Corporate Governance

Moreover, we feel strong corporate governance is an integral part of the MorphoSys corporate value system. We believe that our commitment to high Corporate Governance standards will ultimately increase shareholder value.

In the Statement on Corporate Governance under Section 289f HGB and the Group Statement on Corporate Governance pursuant to Section 315d, the Management Board and the Supervisory Board present information on the most essential components of our corporate governance. The components include the annual Declaration of Conformity pursuant to Section 161 of the Stock Corporation Act (AktG), the relevant information on corporate governance practices and other aspects of corporate governance that include, above all, a description of the working practices of the Management Board and Supervisory Board.

The Management Board and the Supervisory Board of MorphoSys AG declare pursuant to Section 161 of the German Stock Corporation Act:

1. From November 29, 2022, the date of its most recent Declaration of Conformity, MorphoSys AG has complied – with the exceptions described below – with the recommendations of the “Government Commission on the German Corporate Governance Code” in the Code version dated April 28, 2022 (“GCGC 2022”):

• Until June 2023, MorphoSys AG did not comply with the recommendation C.5 of the GCGC 2022, according to which members of the Management Board of a listed company shall not accept the chairmanship of a Supervisory Board in a non-group listed company. Until June 2023, the Chief Executive Officer (CEO) of Morphosys AG, Dr. Jean-Paul Kress, held a position as chairman of the Board of Directors of a French biopharmaceutical company, which had at no time in the past affected the fulfilment of his duties as CEO of MorphoSys AG. MorphoSys AG continuously ensured that Dr. Kress’ position as chairman of the Board of Directors of such company did not distract his focus on MorphoSys AG’s business and that Dr. Kress had sufficient time to perform his duties as CEO of MorphoSys AG with due regularity and care. 
• MorphoSys AG does not comply with the recommendation C.4 of the GCGC 2022, according to which a Supervisory Board member, who is not a member of any Management Board of a listed company, shall not accept more than five Supervisory Board mandates at non-group listed companies or comparable functions (in a listed or non-listed company), with an appointment as chair of the Supervisory Board being counted twice. The member of the Supervisory Board Dr. George Golumbeski currently holds the following functions in pharmaceutical and biotechnological companies in Ireland and the United States of America:
  • In listed companies: One function as chairman and one function as member of the Board of Directors
  • In non-listed companies: Three functions as chairman and one function as member of the Board of Directors
    Dr. Golumbeski’s positions have at no time in the past affected the fulfilment of his duties as a member of the Supervisory Board of MorphoSys AG. MorphoSys AG continuously ensures that Dr. Golumbeski’s positions will not distract his focus on MorphoSys AG’s business and that Mr. Golumbeski has sufficient time to perform his duties as a member of the Supervisory Board of MorphoSys AG with due regularity and care.

2. MorphoSys AG will continue to comply – with the exception of the deviation from recommendation C.4 of the GCGC 2022 as described above – with the recommendations of the GCGC 2022.

Planegg, this November 29, 20232

MorphoSys AG

Link to German Corporate Governance Code

The Statements on Corporate Governance and Corporate Governance Reports of previous years can be found in the respective annual reports.

The Supervisory Board of MorphoSys AG has updated its competence profile and objectives for its composition, based on the new recommendations of the German Corporate Governance Code in its version as of April 28, 2022 (the “Code”) and has established a diversity concept pursuant to Sec. 289f para. 2 no. 6 HGB.

According thereto, the Supervisory Board of MorphoSys AG shall be composed in such a way that the Supervisory Board in its entirety possesses the knowledge, ability and expert experience required to properly perform its duties and to ensure proper supervision and advice of the Management Board of MorphoSys AG, taking the principles of diversity into account.

For the election to the Supervisory Board, such candidates shall be proposed to the Annual General Meeting who can, based on their professional expertise and experience, integrity, commitment, independence and character, fulfill the overall competence profile. Further, proposals to the Annual General Meeting shall take the objectives for the composition of the Supervisory Board into account. 

Competency Profile

The members of the Supervisory Board shall in its entirety possess the professional expertise and experience to successfully carry out the responsibilities of the Supervisory Board of MorphoSys AG as an internationally operating biopharmaceutical company.

The Supervisory Board considers in particular the following skills and expertise to be essential for the composition of the Supervisory Board of MorphoSys AG:

• General knowledge of the industry of the Company in order to be able to make sufficient commitments on substance in the Supervisory Board meetings;
• At least one member must have experience in drug development;
• At least one member must have experience in commercialization; 
• At least one member must possess expertise regarding sustainability issues relevant to the Company;
• At least one member must possess expertise in the field of accounting and at least one further member must possess expertise in the field of auditing (Sec. 100 para. 5 German Stock Corporation Act); 
• At least one member must have experience in personnel matters relating to the Management Board. 

Diversity Concept

The Supervisory Board aims to ensure a reasonable level of diversity with regard to age, gender, internationality and occupational background as well as professional expertise, experience and personalities, in order to achieve a diverse combination of the members of the Supervisory Board and to enable the Supervisory Board in its entirety to base its decisions on different cultural and professional perspectives and wide experiences.

The Supervisory Board will in particular take the following criteria into account:

• At least two members of the Supervisory Board have extensive international experience or an international background;
• At least one member of the Supervisory Board is under the age of 60 at the time the member is appointed;
• At least two members of the Supervisory Board have different professional backgrounds and experiences;
• With regard to the proportion of women on the Supervisory Board, the Supervisory Board in accordance with Sec. 111 para. 5 of the German Stock Corporation Act has set target figures and deadlines for their achievement, to which reference is made. 

Further Objectives for the Composition of the Supervisory Board

The Supervisory Board further determines the following objectives for its composition:
 

Age Limit

The members of the Supervisory Board of MorphoSys AG shall, as a rule, not be older than 70 years at the time they are appointed by the Annual General Meeting. The Supervisory Board may, however, make an exception to this provision in specific cases.

Period of Membership 

The continuous period of membership of any member of the Supervisory Board should, as a rule, not exceed 12 years. The Supervisory Board may, however, make an exception to this provision in specific cases.

 
Independence 

The Supervisory Board of MorphoSys AG considers a number of at least four independent members to be an appropriate number of independent members, taking into account the shareholder structure. The Code considers a Supervisory Board member independent from MorphoSys AG, its Management Board or a controlling shareholder if he or she has no personal or business relationship with the Company, the Management Board or a controlling shareholder. The Supervisory Board’s assessment of independence of Supervisory Board members is, amongst others, based on the recommendations of the Code. Amongst others, this means that a member of the Supervisory Board is generally not considered independent, if such member or a close family member of such member

•  was a member of the Management Board of MorphoSys AG in the two years prior to his or her appointment to the Supervisory Board of MorphoSys AG;
• maintains or has maintained a material business relationship with MorphoSys AG, or a group company of MorphoSys AG in the year prior to his or her appointment (directly or indirectly);
• is a close family member of a Management Board member; or
• has been a member of the Supervisory Board for more than twelve years.

Material and lasting conflicts of interest should be avoided, particularly those arising from activities for major competitors. However, it has to be considered that the possible emergence of conflicts of interests in individual cases cannot generally be excluded. Potential conflicts of interest must be disclosed to the Chairman of the Supervisory Board and will be resolved by appropriate measures, which may lead, in case of a not merely temporary conflict of interest, to the termination of that member’s Supervisory Board mandate. 
 

Availability

Each member of the Supervisory Board must ensure that he or she has sufficient time to dedicate to the proper fulfilment of their position as a member of the Supervisory Board of MorphoSys AG. This – as a rule – requires that

• the Supervisory Board member is able to attend at least four ordinary Supervisory Board meetings per year, for which a reasonable amount of preparation time is required in each case;
• the Supervisory Board member is able to participate in extraordinary meetings of the Supervisory Board, if necessary, to deal with specific topics;
• the Supervisory Board member is able to participate in the Annual General Meeting;
• the Supervisory Board member has sufficient time available to review the annual and consolidated financial statements; and
• the Supervisory Board member sets aside additional time to prepare and participate in committee meetings, depending on his or her possible membership in one or more of the current three committees of the Supervisory Board.

The Supervisory Board takes the above principles into account when proposing a candidate to the general meeting for election. 

(as of November 2022)

Composition of the different Supervisory Board Committees

In the Supervisory Board

The Supervisory Board of MorphoSys AG consists of six members, two of whom are women, representing a proportion of 33.33 %. The Supervisory Board of MorphoSys AG has set the target for the proportion of women on the Supervisory Board at 33.33 %, meaning at least two out of six members shall be women. This target figure shall apply until June 30, 2025.

In the Management Board

The Management Board of MorphoSys AG consists of two members, all of whom are men. As a result, the current proportion of women on the Company’s Management Board is 0 %. The Supervisory Board has set the target for the proportion of women on the Company’s Management Board at 0 %. This target figure shall apply until June 30, 2025.

In the First and Second Management Level below the Management Board

1. Target for the first management level below the Management Board

In 2020, the Management Board confirmed its resolution for a target of 30 % of women in the first management level below the Management Board as of July 2017 and intends to maintain a minimum percentage of 30 % women in the first management level below the Management Board until June 30, 2025. As of the date of the resolution on the target, the first management level below the Management Board of MorphoSys AG (department heads reporting directly to the Management Board) consisted of 21 members, of which 9 are women, corresponding to a proportion of women of 42.86 %.

2. Target for the second management level below the Management Board

In 2020, the Management Board confirmed its resolution for a target of 30 % women in the second management level below the Management Board as of July 2017 and intends to maintain a minimum percentage of 30 % women in the second management level below the Management Board until June 30, 2025. As of the date of the resolution on the target, the second management level below the Management Board of MorphoSys AG (department heads reporting directly to the first management level below the Management Board) consisted of 53 members, 22 of whom are women, corresponding to a proportion of women of 41.51 %.

(as of November 2022)

Pursuant to Section 289f (2) No. 6 of the German Commercial Code, the Supervisory Board has determined the following diversity concept for the composition of the Management Board of MorphoSys AG.

The aim of the diversity concept for the Management Board is to use the aspect of diversity in a targeted manner for the further success of the Company. The Supervisory Board believes that diversity in the sense of different perspectives, competencies and backgrounds of experience is an important prerequisite for competitiveness and sustainable corporate success.

Together with the Management Board, the Supervisory Board ensures long-term succession planning for the Management Board. In the search for candidates for the position of a member of the Management Board of MorphoSys AG, the decisive selection criteria include professional qualifications for the position to be taken over, leadership qualities, past performance, and acquired skills and knowledge of the business of MorphoSys AG.

In determining the composition of the Management Board, the Supervisory Board also particularly takes the following aspects into account:

• The members of the Management Board shall, in their entirety, possess the knowledge, skills and professional experience required to perform their duties.
• Where possible, the members of the Management Board should have different levels of educational and professional experience.
• The members of the Management Board shall, in their entirety, be familiar with the market environment, the individual business areas and the market segment in which MorphoSys AG operates.
• The members of the Management Board shall, in their entirety, have relevant experience in the management of listed companies.
• The members of the Management Board shall have a balanced age structure.
• With regard to the proportion of women on the Management Board, the Supervisory Board has set targets, as well as deadlines for their achievement, in accordance with Section 111 (5) AktG, to which reference is made.

The above criteria were taken into account in the appointment of the Management Board members.

Other Targets in the Composition of the Management Board

AGE LIMIT

At the time of their appointment, Management Board members should not be more than 67 years of age. The Supervisory Board may, however, decide to make an exception in specific cases. The age limit of 67 is currently complied with.

(as of March 2022)

Pursuant to Art. 19 para. 5 subparagraph 1, sentence 1 of the European Market Abuse Regulation (“MAR”) the Members of the Management and Supervisory Boards of MorphoSys AG, as well as persons closely associated with them , are legally bound to report trading in MorphoSys stock to the German Federal Financial Supervisory Authority (BaFin). Every transaction conducted on their own account relating to the shares or debt instruments of MorphoSys or to derivatives or other financial instruments linked thereto must be reported.

All transactions have to be published unless the total value of these tradings executed by such person within one calendar year does not exceed EUR 20,000.

Notes:
Participants in the MorphoSys stock option and/or convertible bonds programs who choose to “exercise and sell” receive the difference between the so-called exercise price (price determined at the time of issuing the options) and the Xetra closing price of the MorphoSys stock on the day of exercise, as a taxable income.