BMW 2004 Annual Report Download - page 114

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In addition, the Corporate Governance Code of
the BMW Group was amended to bring it into line
with new German legislation, including the new ver-
sion of §15a of the Trade Securities Act, and was
posted,together with the Declaration of Compliance,
on the Internet.
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
transparency in the disclosure of the components of
compensation. The following section therefore de-
scribes 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 com-
pensation are also disclosed in absolute figures.
1. Compensation of the Board of Management
Responsibilities
The structure and determination of the compensation
of the Board of Management are the responsibility of
the Personnel Committee of the Supervisory Board.
The Personnel Committee comprises the Chairman
of the Supervisory Board and his four deputies.
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 performance,
the variable component 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 per-
formance-related bonus. 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 framework,
which will include a high variable proportion.
The factors determining the amount of variable
compensation enable members of the Board of
Management to earn a competitive level of income
with a very high bonus element (2004: 84.0%,
2003: 82.2%) for financial years in which the BMW
Group performs well.
Measurement of the variable component of
compensation is based on the BMW Group’s net
profit for the relevant year and the level of the
dividend.
Individual upper limits are set for the compen-
sation 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 the com-
pensation system at regular intervals with regard to
the structure and amount of the Board of Manage-
ment’s remuneration.
Compensation of the Board of Management
for the financial year 2004
On the basis of the proposed dividend, the com-
pensation of the Board of Management for the
financial year 2004 amounts to euro 11.9 million
(2003: euro 10.7 million).
The compensation components were as
follows:
in euro million 2004 2003
Amount Proportion Amount Proportion
Fixed salary 1.9 16.0% 1.9 17.8%
Bonus 10.0 84.0% 8.8 82.2%
Total compensation 11.9 100% 10.7 100%