Audi 2013 Annual Report Download - page 212

CORPORATE GOVERNANCE REPORT
REMUNERATION REPORT
MANAGEMENT REPORT
209
A
year, bonus payments totaled EUR 13,894 (14,357) thousand,
with the LTI reaching EUR 4,500 (4,104) thousand.
//// BONUS SYSTEM
The bonus system is designed to reward positive performance
of the Audi Group. Basically, the level of the bonus is based on
the results achieved, on the Company’s economic situation and
on the personal performance of the individual member of the
Board of Management. The operating profit, in the form of a
two-year average, is used as the calculation basis. The system
is regularly reviewed by the Supervisory Board and adjusted
where necessary.
//// LONG TERM INCENTIVE (LTI)
For Audi, as a Volkswagen Group brand, the amount of the
Long Term Incentive (LTI) essentially depends on the extent
to which targets included in the Volkswagen Group’s Strategy
2018 are achieved.
Specifically, this relates to the following targets:
>Top customer satisfaction, measured using the customer
satisfaction index,
>Top employer, measured using the employee index,
>Rise in sales, measured using the growth index, and
>Rise in return, measured using the return index.
The customer satisfaction index is based on indicators of cus-
tomers’ overall satisfaction with the dealers supplying the
products, with new vehicles and with service performance,
based on the most recent workshop visit in each case. The
employee index is calculated on the basis of such indicators as
employment and productivity, as well as participation levels
and results from employee surveys. Key indicators for the
purposes of the growth index are deliveries to customers and
market share.
The indices calculated in this way on customer satisfaction,
employees and the sales situation are added together and the
total is then multiplied by the return index, calculated from
the development in the return on sales and the dividend paid
on the Volkswagen AG ordinary share. This ensures that the LTI
is only paid out if the Volkswagen Group as a whole has been
financially successful. If the threshold of a return on sales of
1.5 percent is not exceeded by the Volkswagen Group, the
return index – and thus also the overall index – will equal zero,
and the LTI will not be paid out.
// BENEFITS PAID UPON REGULAR
TERMINATION OF ACTIVITY
Upon the regular termination of their activity, members of the
Board of Management of AUDI AG are entitled to retirement
pay and, for as long as this payment is made, to the use of
company cars in return for payment of a fixed charge. The
benefits are paid out in full from the age of 63. This age limit
is gradually being increased to 65.
Retirement pay is a maximum of 50 percent of the last
monthly salary.
Surviving dependents receive a widow’s or orphan’s pension. The
widow’s pension is a maximum of 60 percent of retirement pay,
the full orphan’s pension 30 percent and the half orphan’s
pension 15 percent. For all full orphans or half orphans com-
bined, the pension is no more than 60 percent of retirement
pay. A full or half orphan’s pension is paid up to no later than
the age of 25.
As of December 31, 2013, provisions for pensions for current
members of the Board of Management pursuant to IAS 19
totaled EUR 28,119 (19,615) thousand. Allocations to the
provisions including transfers during the past fiscal year
totaled EUR 8,504 (12,057) thousand. The measurement of
pension obligations also includes other benefits such as surviv-
ing dependents’ pensions.
Measured in accordance with the requirements of German
commercial law, pension obligations totaled EUR 22,306
(12,844) thousand, with EUR 9,463 (6,107) thousand, includ-
ing transfers, having been allocated in 2013. Current pension
payments are increased in line with the index-linking of the
highest collectively agreed salary, provided that the applica-
tion of Section 16 of the German Act on the Improvement of
Company Pension Provision (BetrAGV) does not lead to a high-
er increase.
Former members of the Board of Management and their sur-
viving dependents received EUR 2,398 (12,207) thousand
during the reporting period. This included payments resulting
from termination of office of EUR 450 (10,258) thousand, of
which obligations of EUR 2,983 (7,821) thousand were still
outstanding as of the balance sheet date. As at December 31,
2013, pension obligations for the above group of individuals,
calculated pursuant to IAS 19, totaled EUR 43,194 (51,458)
thousand. The equivalent figure calculated in accordance with
the rules under German commercial law was EUR 37,308
(39,717) thousand.
// BENEFITS PAID UPON EARLY
TERMINATION OF ACTIVITY
If the activity is ended with good cause for which the member
of the Board of Management is not responsible, entitlement to
payment of a settlement shall be limited to a maximum of two
years’ annual remuneration (settlement cap).