978-0470424650 Annual Report Henkel Henkel Case Part 2

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Annual Report 2009

The Company » Shares and bonds

stock exchanges in Germany. In the USA, investors are able

to invest in Henkel preferred and ordinary shares by way of

stock ownership certificates obtained through the Sponsored

Level I ADR (American Depositary Receipt) Program. The

number of ADRs representing ordinary and preferred shares

outstanding at the end of the year was about 5.1 million

(end of 2008: 6.3 million).

Share data

Preferred Ordinary

Security code no. 604843 604840

ISIN code DE0006048432 DE0006048408

Stock exch. symbol HEN3.ETR HEN.ETR

Number of shares 178,162,875 259,795,875

The international significance of Henkel preferred shares

derives not least from their inclusion in major indexes that

serve as important indicators for the capital market and as

benchmarks for fund managers. Particularly noteworthy in

this respect are the MSCI World, the Dow Jones Euro Stoxx,

and the FTSE World Europe indexes. Henkel is also listed in

the Dow Jones Titans 30 Personal & Household Goods index,

confirming our position as one of the 30 most important

listed corporations operating in the personal and house–

hold goods sectors worldwide. And as a DAX stock, Henkel

counts as one of the 30 most important listed companies

Trading volumes decreased compared to the previous year,

as did the average trading volume figures for the DAX as a

whole. Each trading day saw an average of 1.0 million pre-

ferred shares changing hands (previous year: 1.7 million).

The average volume in the case of our ordinary shares de–

creased to 200,000 per trading day (previous year: 330,000).

Due to the increase in price levels, the market capitalization

of our ordinary and preferred shares combined rose from

8.9 billion euros to 14.6 billion euros.

Henkel shares remain an attractive investment for long-

term investors. Shareholders who invested 1,000 euros when

Henkel’s preferred shares were issued in 1985, and then

re-invested the dividends received (excluding taxes) in the

stock, would have had a portfolio value of about 11,070 euros

by the end of 2009. This represents investment growth of

1,007 percent or an average yield of 10.4 percent per year.

Over the same period, DAX tracking would have provided

an annual yield of 7.0 percent. And over the last five and

ten years, the Henkel share has shown an average yield of

13.4 and 7.0 percent per year respectively.

Henkel shares listed in all major indexes

Henkel shares are predominantly traded on the Xetra elec-

tronic market of the Frankfurt Stock Exchange. Henkel is

also represented on the floor of this and all other regional

Key data on Henkel shares 2005 to 2009

in euros1) 2005 2006 2007 2008 2009

Earnings per share

Ordinary share 1.75 1.97 2.12

2.81 1.38

Preferred share 1.77 1.99 2.14

2.83 1.40

Share price at year-end

Ordinary share 26.18 32.73 34.95

18.75 31.15

Preferred share 28.33 37.16 38.43

22.59 36.43

High for the year

Ordinary share 26.18 33.14 37.50

34.95 31.60

Preferred share 28.37 37.82 41.60

38.43 36.87

Low for the year

Ordinary share 20.32 25.66 29.96

16.68 16.19

Preferred share 21.46 28.21 33.70

19.30 17.84

Dividends

Ordinary share 0.43 0.48 0.51

0.51 0.51

Preferred share 0.45 0.50 0.53

0.53 0.53

Market capitalization

2) in bn euros 11.8 15.1 15.9 8.9 14.6

Ordinary share

in bn euros 6.8 8.5 9.1

4.9 8.1

Preferred share

in bn euros 5.0 6.6 6.8

4.0 6.5

Closing share prices, Xetra trading system

Proposed

18 Annual Report 2009

The Company » Shares and bonds

2.2 percent of the total preferred shares outstanding.

The vesting period for newly acquired ESP shares is three

years.

Henkel bonds

Henkel is represented in the international bonds markets by

three bonds with a total volume of 3.3 billion euros:

Bond data

Senior bond Senior bond Hybrid bond

Due date June 10, 2013

March 19, 2014

Nov. 25, 2104

Volume 1.0 bn euros

1.0 bn euros

1.3 bn euros

Nominal coupon 4.25 %

4.625 %

5.375 %

Coupon

payment date June 10

March 19

Nov. 25

Listing Frankfurt

Luxembourg

Security code no. 664196 A0AD9Q A0JBUR

ISIN code DE0006641962

XS0418268198

XS0234434222

1) First call option for Henkel on November 25, 2015

Further detailed information regarding these bonds,

current developments in their respective prices and the

associated risk premium (credit margin) can be found

on our website www.henkel.com/ir.

Committed to capital market communication

Henkel is covered by numerous financial analysts, primarily

in the UK, Germany and the USA. Over 35 equity and debt

analysts regularly publish reports and commentaries on

the performance of the company.

Henkel places great importance on meaningful dialogue

with both investors and analysts. In 2009, institutional inves–

tors and financial analysts were afforded the opportunity

to talk directly with our top management in more than

30 capital market conferences and road shows held in

Europe and North America. The two highlights of the year

in Germany. As of year-end 2009, the market capitalization

of the DAX-relevant preferred shares was 6.5 billion euros,

placing Henkel 20th among the DAX companies (2008: 24th).

In terms of trading volumes, Henkel was ranked 28th on the

list (2008: 29th). Our DAX weighting was 1.22 percent.

International shareholder structure

According to notices of disclosure received by the company,

the Henkel family owns a majority of the ordinary shares

amounting to 52.57 percent. Silchester International Inves–

tors Limited headquartered in London, UK, holds 3.01 per–

cent of our ordinary shares. We have received no further

notices of disclosure from other shareholders indicating a

notifiable shareholding in excess of 3 percent of the voting

shares. The ownership pattern of our preferred shares – the

significantly more liquid class of stock – shows a free float of

100 percent. A majority of these shares are owned by institu–

tional investors with globally distributed shareholdings.

In the period up to 2007, Henkel repurchased around 7.5 mil–

lion preferred shares to fund the Stock Incentive Plan oper–

ated for our senior executive personnel. As of December 31,

2009, this treasury stock amounted to 4.5 million preferred

shares.

Employee shares

Since 2001, Henkel has been operating a share ownership

plan for all employees worldwide. For each euro invested

by an employee (limited to 4 percent of salary up to a maxi–

mum of 5,000 euros per year), Henkel added an additional

33 cents in 2009. The number of participants in this Em–

ployee Share Program (ESP) decreased in the year under

review with around 9,500 employees in 56 countries buying

Henkel shares within the framework of the 2009 tranche.

At year-end, around 14,000 employees held a total of some

four million shares within the ESP, representing roughly

Analyst recommendations

Hold 39 %

Buy 42 %

Sell 19 %

At December 31, 2009; basis: 30 equity analysts

Shareholder structure:

Institutional investors holding Henkel preferred shares

Switzerland 8 %

Germany 10 %

USA 26 %

UK 26 %

Rest of World 10 %

Rest of Europe 20 %

Source: Thomson Reuters

Annual Report 2009

The Company » Shares and bonds

were our Analyst and Investor Conference held in Düssel–

dorf on February 25, 2009, and our Investor Day for the

Laundry & Home Care business sector which took place on

September 2, 2009. At this latter conference, Dr. Friedrich

Stara and his management team presented the strategy and

new developments of the Laundry & Home Care business

sector to about 50 analysts and investors from around the

world. In addition, we held numerous telephone confer–

ences and one-on-one meetings – amounting to more than

500 events in all.

Private investors are able to receive all relevant informa–

tion through telephone enquiry or via the Investor Relations

website www.henkel.com/ir. This also serves as the medium

for the live broadcast of telephone and analyst conferences as

well as the transmission of the Annual General Meeting. The

latter also offers all shareholders the possibility of obtaining

extensive information from Henkel’s management.

The quality of our capital market communication was

again evaluated in 2009 by various independent ranking

organizations. Once more, our Investor Relations team gar–

nered a number of top positions in various comparisons

with European corporations in the home & personal care

category.

You will find a financialcalendar with all our important

publishing and announcement dates on the inside back

cover of this Annual Report.

Interdisciplinary teamwork on behalf of the operating business sectors: Experts from Purchasing working

together with packaging developers in order to harmonize the color composition of plastics-based containers.

The plastic granulates they are selecting – known as master batches – are used in the manufacture of bottles

or caps to give them their color. By working together, the team lays the foundations for improved efficiency

and cost economy.

From the left:

UlrikeDanne Dr.ChristianKirsten ManuelDelgado Dr.JanineVoß RobertBossuyt

Packaging Manager –

Cosmetics/Toiletries

Head of Purchasing –

Cosmetics/Toiletries

Worldwide

Purchasing Manager –

Plastics Material Group

and Head of Purchasing

Spain/Portugal

Project Manager for

Master Batches in the

Purchasing Dept.

Head of Purchasing –

Laundry & Home Care

Worldwide

Annual Report 2009

45 Acquisitions and divestments

45 Capital expenditures

46 Net assets

47 Financing

48 Financial position

48 Key financial ratios

48 Employees

51 Procurement

52 Production

53 Research and development

55 Marketing and distribution

56 Sustainability/

Corporate social responsibility

58 Business sector performance

58 Laundry & Home Care

62 Cosmetics/Toiletries

66 Adhesive Technologies

71 Risk report

71 Risk management system

72 Disclosure of major individual risks

75 Overall risk

76 Forecast

76 General economic development

76 Sector development

77 Opportunities

77 Outlook for the Henkel Group in 2010

78 Long-term sales and profits forecast:

2012 financial targets

78 Subsequent events

22 I. Corporate governance/

Corporate management report

26 II. Remuneration report

34 Operational activities

34 Overview

34 Organization and business sectors

34 Strategy and financial targets for 2012

34 Starting point

35 Strategic priorities and progress in fiscal 2009

36 Financial targets for 2012

37 Value-based management and control system

37 EVA® and ROCE

38 Statutory and regulatory situation

39 Business performance

39 World economy

39 Private consumption and

developments by sector

40 Management Board review of business

performance

41 Sales and profits

43 “Global Excellence” restructuring program

43 National Starch:

integration of operational activities

44 Expense items

44 Other operating income and charges

44 Financial result

44 Net earnings

45 Dividends and distribution policy

45 Earnings per share (EPS)

22 Annual Report 2009

the Articles of Association [Corporate Bylaws]). All shares of

Henkel Management AG are held by the corporation.

» The rights and duties of the supervisory board of a KGaA

are more limited compared to those of the supervisory

board of an AG. In particular, the supervisory board is

not authorized to appoint personally liable partners, to

preside over the associated contractual arrangements, to

impose procedural rules on the management board or to

rule on business transactions. A KGaA is not required to

appoint a director of labor affairs, even if, like Henkel, the

company is bound to abide by Germany’s Codetermination

Act of 1976.

» The general meeting of a KGaA essentially has the same

rights as the shareholders’ meeting of an AG. In addition,

it votes on the adoption of the annual financial statements

of the corporation; it further formally approves the actions

of the personally liable partners. In the case of Henkel, it

also elects and approves the actions of the members of

the Shareholders’ Committee. Resolutions passed in gen-

eral meeting require the approval of the personally liable

partner where they involve matters which, in the case of

a partnership, require the authorization of the personally

liable partners and also that of the limited partners (Clause

285 (2) AktG) or relate to the adoption of annual financial

statements (Clause 286 (1) AktG).

According to our Articles of Association, in addition to the

Supervisory Board, Henkel also has a standing Shareholders’

Committee comprising a minimum of five and a maximum

of ten members, all of whom are elected by the Annual Gen–

eral Meeting [AGM] (Article 27 of the Articles of Association).

The Shareholders’ Committee is required in particular to

perform the following five functions:

1. It acts in place of the AGM in guiding the business activi–

ties of the corporation.

2. It decides on the appointment and dismissal of person–

ally liable partners.

3. It holds both the power of representation and executive

powers over the legal relationships prevailing between

the corporation and Henkel Management AG as the per-

sonally liable partner.

4. It exercises the voting rights of the corporation in the

General Meeting of Henkel Management AG.

5. And it issues rules of procedure incumbent upon Henkel

Management AG (Clause 278 (2) AktG in conjunction with

Clauses 114 and 161 HGB and Articles 8, 9 and 26 of the

Articles of Association).

Corporate governance at

Henkel AG & Co. KGaA

Corporategovernanceinthesenseofresponsible,

transparentmanagementandcontrolofthecorpora–

tionalignedtothelong-termincreaseinshareholder

valuehaslongbeenanintegralcomponentofourcor–

porateculture,andwillremainsointothefuture.

Consequently,theManagementBoard,Share–

holders’CommitteeandSupervisoryBoardhave

committedtothefollowingprinciples:

»Valuecreationasthefoundationofourmanage–

rialapproach

»Sustainabilityachievedthroughtheapplicationof

sociallyresponsiblemanagementprinciples

»Transparencysupportedbyanactiveandopen

informationpolicy

I. Corporate governance/Corporate

management report

This Corporate Governance Report describes the principles of

the management and control structure, corporate steward–

ship and also the essential rights of shareholders of Henkel

AG & Co. KGaA; in addition, it explains the special features

that arise from our particular legal form and our Articles of

Association as compared to a joint stock corporation (AG in

Germany). It takes into account the recommendations of the

German Corporate Governance Code and contains all the in–

formation required according to Clause 289 (4), Clause 289 (a)

and Clause 315 (4) of the German Commercial Code [HGB].

Legal form/Special statutory features of

Henkel AG & Co. KGaA

Henkel is a “Kommanditgesellschaft auf Aktien” (KGaA).

A KGaA is a company with its own legal personality (i.e.

it is a legal person) in which at least one partner assumes

unlimited liability in respect of the company’s creditors

(personally liable partner). The other partners participate

in the capital stock, which is split into shares, and their

liability is limited by these shares; they are thus not liable

for the company’s debts (limited partners per Clause 278 (1)

German Joint Stock Corporation Act [AktG]).

There are the following major differences with respect

to an AG:

»At Henkel AG & Co. KGaA, the executive role is assigned

to Henkel Management AG – acting through its manage-

ment board – as the sole personally liable partner (Clause

278 (2), Clause 283 AktG in conjunction with Article 11 of

Group management report » Corporate governance

Group management report

Annual Report 2009

Authorized capital; share buy-back

According to Art. 6 (5) of the Articles of Association, there

is an authorized capital limit. Acting within this limit, the

personally liable partner is authorized, subject to the ap–

proval of the Supervisory Board and of the Shareholders’

Committee, to increase the capital stock of the corporation

in one or several acts until April 9, 2011, by up to a total of

25,600,000 euros through the issue for cash of new preferred

shares with no voting rights. All shareholders are essentially

assigned pre-emptive rights. However, these may be set aside

provided that the issue price of the new shares is not sig–

nificantly below the quoted market price of the shares of

the same class at the time of final stipulation of the issue

price. They may also be set aside in order to facilitate the

disposal of fractional amounts of shares.

In addition, the personally liable partner is authorized to

purchase ordinary and/or preferred shares of the corporation

at any time up to October 19, 2010, subject to the condition

that the shares acquired on the basis of such authoriza–

tion, together with the other shares that the corporation

has already acquired and holds as treasury stock, shall not

at any time exceed 10 percent in total of the capital stock.

This authorization can be exercised for any legal purpose.

To the exclusion of the pre-emptive rights of existing share–

holders, treasury stock may be used to operate the Stock

Incentive Plan of the Henkel Group or transferred to third

parties for the purpose of acquiring companies or invest–

ing in companies. Treasury stock may also be sold to third

parties against payment in cash, provided that the selling

price is not significantly below the quoted market price at

the time of share disposal.

Major shareholders

According to notifications received by the company on De–

cember 30, 2009, a total of 52.57 percent of the voting rights

is held by parties to the Henkel family’s share-pooling agree–

ment. This agreement was concluded between members of the

families of the descendants of company founder Fritz Henkel;

it contains restrictions with respect to transfers of the ordi–

nary shares covered (Art. 7 of the Articles of Association).

Interaction between Management Board,

Shareholders’ Committee, Supervisory Board;

other committees

The Management Board of Henkel Management AG (“Man-

agement Board”), which is responsible for the corporation’s

operating business, the Shareholders’ Committee and the

Capital stock denominations; shareholder rights

The capital stock of the corporation amounts to 437,958,750

euros. It is divided into a total of 437,958,750 bearer shares

of no par value, of which 259,795,875 are ordinary bearer

shares (proportion of capital stock: 259,795,875 euros or

59.3 percent) and 178,162,875 preferred shares (proportion

of capital stock: 178,162,875 euros or 40.7 percent).

Each ordinary share grants to its holder one vote. The

preferred shares accord to their holder all shareholder rights

apart from the right to vote. Unless otherwise resolved in

General Meeting, the unappropriated profit is distributed

as follows: first, the holders of preferred shares receive a

preferred dividend in the amount of 0.04 euros per preferred

share. The holders of ordinary shares then receive a dividend

of 0.02 euros per ordinary share, with the residual amount

being distributed to the holders of ordinary and preferred

shares in accordance with the proportion of the capital

stock attributable to them (Article 35 (2) of the Articles of

Association). If the preferred dividend is not paid out either

in part or in whole in a year, and the arrears are not paid

off in the following year together with the full preferred

share dividend for that second year, the holders of preferred

shares are accorded voting rights until such arrears are

paid (Clause 140 (2) AktG). Cancellation or limitation of this

preferred dividend requires the consent of the holders of

preferred shares (Clause 141 (1) AktG).

There are no shares bearing cumulative/plural voting

rights, preferential voting rights or maximum voting rights

(voting restrictions).

The shareholders exercise their rights in the Annual

General Meeting as per the relevant statutory provisions and

the Articles of Association of Henkel AG & Co. KGaA. In par–

ticular, they may vote (as per entitlement), speak on agenda

items, ask relevant questions and propose motions.

Unless otherwise required by mandatory provisions of

statute or the Articles of Association, the resolutions of the

General Meeting are adopted by simple majority of the votes

cast and, inasmuch as a majority of shares is required by

statute, by simple majority of the voting stock represented

(Art. 24 of the Articles of Association). This also applies to

changes in the Articles of Association. However, modifica–

tions to the object of the company require a three-quarters’

majority (Clause 179 (2) AktG).

Group management report » Corporate governance

24 Annual Report 2009

tatives on the Supervisory Board. The Chairperson of the

Audit Committee is elected from candidates proposed by

the shareholder representatives on the Supervisory Board.

The Chairperson of the Audit Committee is someone other

than the Chairperson of the Supervisory Board or a former

member of the Management Board, and should be an expert

in the fields of accountancy and auditing, and in the applica–

tion of internal checks and balances. The Audit Committee

prepares the proceedings and resolutions of the Supervisory

Board relating to adoption of the annual financial state–

ments and the consolidated financial statements, and also

the auditor appointment proposal to be made to the Annual

General Meeting. It is also concerned with monitoring the

accounting process, the effectiveness of the internal checks

and balances, the risk management system and the internal

auditing and review system, and with compliance issues. It

further discusses with the Management Board the quarterly

reports and the financial report for the half-year prior to

their publication, issues audit mandates to the auditors and

defines the focal areas of the audit or review.

The Nominations Committee comprises the Chairperson

of the Supervisory Board and two further members elect–

ed by the shareholder representatives on the Supervisory

Board; the Chairperson of the Supervisory Board is also

Chairperson of the Nominations Committee. The Nomina-

tions Committee prepares the proposals to be submitted by

the Supervisory Board to the Annual General Meeting for the

election of members to the Supervisory Board (shareholder

representatives).

At regular intervals, the Supervisory Board and the

Shareholders’ Committee carry out an internal review to

determine the efficiency with which they and their com–

mittees/subcommittees are performing their duties. This

self-assessment is performed on the basis of a comprehensive

checklist which also contains items relating to corporate

governance and improvement indicators. Pursuant to the

German Corporate Governance Code, conflicts of interest

must be disclosed in an appropriate manner to the Supervi–

sory Board or Shareholders’ Committee, particularly those

that may arise as the result of a consultancy or committee

function performed in the service of customers, suppliers,

lenders or other business partners. Members encountering

material conflicts of interest that are more than just tem-

porary are required to resign their mandate.

Cooperation within the Management Board of Henkel

Management AG and the division of responsibilities are

regulated by rules of procedure issued by the Supervisory

Supervisory Board of the corporation cooperate closely for

the benefit of the organization.

The Management Board agrees the strategic alignment

of the corporation with the Shareholders’ Committee and

discusses with it at regular intervals the status of imple–

mentation of said strategy.

In keeping with good corporate management practice,

the Management Board informs the Shareholders’ Commit–

tee and the Supervisory Board regularly, and in a timely

and comprehensive fashion, of all issues of relevance to the

corporation concerning business policy, corporate planning,

profitability, the business development of the corporation

and of major Group companies, and also matters relating

to the risk situation and risk management.

The Shareholders’ Committee has determined the trans–

actions of fundamental significance that are subject to its

consent (Article 26 of the Articles of Association). These

relate, in particular, to decisions or measures that mate–

rially change the net assets, financial position or results

of operations of the corporation. The Management Board

complies with these rights of consent and also the spheres

of authority of the General Meeting in matters subject to

statutory control.

The Shareholders’ Committee passes its resolutions on the

basis of a simple majority of the votes cast. It has established a

Finance Subcommittee and a Human Resources Subcommit–

tee, each of which comprises five members of the Sharehold–

ers’ Committee. The Finance Subcommittee deals principally

with the financial matters, accounting issues including exter–

nal auditing, taxation planning and accounting policies, and

the internal auditing and risk management of the corpora–

tion. It also carries out the necessary preparatory work for

decisions to be taken by the Shareholders’ Committee in such

affairs. The Human Resources Subcommittee deals principally

with personnel matters relating to the members of the Man–

agement Board, human resources strategy, and remuneration.

It is also concerned with successor planning and identifying

management potential within the individual business sectors,

taking into account relevant diversity aspects.

The Supervisory Board passes its resolutions by simple ma–

jority of the votes cast. In the event of a tie, the Chairperson

has the casting vote. The Supervisory Board has established

an Audit Committee and a Nominations Committee. The

Audit Committee is made up of three shareholder and three

employee-representative members of the Supervisory Board,

each elected by the Supervisory Board based on proposals

of their fellow shareholder or fellow employee represen–

Group management report » Corporate governance

Annual Report 2009

pliance organization with locally and regionally responsible

compliance officers led by a globally responsible Chief Com–

pliance Officer. The CCO manages and controls compliance-

related activities undertaken at the corporate level, oversees

fulfillment of both internal and external regulations, and

supports the corporation in the further development and

implementation of the associated standards. He is assisted

in this capacity by Internal Audit and also by a Compliance

Committee of interdisciplinary composition.

The remit of the locally and regionally responsible com–

pliance officers includes organizing and overseeing the

training activities and implementation measures tailored

to the specific requirements of their locations. They report

through the locally or regionally responsible Presidents

to the Chief Compliance Officer. The CCO and the Head of

Internal Audit report to the Management Board and also

the Audit Committee of the Supervisory Board on identified

compliance violations.

The procedures to be adopted in the event of complaints

or suspicion of malpractice also constitute an important ele–

ment of the compliance regime. In addition to our internal

reporting system and complaint registration channels, em–

ployees may also, for the purpose of reporting serious viola–

tions to the CCO, anonymously use a Compliance Hotline

operated by an external service-provider. This agency is man–

dated to initiate the necessary follow-up procedures.

Our corporate compliance activities are focused on the

fields of safety, health and the environment, antitrust law

and the fight against corruption. Further compliance-rele-

vant areas relate to capital market law. Supplementing the

legal provisions, internal codes of conduct have been put in

place to regulate the treatment of information that has the

potential to affect share prices. There are also rules that go

beyond the legal requirements, governing the behavior of

the members of the Board of Management, the Shareholders’

Committee and the Supervisory Board, and also employees

of the corporation who, due to their function or involvement

in projects, have access to insider information.

For further details relating to the principles guiding

our corporate stewardship, please go to our website www.

henkel.com/sustainability.

Application of the German

Corporate Governance Code

Notwithstanding the special features arising from our legal

form and Articles of Association, Henkel AG & Co. KGaA

complies with the recommendations (“shall” provisions)

Board of Henkel Management AG. The Management Board

reaches its decisions by simple majority of the votes cast. In

the event of a tie, the Chairperson has the casting vote.

Some members of the Supervisory Board and of the

Shareholders’ Committee are or were in past years holders of

senior managerial positions in other companies. Inasmuch

as Henkel pursues business activities with these companies,

the same arm’s length principles apply as those applicable

to transactions with and between unrelated third parties.

We are of the view that, in this respect, there are no con–

flicts of interest or doubts as to the independence of the

members concerned.

For more details on the composition of the Management

Board, the Supervisory Board and the Shareholders’ Com–

mittee and also the subcommittees established within the

Supervisory Board and the committees of the Shareholders’

Committee, please refer to pages 134 to 140.

For further details with respect to corporate governance

in general, please go to our website at www.henkel.com/ir.

Principles of corporate stewardship/Compliance

The corporation, our management bodies and our employees

around the world orientate their activities to our corporate

vision and values so that our daily work may be constantly

aligned to the guiding principles of sustainable develop–

ment. These provide the framework governing the conduct

and actions of Henkel employees in all areas of business

and in all localities in which Henkel operates. They are an

expression of our own corporate culture.

Henkel is committed to ensuring that all business trans–

actions are conducted in an ethically irreproachable, legal

fashion. The Management Board has therefore issued a series

of Group-wide codes, standards and guidelines governing the

behavior of all Henkel employees. These regulatory instru–

ments are regularly reviewed and amended as appropriate.

Our Code of Conduct supports our employees in dealing

with ethical and legal issues; our Code of Teamwork and

Leadership defines the approach, actions and attitudes to

be adopted by management and employees in their inter–

personal dealings; and the Code of Corporate Sustainability

describes the principles that underlie our approach to sus–

tainable, socially responsible development. Taken together,

these codes also enable Henkel to meet the commitments

derived from the Global Compact of the United Nations.

Ensuring compliance in the sense of obeying laws and

adhering to regulations is an integral component of our

business processes. Henkel has established a Group-wide com–

Group management report » Corporate governance

26 Annual Report 2009

according to Clause 285 sentence 1 no. 9, Clause 289 (2)

no. 5, Clause 314 (1) no. 6 and Clause 315 (2) no. 4 of the

German Commercial Code [HGB]. The associated informa–

tion has not therefore been additionally disclosed in the

notes to the consolidated financial statements at the back

of this Annual Report.

1. Remuneration of the Management Board

With the Act on the Appropriateness of Management Board

Remuneration [VorstAG], which passed into German law on

August 5, 2009, the legislature is pursuing the objective of

linking executive compensation to a sustainable corporate

management approach aligned to long-term benefits. The

current system of compensation for the members of Henkel’s

Management Board is already largely governed by these

principles. Nevertheless, the Supervisory Board of Henkel

Management AG has resolved to review the remuneration

system once more in all its details and, where appropriate,

to introduce modifications in order to further enhance

the already sustainable and long-term alignment of the

corporation’s executive compensation mix. The Annual

General Meeting will be duly informed of the current status

of this review.

Regulation

Regulation and confirmation of compensation for members

of the Management Board of Henkel Management AG are

the responsibility of the Supervisory Board of Henkel Man–

agement AG in consultation with the Human Resources

Subcommittee of the Shareholders’ Committee. The Supervi–

sory Board of Henkel Management AG is comprised of three

members of the Shareholders’ Committee. The compensation

system is regularly reviewed in terms of structure and the

amounts involved. In order to ensure the competitiveness of

the overall remuneration package, this process takes into ac–

count the size and international activities of the corporation,

its economic position, the level and structure of remunera–

tion encountered in similar companies and also the general

compensation structure within the Henkel organization.

Structure and amounts

In accordance with the objective of achieving a sustainable

increase in shareholder value, the remuneration of the

Management Board is characterized by a high proportion of

performance-related compensation. The package comprises

of the German Corporate Governance Code, with two

exceptions: (1) The contracts of employment for members

of the Management Board contain no severance pay cap

in the event of premature termination of their tenure as

executives of the corporation without good reason, i.e.

there is no limitation to a possible severance payout to the

usual maximum of two years’ emoluments. (2) In order to

protect the legitimate interests and private spheres of the

members of the management bodies who are also mem–

bers of the Henkel family, their individual shareholdings

are not disclosed unless required by compelling statutory

obligations. The Code requires disclosure of shareholdings

in excess of 1 percent.

Henkel also complies with all the suggestions (“may/

should” provisions) of the Code in keeping with our legal

form and the special statutory features anchored in our

Articles of Association. The corresponding declarations of

compliance together with the reasons for deviations from

recommendations can be found on our website at www.

henkel.com/ir.

In accordance with the Declaration of Compliance, the

following details have been disclosed in relation to notifiable

shareholdings: The aggregate holdings of the members of

the Supervisory Board and of the members of the Sharehold–

ers’ Committee exceed in each case 1 percent of the shares

issued by the corporation. The members of the Management

Board together hold less than 1 percent of the shares issued

by the corporation.

In fiscal 2009, a total of three transactions were notified

in compliance with Clause 15a WpHG [Securities Trading

Act, “Directors’ Dealings”]. One member of the Shareholders’

Committee sold a total of 200,000 ordinary shares. For fur–

ther details in this regard, please go to our website www.

henkel.com/ir.

II. Remuneration report

This Remuneration Report provides an outline of the com-

pensation system for the Management Board, Henkel Man-

agement AG as the personally liable partner, the Supervisory

Board and the Shareholders’ Committee of Henkel AG &

Co. KGaA, and the Supervisory Board of Henkel Manage–

ment AG; it also indicates the level and structure of the

remuneration paid. The Remuneration Report takes into

account the recommendations of the German Corporate

Governance Code and contains all the information required

Group management report » Corporate governance

Annual Report 2009

ence price). If, during the performance period, earnings

per preferred share increase by at least 15 percent, 21 per-

cent or 30 percent, each participant is allocated a further

1,800, 3,600 or 5,400 CPUs respectively. To calculate the

increase in earnings per preferred share, the earnings per

preferred share of the financial year prior to the year of issue

is compared with the earnings per preferred share of the

second financial year after the year of issue. The amounts

included in the calculation of the increase are in each case

the earnings per preferred share as disclosed in the consoli–

dated financial statements of the relevant financial years,

adjusted for exceptional items. The monetary value per CPU

essentially corresponds to the reference price of the Henkel

preferred share. A ceiling value (cap) is imposed in the event

of extraordinary share price increases.

Other emoluments

The other emoluments largely relate to benefits arising out

of standard commercial insurance policies and the provi–

sion of a company car.

Other regulatory provisions

In the event of members of the Management Board taking

retirement, they are entitled to continued payment of their

remuneration for a further six months, but not beyond the

month of their 65th birthday.

The corporation maintains on behalf of members of

management bodies and employees of Henkel a third-party

group insurance policy (D&O insurance) protecting against

consequential loss, which policy also covers members of

the Management Board. For members of the Management

Board, there is an own-risk deductible amounting to 10 per–

cent per event up to a maximum of one-and-a-half times

their fixed annual salary for loss events occurring within

a financial year.

Remuneration for 2009

Effective the end of the Annual General Meeting on April 14,

2008, Henkel Management AG joined the corporation as its

sole personally liable partner, replacing the former man–

agement of the corporation. The figures for the previous

year indicated in the following refer to the remuneration

received for the entire period of fiscal 2008, i.e. including

the Management Board emoluments in the period from

January 1, 2008 until conclusion of the Annual General

Meeting on April 14, 2008.

three components: a fixed salary, a variable performance-

related cash payment (short-term incentive/STI) and a vari-

able performance-related long-term incentive (LTI) in the

form of a share-based payment. Added to these emoluments

are ancillary benefits and earnings-linked pension entitle-

ments. The components in detail:

Fixed salary

The fixed salary is paid monthly. It is determined on the

basis of the functions, responsibilities and period of Manage–

ment Board service of the recipients concerned.

Short-term incentive (STI)

The performance criteria governing the short-term incentive

are primarily return on capital employed (ROCE) and earn-

ings per preferred share (EPS). The individual performance of

the Management Board member concerned, and the size, sig–

nificance and development of the business/functional unit(s)

involved are also taken into account. Payment is made in

arrears on an annual basis as a function of the performance

achieved in the immediately preceding financial year.

Long-term incentive (LTI)

Each member of the Management Board is allocated, as a

function of the absolute increase in the price of the Henkel

preferred share and the increase in the earnings per Henkel

preferred share (EPS) achieved over a period of three years

(performance period), the cash equivalent of up to 10,800

preferred shares – so-called Cash Performance Units (CPUs)

– per financial year (= tranche). On expiry of the perfor–

mance period, the number and the value of the CPUs due

are determined and the resulting tranche income is paid

in cash. Each member of the Management Board partici–

pating in a tranche is required to acquire a personal stake

by investing in Henkel preferred shares to the value of 25

percent of the gross tranche payout – this corresponds to

around half the amount paid out in cash – and to place

these shares in a blocked custody account with a five-year

drawing restriction.

In the event of an absolute rise in the share price during

the performance period of at least 15 percent, 21 percent

or 30 percent, each participant is allocated 1,800, 3,600 or

5,400 CPUs respectively. To calculate the increase in the

share price, the average price in January of the year of issue

of a tranche is compared to the average price in January of

the third financial year following the year of issue (refer–

Group management report » Corporate governance

28 Annual Report 2009

Pension benefits

The retirement pension for members joining the Management

Board of the former Henkel KGaA before January 1, 2005

amounts to a certain percentage of the last paid fixed salary

(defined benefit). For these Management Board members, the

amount payable is set at 60 percent of the final fixed salary

in the event of retirement after their 62nd birthday. The ac-

tual percentage individually determined for each executive

is made up of two components: the so-called base percentage

rate derived from the vested pension entitlement earned

prior to entry into the former or latter Management Board,

and an annual percentage increase of the base percentage

during the executive’s membership of the former and latter

Management Board.

Effective January 1, 2005, we changed the pension system

for new members of the Management Board to a defined con–

tribution scheme. Once a covered event occurs, the affected

members of the Management Board receive a superannua–

tion lump-sum payment combined with a continuing basic

annuity. The superannuation lump-sum payment comprises

the total of annual contributions calculated on the basis of a

certain percentage of the fixed salary and of the short-term

incentive, this percentage being the same for all members of

The total compensation paid to members of the Management

Board for the performance of their duties for and on behalf

of Henkel AG & Co. KGaA and its subsidiaries during the year

under review amounted to 10,568k euros (2008: 13,270k

euros). Of the total cash emoluments of 9,651k euros paid

in respect of 2009 (2008: 11,743k euros), 3,531k euros was

in fixed salary (2008: 3,763k euros), 5,953k euros was from

the short-term incentive (2008: 7,808k euros) and 167k euros

was in respect of other emoluments (2008: 172k euros). Also

included in the total remuneration are the CPUs granted

to the members of the Management Board for 2009 as LTI,

which become payable in 2012 as a function of the degree

of attainment of the associated performance targets. It is

a legal requirement that a value be disclosed in the year

of grant, and this value has been calculated based on an

assumed increase of both parameters (EPS/share price) of

21 percent over the performance period, giving an imputed

amount of 917k euros (2008: 1,527k euros).

The remuneration of the individual members of the

Management Board in the year under review totaling 11,295k

euros is indicated in the table below together with a break–

down according to the individual components referred to

above.

Group management report » Corporate governance

Remuneration of the Management Board

in k euros Cash components

Fixed

salary

Short-term

incentive

Other

emoluments

Total cash

emoluments

Value of long-

term incentive1)

Total

remuneration1)

Kasper Rorsted

2009

963.0 1,658.1 25.9

2,647.0

189.7

2,836.7

2008 856.5 1,820.6 53.8

2,730.9

293.8

3,024.7

Prof. Dr. Ulrich Lehner

2009

–––

–

(until April 14, 2008) 2008 262.5 706.2 14.1

982.8

28.6

1,011.4

Thomas Geitner

2009

642.0 1,068.8 25.2

1,736.0

189.7

1,925.7

(since March 1, 2008) 2008 501.0 975.6 24.1

1,500.7

277.4

1,778.1

Alois Linder

2009

–––

–

(until June 18, 2008) 2008 280.0 794.5 11.1

1,085.6

45.7

1,131.3

Dr. Friedrich Stara

2009

642.0 1,068.8 18.9

1,729.7

158.1

1,887.8

2008 621.0 1,133.8 30.2

1,785.0

293.8

2,078.8

Dr. Lothar Steinebach

2009

642.0 1,088.8 23.4

1,754.2

189.7

1,943.9

2008 621.0 1,203.8 22.7

1,847.5

293.8

2,141.3

Hans Van Bylen

2009

642.0 1,068.8 73.1

1,783.9

189.7

1,973.6

2008 621.0 1,173.8 15.8

1,810.6

293.8

2,104.4

Total 2009 3,531.0 5,953.3 166.5 9,650.8 916.9 10,567.7

33.4 % 56.3 % 1.6 % 8.7 % 100.0 %

Total 2008 3,763.0 7,808.3 171.8

11,743.1

1,526.9

13,270.0

28.4

% 58.8

% 1.3

% 11.5

100.0 %

1) 2009 LTI payout in 2012; these figures will only be attained in the event of EPS/share price increasing by 21 percent in the performance period

2) In addition to the emoluments indicated above and those for services rendered during the financial year, in 2009 Mr. Rorsted was also reimbursed expenditures on

security measures at his home plus removal expenses amounting to 727k euros in accordance with agreements relating to his appointment to the Management Board

3) 2008 LTI for Messrs. Lehner/Linder only up to time of departure in 2008; 2009 LTI for Mr. Stara calculated up to standard retirement age in 2011

Annual Report 2009

3. Remuneration of the Supervisory Board

and of the Shareholders’ Committee of

Henkel AG & Co. KGaA

Regulation

The remuneration for the Supervisory Board and the Share–

holders’ Committee has been approved in General Meeting;

the corresponding provisions are contained in Articles 17

and 33 of the Articles of Association.

Structure and amounts

The structure and amount of the remunerations are com–

mensurate with the size of the corporation, its economic

success and the functions performed by the Supervisory

Board and Shareholders’ Committee respectively.

The remuneration package comprises three components:

a fixed fee, a variable, dividend-related bonus and a variable

performance-related long-term incentive (LTI) based on the

success of the corporation. The components in detail:

Fixed fee

Each member of the Supervisory Board and of the Share–

holders’ Committee receives a fixed fee of 20,000 euros and

50,000 euros per year respectively. The higher fixed fee in the

latter case is due to the fact that, as required by the Articles

of Association, the Shareholders’ Committee is involved in

business management activities.

the Management Board. Any vested pension rights earned

within the corporation prior to the executive’s joining the

Management Board are taken into account as start-up units.

This ensures the establishment of a performance-related

pension system.

The pension benefits accruing to the members of the

former and latter Management Board as of the balance sheet

date, and also the contributions to the pension scheme made

in 2009, are shown in the tables above.

A total of 78,612k euros (2008: 58,613k euros) has been

provided for pension obligations to former members of

the former and latter Management Board and the former

directors of the legal predecessor of Henkel KGaA, and their

surviving dependants. Amounts paid to such recipients

during the year under review totaled 6,311k euros (2008:

12,200k euros).

2. Remuneration of Henkel Management AG for

assumption of liability, and reimbursement of

expenses to same

For assumption of the liability and management of the

businesses of the corporation, Henkel Management AG in

its function as personally liable partner receives an annual

payment of 50,000 euros (= 5 percent of its capital stock)

plus any value-added tax (VAT) due, said fee being payable

irrespective of any profit or loss made.

Henkel Management AG may also claim reimbursement

from the corporation of all expenses incurred in connection

with the management of the latter’s businesses, including

the emoluments paid to its management bodies.

Defined contribution

in euros Superannuation lump sum Basic annuity

Total

lump sum

Addition to superannu-

ation lump sum 2009

Total basic

annuity (p.a.)

Addition to basic

annuity for 2009

Kasper Rorsted 1,486,192.50 489,892.50 1,273.65 242.78

Dr. Friedrich Stara 1,178,325.00 308,475.00 624.35 126.86

Hans Van Bylen 1,175,669.10 315,675.00 1,139.54 230.69

Thomas Geitner 361,042.50 280,012.50 349.34 170.35

Defined benefit

in euros Retirement pension p.a. on onset

of pension as of balance sheet date

Change in pension

provisions for 2009

Dr. Lothar Steinebach 385,200 1,086,607

Group management report » Corporate governance

30 Annual Report 2009

of 50 percent of the cash amount accruing to a member of

the Supervisory Board (fixed fee plus dividend bonus); if

they are the Chairperson of one or more committees, they

receive a fee of 100 percent of this amount. Activity in the

Nominations Committee is not remunerated separately.

Other regulatory provisions

The members of the Supervisory Board or a committee re–

ceive an attendance fee amounting to 500 euros for each

meeting in which they participate. If several meetings take

place on one day, the attendance fee is only paid once. In

addition, the members of the Supervisory Board and of the

Shareholders’ Committee are reimbursed expenses arising

from the performance of their mandates. The members of

the Supervisory Board are also reimbursed the value-added

tax (VAT) payable on their total remunerations and reim–

bursed expenses.

The corporation maintains on behalf of members of

management bodies and employees of Henkel a third-party

group insurance policy (D&O insurance) protecting against

consequential loss, which policy also covers members of the

Supervisory Board and of the Shareholders’ Committee. For

members of the Supervisory Board and of the Shareholders’

Committee, there is an own-risk deductible amounting to

10 percent per event up to a maximum of one-and-a-half

times their fixed annual fee for loss events occurring within

a financial year.

Remuneration for 2009

Total remuneration paid to the members of the Supervisory

Board (fixed fee, dividend bonus, attendance fee, compo–

nents payable for committee activity and long-term incen-

tive for 2009) for the year under review amounted to 1,425k

euros plus VAT (2008: 1,231k euros plus VAT). Of the total

cash emoluments paid for 2009 (fixed fee, dividend bonus,

attendance fee and components payable for committee

activity) amounting to 1,168k euros plus VAT of 198k euros

(2008: 974k euros plus VAT of 144k euros), 350k euros was

in fixed fees, 588k euros in dividend bonus, 31k euros in

attendance fees and 199k euros in components payable

for committee activity (including relevant additional at–

tendance fees).

Dividend bonus

Each member of the Supervisory Board and of the Share–

holders’ Committee further receives an annual bonus of

2,400 euros for every full 0.02 euros by which the preferred

dividend paid out for the prior year exceeds 0.25 euros.

Long-term incentive (LTI)

As a long-term incentive, each member of the Supervisory

Board and of the Shareholders’ Committee receives an ad-

ditional cash payment each year, the amount of which de-

pends on the increase in earnings per preferred share over

a three-year reference period. The earnings per share (EPS)

of the financial year preceding the payment-related year

is compared with the EPS of the second financial year fol-

lowing the payment-related year. If the increase is at least

15 percent, an amount of 600 euros is paid for each full

percentage point of the total achieved increase. If the in–

crease reaches a minimum of 21 percent, the amount paid

per percentage point is 700 euros, and if the increase is

a minimum of 30 percent, the amount paid per percent–

age point is 800 euros. The calculation is based on the ap–

proved and endorsed consolidated financial statements of

the respective financial years as duly audited and provided

with an unqualified opinion, with EPS being adjusted for

exceptional items.

However, based on the single rate governing the remunera–

tions payable to a member, the total of the dividend bonus and

the long-term incentive is limited to 50,000 euros (cap).

Remuneration for chairpersons/vice-chairpersons/

(sub)committee members

The Chairperson of the Supervisory Board and the Chair-

person of the Shareholders’ Committee each receives double

the amount, and the Vice-chairperson in each case one-and-

a-half times the amount accruing to an ordinary member.

Members of the Shareholders’ Committee who are also

members of one or more subcommittees of the Sharehold-

ers’ Committee each additionally receive remuneration

equivalent to the initial amount; if they are the Chairperson

of one or more subcommittees, they receive double.

Members of the Supervisory Board who are also members

of one or more committees each additionally receive a fee

Annual Report 2009

4. Remuneration of the Supervisory Board of

Henkel Management AG

In accordance with Article 14 of the Articles of Association

of Henkel Management AG, the members of the Supervi–

sory Board of Henkel Management AG receive an annual

fee of 10,000 euros, although members of this body who

are also members of the Supervisory Board or Shareholders’

Committee of Henkel AG & Co. KGaA do not receive such

compensation.

As the Supervisory Board of Henkel Management AG is

comprised of members of the Shareholders’ Committee,

no fees were paid to members of that Supervisory Board in

the year under review.

The total remuneration of the members of the Shareholders’

Committee for the year under review (fixed fee, dividend

bonus, components payable for subcommittee activity and

LTI 2009) amounted to 2,345k euros (2008: 2,303k euros).

Of the total cash emoluments paid for 2009 (fixed fee and

dividend bonus, including the components payable for sub–

committee activity) amounting to 1,994k euros (2008: 1,959k

euros), 593k euros was in fixed fee, 398k euros in dividend

bonus and 1,003k euros in remuneration for subcommittee

activity (excluding the LTI amount due).

The dividend bonus in each case was based on a dividend

of 0.53 euros per preferred share.

Also included in the total remunerations was the long-

term incentive (LTI) granted to the members of the Super–

visory Board and of the Shareholders’ Committee for 2009

in the form of a deferred conditional payment entitlement.

This will be paid out following the 2012 Annual General

Meeting as a function of the earnings per preferred share

(EPS) achieved in 2011. It is a legal requirement that an LTI

value be disclosed in the year of grant. According to our

Articles of Association, the total of dividend bonus and LTI

is limited to a ceiling of 50,000 euros per ordinary member.

Given this upper maximum, and assuming an increase in

EPS of 21 percent in the performance period, the totals ap-

plicable for 2009 are 257k euros for the Supervisory Board

and 351k euros for the Shareholders’ Committee (including

remuneration components for (sub)committee activity).

The remuneration of the individual members of the

Supervisory Board and of the Shareholders’ Committee for

the year under review is indicated in the tables overleaf,

together with a breakdown according to the individual

components referred to above.

Group management report » Corporate governance

32 Annual Report 2009

Remuneration of the Supervisory Board

in euros Cash components

Fixed

fee

Dividend

bonus

Atten-

dance fee

Fee for sub-

committee

activity

Total cash

emolu-

ments

Value of

long-term

incentive

Total

remunera-

tion

Dr. Simone Bagel-Trah

4),

2009

25,480 42,806 2,000 7,842

78,128

18,727

96,855

Chair since September 23, 2009 2008 14,317 24,052 2,000 –

40,369

10,523

50,892

Dipl.-Ing. Albrecht Woeste

4),

2009

29,041 48,789 1,500 20,958

100,288

21,345

121,633

until September 22, 2009, Chair 2008 40,000 67,200 2,500 –

109,700

29,400

139,100

Winfried Zander

4),

2009

30,000 50,400 2,000 28,800

111,200

22,050

133,250

Vice-chair 2008 30,000 50,400 2,500 –

82,900

22,050

104,950

Dr. Friderike Bagel

2009

5,973 10,034 500 8,503

25,010

4,390

29,400

(until April 20, 2009) 2008 20,000 33,600 2,500 –

56,100

14,700

70,800

Engelbert Bäßler

2009

– – – –

–

(until April 14, 2008) 2008 5,683 9,548 500 –

15,731

4,177

19,908

Jutta Bernicke

2009

20,000 33,600 2,000 –

55,600

14,700

70,300

(since April 14, 2008) 2008 14,317 24,052 1,500 –

39,869

10,523

50,392

Hans Dietrichs

2009

– – – –

–

(until March 31, 2008) 2008 4,973 8,354 500 –

13,827

3,655

17,482

Fritz Franke

2009

20,000 33,600 1,500 –

55,100

14,700

69,800

(since April 14, 2008) 2008 14,317 24,052 2,000 –

40,369

10,523

50,892

Johann-Christoph Frey

2009 5,479 9,205 500

–

15,184

4,028

19,212

(since September 23, 2009) 2008 – – – –

–

Birgit Helten-Kindlein

2009

20,000 33,600 2,000 28,800

84,400

14,700

99,100

(since April 14, 2008) 2008 14,317 24,052 2,000 –

40,369

10,523

50,892

Bernd Hinz

2009

20,000 33,600 2,000 –

55,600

14,700

70,300

2008 20,000 33,600 2,500 –

56,100

14,700

70,800

Prof. Dr. Michael Kaschke

2009

20,000 33,600 1,500 –

55,100

14,700

69,800

(since April 14, 2008) 2008 14,317 24,052 1,500 –

39,869

10,523

50,392

Thomas Manchot

2009

20,000 33,600 2,000 –

55,600

14,700

70,300

2008 20,000 33,600 2,500 –

56,100

14,700

70,800

Prof. Dr. Dr. h.c. mult. Heribert Meffert

2009

– – – –

–

(until April 14, 2008) 2008 5,683 9,548 500 –

15,731

4,177

19,908

Thierry Paternot

2009

20,000 33,600 2,000 –

55,600

14,700

70,300

(since April 14, 2008) 2008 14,317 24,052 2,000 –

40,369

10,523

50,892

Andrea Pichottka

2009

20,000 33,600 2,000 –

55,600

14,700

70,300

2008 20,000 33,600 2,500 –

56,100

14,700

70,800

Prof. Dr. Dr. h.c. mult. Heinz Riesenhuber

2009

– – – –

–

(until April 14, 2008) 2008 5,683 9,548 500 –

15,731

4,177

19,908

Prof. Dr. Theo Siegert

2009 14,027 23,566 1,500

20,297

59,390

10,310

69,700

(since April 20, 2009) 2008 – – – –

–

Konstantin von Unger

2009

20,000 33,600 2,000 –

55,600

14,700

70,300

2008 20,000 33,600 2,000 –

55,600

14,700

70,300

Michael Vassiliadis

2009

20,000 33,600 2,000 28,300

83,900

14,700

98,600

2008 20,000 33,600 2,000 –

55,600

14,700

70,300

Dr. h.c. Bernhard Walter

2009

20,000 33,600 1,500 55,600

110,700

14,700

125,400

2008 20,000 33,600 2,500 –

56,100

14,700

70,800

Werner Wenning

2009

– – – –

–

(until April 14, 2008) 2008 5,683 9,548 500 –

15,731

4,177

19,908

Ulf Wentzien

2009

20,000 33,600 2,000 –

55,600

14,700

70,300

(since April 14, 2008) 2008 14,317 24,052 2,000 –

40,369

10,523

50,892

Dr. Anneliese Wilsch-Irrgang

2009

– – – –

–

(until April 14, 2008) 2008 5,683 9,548 500 –

15,731

4,177

19,908

Rolf Zimmermann

2009

– – – –

–

(until April 14, 2008) 2008 5,683 9,548 500 –

15,731

4,177

19,908

Total 2009 350,000 588,000 30,500 199,100 1,167,600 257,250 1,424,850

2008 349,290 586,806 38,000 –

974,096

256,728

1,230,824

1) Fee for service on the Audit Committee; there is no separate fee payable for service on the Nominations Committee

3) Figures do not include VAT

4) Member of the Audit Committee chaired by Dr. h.c. Bernhard Walter

Group management report » Corporate governance

Annual Report 2009

Remuneration of the Shareholders’ Committee

in euros Cash components

Fixed

fee

Dividend

bonus

Fee for sub-

committee

activity

Total cash

emolu-

ments

Value of

long-term

incentive

Total

remunera-

tion

Dr. Simone Bagel-Trah, Chair

Vice-chair until September 18, 2009

(Chair HR Subcom.)

2009

82,123 55,187 167,200

304,510 53,544 358,054

2008 67,896 45,626 143,445

256,967 45,184 302,151

Dipl.-Ing. Albrecht Woeste

(until September 18, 2009), Chair

(Member HR Subcom.)

2009

71,507 48,052 59,779

179,338 31,535 210,873

2008 100,000 67,200 107,355

274,555 48,277 322,832

Dr. h.c. Christoph Henkel,

Vice-chair

(Chair Finance Subcom.)

2009

75,000 50,400 167,200

292,600 51,450 344,050

2008 75,000 50,400 167,200

292,600 51,450 344,050

Dr. Paul Achleitner

(Member Finance Subcom.)

2009

50,000 33,600 83,600

167,200 29,400 196,600

2008 50,000 33,600 83,600

167,200 29,400 196,600

Boris Canessa (since September 19, 2009)

(Member HR Subcom.)

2009

14,247 9,574 23,821

47,642 8,377 56,019

2008 – – –

– – –

Stefan Hamelmann

(Vice-chair Finance Subcom.)

2009

50,000 33,600 83,600

167,200 29,400 196,600

2008 57,104 38,374 83,600

179,078 31,489 210,567

Dr. h.c. Ulrich Hartmann

(Member Finance Subcom.)

2009

50,000 33,600 83,600

167,200 29,400 196,600

2008 50,000 33,600 83,600

167,200 29,400 196,600

Prof. Dr. Ulrich Lehner (since April 14, 2008)

(Member Finance Subcom.)

2009

50,000 33,600 83,600

167,200 29,400 196,600

2008 35,792 24,052 59,845

119,689 21,046 140,735

Konstantin von Unger

(Vice-chair HR Subcom.)

2009

50,000 33,600 83,600

167,200 29,400 196,600

2008 50,000 33,600 83,600

167,200 29,400 196,600

Karel Vuursteen

(Member HR Subcom.)

2009

50,000 33,600 83,600

167,200 29,400 196,600

2008 50,000 33,600 83,600

167,200 29,400 196,600

Werner Wenning (since April 14, 2008)

(Member HR Subcom.)

2009

50,000 33,600 83,600

167,200 29,400 196,600

2008 35,792 24,052 59,845

119,689 21,046 140,735

Dr. Hans-Dietrich Winkhaus

(until April 14, 2008)

(Member Finance Subcom.)

2009

– – –

–––

2008 14,208 9,548 23,755

47,511 8,354 55,865

Total

2009 592,877 398,413 1,003,200 1,994,490 350,706 2,345,196

2) Including LTI amount arising from subcommittee activity

4) Plus tax of 20k euros on income paid in kind

Group management report » Corporate governance

34 Annual Report 2009

and cleaning products. The portfolio of the Cosmetics/Toilet–

ries business sector encompasses hair cosmetics, products

for body, skin and oral care, and products for the hair salon

business. The Adhesive Technologies business sector offers

decoration and renovation products, adhesive and correc–

tion products for home and office, building adhesives and

industrial and structural adhesives, sealants and surface

treatment products.

Our three business sectors are managed on the basis of

globally operational strategic business units. These are sup–

ported by the central functions of Henkel AG & Co. KGaA in

order to ensure optimum utilization of corporate synergies.

Implementation of the strategies at a country and regional

level is the responsibility of the affiliated companies. The ex–

ecutive bodies of these companies manage their businesses in

line with the relevant statutory regulations, supplemented

by their own Articles of Association, internal procedural

rules and the principles incorporated in our globally ap–

plicable management standards, codes and guidelines.

Strategy and financial targets for 2012

Starting point

We will continue to focus on our three growth-generating

strategic areas of competence Laundry & Home Care, Cos–

metics/Toiletries and Adhesive Technologies. The recession

of the year under review has especially highlighted the

importance of a strong portfolio comprised of mutually

complementary activities. Already today, we enjoy leading

positions in all three segments in the mature markets, and

we intend to further expand these going forward. However,

in the growth regions too, we can point to more than 100

leading positions in the associated categories of our business

sectors Laundry & Home Care and Cosmetics/Toiletries. Our

Adhesive Technologies business sector leads the market in

over 30 emerging economies. It is essential for us to develop

and maintain strong and expandable market positions in

the countries in which we have a presence. Already today,

we generate 38 percent of our total sales in growth regions.

In 2004, the overall share of these emerging markets was

just 26 percent.

With our three growth-generating strategic areas of

competence and the leading positions we already occupy

in both the mature markets and the growth regions, we

Operational activities

Overview

Henkel was founded in 1876. Consequently, the year under

review marked the 133rd in our corporate history. Today,

Henkel boasts a global workforce of some 50,000 employees,

and day in, day out, people in more than 125 countries put

their trust in our brands and technologies.

Global operations

Organization and business sectors

Henkel AG & Co. KGaA is operationally active as well as

being the parent company of the Henkel Group. In this

latter capacity, it is responsible for defining and pursuing

Henkel’s corporate objectives as well as for the manage–

ment, control and stewardship of our Group-wide activities,

including risk management and the allocation of resources.

Henkel AG & Co. KGaA performs its tasks within the legal

scope afforded to it as part of the Henkel Group, with the

affiliated companies otherwise operating as legally inde–

pendent entities.

Operational management and control is the responsibil–

ity of the Management Board of Henkel Management AG in

its function as sole personally liable partner. The Manage-

ment Board is supported by the Corporate functions.

Henkel is organized into three business sectors/strategic

areas of competence:

» Laundry & Home Care

» Cosmetics/Toiletries

» Adhesive Technologies

Our product range in the Laundry & Home Care business

sector comprises heavy-duty detergents, specialty detergents

Group management report » Operational activities / Strategy and financial targets for 2012

Countries in which Henkel operates

Annual Report 2009

Group management report » Strategy and financial targets for 2012

also want to further increase our market shares in the

mature markets.

2. Concentrationonourtopbrands

Our focus is on fewer but stronger brands and further

expansion of our strong regional and global brands.

Brand awareness is to be further enhanced through ex-

tensive investment. Our three top brands Schwarzkopf,

Loctite and Persil already account for around 25 percent

of our sales. Our objective is to grow organically twice

as fast with these and other top brands as Henkel over–

all, and therefore to significantly expand their share of

total sales. At the same time, we are reducing the total

number of our brands by selling off or discontinuing

the smaller and less important brands.

3. Innovationandinnovationrates

With innovation rates1) of around 40 percent in the

business sectors Laundry & Home Care and Cosmetics/

Toiletries, and of around 20 percent at Adhesive Tech–

nologies, we count among the strongest innovators in

our fields of competence. We are helped in this respect by

the proximity we have to our consumers and customers,

actively incorporating both audiences in our product

development activities where appropriate. We have also

made it our principle only to launch a new product onto

the market if it has a positive effect on the gross margin

and makes a contribution to sustainable development in

at least one of our five focal areas – see page 56.

4. Operationalexcellence

In our purchasing activities, our aim is to create benefits

for ourselves through the further development of our

strategies. These include concentrating on strategic sup–

pliers and on procuring materials in low-cost emerging

economies. Our objectives with regard to production

and supply chain management include further reduc–

ing the number of manufacturing sites, particularly in

the mature markets. This will enable us to reduce the

complexity of our structures and better utilize available

capacities. We will also be introducing improvements

with respect to our administrative, selling and distribu–

tion expenses, for example by systematically utilizing

standardized processes and our shared services, and by

outsourcing non-core activities. We expect such mea–

sures to yield significant cost savings.

have a strong basis for generating profitable growth in the

future.

Strategic priorities and progress in fiscal 2009

In 2008, we set ourselves three strategic priorities:

Achieve our full business potential

For this, we have identified the following drivers:

1. Portfoliooptimization

Within the Laundry & Home Care business sector, we

aim to increase our profitability in the mass categories

such as heavy-duty detergents and hand dishwashing

products, and drive growth in the profitable specialty

categories such as household cleaners and fabric soft–

eners. In the Cosmetics/Toiletries business sector, we

intend to further enhance profitability by strengthening

our innovation leadership and expanding the Schwarz–

kopf brand. Within the Adhesive Technologies business

sector we want to improve our profitability in the au–

tomotive segment and consumer adhesives business,

drive growth in specialty applications and utilize our

advantages of scale with innovations in the industrial

adhesives segment.

In addition, we intend to achieve disproportionate

expansion in the growth regions through increased

capital expenditures, and to expand the share of sales

accounted for by these markets over the next few years

to 45 percent while also improving our margins. We

1) Percentage share of sales accounted for by new products launched onto the

market in the last three years (five years for Adhesive Technologies)

Achieve

our full

business potential

Focus