BMW 2003 Annual Report Download - page 52

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51
Principles for the compensation of the Board of
Management and Supervisory Board
The BMW Group supports the endeavours of the
German Corporate Governance Code to increase
the transparency in the disclosure of the components
of compensation. The following section therefore
describes the principles relating to the compensation
of the Board of Management and the stipulations
set out in the statutes relating to the compensation
of the Supervisory Board. As well as discussing
the structure of remuneration, the components of
compensation are also disclosed in absolute figures.
1. Compensation of the Board of Management
Responsibilities
The structure and determination of the compensa-
tion of the Board of Management are the responsi-
bility of the Personnel Committee of the Supervisory
Board. The Personnel Committee comprises the
Chairman of the Supervisory Board and the four
deputies to the Chairman.
Overall objective
The compensation model used for the Board of
Management should be attractive in the context of
the competitive environment for highly qualified
executives. As an incentive to encourage perform-
ance, the variable component of compensation
should be linked to a high degree to the financial
success of the BMW Group. The structure of the
compensation of the Board of Management should
also contain parallels to the compensation system
applied to employees and senior management.
Components of compensation
The compensation of the Board of Management
comprises a fixed component and a variable bonus
based on performance. For the purposes of deter-
mining the overall compensation of the Board of
Management, the Personnel Committee, having
considered the overall position and forecasts of the
BMW Group, decides on an overall salary frame-
work, which will include a high variable proportion.
The factors determining the amount of variable
compensation enable members of the Board of
Management to earn an attractive level of income
with a very high bonus element (2003: 82.2%,
2002: 81.5 %) for financial years in which the BMW
Group performs well.
Measurement of the variable component of com-
pensation is based on the
BMW
Group’s
net profit for
the relevant year and the level of the dividend.
An upper limit is set for the compensation of the
Board of Management.
The compensation system does not include any
stock options, value appreciation rights which work
in the same way as stock options or any other stock-
based compensation components.
The Personnel Committee reviews at regular
intervals the compensation system, with regard to
the
structure and amount of the remuneration of the
Board of Management.
Compensation of the Board of Management for
the financial year 2003
On the basis of the proposed dividend, the compen-
sation of the Board of Management of the BMW
Group for the financial year 2003 amounts to euro
10.7 million (2002: euro 11.9 million).
T
he components of compensation were as
follows:
in euro million 2003 2002
Amount Proportion Amount Proportion
Fixed salary 1.9 17.8% 2.2 18.5%
Bonus 8.8 82.2% 9.7 81.5%
To t al compensation 10.7 100 % 11.9 100 %