BMW 2010 Annual Report Download - page 158

156
140 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
140 Information on the Company’s
Governing Constitution
142 Declaration of the Board of
Management and of the
Supervisory
Board pursuant to
§ 161 AktG
143 Members of the Board of
Management
144 Members of the Supervisory Board
147 Information on Work Procedures
of the Management Board and
Supervisory Board
154 Compensation Report
162 Information on Corporate
Governance Practices
163 Compliance in the BMW Group
receive the benefits already promised to them, they have
been given the option to choose between the previous
system and the new one. No changes were made to exist-
ing arrangements in 2010.
In the event of the termination of mandate, current mem-
bers of the Board of Management are entitled to receive
certain defined benefits in accordance with the pension
scheme rules. Pensions are paid to former members 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 is unchanged from the previous year and
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 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 payments are adjusted by analogy
to the rules applicable for the adjustment of civil serv-
ants’ pensions: the pensions of members of the Board of
Management are adjusted when the civil servants remu-
neration level B6 (excluding allowances) is increased
bymore than 5% or 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 transi-
tional payment 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 evaluation of all circumstances. Arrange-
ments are in place concerning the offsetting of other
in-
come against pensions and transitional payments.
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 –
depending on the wish of the ex-board member con-
cerned – 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 pen-
sion). 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 terminated 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 de-
termined on the basis of the amount accrued in each
board member’s individual pension savings account. The
amount on this account arises from annual contribu-
tions
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 amounted to euro 240,000 for
2010, euro 270,000 for 2011 and euro 300,000 from 2012
onwards. 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 in monthly amounts. 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).
In the case of invalidity or death, a minimum of 60% of
the potential annual contributions will be paid until the
person concerned would have reached the age of 60. At
the changeover to the new system, current members of
the Board of Management were credited with a starting
balance of equivalent value to any entitlements already
vested.
The starting balance and all contributions subsequently
credited to board members under the new scheme have
been externally financed in conjunction with a trust
model that is also used to fund pension obligations to
employees.
Pensions are increased annually by an amount of at least
1%.
Income earned on an employed or a self-employed basis
up to the age of 63 is offset against the pension entitle-
ment. In addition, certain circumstances have been speci-
fied, in the event of which, the Company no longer has
any obligation to pay benefits. In such cases, no transitional
payments will be made either.
Retired board members are entitled to use company and
lease vehicles in line with the rules applicable for senior
heads of departments.