Audi 2007 Annual Report Download - page 229

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pany assure that the interests of the members of the Board of Management are consistent
with those of the other stakeholders.
The remuneration paid to members of the Board of Management for the 2007 fiscal year
amounted to EUR 4,614 (4,531) thousand, of which variable components accounted for
EUR 2,309 (2,479) thousand. The variable component in the year before also included remu-
neration under stock options granted; the fair value at the time of granting amounted to
EUR 106 thousand. The fixed remuneration components for the members of the Board of
Management totaled EUR 2,305 (2,052) thousand in the 2007 fiscal year. Disclosure of the
remuneration paid to each individual member of the Board of Management, by name, pur-
suant to Section 314, Paragraph 1, No. 6a), Sentences 5 to 9, of the German Commercial
Code has not been effected, as the 2006 Annual General Meeting adopted a corresponding
resolution that is valid for a period of five years.
In addition to fixed payments in cash, there are varying levels of contributions in kind,
including, in particular, the use of company cars.
Each member of the Board of Management is paid a variable annual bonus. The variable
bonus comprises annually recurring components that are linked to the Company’s economic
success. It is largely based on the earnings achieved by the Company and its economic posi-
tion. There are no non-recurring variable components linked to business success in the
remuneration paid to members of the Board of Management.
Stock options serve as variable remuneration components providing a long-term incen-
tive. These options are based on the performance of Volkswagen ordinary shares. Since
Volkswagen AG’s stock option plan was not extended beyond 2006, no further convertible
bonds were issued in the 2007 fiscal year.
The structure of the stock option plan is essentially as follows: The basis for determining
the conversion price (base conversion price) of a tranche consists of the average Xetra clos-
ing prices of Volkswagen ordinary shares on the five trading days preceding each decision
to issue convertible bonds. Conversion may be effected for the first time following a qualify-
ing period of 24 months and thereafter up until a period of five years has elapsed from the
time the convertible bonds were issued. The conversion price is initially 110 percent of the
base conversion price, rising by five percentage points in each subsequent year. Members
of the Board of Management may exercise their conversion rights only three times a year,
during four-week exercise periods, each of which commences on a public reporting date of
Volkswagen AG. In the spirit of the German Corporate Governance Code, the stock option
plan is thus based on demanding, relevant comparison parameters. Further details are pre-
sented in the Agenda to the Annual General Meeting of Volkswagen AG on April 16, 2002,
which authorized the introduction of the stock option plan.
The structure of the stock option plan is designed to grant the members of the Board of
Management a remuneration component that is based on appreciation of the Company’s
trading price. It is thus intended to contribute toward increasing value creation and toward
enhancing the value of Volkswagen AG. Moreover, stock option plans are a widely used
instrument for recruiting and retaining board members.
Retrospective adjustment of the stock option plan’s performance targets or comparison
parameters is not permissible.
Inordinate proceeds from the stock options are not expected due to the linkage with the
trading price performance of Volkswagen ordinary shares and the restricted number of
options per tranche. In order to implement the recommendation of the German Corporate
Governance Code, the Supervisory Board is prepared to reach an agreement with the mem-
bers of the Board of Management on a cap in the event of exceptional, unforeseen devel-
opments.
In the 2007 fiscal year, 1,500 stock options were exercised by members of the Board of
Management of AUDI AG. On December 31, 2007, the members of the Board of Management
were entitled to purchase a total of 14,500 ordinary shares of Volkswagen AG upon the con-