BMW 2012 Annual Report Download - page 172

172
152 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
152 Information on the Company’s
Governing Constitution
153 Declaration of the Board of
Management and of the
Supervisory
Board pursuant to
§ 161 AktG
154 Members of the Board of
Management
155 Members of the Supervisory Board
158 Work Procedures of the
Board of Management
160 Work Procedures of the
Supervisory Board
165 Information on Corporate
Governance Practices
166 Compliance in the BMW Group
170 Compensation Report
members appointed for the first time prior to 1 January
2010 had a legal right to receive the benefits already
promised to them, these board members were given the
option to choose between the previous system and the
new one.
In the event of the termination of mandate, Board of
Management members appointed for the first time
prior to 1 January 2010 are entitled to receive certain
defined benefits in accordance with the old 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 € 10,000 or
€ 15,000 (Chairman of the Board of Management) plus a
fixed amount. The fixed amount is made up of approxi-
mately € 75 for each year of service in the Company be-
fore becoming a member of the Board of Management
plus between € 400 and € 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 servants’ pensions: the
pen-
sions of members of the Board of Management are
adjusted when the civil servants remuneration level B6
(excluding allowances) is increased by more than 5 % or
in accordance with the Company Pension Act.
When a mandate is terminated, the new defined contri-
bution 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 retire-
ment – depending on the wish of the ex-board member
concerned – in the form of a lifelong monthly pension,
as a one-off amount, in a maximum of ten annual
instal-
ments, 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 pen-
sion scheme in Germany or, if their mandate had termi-
nated earlier and had not been extended, to members
who have either reached the age of 60 or are perma-
nently 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 mem-
ber who has elected to receive a lifelong pension, 60 %
of that amount is paid as a lifelong widow’s pension.
Pensions are increased annually by an amount of at
least 1 %.
The amount of the retirement pension to be paid is
determined on the basis of the amount accrued in each
board member’s individual pension savings account.
The amount on this account arises from annual
con-
tributions paid in plus interest earned depending on the
type of investment.
The annual contribution to be paid amounts to € 300,000
(2011: € 270,000) for each member of the Board of
Management and € 525,000 (2011: € 475,000) for the Chair-
man
of the Board of Management. 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. corre-
sponds
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 the po-
tential annual contributions will be paid until the person
concerned would have reached the age of 60.
Contributions falling due under the defined contribution
scheme are paid into an external fund in conjunction
with a trust model that is also used to fund pension ob-
ligations to employees.
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
specified, 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.
Board of Management members who retire immediately
after their service on the board and who draw a
retire-
ment pension are entitled to purchase vehicles and
other services of the BMW Group at conditions that also
apply in each relevant case for pensioners and to lease
BMW Group vehicles in accordance with the guidelines
applicable to senior heads of departments.
Compensation claims, entitlements to receive amounts
from third parties
If a board member’s mandate is terminated early with-
out important reason, there are no contractual commit-
ments to pay compensation. Similarly, there are no com-
mitments to pay compensation for early termi nation in
the event of a change of control or a takeover offer.