exchange on the ten
trading days prior to the decision of the Board of Management to issue the
convertible bonds or bonds with warrants, or at least 80% of the mean closing
price of Company shares in Xetra trading (or a comparable successor system)
during the days on which the subscription rights are traded on the Frankfurt
stock exchange, with the exception of the last two trading days for the
subscription rights.
Notwithstanding Section 9 para. 1 of the German Stock Companies Act, the
conditions of the convertible bonds or bonds with warrants may contain a clause
safeguarding against the dilution of stock for the event that during the
conversion or exercise period the Company, whilst granting its shareholders
pre–emptive rights, either increases its capital or issues further convertible
bonds or bonds with warrants, or issues other warrants, and does not grant the
holders of conversion rights and/or warrants subscription rights to the extent
to which they would have been entitled after exercising the conversion or
exercise rights or after the conversion requirements from such bonds have been
satisfied. The terms and conditions may also provide for the conversion rights
and/or warrants to be adjusted in the case of other measures of the Company that
might lead to a dilution in the value of the conversion rights and/or warrants.
The proportional amount of the share capital to be subscribed for per bond may
on no account exceed the nominal value of the bond.
ff) Further scope for action
Subject to compliance with the above conditions, the Board of Management
shall be authorised to determine all further details of the issue and terms of
the bonds or to establish these in agreement with the executive bodies of the
Group companies issuing the bonds, particularly the interest rate, the issue
price, the maturity period and denomination, agreement of subordination compared
with other liabilities, subscription or conversion ratio (e.g. a variable
conversion ratio depending on the performance of the share price during the term
or a conversion ratio based on a bond issue price lower than the nominal value),
fixing of an additional cash payment, compensation for or combination of
fractional amounts, cash payment instead of delivery in shares, the amount of
the exercise or conversion price, and the exercise or conversion period.
c) Contingent capital increase
The share capital shall be conditionally increased by up to €100m through the
issue of registered nopar–value shares entitled to dividend from the beginning
of the business year in which they are issued. This contingent capital increase
is for granting shares to the holders or creditors of convertible bonds or bonds
with warrants issued by the Company or by a dependent Group company up to 27
April 2010 under the aforementioned authorisation, insofar as the issue is
against cash payment. The new shares shall be issued at the exercise and
conversion price fixed in accordance with the criteria of the aforementioned
authorisation. The increase in the share capital shall be carried out only to
the extent that warrants or conversion rights from the bonds are exercised or
conversion requirements from such bonds are satisfied. The Board of Management
shall be authorised to decide on the further details of the contingent capital
increase (Contingent Capital Increase 2005).
d) Amendment to the Articles of Association
Article 4 paragraph 4 of the current Articles of Association (Contingent
Capital Increase 2003 II) shall be replaced by the following new paragraph 4:
"(4) A contingent increase in the share capital by a further amount of
up to 100 million euros, consisting of registered no–par–value shares entitled
to dividend from the beginning of the business year in which they are issued,
has been authorised. This contingent capital increase is for granting shares to
the holders or creditors of convertible bonds or bonds with warrants issued by
the Company or by a dependent Group company up to 27 April 2010 under the
authorisation of the Annual General Meeting of 28 April 2005, insofar as the
issue is against cash payment. The increase in the share capital shall be
carried out only to the extent that warrants or conversion rights from the bonds
are exercised or conversion requirements from such bonds are satisfied. The
Board of Management shall be authorised to decide on the further details of the
contingent capital increase (Contingent Capital Increase 2005)."
The remuneration to be paid as from the business year 2005 is to be
restructured to take account of the increased demands placed on the activities
of Supervisory Board members in connection with the corporate governance
discussion concerning transparent company management and the reservations about
the linking of performance–related remuneration components to the dividend. The
fixed remuneration component for Supervisory Board members is to be raised from
€25,000 to €45,000, and the dividend–related component replaced by a
result–related component. This means that each Supervisory Board member will
receive €4,500 for each full euro by which earnings per share exceed €4, but a
maximum of €36,000. The multipliers for calculating the fixed and variable
remuneration of the Chairman of the Supervisory Board and Deputy Chairmen shall
remain unchanged. Besides this, the additional remuneration for work on
committees is to be based only on the fixed remuneration. The overall
remuneration for each Supervisory Board member is to be limited to
two–and–a–half times the fixed remuneration.
The Board of Management and the Supervisory Board propose that the Article 15
of the Articles of Association be reworded as follows:
"(1) Each member of the Supervisory Board shall receive an annual
remuneration of 45,000 euros. The Chairman of the Supervisory Board shall be
entitled to twice, and each of the Deputy Chairmen to one–and–a–half times, this
remuneration.
(2) In addition, each member of the Supervisory Board shall receive
result–related annual remuneration. This shall amount to 4,500 euros for each
full euro by which earnings per share exceed 4 euros, but to a maximum of 36,000
euros. The Chairman of the Supervisory Board shall be entitled to twice, and the
Deputy Chairman to one–and–a–half times, this remuneration. The basis for
calculating the result–related remuneration shall be the undiluted earnings per
share from continuing operations, as shown in the consolidated financial
statements in accordance with International Financial Reporting Standards
(IFRS), with the proviso that ordinary shares bought back by the Company be
taken into account in the same way as the ordinary shares in circulation.
(3) Each member of a committee shall receive an additional amount
equivalent to 25%, and the chairman of a committee an additional amount
equivalent to 50%, of the remuneration provided for under paragraph 1 sentence
1. This shall not apply to the chairman and members of the Conference Committee
set up in accordance with Section 27 para. 3 of the German Co–Determination Act.
(4) The members of the Audit Committee shall receive an attendance fee
of 2,000 euros for each meeting of the Committee they attend which does not take
place on the same day as a Supervisory Board meeting.
(5) The total annual remuneration of members of the Supervisory Board
in accordance with paragraphs 1 to 4 shall be limited to two–and–a–half times
the amount payable under paragraph 1.
(6) The Company shall reimburse the members of the Supervisory Board
for their expenses and for turnover taxes.
(7) Supervisory Board members who have only served on the Supervisory
Board or one of its committees for part of the business year shall be
remunerated on a pro rata basis.
(8) This provision shall apply for the first time to the remuneration
payable for the business year 2005."