BMW 2010 Annual Report Download - page 159

157 STATEMENT ON CORPORATE GOVERNANCE
If a board member’s mandate is terminated early without
important reason, there are no contractual commitments
to pay compensation. Similarly, there are no commitments
to pay compensation for early termination in the event
of a change of control or a takeover offer.
No members of the Board of Management received any
payments or benefits from third parties in 2010 on account
of their activities as members of the Board of Manage-
ment of BMW AG.
Overview of compensation system and compensation components
Component Parameter / measurement base
Salary
Member of the Board of Management:
– euro 420,000 p. a. (first term of appointment)
– euro 480,000 p. a. (from second term of appointment onwards)
Chairman of the Board of Management:
– euro 840,000 p. a.
Variable compensation
Bonus:
(if target is 100% achieved, the ratio of salary and bonus will
be approximately 20 : 80)
Target bonuses (if target is 100 % achieved):
– euro 1.5 million (first term of appointment)
– euro 1.75 million (from second term of appointment onwards)
– euro 3.00 million (Chairman of the Board of Management)
a) Corporate earnings-related bonus
(corresponds to 50 % of target bonus if target is 100 %
achieved)
– Quantitative criteria fixed in advance for a period of three financial years
– Formula: 50 % of target bonus x earnings factor x dividend factor (common stock)
– the earnings factor is derived from the Group net profit and the Group post-tax return on
sales
– Corridor: 0 –150 %* (fixed upper limit)
b) Performance-related bonus
(corresponds to 50 % of target bonus if target is 100 %
achieved)
– Primarily qualitative criteria, expressed in terms of a performance factor aimed at
measuring the board members contribution to sustainable and long-term performance
and the future viability of the business
– Formula: 50 % of target bonus x performance factor
– Other criteria for performance factor: innovation (economic and ecological, e.g. reduc-
tion of CO2 emissions), leadership skills and attractiveness as employee, corporate
social responsibility, progress in implementing diversity concept
– Corridor: 0 –150 %* (fixed upper limit)
Share-based compensation components – introduction planned for financial years from 1 January 2011 onwards
– requirement for board members to invest 20 % of their total bonuses (after tax) for finan-
cial years from 1 January 2011 onwards in BMW AG common stock
– one half of the amount required to finance this investment to be provided by Company.
– minimum holding period of four years
– at the end of the holding period, board member receives either one additional share or
an equivalent cash amount (at option of Company)
Special bonus payments May be paid in justified circumstances on appropriate basis, no entitlement
Other remuneration
Contractual agreement, main points: use of company cars, insurance premiums,
contributions towards security systems, medical check-up
Compensation entitlements on termination of contract, compensation entitlements in event of change of control or takeover bid
No contractual entitlements
Retirement and surviving dependants’ benefits
Model Principal features
a) Defined benefits
(only applies to board members appointed for the first
time before 1 January 2010; based on legal right to
receive the benefits already promised to them, this group
of persons is entitled to opt between (a) and (b))
Pension of base amount of euro 10,000 (Chairman: euro 15,000) plus fixed amounts
based on length of company and board service, in certain circumstances transitional
payments
b) Defined contribution system since 1 January 2010 with
guaranteed minimum rate of return Pension based on amounts credited to individual savings accounts for contributions paid and interest earned
Annual contribution for board member (Chairman)
for 2010: euro 240,000 (euro 425,000)
for 2011: euro 270,000 (euro 475,000)
for financial year 2012 and thereafter: euro 300,000 (euro 525,000)
Various forms of disbursement
No transitional payments
* Upper limit for financial year 2011 and thereafter will increase to 250 %.