Corporate governance structures are established to make sure corporations are accountable to their owners—the shareholders.

But our corporate governance is more than the company's relationship to our shareholders, it also reflects our relationship to society, because issues that matter to our key stakeholders can very quickly become important issues for our shareholders. As such, our corporate governance objective is to balance fiduciary duty and accountability to generate long-term shareholder value, while also considering, in a transparent manner, the concerns of other stakeholders.

We want our policies and activities to be consistent with—and support—our goals, initiatives, and business values. To this end, we have invested in, and continue to devote considerable time and resources to meaningful policies related to an effective corporate governance structure and ethical business practices.

The Board

As part of our Board's primary mission to represent and protect the interests of the company's shareholders, the Board meets a minimum of six times a year and as otherwise needed to review company progress on a wide variety of measures. The Board oversees the affairs of the company, including our governance. The Board has established several committees to enable it to fulfill our obligations to Merck shareholders.

As of December 1, 2011, Kenneth C. Frazier, Merck's Chairman of the Board, President and Chief Executive Officer is the only Merck executive on the board. Mr. William Harrison, Jr., serves as the board's Lead Director.  As Lead Director, Mr. Harrison confers with management on matters involving the board and serves as a liaison between the board and shareholders on investor matters. The board has established several committees to fulfill its obligations to Merck shareholders. Mr. Frazier is not a member of any of the board's committees.  Only independent directors serve on the board's committees.

The Board has a "balanced" membership, representing relevant areas of experience, types of expertise and backgrounds. While it is the Board's philosophy that matters of significance should be considered and, where appropriate, acted on by the full Board, Board Committees assist it in carrying out its responsibilities and provide greater focus in key areas.Corporate Responsibility is one such area.

The Committee on Public Policy and Social Responsibility was established to advise the Board and management on policies and practices pertaining to the company's responsibilities as a global corporate citizen.

Board Independence & Performance

Some shareholders have expressed a desire for complete independence of the Merck Board. Our policy is that the Merck Board should consist of a substantial majority of independent directors in accordance with the standard for independence set forth in our Policies of the Board.

For additional details on the responsibilities of the company's Lead Director, please go to page 18 of Merck's 2011 Proxy Statement.

Corporate Management

Merck Chairman, President and Chief Executive Officer Kenneth C. Frazier is accountable to the Merck Board. Merck's Executive Committee, an internal management committee of Merck executives who report directly to Mr. Frazier, meets monthly and as needed to review progress against the Plan to Win, a strategy established to guide the company to 2012, and other company matters.

Compliance

Merck's board of directors and senior management oversee the company's comprehensive compliance program, which is designed to maintain a culture that promotes the prevention, detection and resolution of potential violations of law or company policies. The Global Compliance Organization (GCO) was established following the merger between Merck and Schering-Plough. The GCO is headed by Richard S. Bowles, executive vice president and chief compliance officer, and reports directly to the CEO and president. Merck's compliance program is dynamic—involving regular assessments to ensure the program is responsive to the company's evolving business and associated compliance risks.

The Corporate Compliance Committee meets quarterly to oversee the development and implementation of the company's compliance program. Each division within Merck, through its Divisional Compliance Committee, periodically assesses the division's respective compliance risk areas, sets priorities for addressing risks, participates in the development of training and other educational programs, addresses the need for appropriate monitoring and auditing programs, and establishes performance objectives and reviews to assess the effectiveness of the division's compliance program. Divisional Compliance Committees present regular updates on the status of their compliance program to Merck's Corporate Compliance Committee.

The Chief Compliance Officer gives a quarterly report of the state of ethics and compliance at Merck to the Audit Committee of the board to help it meet its governance and oversight responsibilities.

Environment, Health and Safety Governance

We are committed to full compliance with all environmental and employee health and safety laws and regulations, and are also committed to actively identifying, understanding and addressing potential Environmental, Health and Safety (EHS) risks and concerns of our stakeholders. The Executive Committee has recently established an EHS Council to provide enterprise-wide leadership and governance of our EHS compliance and performance. In addition to a Corporate EHS Policy, we are continuing to implement and sustain a robust compliance management program that effectively oversees and manages EHS issues affecting the company in order to meet and exceed our responsibilities and commitments.

Risk Management

Merck's Corporate Audit and Assurance Services group is accountable to the Audit Committee of the Merck board to assess the adequacy and effectiveness of the company's control environment related to financial reporting and operating processes. This includes the appropriate management and oversight of key company risks, in accordance with our corporate policy on audit, control and risk management.

Disclosures

We are committed to a policy of full, true, timely and plain-English disclosure of all material information, in order to keep shareholders and the investing public informed about the corporation's business and operations. Accordingly, we have established a corporate disclosure policy that articulates the standards, processes and governance for the company's disclosure practices. Pursuant to the policy, Merck's Disclosure Committee oversees the company's disclosure practices and disclosure obligations.

Office of Ethics and the Code of Conduct

Established in 1995, the Office of Ethics develops and oversees global initiatives designed to deter illegal, unethical and improper behavior related to the company's business. To make sure employees understand the company's expectations, a Code of Conduct was established in 1999, and updated in 2002 and 2004. Edition III of the Code of Conduct was published in May 2011. All employees are required to complete training on our Code of Conduct, and are evaluated on ethical business practices in annual performance reviews. The Office of Ethics monitors ethical conduct. For more information, please click here.

Governance of our Research Agenda

The Research Leadership Team, chaired by the Executive Vice President and President, Merck Research Laboratories (MRL), reviews and approves the company's research objectives and strategy. The Research Leadership team is comprised of the heads of the eight functional areas within MRL.

Safety Monitoring

Merck has an efficient global system of pharmacovigilance to compile, assess and understand adverse experiences related to our products. Our global safety teams within Merck Research Laboratories are responsible for the safety evaluation of our medicines and vaccines. In parallel, at the country level, local pharmacovigilance teams at our subsidiaries worldwide are responsible for ensuring that safety information is collected and reported to our global safety staff at headquarters and to local regulatory authorities. For more information, please click here.

Corporate Responsibility Governance

In 2007, Merck established the Office of Corporate Responsibility as well as company-wide processes to identify corporate responsibility issues that are important to our business success and our stakeholders, and to formally manage targets and performance for those issues. Learn more.