BMW 2005 Annual Report Download - page 132

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Annual document pursuant to §10 of the
Securities Prospectus Act
Notifications pursuant to stock exchange and secu-
rities regulations, published or made available to
the public by BMW AG during the financial year 2005,
are available online at www.bmwgroup.com/ir. By
following this procedure, BMW AG has simultane-
ously
implemented a new provision contained in
the Securities Prospectus Act dated 22 June 2005.
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
describes the principles relating to the compensa-
tion of the Board of Management and the stipula-
tions set out in the Articles of Association 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 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 objectives
The compensation model used for the Board of
Management should be attractive in the context of
the competitive environment for highly qualified ex-
ecutives. 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 in-
cludes fixed and variable salaries. For the purposes
of determining 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 a competitive level of income
with a very high bonus element (2005: 83.6%, 2004:
84.0%) for financial years in which the BMW Group
performs well. Measurement of the variable compo-
nent of compensation 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 Per-
sonnel 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 2005
On the basis of the proposed dividend, the total
salaries of the Board of Management for the finan-
cial
year 2005 amounts to euro 12.2 million (2004:
euro 11.9 million), comprising fixed components
of euro 2.0 million and variable components of euro
10.2 million (2004: euro 10.0 million).
in euro million 2005 2004
Amount Proportion Amount Proportion
Fixed salaries 2.0 16.4% 1.9 16.0%
Variable salaries 10.2 83.6% 10.0 84.0%
Total salaries 12.2 100% 11.9 100 %