BMW 2006 Annual Report Download - page 122

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group’s intranet of the objectives, rights and duties
ensuing from the General EqualTreatment Act (GETA).
Staff and senior management, particularly those
working in the Human Resources department are
regularly given training regarding the content of
the
GETA.Acknowledgement of the aims incorporated in
this law, together with the corresponding guide-
lines for management and employees are docu-
mented in the agreement “Fairness in theWorkplace”.
Compensation Report
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 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.
In accordance with the recommendations of the
GCGC, the compensation of each member of the
Board of Management and the Supervisory Board is
individually disclosed and analysed into components.
1. Compensation of the Board of Management
Responsibilities
The determination and monitoring of the compen-
sation of the Board of Management are the respon-
sibility of the Personnel Committee of the Super-
visory 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
executives. As an incentive to encourage perform-
ance, the variable component should be closely
linked 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 and a variable component. In addi-
tion, benefits are payable at the end of members’
mandates, primarily in the form of pension benefits.
For the purposes of determining the overall compen-
sation of the Board of Management, the Personnel
Committee, having considered the overall position
and forecasts of the BMW Group, decides on a
salary framework, which will include a high variable
proportion.
The Personnel Committee reviews the compen-
sation system at regular intervals, with regard to
the structure and amount of the remuneration of the
Board of Management.
Fixed remuneration comprises a base remuner-
ation amount, which is paid as monthly salary, and
other remuneration elements. Other remuneration
elements comprise mainly the use of company cars
and the payment of insurance premiums.
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 (2006: 84.1%, 2005:
83.6%) for financial years in which the BMW Group
performs well. The measures used to determine
the variable component of compensation are 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 each member of the Board of
Management.
The compensation system does not include any
stock options, value appreciation rights comparable
to stock options or any other stock-based compen-
sation components. No compensation agreements
have been concluded with members of the Board
of Management for situations involving a take-over
offer. The members of the Board of Management do
not receive any loans from the BMW Group.
Similarly,
they did not receive any payments or benefits from
third parties in 2006 on account of their activities as
members of the Board of Management.
Pension agreements are in place in the event of
the termination of a mandate.
Pensions are paid to former members of the
Board of Management who have either reached the
age of 65, or, if their mandate had terminated earlier
and had not been extended, to members who have
reached the age of 60, or are unable to work due
to ill-health or accident,or who have entered into early
retirement in accordance with a special arrangement.
The pension comprises a basic monthly amount of
euro 10,000 or euro 15,000 (Chairman of the Board
of Management) plus a fixed amount.The fixed
amount is made up of approximately euro 75 for
each year of service in the company before becom-
ing a member of the Board of Management, plus
between euro154 and euro 400,or between euro153
and euro 600 (Chairman of the Board of Manage-
ment), for each full year of service on the board (up
to a maximum of 15 years). Pension payments are