BMW 2009 Annual Report Download - page 155

The Supervisory Board carries out an annual review of the
appropriateness of the total compensation of the Board
of Management; in horizontal terms, this is done by com-
paring compensation paid by DAX 30 companies and, in
vertical terms, by comparing board compensation with the
salaries of senior management (below board level) and
with average salaries of employees.
In the event of the termination of mandate, current mem-
bers of the Board of Management are entitled to receive
certain defined benefits. Pensions are paid to former
mem-
bers of the Board of Management who have either reached
the age of 65, or, if their mandate was terminated earlier
and not extended, to members who have either reached
the age of 60 or who are unable to work due to ill-health
or accident, or who have entered into early retirement in
accordance with a special arrangement. The amount of
the pension comprises, unchanged from the previous year,
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
becoming a member of the Board of Management plus
between euro 400 and euro 600 for each full year of service
on the board (up to a maximum of 15 years). Pension pay-
ments are adjusted by analogy to the rules applicable for
the adjustment of civil servants’ pensions: the pensions
of members of the Board of Management are adjusted ac-
cordingly when the civil servants remuneration level B6
(excluding allowances) is increased by more than 5 % or
increased in accordance with the Company Pension Act.
If a mandate is ended early before the member of the Board
of Management reaches the age of 60, a transitional pay-
ment amounting to two-thirds of the pension theoretically
earned up to the date when a full pension can be drawn,
may become payable if, after a minimum of three years of
service as a member of the Board of Management, this is
considered appropriate on the basis of an objective evalua-
tion of all circumstances. Arrangements are in place
con-
cerning the offsetting of other income against pensions
and transitional payments.
With effect from financial years beginning on or after 1 Jan-
uary 2010, the provision of retirement and surviving de-
pendants’ benefits for existing and future members of the
Board of Management has been changed to a defined
contribution system with a guaranteed minimum return
(similar to the switch to a defined contribution system for
middle and senior management in 2009 – see page 29
et
seq.). Given the fact that board members already have a
legal right to receive the benefits already promised to them,
they have been given the option to choose between the
previous system and the new one. All current members of
the Board of Management have agreed to the correspond-
ing changes in their contracts with effect from 1 January
2010.
If a mandate is terminated after 1 January 2010, the new
system provides entitlements which can be paid either
(a) in the case of death or invalidity as a one-off amount or
over a maximum of ten years or (b) on retirement – depend-
ing
on the wish of the ex-board member concerned – in the
form of a life-long monthly pension, as a one-off amount ,
over a maximum of ten years, or in a combined form (e. g.
a combination of a one-off payment and a proportionately
reduced life-long monthly pension). Pensions are paid to
former members of the Board of Management who have
either reached the statutory retirement age for the state
pension scheme in Germany, or if their mandate had ter-
minated earlier and had not been extended, to members
who have either reached the age of 60 or are permanently
unable to work, or who have entered into early retirement
in accordance with a special arrangement. In addition,
following the death of a retired board member who has
elected to receive a life-long pension, 60 % of that amount
is paid as a life-long widow’s pension.
The amount of the retirement pension to be paid is deter-
mined on the basis of the amount accrued in each board
member’s individual pension savings account. The amount
on this account arises from annual contributions paid by
the Company plus interest earned based on the type of
investment.
The annual contribution to be paid for each member of the
Board of Management amounts to euro 240,000 for 2010,
euro 270,000 for 2011 and euro 300,000 from 2012 on-
wards. The equivalent figures for the Chairman of the Board
of Management are euro 425,000, euro 475,000 and
euro
525,000. The contributions are credited, along with
interest earned, to the personal savings accounts of board
members on a monthly basis. The guaranteed minimum
rate of return p. a. corresponds to the maximum interest
rate used to calculate insurance reserves for life insurance
policies (guaranteed interest on life insurance policies)
which currently stands at 2.25 %.
In the case of invalidity or death, a minimum of 60 % of the
potential annual contributions will be paid until the person
153 Statement on Corporate Governance