BMW 2015 Annual Report Download - page 191

191 STATEMENT ON CORPORATE GOVERNANCE
benefits in accordance with the rules of an older (de-
fined benefit) pension plan. Under the defined benefit
plan, the entitlement to retirement benefits arises at the
earliest on reaching the age of 60 or in case of invalidity.
The amount of the pension comprises a basic monthly
amount of € 10,000 plus a fixed amount. The fixed amount
is made up of approximately € 75 for each year of ser-
vice in the Company before becoming a member of the
Board of Management and between € 400 and € 600 for
each full year of service on the board (up to a maximum
of 15 years). Pension payments are adjusted based on
the rules applicable for the adjustment of civil servants’
pensions, i. e. the pensions of members of the Board of
Management are adjusted when the civil servants re-
muneration level B6 (excluding allowances) is increased
by more than 5 % or in accordance with the Company
Pension Act.
If a mandate is terminated, the new defined contribution
system provides entitlements which can be paid either
(a) in case of death or invalidity as a one-off amount, in
instalments, or (b) upon retirement – depending on the
wish of the ex-board member concerned – optionally
in
the form of a lifelong monthly pension, as a one-off
amount, or in
instalments, or in a combined form (e. g.
a combination
of a one-off payment and a proportion-
ately reduced lifelong monthly pension). Former mem-
bers of the Board of Management are entitled to receive
the retirement benefit at the earliest upon reaching the
age of 60, or in the case of entitlements awarded after
1 January 2012, upon reaching the age of 62.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each board mem-
ber’s individual pension savings account. The amount
on this account arises from annual contributions paid
in, plus interest earned depending on the type of
investment.
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of benefit
payments, a surviving spouse or otherwise surviving
children – in the latter case depending on their age and
education – are entitled to receive benefits as surviving
dependants. In case of invalidity or death, a minimum
benefit based on the potential annual contributions (up
to a maximum of 10) will be paid until the person
con-
cerned would have reached the age of 60. In addition,
following the death of a retired board member who has
elected to receive a lifelong pension, 60 % of that amount
is paid as a lifelong widow’s pension. Pensions are in-
creased
annually by at least 1 %.
Depending on the length of membership in the Board
of Management and the board member’s previous ac-
tivities, the annual contribution to be paid amounts
to between € 350,000 and € 400,000 for a member of
the Board of Management and between € 500,000 and
€ 700,000 for its Chairman. The guaranteed minimum
rate of return p. a. corresponds to the maximum interest
rate used to calculate insurance reserves for life insur-
ance policies (guaranteed interest on life insurance poli-
cies). When granting pension entitlements, the Super-
visory
Board considers the targeted level of pension
provision in each case as well as the resulting expense
for the BMW Group.
Contributions falling due under the defined contribution
model 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 may be offset against pension
entitle-
ments. 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.
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 BMW Group services at conditions that also apply
in each relevant case for pensioners and to lease BMW
Group vehicles in accordance with the guidelines appli-
cable to senior heads of departments. Retired Chairmen
of the Board of Management are entitled to use a BMW
Group vehicle as a Company car on a similar basis to
senior heads of departments, and depending on availa-
bility and against payment, use BMW chauffeur services.
Termination benefits on premature termination of board
activities, benefits paid by third parties
In conjunction with the amicable early termination
of Dr Reithofer’s Board of Management mandate with
effect from the end of the Annual General Meeting
2015, the Company also reached an agreement with
Dr Reithofer concerning the early termination of his
service contract with effect from the end of the Annual
General Meeting 2015. The contract termination agree-
ment envisages the calculation of variable cash remu-
neration for prorated activities in the financial year 2015
based on target attainment for the financial year 2013.
This arrangement ensures that, having been elected to
the Supervisory Board, he will not be involved in decid-