BMW 2014 Annual Report Download - page 192

192
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173
Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
Overview of compensation system and compensation components
Component Parameter / measurement base
Basic compensation p. a.
Member of the Board of Management:
– € 0.75 million (first term of appointment)
– € 0.90 million (from second term of appointment onwards or fourth year in office)
Chairman of the Board of Management:
– € 1.50 million
Variable compensation
Bonus Target bonuses p. a. (if target is 100 % achieved):
– € 1.50 million (first term of appointment)
– € 1.75 million (from second term of appointment onwards or fourth year in office)
– € 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
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
– Criteria for the performance factor also include: innovation (economic and ecological,
e. g. reduction of CO2 emissions), customer orientation, ability to adapt, leadership ac-
complishments and attractiveness as employer, progress in implementing the diversity
concept and activities that foster corporate social responsibility
Special bonus payments May be paid in justified circumstances on an appropriate basis, contractual basis, no
entitlement
Share-based remuneration programme
a) Cash compensation component
b) Share-based remuneration component
(matching component)
– Requirement for Board of Management members to each invest an amount equivalent
to 20 % of their total bonus (after tax) in BMW AG common stock
–
Earmarked cash remuneration equivalent to the amount required to be invested in
BMW AG shares, plus taxes and social insurance contributions
– Once the four-year holding period requirement is fulfilled, Board of Management
members receive for each three common stock shares held either – at the Company’s
option –
one further share of common stock or the equivalent amount in cash, unless
the employment relationship was ended before expiry of the agreed contractual period
(except where caused by death or invalidity).
Other compensation
Contractual agreement, main points: use of company cars, insurance premiums,
contributions towards security systems, medical check-up
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 € 120,000 (Chairman: € 180,000) p. a. plus fixed amounts based on length of
Company and board service
b) Defined contribution system with guaranteed minimum
rate of return
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension contributions p. a.:
Member of the Board of Management: € 350,000 – € 400,000
Chairman of the Board of Management: €700,000
Remuneration caps (maximum remuneration)
in € p. a. Bonus Share-based compensation programme Possible Total *
Cash compensation Monetary value special bonus
for share acquisition of matching
component
Member of the Board of Management
in the first term of appointment 3,000,000 700,000 700,000 1,000,000 4,925,000
Member of the Board of Management
in the second term of appointment
or from fourth year in office 3,500,000 800,000 800,000 1,200,000 5,500,000
Chairman of the Board of Management 6,000,000 1,400,000 1,400,000 1,500,000 9,850,000
* Including basic remuneration, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the
individual components.