As a rule, the members of the Executive Board of an Aktiengesellschaft (German public limited company) in Germany are released from the obligation to pay statutory pension and unemployment insurance; as a result, no corresponding employer contributions were made.
The members of the Executive Board receive social security payments and smaller non-cash pay- ments (e.g., accident insurance protection) to the extent required by law in Germany or standard for comparable employees. This relates exclusively to payments that do not constitute income under German income tax law, or which are subject to lump-sum taxation.
During the year under review, the members of the Executive Board were reimbursed for their neces- sary travel and entertainment expenses up to the maximum amount under German income tax law. In addition, the company bore the cost of D&O insurance, which protects members of the Executive and Supervisory Boards and other company executives. This comprised two policies (basic insurance and additional insurance). According to the regulations of the German Corporate Governance Code a deductible is included in the D&O insurance for both the members of the Executive Board and also the members of the Supervisory Board in the amount of 10% of the damage up to one and a half times their fixed annual remuneration. The total premium for the persons named amounted to EUR 53 thousand for fiscal year 2011 (previous year: EUR 56 thousand).
EUR thousand Value of defined benefit obligation as of Dec. 31, 2011
Ines Kolmsee 979
Gerhard Ertl 741
No remuneration was paid to members of the Group’s Executive Board by consolidated subsidiar- ies for mandates with these companies. The Board of the non-consolidated company Jamipol also includes members of the Group’s Executive Board; Jamipol paid this group of people a meeting fee of INR 20,000 for Ms. Ines Kolmsee and INR 5,000 for Mr. Reiner Bunnenberg in fiscal year 2011. In the first quarter of 2011, Reiner Bunnenberg still received payments that did not relate to his activi- ties as a member of the Executive Board from January 1, 2011, but to his work in 2010.
7. “Phantom Stock” program (expired):
Stock option programs were set up in 2008 for the members of the Executive Board at that time (Ines Kolmsee and Gerhard Ertl) in the form of phantom stocks. The program of Reiner Bunnenberg ended on December 31, 2010 before he was appointed to the Executive Board.
Ines Kolmsee and Gerhard Ertl were each due 30,000 phantom stocks. The increase in the value of these stocks is identified on pre-defined valuation dates based on the weighted XETRA average closing prices over a period of 20 trading days. The increase in share prices between two valuation dates gives the number of shares or cash compensation per phantom stock due to the member of the Executive Board. If the share price falls, this amount is zero. In the event that a member exits the Executive Board, the ongoing options expire to the extent that these rights had not already re- sulted on the date the employment relationship ended because the valuation date had been reached. The company has the right to fulfill the claims of the respective member of the Executive Board by making a cash payment instead of delivering shares (cash settlement).
• Gerhard Ertl’s program ran until he left the company without a payment being due in the period under review.
• Ms. Ines Kolmsee’s program runs through to March 31, 2011. During the year under review one tranche of this program for Ines Kolmsee became due and she asserted it. The company, represented by its Supervisory Board, used its right to make cash settlement, and settled Ms. Kolmsee’s claims with a cash payment in the amount of EUR 152 thousand.
As a result, on the balance sheet date, there are no more phantom stocks for the members of the Executive Board.
Further information:
There are no advances, loans or liabilities in favor of the members of the Executive Board.
The following compensation agreements have been reached with the members of the Executive Board: In the event that the appointment of a member of the Executive Board to company’s Executive Board is revoked (with the exception of extraordinary termination by the Company), the members of the Executive Board are entitled to compensation. This amounts to twice the amount of the last fixed annual remuneration for each full period of two years that this person is a member of the company’s Executive Board. It is limited to the lesser of two maximum annual total salaries (fixed and variable remuneration) or the maximum total remuneration (fixed and variable remuneration) for the remain- ing period of the contract.
In the event of a change of control of the company, the members of the Executive Board have extraor- dinary termination rights. If these extraordinary termination rights are exercised, the compensation rules concerning the revocation of the appointment apply accordingly to the extent that the member of the Executive Board does not receive comparable payments from a third party in connection with the change of control.
In addition, a prohibition on competition for the period after the end of the employment contract for a maximum of two years has been agreed. In this regard, each member of the Executive Board is due maximum monthly compensation in the amount of their last monthly fixed remuneration. On this basis, Mr. Gerhard Ertl, who has left the Executive Board in the year under review, received an amount of EUR 63 thousand in 2011.