DSM’s business-steering model remained unchanged in 2007, after having been adapted to the Vision 2010 strategy in 2006. The business groups are the main building blocks of the organization; they have integral long-term and short-term business responsibility and have at their disposal all functions that are crucial to their business success. In order to facilitate selective leveraging of expertise and implementation capabilities in the approach to markets, products and technologies, business groups with the most important commonalities in these areas are grouped into clusters. The business groups within a specific cluster report to one member of the Managing Board. This Board member has the responsibility of managing synergy within the cluster. In order to ensure sufficient independence with regard to financial management, the Chief Financial Officer has no business groups reporting to him.

In 2007, a management framework for the corporate level was created, providing a description of the relations between the main building blocks mentioned above and geographical and functional management. It also describes the most important (decision) processes, responsibilities and ’rules of the game’ at the Managing Board and corporate staff levels and includes the governance relations with the next-higher levels (Supervisory Board / shareholders) and the operational units. The framework reinforces governance by pulling together information that was previously available in a fragmented form.

One of the outcomes of the Vision 2010 mid-term review was the decision to accelerate growth in life sciences and materials sciences and divest other activities. This move is reflected in the change – as of 1 January 2008 – from four clusters (Nutrition, Pharma, Performance Materials and Industrial Chemicals) to five (Nutrition, Pharma, Performance Materials, Polymer Intermediates and Base Chemicals and Materials). The activities in the latter cluster will be carved out in order to facilitate their disposal.

As stated before, there were no major changes to DSM's overall governance framework in 2007. The figure below depicts this framework and the most important governance elements and regulations at each level.

Note: all internal regulations apply in addition to applicable national and international laws and regulations. In cases where internal regulations are incompatible with national or international laws and regulations, the latter prevail.

For the sake of clarity, a short summary of the main aspects of the framework at Managing Board / corporate level and operational level is given here:

• The Managing Board adheres to the Regulations of the Managing Board.
• In addition, the Managing Board and corporate staff departments / services work according to the Management Framework for the corporate level. This implies amongst other things that they adhere to the DSM Values and applicable corporate policies and requirements, and set the company’s strategic direction and objectives in the Corporate Strategy Dialogue (CSD). The framework further defines the roles of clusters, corporate staff departments, shared-competence business-support functions, the China Governance function, the DSM Innovation Center and the charters of several Boards. Together they define the basic organizational structure and the division of responsibilities between the Managing Board, these corporate and central functions and the business groups and clusters. In addition, they maintain the Management Framework for the operational units.
• The operational units conduct their business within the parameters of this Management Framework. This implies amongst other things that the operational units establish the strategy and objectives of their business according to the Business Strategy Dialogue (BSD), in which process various scenarios and related risk profiles are investigated. The framework further stipulates that the strategy implementation must take place in line with corporate policies and multi-year plans in several functional areas and in compliance with the Corporate Requirements. Whenever a special situation calls for it, the Corporate Requirements are extended to include so-called Management Directives (for example a travel ban for security reasons).

Compliance with the Corporate Requirements and the effectiveness of the risk-management and internal-control system are monitored by the entities themselves and discussed regularly between the Managing Board and the operational units. On average once every three years, the units are also audited by Corporate Operational Audit (COA). The director of the COA department reports to the chairman of the Managing Board and has the authority to consult with the chairman of the Audit Committee. Furthermore, the director of COA acts as the compliance officer with regard to inside information and is the chairman of the DSM Alert Committee, which implements the Whistleblower Policy.