BMW 2007 Annual Report Download - page 144

142
137 Corporate Governance
137
Members of the Supervisory Board
140
Members of the Board of Management
141 Corporate Governance at BMW Group
142 Compensation Report
146 Shareholdings of Members of
the Board
of Management and
Supervisory Board
147 Declaration of the Board of
Management
and of the Supervisory
Board pursuant to §161 AktG
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
disclosed by name 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 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
comprises a fixed and a variable component. In addi-
tion, benefits are also payable at the end of mem-
bers’ mandates, primarily in the form of pension
benefits. 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 framework, which will include a
high variable proportion.
The Personnel Committee reviews the com-
pensation system at regular intervals, with regard to
the structure and amount of the remuneration of the
Board of Management.
Fixed salaries comprise a base remuneration
amount, which is paid as monthly salary, and other
remuneration elements. Other remuneration ele-
ments 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 (2007: 82.2 %, 2006:
ployees of the BMW Group during the years 2006
and 2007. In order to reduce the risk of irregularities,
the applicable rules for receiving payments/benefits
and attending non-business events have once again
been communicated to employees working in the
purchasing department as well as to some 600 sup-
pliers. In 2007, the BMW Group set up a Compliance
Committee which reports directly to, and advises,
the Board of Management of BMW AG on compli-
ance-related matters. The Committee has, amongst
other functions, the task of identifying and assessing
compliance-related risks and other risks which could
endanger the good reputation of the BMW Group.
By analysing the structural, organisational and/or
process-related context of identified breaches of
rules, the Compliance Committee is also able to de-
sign preventative measures and instruct the relevant
departments to implement those measures. Each
and every employee of the BMW Group is obliged to
act responsibly and in compliance with the law.
In the interest of investor protection and in order
to ensure that the BMW Group complies with regu-
lations relating to potential insider information, the
Board of Management has appointed an Ad-hoc
Committee which is made up from representatives
of various specialist departments and whose mem-
bers examine the relevance of issues for ad-hoc
disclosure purposes. The procedures and decision-
taking process applied by this committee, which has
been in place since 1994, have been brought into
line with the revised requirements of the Investors’
Protection Improvement Act. All persons working
on behalf of the enterprise and with access to insider
information in accordance with existing rules have
been, and continue to be, included in an appropriate
list and informed of the duties arising from insider
rules.
Compliance matters are also included in the
Board of Management’s reports to the Audit Com-
mittee set up by the Supervisory Board.
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 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
Corporate Governance