Audi 2008 Annual Report Download - page 243

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47 German Corporate Governance Code
The Board of Management and Supervisory Board of AUDI AG submitted the declaration pursu-
ant to Section 161 of the German Stock Corporation Act relating to the German Corporate Gov-
ernance Code on November 24, 2008, and made it permanently accessible on the Internet at
www.audi.com/cgk-declaration.
48 Details relating to the Supervisory Board and Board of Management
The remuneration paid to members of the Board of Management complies with the legal re-
quirements of the German Stock Corporation Act as well as the recommendations and most of
the suggestions of the German Corporate Governance Code.
The total short-term remuneration comprises fixed and variable components. The fixed compo-
nents assure a base remuneration that enables the member of the Board of Management to
execute his duties conscientiously and in the best interests of the company, without becoming
dependent upon the attainment of short-term targets. Conversely, variable components that
are contingent on the economic position of the Company reconcile the interests of the Board of
Management with those of the other stakeholders.
The remuneration paid to members of the Board of Management for the 2008 fiscal year
amounted to EUR 6,893 (4,614) thousand, of which variable components accounted for
EUR 4,135 (2,309) thousand. Fixed components paid to the members of the Board of Manage-
ment in the 2008 fiscal year totaled EUR 2,758 (2,305) thousand. Disclosure of the remunera-
tion paid to each individual member of the Board of Management, by name, pursuant to Section
314, Para. 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 position. 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 incentive.
These options are based on the performance of Volkswagen ordinary shares. Since the stock
option plan of Volkswagen AG (Wolfsburg) was not extended beyond 2006, no further convert-
ible bonds were issued in the 2008 fiscal year.
The stock option plan is basically designed as follows: The basis for determining the conversion
price (base conversion price) of a tranche consists of the average XETRA closing prices of Volks-
wagen ordinary shares on the five trading days preceding each decision to issue convertible
bonds. Conversion may be effected for the first time following a qualifying 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 com-
parison parameters. Further details are presented 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 purpose of the stock option plan’s structure is to grant the members of the Board of Man-
agement a remuneration component that is based on appreciation of Volkswagen common
shares. 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.
The possibility of retrospectively adjusting the stock option plan’s performance targets or com-
parative parameters is excluded.