e6vk
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2006
Bayer Aktiengesellschaft
Bayer Corporation*
(Translation of registrant’s name into English)
Bayerwerk, Gebaeude W11
Kaiser-Wilhelm-Allee
51368 Leverkusen
Germany
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of
Form 20-F or Form 40-F.
Form 20-F
þ Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101 (b)(1): N/A
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101 (b)(7): N/A
Indicate by check mark whether, by furnishing the information contained in this form, the
registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Yes o No þ
If “Yes” is marked, indicate below the file number assigned to the registrant in connection
with Rule 12g3-2(b): N/A
* Bayer Corporation is also the name of a wholly-owned subsidiary of the registrant in the United
States.
TABLE OF CONTENTS
Agenda
1
This is
to give Notice of our Annual Stockholders’ Meeting to be held on Friday, April
28, 2006 at 10:00 hours (CEST) in the Congress Center North of the Cologne Exhibition Center,
Hall 9, Deutz-Mülheimer-Straße 111, 50679 Cologne, Germany.
Agenda
1. Submission of the Approved Financial
Statements and Consolidated Financial
Statements, the Management Reports for
the Bayer AG and the Bayer Group, and
the Report of the Supervisory Board for
Fiscal Year 2005; Resolution on
Distribution of the Profit.
The Board of Management and the Supervisory
Board propose that the balance sheet profit
in the amount of Euro 693,824,824 be used to
pay a dividend of Euro 0.95 per share
entitled to dividends and that this be
payable on May 2, 2006.
2. Ratification of the Actions of the
Members of the Board of Management
The Board of Management and the Supervisory
Board propose to ratify the actions of the
members of the Board of Management holding
office during the 2005 fiscal year with
respect to that year.
3. Ratification of the Actions of the
Members of the Supervisory Board
The Board of Management and the
Supervisory Board propose to ratify the
actions of the members of the Supervisory
Board holding office during the 2005 fiscal
year with respect to that year.
4. Revocation of Existing Authorized
Capital, Creation of New Authorized Capital
with the Option of Excluding Subscription
Rights and Amendment of § 4 (2) and (3) of
the Articles of Incorporation (Capital Stock)
The terms for the current Authorized
Capital I (§ 4 (2) sentences 1 – 3 of the
Articles of Incorporation) and the current
Authorized Capital II (§ 4 (2) sentences 4–9
of
the Articles of Incorporation) both
expire on April 26, 2007 and therefore
presumably before the planned 2007 Annual
Stockholders’ Meeting. The term for the
Authorized Capital III
(§ 4 (3) of the Articles of Incorporation)
will have been expired at the time of
this year’s Annual Stockholders’ Meeting
since it is limited in time until April
27, 2006. The previously Authorized
Capital shall therefore be renewed in
terms of content and at the same time be
restructured as Authorized Capital I and
II.
The Board of Management and the Supervisory
Board therefore propose to adopt both of the
following resolutions, which are independent
of each other:
(a) (1) The authorization of the Board
of Management to increase with approval of
the Supervisory Board the capital stock of
the Company by up to Euro 150,000,000.00
until April 26, 2007 as provided in § 4 (2)
sentences 1-3 of the Articles of
Incorporation (Authorized Capital I) shall be
revoked by deleting sentences 1 – 3 of § 4
(2) of the Articles of Incorporation.
(2) With approval of the Supervisory
Board and until April 27, 2011, the Board of
Management shall be authorized to increase
the Capital Stock in one or more installments
by up to a total amount of Euro
465,000,000.00 by issuing new bearer non-par
stock. The issue of new bearer non-par stock
may take place in exchange for cash and/or
contributions in kind whereby a capital
increase in exchange for contributions in
kind may only take place for a total amount
of up to Euro 370,000,000.00 (Authorized
Capital I). In such cases, the stockholders
shall be granted subscription rights. Subject
to the approval of the Supervisory Board, the
Board of Management shall however be
authorized to exclude the subscription right
of stockholders for any excess shares
remaining after rights have been allocated
(fractional amounts) and be authorized to
exclude subscrip-
Bayer AG
Annual Stockholders’ Meeting 2006
2 Agenda
tion rights to the extent necessary to
grant subscription rights for new stock to
holders of bonds issued by the Company or its
group companies having conversion rights or
attached warrants or obligatory conversion
rights to the extent bond-holders were
entitled to subscription rights upon exercise
of their conversion right or warrant or
obligatory conversion right. Moreover, the
Board of Management shall be authorized
subject to the approval of the Supervisory
Board to exclude subscription rights if the
increase in capital is in exchange for
contributions in kind for purposes of
acquiring companies, parts of companies, or
participations in companies or other assets.
Subject
to the approval of the Supervisory
Board, the Board of Management shall
determine the rights to be embodied in such
new shares and their conditions of issuance
including the issue price.
(3) Upon entry into the commercial
register of its deletion pursuant to agenda
item 4 (a) (1) above, sentences 1 – 3 of § 4
(2) of the Articles of Incorporation shall be
replaced with the following language:
“(2) With approval of the Supervisory Board
and until April 27, 2011, the Board of
Management is authorized to increase the
Capital Stock in one or more installments by
issuing new bearer non-par stock by up to a
total amount of Euro 465,000,000.00. The
issue of new bearer non-par stock may take
place in exchange for cash and/or
contributions in kind whereby a capital
increase in exchange for contributions in
kind may only take place for a total amount
of up to Euro 370,000,000.00 (Authorized
Capital I). In such cases, the stockholders
shall be granted subscription rights. Subject
to the approval of the Supervisory Board, the
Board of Management shall however be
authorized to exclude the subscription right
of stockholders for any excess shares
remaining after rights have been allocated
(fractional amounts) and be authorized to
exclude subscription rights to the extent
necessary to grant subscription rights for
new
stock to holders of bonds issued by the
Company or its group companies having
conversion rights or attached warrants or
obligatory conversion rights to the extent
bondholders were entitled to subscription
rights upon exercise of their conversion
right or warrant or obligatory conversion
right. Moreover, the Board of Management
shall be authorized subject to the approval
of the Supervisory Board to exclude
subscription rights if the increase in
capital is in exchange for contributions in
kind for purposes of acquiring companies,
parts of companies, or participations in
companies or other assets. Subject to the
approval of the Supervisory Board, the Board
of Management shall determine the rights to
be embodied in such new shares and their
conditions of issuance including the issue
price.”
(4) The Supervisory Board is authorized
to amend § 4 (1) and (2) of the Articles of
Incorporation to correspond to the current
use of the Authorized Capital I or after
expiration of the authorization term.
(5) The Board of Management is
instructed to apply for entry into the
commercial register of the above under agenda
item no. 1 approved revocation of the
Authorized Capital I contained in the current
sentences 1-3 of § 4 (2) of the Articles of
Incorporation only once it is ensured that,
immediately after entry of the deletion of
the current sentences 1-3 of § 4 (2) of the
Articles of Incorporation, the approved
creation of the new Authorized Capital I in
the amount of Euro 465,000,000.00 with the
corresponding amendment to the Articles
of Incorporation pursuant to the above agenda
item
4 (a) (2) and (3) is entered into the
commercial register.
b) (1) The authorization of the Board of
Management contained in § 4 (2) sentences 4-9
of the Articles of Incorporation to increase
the capital stock of the Company, upon
consent of the Supervisory Board and until
April 26, 2007, by a maxi-
Bayer AG
Annual Stockholders’ Meeting 2006
Agenda
3
mum of Euro 100,000,000.00 in
exchange for cash contributions shall be
revoked and the sentences 4-9 of § 4 (2) of
the Articles of Incorporation deleted.
Section 4 (3) of the Articles of
Incorporation containing Authorized Capital
iii limited in time until April 27, 2006
shall be deleted.
(2) The Board of Management shall be
authorized, until April 27, 2011 and with
approval of the Supervisory Board, to
increase capital by up to a total amount of
Euro 186,000,000.00 in one or more
installments by issuing new bearer non-par
stock in exchange for cash contributions
(Authorized Capital ii). In such case, the
stockholders shall be granted subscription
rights. In case of singular or repeated
exercise of the Authorized Capital ii and
with approval of the Supervisory Board, the
Board of Management shall however be
authorized to exclude subscription rights of
the stockholders in an amount of the capital
increase not exceeding
10 % of the capital stock existing at the
time this authorization becomes
effective and existing at the time this
authorization is exercised for purposes
of issuing new stock in exchange for
cash contributions at an issue price not
materially below the market price of the
company’s stock already listed on the
stock exchange at the time the issue
price is finally determined. Stock which
was acquired on the basis of an
authorization of the Stockholders’
Meeting and is sold pursuant to § 71 (1)
No. 8 sentence 5 of the German Stock
Corporation Act (Aktiengesetz) in
conjunction with § 186 (3) sentence 4 of
the German Stock Corporation Act
(Aktiengesetz) during the term of this
authorization shall apply towards the
above-mentioned
10 % limit. Moreover, those stocks shall
be applied towards this limit which were
or are to be issued in satisfaction of
bonds with conversion rights or attached
warrants or which are mandatorily
convertible if the bond was issued
during the term of this authorization
subject to exclusion of the subscription
rights under analogous application of
§ 186 (3) sentence 4 of the German Stock
Corporation Act (Aktiengesetz). Subject
to the consent of the Supervisory Board, the Board of
Management shall decide on the content of the
stock rights and further conditions of the
stock issuance including the issue price.
(3) Upon entry into the commercial
register of the deletion of the current
language pursuant to Agenda Item 4 (5) (b)
(1), § 4 (3) of the Articles of Incorporation
shall be replaced with the following
language:
“(3) The Board of Management is authorized to
increase capital up to a total amount of Euro
186,000,000.00 in one or more installments
until April 27, 2011 with approval of the
Supervisory Board by issuance of new bearer
non-par stock in exchange for cash
contributions (Authorized Capital ii). In
such case, the stockholders shall be granted
subscription rights. In case of singular or
repeated exercise of the Authorized Capital
ii and with approval of the Supervisory
Board, the Board of Management is however
authorized to exclude subscription rights of
the stockholders in an amount of the capital
increase not exceeding
10 % of the capital stock existing at the
time this authorization becomes
effective and existing at the time this
authorization is exercised for purposes
of issuing new stock in exchange for
cash contributions at an issue price not
materially below the market price of the
Company’s stock already listed on the
stock exchange at the time the issue
price is finally determined. Stock which
was acquired on the basis of an
authorization of the Stockholders’
Meeting and is sold pursuant to § 71 (1)
No. 8 sentence 5 of the German Stock
Corporation Act (Aktiengesetz) in
conjunction with § 186 (3) sentence 4 of
the German Stock Corporation Act
(Aktiengesetz) during the term of this
authorization shall apply towards the
above-mentioned
10 % limit. Moreover, those stocks shall
be applied towards this limit which were
or are to be issued in satisfaction of
bonds with conversion rights or attached
warrants or which are obligatory
conversion rights if the bond was issued
during the term
Bayer AG
Annual Stockholders’ Meeting 2006
4 Agenda
of this authorization subject to
exclusion of the subscription rights under
analogous application of § 186 (3) sentence 4
of the German Stock Corporation Act
(Aktiengesetz). Subject to consent of the
Supervisory Board, the Board of Management
shall decide on the content of the stock
rights and further conditions of the stock
issuance including the issue price.”
(4) The Supervisory Board shall be
authorized to amend § 4 (1) and (3) of the
Articles of Incorporation to correspond to
the current use of the Authorized Capital II
or after expiration of the authorization
term.
(5) The Board of Management is
instructed to apply for entry into the
commercial register of the above under agenda
item no. 4 (b) (1) approved revocation of the
Authorized Capital II contained in the
current sentences 4 - 9 of § 4 (2) of the
Articles of Incorporation only once it is
ensured that, immediately after entry of the
deletion of the current sentences 4 - 9 of §
4 (2) of the Articles of Incorporation, the
approved creation of the new Authorized
Capital II in the amount of Euro
186,000,000.00 with the corresponding
amendments to the Articles of Incorporation
pursuant to the above agenda item no. 4 (B)
(2) and (3) are entered into the commercial
register.
***
Reports of the Board of
Management on Agenda Item 4
Concerning Agenda Item 4 Resolution a):
Report of the Board of Management pursuant to
§ 203 (2) sentence 2 in conjunction with §
186 (4) sentence 2 of the German Stock
Corporation
Act (Aktiengesetz)
Generally, in the event that the Authorized
Capital I is exercised, we want to grant our
Stockholders subscription rights and only
wish to be able to exclude such in the
following cases:
The authorization to exclude subscription
rights for fractional amounts serves the
purpose of being able to show a practicable
subscription ratio with respect to the amount
of the respective capital increase. Without
an exclusion of the subscription rights for
fractional amounts, the technical execution
of a capital increase in an even amount and
the exercise of the subscription rights would
be made significantly more difficult. The new
stock created from the fractional amounts
excluded from the subscription rights of the
Stockholders shall be either sold on the
stock market exchange or used in some other
way, which is most beneficial for the
Company.
The authorization to exclude subscription
rights in
favor of holders of bonds issued by the
Company or its group companies having
conversion rights or attached warrants or in
cases of obligatory conversion rights serves
the purpose of not having to reduce the
option or conversion price in order to keep
with the so-called dilution protection clause
of the conversion or warrant conditions in
the event the authorization is used.
Rather, also the holders of bonds having
conversion rights or attached warrants or
obligatory conversion rights shall be granted
subscription rights to the extent they would
be entitled to such upon exercise of the
conversion right or warrant or upon
satisfaction of an obligatory conversion
right. The authorization enables the Board of
Management in the event of using the
Authorized Capital I to choose between the
two alternatives after careful consideration
of the interests.
The authorization to exclude
subscription rights in the event of capital
increases in exchange for contributions in
kind is limited to that portion of the
Authorized Capital I, which may be used for
the capital increases in exchange for
contributions in kind; i.e., a maximum
totaling Euro 370,000,000.00. Therefore, this
authorization is limited to an amount
equaling less than 20 % of the current
Capital Stock of the Company. This
authorization serves the purpose of enabling
the
Bayer AG Annual Stockholders’ Meeting 2006
Agenda 5
acquisition of companies, parts of
companies, or participations in companies or
other assets in exchange for stock. If the
acquisition of participations or the
acquisition of other assets by way of
increasing capital in exchange for
contributions in kind results in tax savings
for the seller or if for some other reason
the seller is more inclined towards receiving
stock in the company rather than cash
payment, this option strengthens the
Company’s negotiating position. In isolated
cases, special interests of the Company may
require to offer the seller new stock as
consideration for a participation in the
company. The Authorized Capital I allows the
company to act quickly and flexibly in the
face of favorable opportunities to acquire
companies, parts of companies or
participations in companies or other assets
in exchange for issuing new stock. The
requested authorization allows in each
individual case an optimal financing of the
acquisition in exchange for the issuance of
new stock with an increase of the Company’s
equity. In any case, the management only
desires to exercise the option of using
Authorized Capital I for purposes of
increasing capital in exchange for
contributions in kind under exclusion of the
subscription rights if the value of the new
stock and the value of the consideration
(i.e., the value of the company, part of
company or participation in the company, or
other asset to be acquired) are in due
proportion to each other. At the same time,
the issue price of the new stock to be issued
shall generally be aligned with the
prevailing market price.
An economic disadvantage for the
Stockholders
excluded from the subscription rights is
thus avoided. By limiting the possible volume
to less than 20 % of the current Capital
Stock of the Company, the voting right of the
Stockholders would only be slightly diluted
in the event that the authorization is
exercised. After consideration of all
aforementioned circumstances, the exclusion
of subscription rights in the above-described
amounts is necessary, suitable,
reasonable, and demanded by the Company’s
interest.
The Board of Management shall in each
case carefully examine the circumstances in
order to ascertain whether the exercise of
the Authorized Capital I and, as the case may
be, the exclusion of subscription rights is
in the interest of the Company and therefore
the Stockholders. The Board of Management
shall inform the Annual Stockholders’ Meeting
of each exercise of the Authorized Capital I.
Concerning Agenda Item No. 4 Resolution b):
Report of the Board of Management pursuant to
§ 203 (2) sentence 2 in conjunction with §
186 (4) sentence 2 of the German Stock
Corporation
Act (Aktiengesetz)
Generally, in the event that the
Authorized Capital ii is exercised, we want
to grant our Stockholders subscription rights
but would like to have the option of
excluding such rights in one particular case
i.e., pursuant to § 203 (1) sentence 1, 203
(2), 186 (3) sentence 4 of the German Stock
Corporation Act (Aktiengesetz):
This possibility serves the interest of
the Company in reaching the best possible
issue price when issuing new stock. The
statutory option provided in § 186 (3)
sentence 4 of the German Stock Corporation
Act (Aktiengesetz) puts the Board of
Management in a position to respond quickly
and flexibly as well economically to current
favorable market opportunities, subject to
the Supervisory Board’s approval. In so doing
a best possible increase in equity will be
attained which is in the interests of the
Company and all Stockholders. By waiving the
time-consuming and costly procedure of
subscription rights, the equity needs may be
quickly covered using short-time market
opportunities and new domestic and foreign
stockholders will be gained. This option of
increasing capital at optimum conditions and
at a nominal expense to subscription rights
is particularly important for the Company
because it allows it to react quickly and
flexibly to market opportunities in new and
fast-changing
Bayer AG Annual Stockholders’ Meeting 2006
6 Agenda
markets and to cover any thus arising
equity needs on a short term basis.
Stock issued under exclusion of
subscription rights pursuant to § 186 (3)
sentence 4 of the German Stock Corporation
Act (Aktiengesetz) may not exceed 10 % of the
Capital Stock i.e. neither at the time that
the authorization takes effect nor at the
time the authorization is exercised. In
calculating this limit, company stock sold
during the term of authorization or company
stock sold excluding subscription rights
pursuant to § 186 (3) sentence 4 of the
German Stock Corporation Act (Aktiengesetz)
will be included. Further included in this
limited number of stock are those stocks
which were or are to be issued in
satisfaction of bonds having conversion
rights or attached warrants or obligatory
conversion rights if the bonds were issued
during the term of this authorization or the
authorization of the Company under exclusion
of subscription rights in analogous
application of § 186 (3) sentence 4 of the
German Stock Corporation Act (Aktiengesetz).
These conditions take into account the
interests of the Stockholders with respect to
the protection against the dilution of their
stockholdings in compliance with the
respective statutory provisions.
The issue price and thus the funds flowing to
the company for the new stock will orient
itself to the market price of already
floating stock and will not significantly
fall short of the market price, the price
expected to be not less than 3 % but in no
case less than 5 % compared to the current
market price.
In view of the fact that all stock issued in
the past by the Company is admitted for trade
in the official market of the German stock
exchanges and that they are widely held,
Stockholders desiring to maintain their
percentage stockholdings may purchase
additional stock of the Company on the stock
market exchange without any problem in cases
where the Authorized Capital II under
exclusion of subscription rights pursuant to
§ 186 (3) sentence 4 of the German Stock
Corporation Act (Aktiengesetz) is utilized.
In the calendar year 2005 more than a billion
non-par stock of the company were traded on
the German stock exchanges equaling 1.5 times
the total number of Company stock.
Generally it is therefore ensured that in
keeping with the statutory parameters of §
186 (3) sentence 4 of the German Stock
Corporation Act (Aktiengesetz), Stockholder
capital interests as well as Stockholder
voting rights are reasonably preserved in the
event that Authorized Capital II is utilized
under exclusion of subscription rights.
Taking all of these circumstances into
account, the authorization to exclude
subscription rights subject to the above
restrictions is necessary,
suitable, reasonable and demanded by the
interests of the Company.
***
5. Amendment of § 16 of the Articles of
Incorporation (Conduct of the
Stockholders’ Meeting)
Due to the Company Integrity and
Modernization of the Right to Contest Act
(Gesetz zur Unternehmensintegrität und
Modernisierung des Anfechtungsrechts) which
came into effect on November 1, 2005, the
provisions concerning the conduct of
Stockholders’ Meetings were amended.
According to the new § 131 (2) sentence 2 of
the German Stock Corporation Act
(Aktiengesetz), the meeting chairman is
entitled to set reasonable time limits on the
right of Stockholders to speak and pose
questions. Thus, the legislature is pursuing
the goal of avoiding misuses of the right to
speak and pose questions and to ensure that
the Stockholders’ Meeting is conducted in a
Bayer AG
Annual Stockholders’ Meeting 2006
Agenda 7
time-efficient manner with focus on
the material strategic decisions.
The Board of Management and Supervisory Board
therefore propose to adopt the following
resolution:
§ 16 (3) of the Articles of Incorporation of
the Company shall read as follows:
“The chairman is entitled to set reasonable
time limits on the right of the stockholders
to speak and pose questions. In particular,
he may at the beginning or during the
Stockholders’ Meeting set reasonable time
frames for the course of the Stockholders’
Meeting, for the comments on the specific
agenda items, or for the specific questions
and speeches.”
The former § 16 (3) of the Articles of
Incorporation of the Company shall become §
16 (4).
6. Authorization to Purchase Company
Shares and Sell Company Shares Subject
to Exclusion of Subscription Rights
Due to the expiration of the
authorization term adopted by the last Annual
Stockholders’ Meeting on October 28, 2006
subject to the revocation of this
authorization, the Board of Management shall
again be authorized to purchase Company
shares. To the extent the shares will be
utilized for stock compensation programs,
these programs for the years 2000 to 2002
have already been the subject of
Stockholders’ Meeting resolutions in the past
years for the shares to be issued in each of
the respective years.
The Board of Management and the Supervisory
Board
propose adoption of the following resolution:
a) The Company is authorized until
October 27, 2007 to purchase Company shares
representing
up to 10% of the Company’s current
capital stock. The purchase must be made on
the stock exchange. The purchase price
(excluding incidental costs of purchase)
shall not be more than or less than 10
percent of the Company’s share price
calculated by the trading day opening auction
on the EXTRA-trading system (or corresponding
successor system) of the Frankfurt Stock
Exchange.
The current authorization to purchase Company
shares, valid until October 28, 2006, will
cease to be valid upon this new authorization
coming into effect.
b) The authorization may be exercised
for all shares in one or more installments.
The authorization may be exercised for any
legally permissible purpose and in pursuit of
one or more of the purposes mentioned in
paragraphs c), d), e) and f) Where it is
used for one or more of the purposes
mentioned in paragraphs c), d) or e), the
subscription rights of the Stockholders are
excluded.
c) The Board of Management is authorized
to sell the shares acquired under this
authorization other than through the stock
exchange or through an offering to all
Stockholders, provided that the sale is made
for cash and at a price that is not
significantly below the stock market value of
the Company’s shares at the time of sale.
This authorization is limited to a total of
10 % of the Company’s capital stock. The
maximum 10 % limit of the capital stock shall
be reduced by the pro rata amount of the
capital stock attributable to those shares
which were issued while this authorization is
still valid in connection with a capital
increase subject to an exclusion of
subscription rights pursuant to § 186 (3)
sentence 4 of the German Stock Corporation
Act (Aktiengesetz). The maximum
10 % limit of capital stock shall further
be reduced by the pro rata amount of
capital stock attributable to those shares which are issued for purposes of
warrant bonds and /or convertible bonds
to the
Bayer AG Annual Stockholders’ Meeting 2006
8 Agenda
extent the bonds are issued while the
authorization is valid subject to the
exclusion of subscription rights under
analogous application of § 186 (3) sentence 4
of the German Stock Corporation Act
(Aktiengesetz).
d) The Board of Management is authorized
to transfer to third parties the shares
acquired under the above-described
authorization, provided this is for the
purpose of acquiring companies, parts of
companies or interests in companies, or consummating
company combinations.
e) In connection with stock option
programs (hereinafter “Stock Compensation
Programs”), the Board of Management is
authorized to offer and transfer Company
shares acquired under the above-described
authorization to managerial and
non-managerial employees of the Company and
its subordinated affiliated companies in the
manner described in paragraph h) below.
f) The Board of Management is authorized
to redeem the shares acquired under the above
authorization without a further resolution of
the Stockholders’ Meeting.
g) The Board of Management may only
exercise the authorizations in paragraphs c)
and d) with the consent of the Supervisory
Board Furthermore, the Supervisory Board may
determine that actions of the Board of
Management based on this resolution of this
Stockholders’ Meeting may be undertaken only
with its consent.
h) Company shares acquired under this
authorization may be used for two different
types of Stock Compensation Programs of the
years 2000-2002: Module 1 of the stock
participation program (hereinafter, “SPP”)
and the stock incentive program (hereinafter,
“SIP”). The essential conditions of these
Stock Compensation Programs are as follows:
Stock Options
Each participant in either of the two
Stock Compensation Programs is eligible to
receive shares of the Company under the
following terms and conditions. Any right to
receive shares of the Company is hereinafter
referred to as a “Stock Option”.
Persons Eligible to Participate
Persons eligible to participate in the
SPP were, in principle, all employees of the
Company covered by collective bargaining
agreements and managerial employees in
contract levels 1 to 3, provided that, at
the time of the commitment, they were
permanently employed by the Company, not
under notice, and, in the year previous to
commitment, received a variable one-time
compensation component. The same applied also
to employees of subordinated affiliated
companies, in so far as such companies also
offered a SPP.
Persons eligible to participate in the
sip were all contract levels 4 and 5
managerial employees provided that, at the
time of the commitment, they were permanently
employed by the Company, not under notice,
not members of a Group Leadership Circle and
in the then respective previous year received
a variable
one-time compensation payment. The same
also applied to managerial employees with
comparable functions in subordinate
affiliated companies taking part in the
program.
Conditions of Participation
It was a condition of participation in
the Stock Compensation Programs that the
participant make a personal investment in
shares of the Company (hereinafter,
“Investment Shares”). The maximum number of
Investment Shares depended on the individual
variable compensation component of each
eligible participant and on the share price
at the respective time of the commitment.
Bayer AG Annual Stockholders’ Meeting 2006
Agenda 9
For every ten (10) of his own
Investment Shares, a participant in Module 1
of the ssp received five (5) Stock Options
representing one Company share each. For
every ten (10) of his own Investment Shares,
a participant in the sip receives ten (10)
Stock Options representing one Company share
each.
Term / Content of the Program
Both Stock Compensation Programs from
the years 2000 to 2002 (ssp Module 1, sip)
have a 10-year term. The programs from the
years 2003 and 2004 involve exclusively cash
payments and are not covered by this
resolution. The Employee Stock Compensation
Program from the Year 2005 is also not
subject of the resolution.
During the term of the program, each
participant can receive further shares of the
Company free of charge (hereinafter,
“Incentive Shares”) for every ten Investment
Shares; under ssp, this is limited to a
maximum of five Incentive Shares, under sip,
a maximum of ten Incentive Shares. It is a
condition of the foregoing that the
participant’s own Investment Shares must
remain in his special deposit account from
the start of the program until the relevant
distribution date. Under sip, the
distribution of Incentive Shares is subject
to a further condition. Incentive Shares for
tranches established before 2003 are only
granted if
the performance of the shares of the
Company (measured as the total return)
exceeds that of the reference index, the Dow
Jones euro stoxx
50sm (performance
index). The performance of the share compared
with the performance of the index is
determined on the basis of the average prices
over the ten trading days preceding the start
of the program or the respective distribution
date in the closing auction of xetra trading
system on the Frankfurt Stock Exchange (or a
corresponding successor system). For tranches
established before the year 2003 not only the
trading price of stock of the Company, but
also dividend payments, measures concerning
the stock capital, the value of subscription
rights and other special rights are to be
taken into account according to
the same criteria as in the Dow Jones
euro stoxx
50sm (performance
index). In connection with the spin-off of the
lanxess subgroup, all currently running
tranches of the Stock Option Programs have
been adjusted to essentially offset the
effects of dilution and loss of value
resulting from the spin-off.
Stock options may be exercised after a
two-year, six-year, and finally 10-year
holding period, respectively. If the
aforementioned conditions are met,
participants are granted, for every ten
deposited Investment Shares, the following
Incentive Shares at the times indicated:
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at end of:
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[no.
Incentive Shares]
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[no.
Incentive Shares]
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• 2 years
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• 6 years
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• 10 years
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Incentive Shares are granted to all
eligible participants free of charge.
Non-transferability/Employee Status
The stock options, i.e. the rights to receive
Incentive Shares, are legally
non-transferable. In principle, they can only
be granted provided that the participant is
employed by the Company or by a subordinated
affiliated company of the Company on the
distribution date and is not under notice.
***
Report by the Board of Management to the
Annual Stockholders’ Meeting pursuant to § 71
(1) no. 8 in conjunction with § 186 (4)
sentence 2 German Stock Corporation Act
(Aktiengesetz) regarding Item 6 of the Agenda
Section 71 (1) no. 8 of the German Stock
Corporation Act (Aktiengesetz) allows stock
corporations to purchase company shares
representing up to 10 percent of the
company’s capital stock on the basis of an
authorization from the Stockholders’ Meeting.
Item 6 of the Agenda contains a proposal to
grant an appropriate authorization, limited
to a term of 18 months. This will enable the
Board of
Bayer AG Annual Stockholders’ Meeting 2006
10 Agenda
Management, in the interest of the
Company and of its stockholders, to purchase
Company shares on the
market representing up to 10 percent of
the Company’s current capital stock.
The Company shares purchased by the Company
can be resold on the stock market or through
a public offering to all stockholders. These
possibilities ensure that the principle of
equality of treatment of stockholders is
respected both in the purchase and the
reissue of the shares.
Furthermore, the Company may also sell
the purchased Company shares off the market,
without a public offering to all
stockholders, provided that the price of the
shares is not significantly lower than the
trading price at the time of sale. This
authorization makes use of the simplified
exclusion of subscription rights allowed
under § 71 (1) no. 8 of the German Stock
Corporation Act (Aktiengesetz) in analogous
application of § 186 (3) sentence 4 of the
German Stock Corporation Act (Aktiengesetz).
In particular, in the interest of the
Company, it will be possible to offer shares
of the Company to institutional investors
domestically and abroad and to broaden the
stockholder base. The requested authorization
will allow the Company to respond quickly and
flexibly to favorable stock market
conditions. The interests of stockholders
with regard to their assets and voting rights
will be duly respected. The authorization
based on § 186 (3) sentence 4 of the German
Stock Corporation Act (Aktiengesetz) to
exclude subscription rights upon the sale of
the Company’s own shares, including any
authorizations to issue new shares or
convertible bonds and excluding subscription
rights under § 186 (3) sentence 4 of the
German Stock Corporation Act (Aktiengesetz)
is limited to a maximum of 10 percent of the
Company’s capital stock. For these purposes,
the capital stock is defined as the capital
stock existing at the time the authorization
is first exercised. The maximum
amount shall include otherwise issued
shares subject to exclusion of subscription
rights pursuant to or analogously pursuant to
§ 186 (3) sentence 4 of the German Stock
Corporation Act (Aktiengesetz). The aim of
protecting stockholders from dilution is
achieved by stipulating that the shares may
only be sold for a price that is not
significantly lower than the
applicable trading price. The final
selling price of the Company shares shall be
determined immediately prior to the sale. The
Board of Management shall endeavor — taking
into account current market circumstances —
to keep any discount on the trading price as
low as possible. Interested stockholders can
maintain their participation quota through
purchases on the market at essentially
identical conditions.
The Company shall furthermore be allowed to
offer its own shares for consideration in the
context of company combinations or the
acquisition of companies or parts of
companies or interests in companies. The
proposed authorization should give the
Company the necessary scope to use quickly
and flexibly any
acquisition opportunities that arise. The
proposed exclusion of subscription rights
will enhance this aim. When determining the
valuation, the Board of Management will
ensure that the interests of stockholders are
duly protected. As a rule, it will base its
assessment of the share value offered as
consideration on the trading price of the
Company shares. However, the intention is not
to link the value rigidly to a trading price,
particularly so as to prevent the outcome of
negotiations, once achieved, from being
jeopardized by fluctuations in the trading
price. The Company is not planning any
specific acquisitions at the present time.
Furthermore, under the provisions of
paragraphs e) and h), the Company should be able to use its own
Company shares for Stock Compensation Programs from the years 2000 to 2002. This option is not necessary for comparable Stock Compensation
Bayer AG
Annual Stockholders’ Meeting 2006
Agenda 11
Programs of the years 2003 and 2004
because these programs are not geared to the
issue of shares but exclusively payment in
cash. The employee stock compensation program
launched in 2005 is also not subject of the
resolution.
The grant of stock options or
subscription rights to employees and
managerial employees entitling them to buy
Company stock under certain conditions is one
of the customary internationally recognized
methods of compensation. This creates
incentive to increase the value of the
company even more by outstanding work thereby
promoting, in the interest of the
Stockholders and the Company, the performance
of the Company’s shares on the stock market
also in comparison to other companies. At the
same time, qualified employees and management
will be attracted to the Bayer Group and also
stay long-term with the Company. In view of
this goal, the shares purchased for purposes
of satisfying the Stock Compensation Programs
of 2000-2002 in the event of sale may not be
offered to the Stockholders but only to the
participants of the Stock Compensation
Programs 2000–2002.
All of the material terms of the relevant
Stock
Compensation Programs are set forth in the
proposed resolution. Therefore, only the most
important provisions are outlined below:
The proposed authorization allows the Company
to use its Company shares for satisfying
claims of SPP Module 1 and the SIP.
The Stock Compensation Programs using the
Company’s own shares as proposed for
Stockholders’ Meeting authorization, have two
or three main features which are of
particular interest to the Company and its
Stockholders:
The first main feature relates to the
respective holding periods by which
managerial and non-managerial employees are bound to the Bayer
Group for the medium to long term. These
holding periods are longer than those
stipulated by the Stock Option Programs of
other companies, in some cases significantly
so.
The second main feature relates to the
participant’s personal investment. Only if
eligible managerial and non-managerial
employees invest on their own account and
hence at their own risk in shares of the
Company, can they participate in the Stock
Compensation Programs as described above.
This gives the Stock Compensation Programs
particular significance and particular weight
in a way that distinguishes them from many
other stock compensation programs of other
companies. Managerial and non-managerial
employees not only have the opportunity to
share in the growing value of the Company
through their own individual performance.
They also — like the stockholders —
participate in the risk by investing their
own money.
Finally, the third main feature relates
to the further conditions for exercising the
options.
Two modules are available to
participants in the SPP. While Module 2, on
which it is not necessary to pass a
resolution here, has features of a typical
employee stock compensation program and which
under § 71(1) no. 2 of the German Stock
Corporation Act (Aktiengesetz) uses the
Company’s own shares, acquired on the market
by the Board of Management, Module 1 goes
beyond § 71(1) no. 2 of the German Stock
Corporation Act (Aktiengesetz) and is an
innovative type of employee share ownership
scheme which makes the granting of further
shares in the Company conditional on the
employee remaining with the Bayer Group and
on making a personal investment.
Bayer AG Annual Stockholders’ Meeting 2006
12 Agenda
Participants in the sip only receive
incentive shares for tranches up until
including 2002 if the performance of the
shares of the Company (based on the total
return) exceeds that of the Dow Jones
euro stoxx
50sm (performance index)
over the reference period. The managerial
employees of the Bayer Group are therefore
willing to measure their performance against
that of other leading listed companies in the
European Economic Area.
The Stock Compensation Programs represent
remuneration elements, which, in the interest
of enhancing motivation, increase the amount of
existing flexible remuneration components and
should help enhance Bayer’s corporate value
in the long term. At the time the Incentive
Shares are granted, the managerial employee
has already earned this remuneration, i.e.
the shares of the Company, through his own
efforts so that the shares are issued to him
free of charge.
Calculation of the fair value (i.e., the
market value of the incentive claims) is
based on an international standard practice
of using the option price theory
(Black/Scholes Model) which takes into
account the volatility of the stock returns,
the due date of the incentive claim, the
market interest rate, as well as the expected
dividends of Bayer shares. Using this
calculation method, the incentive claim
amounts approximate as follows:
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Estimated Intrinsic Value (in Euro) |
Module 1 of SPP |
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approximately 14 million |
SIP |
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approximately 3.1 million |
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In 2005, no bonus stock was issued
to employees or managerial employees under
the SPP Module 1 incentive plan or the SIP
incentive plan.
Finally, the authorization allows the Company
to redeem Company shares without a further
resolution of the Stockholders’ Meeting. It is also
common to grant such authorization. It allows
the Company to react appropriately and
flexibly in any particular capital market
situation.
In the event the authorization is
exercised, the Board of Management shall
report such at the following Stockholders’
Meeting.
***
7. Approval of the Control and Profit
Transfer Agreement between the Company and
Bayfin GmbH
The Board of Management and the Supervisory
Board propose to approve the Control and
Profit Transfer Agreement between the Company
and Bayfin GmbH dated March 2, 2006.
On March 2, 2006 the Company (“Bayer”)
and Bayfin GmbH (“Bayfin”) entered into a
Control and Profit Transfer Agreement. The
Control and Profit Transfer Agreement has the
following content:
§ 1
Management
(1) Bayfin shall subordinate the
management of its company to Bayer. Bayer is
thus entitled to instruct Bayfin’s Management
Board with respect to the management of the
company.
(2) Bayer shall exercise its right to
give instruction only through its Board of
Management. Instructions must be in writing.
Bayer AG
Annual Stockholders’ Meeting 2006
Agenda 13
§ 2
Profit Transfer
(1) Bayfin agrees to transfer its entire
profit to Bayer. This obligation becomes
first effective for the entire profit of the
fiscal year beginning on January 1, 2006.
Except for the setting up or reversal of
retained earnings pursuant to § 2 (2) below,
the year’s net income before transfer of
profit less any losses carried forward from
the previous year is to be transferred.
(2) Upon consent by Bayer, Bayfin may
appropriate funds from the year’s net income
to other retained earnings (§ 272 (3) German
Commercial Code (Handelgesetzbuch)) if this
is permissible under the German Commercial
Code and would be considered commercially
reasonable by a prudent businessman. Upon
Bayer’s request, other retained earnings
pursuant to § 272 (3) of the German
Commercial Code (Handelgesetzbuch) set up
during the life of this Agreement shall be
reversed and applied against any year’s net
losses or be transferred as profits. There
shall be no transfer of funds from the
reversal of other retained earnings pursuant
to § 272 (3) of the German Commercial Code
(Handelgesetzbuch) existing before this
Agreement becomes effective or from capital
reserves. § 301 of the German Stock
Corporation Act (Aktiengesetz) shall apply
analogously.
§ 3
Assumption of Loss
Bayer has a duty towards Bayfin to
assume losses under analogous application of
the provisions of § 302 of the German Stock
Corporation Act (Aktiengesetz ) concerning
profit transfer agreements.
§ 4
Effective Date and Term
(1) This Agreement requires the approval
of the Shareholders’ Meeting of Bayfin and
the Stockholders’ Meeting of Bayer.
(2) The Agreement shall become
effective upon its entry into the commercial
register at Bayfin’s registered office and,
except for the right to give instructions,
shall apply retroactively as of January 1,
2006. The right to instruct may be first
exercised upon entry of the Agreement in the
commercial register located at the registered
office of Bayfin.
(3) The Agreement may be terminated by
giving six-months notice as of the end of any
fiscal year however not before expiration of
December 31, 2010. If the Agreement is not
terminated, then, subject to the same notice
period, it is automatically extended for one
year respectively.
(4) The right to terminate the Agreement
for cause without notice shall remains
unaffected. In particular, Bayer shall be
entitled to terminate for cause if it no
longer owns a majority interest in Bayfin or
if another person acquires a shareholding
interest in Bayfin.
§ 5
Miscellaneous
The invalidity or infeasibility of one
or more provisions of this Agreement shall
not affect the validity of the remaining
provisions.
The Control and Profit Transfer
Agreement is described and explained in more
detail in the Joint Agreement Report of the
Management Board of the Company and the
Management of Bayfin GmbH.
8 . Appointment of Auditors
The Supervisory Board proposes that
Pricewater-houseCoopers Aktiengesellschaft,
Wirtschaftsprüfungsgesellschaft, Essen,
Germany be appointed as
auditors for the 2006 fiscal year.
***
Bayer AG Annual Stockholders’ Meeting 2006
14 Agenda
Upon giving notice of the Stockholders’
Meeting, in particular the documents listed
below will be available for inspection by the
Stockholders on the Company’s business
premises Building Q 26 (Legal Department),
Kaiser-Wilhelm-Allee, 51368 Leverkusen,
Germany. Upon request of any Stockholder,
copies of the same will be provided without
undue delay and without charge. They may also
be viewed in the internet under www.asm2006.bayer.com:
• Annual Financial Statements, Bayer Group
Financial Statements, the Management
Reports of Bayer AG and the Bayer Group,
report of the Supervisory Board, proposal
by the Board of Management for
distribution of the balance sheet profit
(Agenda Item 1)
• Report of the Board of Management
pursuant to § 203 (2) sentence 2 in
conjunction with § 186 (4) sentence 2 of
the German Stock Corporation Act
(Aktiengesetz) (Agenda Item 4 Resolution
a))
• Report of the Board of Management
pursuant to § 203 (2) in conjunction with
§ 186 (4) sentence 2 of the German Stock Corporation Act
(Aktiengesetz) (Agenda Item 4 Resolution b)
• Report of the Board of Management
pursuant to § 71 (1) no. 8 of the German
Stock Corporation Act (Aktiengesetz) in
conjunction with § 186 (4) sentence 2
German Stock Corporation Act
(Aktiengesetz) (Agenda Item 6)
• Control and Profit Transfer Agreement
between the Company and Bayfin GmbH,
Joint Agreement Report concerning the
Control and Profit Transfer Agreement
between the Company and Bayfin GmbH,
Annual Statements, and Management Report
of the Company as well as the Annual
Financial Statements of Bayfin GmbH for
the last 3 fiscal years respectively
(Agenda Item 7)
Stockholders’ Meeting Attendance
Requirements for entitlement of
Stockholders to attend the Stockholders’
Meeting and to exercise voting rights have
been amended by the Company Integrity and
Modernization of the Right to Contest Act
(UMAG), which became effective on November 1,
2005 and the corresponding amendments to the
Company’s Articles of Incorporation.
Accordingly, those Stockholders are
entitled to attend the Stockholders’ Meeting
and exercise voting rights who, at latest,
upon expiration of April 21, 2006 (24:00
hours CEST) are registered at the Company
under the following address
Bayer
Aktiengesellschaft
c/o Deutsche Bank AG
General
Meetings
60272 Frankfurt am
Main
Facsimile: +49 (0)69 /
910-86045
e-Mail:
WP.HV@ETB-AG.COM
and have showed under such address
certification issued by a depositary
institution showing stock ownership in the
Company at the beginning of April 7, 2006
(00:00 hours CEST). The registration and
certification of stock ownership must be in
text form and in the German or English language.
Registration does not restrict Stockholders
to transfer its shares or block its shares.
Proxy
Stockholders may appoint an individual
or a stockholders’ association as proxy to
exercise their voting rights.
The Company is offering its Stockholders the
opportunity to appoint a Company-nominated
proxy who is bound by instructions of the
Stockholders
Bayer AG
Annual Stockholders’ Meeting 2006
Agenda
15
before the Stockholders’ Meeting. In
order to appoint Company-nominated proxies.
Stockholders need an admission ticket to the
Stockholders’ Meeting. To ensure that the
admission ticket is received in good time.
Stockholders should place their order with
the depositary institutions as early as
possible.
If Company-nominated proxies are
appointed, they must be given instructions on
exercising voting rights. Without such
instructions the authorization is invalid.
The proxies are obligated to vote as
instructed.
Authorization of, and instructions to the
Company-nominated proxies may be given in
writing or alternatively, in a manner specified by the Company, electronically via the
internet.
Detailed information on authorizing and
instructing Company-nominated proxies can be
found on the admission ticket to the
Stockholders’ Meeting. This information may
also be viewed on the internet at
www.asm2006.bayer.com.
Partial Broadcast of the Stockholders’ Meeting in the Internet
All Stockholders of the Company as well as
the interested public may view Board of
Management Chairman’s speech at the
Stockholders’ Meeting on April 28, 2006 at
approximately 10:15 hours live in the
internet under
www.asm2006.bayer.com. There
will be no further picture and sound
broadcast of the Stockholders’ Meeting.
Stockholder Counter-Motions and Election Nominations
Counter-motions or election nominations duly
submitted by Stockholders regarding specific
items of the Agenda must be submitted
exclusively to the following address:
Bayer
Aktiengesellschaft
Gebäude Q 26
(Legal Department/Rechtsabteilung)
Kaiser-Wilhelm-Allee
51368 Leverkusen, Germany
Facsimile: + 49 (0) 214 / 30-56524
Counter-motions or election nominations
submitted by Stockholders that are received
by the expiration of
April 13, 2006 (24:00 hours cest) at the
aforesaid address will be published promptly
on the internet at
www.asm2006.bayer.com.
Counter-motions or nominations for election
submitted by Stockholders sent to different
addresses or received late will not be
considered.
Leverkusen, March 2006
Bayer Aktiengesellschaft
The Board of Management
This notice is a convenience
translation. For the relevant legal
document, please refer to the original
German version which is published in the
Internet under www.ebundesanzeiger.de.
Bayer AG
Annual Stockholders’ Meeting 2006
16 Masthead
MASTHEAD
The complete financial statements of the
Bayer Group have been examined by the
auditors, PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, who have
issued an unqualified opinion. The complete
Annual Report, which includes the financial
statements of the Bayer Group, is published
in English and German. The financial
statements of Bayer AG are published
separately in both languages. These
publications and lists of Bayer’s direct and
indirect holdings may be obtained on request
from Bayer AG, Communications, 51368
Leverkusen, Germany.
Publisher
Bayer AG,
51368 Leverkusen,
Germany
Editor
Ute Bode, phone ++49/214/30-58992
Email: ute.bode.ub@bayer-ag.de
English edition
Bayer Industry Services GmbH & Co. OHG
Central Language Service
Investor Relations
Peter Dahlhoff, phone ++49/214/30-33022
Email: peter.dahlhoff.pd1@bayer-ag.de
Date of publication
March 6, 2006
Bayer on the Internet
www.BAYER.com
ISSN 0343/1975
Forward-Looking Statements
This publication contains forward-looking
statements. These statements use words like
“believes”, “assumes”, “expects” or similar
formulations. Various known and unknown
risks, uncertainties and other factors could
lead to material differences between the
actual future results, financial situation,
development or performance of our company
and those either expressed or implied by
these statements. These factors include, among other things:
| • |
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downturns in the business cycle of the
industries in which we compete; |
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new
regulations, or changes to existing
regulations, that increase our operating
costs or otherwise reduce our profitability; |
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increases in the price of our raw
materials, especially if we are unable to
pass these costs along to customers; |
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loss or reduction of patent protection for our
products; |
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liabilities, especially those
incurred as a result of environmental laws
or product liability litigation; |
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fluctuation in international currency
exchange rates as well as changes in the
general economic climate; and |
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other factors identified in this publication. |
These factors include those discussed in our
public reports filed with the Frankfurt
Stock Exchange and with the u.s. Securities
and Exchange Commission (including our Form
20-F). In view of these uncertainties, we
caution readers not to place undue reliance
on these forward-looking statements. We
assume no liability whatsoever to update
these forward-looking statements or to
conform them to future events or
developments.
Bayer AG
Annual Stockholders’ Meeting 2006
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Bayer Aktiengesellschaft |
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By:
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/s/ ppa. Dr. Alexander Rosar
Name: Dr. Alexander Rosar
Title: Head of Investor Relations
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By:
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/s/ Dr. Armin Buchmeier |
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Name: Dr. Armin Buchmeier
Title: Senior Counsel |
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Date:
March 22, 2006