Mercedes 2003 Annual Report Download - page 92
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Please find page 92 of the 2003 Mercedes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.The present compensation system has one fixed component and
three variable, performance-related components:
– A fixed base salary related to the area of responsibility of each
Board of Management member. Every year, the base salary and
total compensation are reviewed and compared with a group of
comparable international companies.
– Variable compensation in the form of an annual bonus, related to
the base salary but primarily oriented towards the achievement
by DaimlerChrysler of its planned operating profit. In addition,
the development of total shareholder return and individual
performance can lead to the annual bonus being adjusted
upward or downward.
– A medium-term variable element of compensation in the form of
a three-year performance plan based firstly on the relative
performance of return on sales compared with selected
competitors and secondly on the actual return on capital
compared with the goal set in the approved planning. This
compensation takes place through the allocation of phantom
shares, which are then paid out at the currently valid price after
three years depending on the achievement of the
aforementioned goals.
– A long-term variable element of compensation, at present in the
form of a stock option plan. The options granted within this plan
can be exercised at a previously determined reference price per
DaimlerChrysler share plus a 20% mark up. Half of the options
can be exercised at the earliest two years after being granted,
the other half at the earliest after three years. Options not
exercised become void ten years after being granted. The
Presidential Committee can impose a limit or reserve the right to
impose such a limit on the long-term variable compensation paid
as of the 2004 financial year in the case of exceptional and
unpredictable developments.
The Presidential Committee of the Supervisory Board of
DaimlerChrysler AG has issued stock ownership guidelines for the
Board of Management, according to which the members of the
Board of Management are required to hold a part of their private
assets in the form of DaimlerChrysler shares. For example, the
members of the Board of Management had to use a part of their
variable compensation paid for the year 2003 to purchase shares
in the company.
Compensation of the Supervisory Board. The Articles of
Incorporation of DaimlerChrysler AG currently stipulate that the
members of the Supervisory Board receive a fixed compensation in
addition to the reimbursement of their expenses after the end of
the financial year. The Chairman of the Supervisory Board receives
three times this amount, the Deputy Chairman of the Supervisory
Board and the Chairman of the Audit Committee receive twice this
amount, chairmen of other committees of the Supervisory Board
receive 1.5 times this amount and members of the committees of
the Supervisory Board receive 1.3 times this amount. If a member
of the Supervisory Board exercises several of the aforementioned
functions, he receives only the compensation for the function with
the highest compensation. The members of the Supervisory Board
and its committees receive attendance fees for each of the
meetings of the Supervisory Board and its committees that they
attend (see page 144, Note 24 and page 169, Note 37).
Declaration in accordance with the listing standards of the
New York Stock Exchange. DaimlerChrysler’s declaration
concerning significant differences between the systems of
corporate governance in Germany and the United States, which is
based on the listing standards of the New York Stock Exchange can
be seen on the Internet at www.daimlerchrysler.com/corpgov_e.
German Corporate Governance Code. Section 161 of the
German Stock Corporation Act (AktG) requires the Board of
Management and the Supervisory Board of a listed stock
corporation to declare each year that the recommendations of the
“German Corporate Governance Code Commission” published by
the Federal Ministry of Justice in the official section of the
electronic Federal Gazette have been and are being met, or, if not,
which recommendations have not been or are not being applied.
The German Corporate Governance Code (the “Code”) contains
rules with varying binding effects. Apart from outlining aspects of
the current German Stock Corporation Act, it contains recommen-
dations from which companies are permitted to deviate; however, if
they do so, they must disclose this fact each year. The Code also
contains suggestions which can be ignored without giving rise to
any disclosure requirement.
Declaration of compliance with the German Corporate
Governance Code. The Board of Management and the Supervisory
Board of DaimlerChrysler AG have decided to disclose not only
deviations from the Code’s recommendations, but also – without
being legally obliged to do so – deviations from its suggestions.
The declaration of compliance filed with the Commercial Registry
pursuant to Section161 of the German Stock Corporation Law can
be seen on the Internet at www.daimlerchrysler.com/corpgov_e.
In the declaration of compliance pursuant to Section161 of the
German Stock Corporation Act, the Board of Management and the
Supervisory Board of DaimlerChrysler AG have stated that both the
recommendations and the suggestions of the German Corporate
Governance Code have been and are being met. The Board of
Management and the Supervisory Board of DaimlerChrysler AG
also intend to follow the recommendations and suggestions of the
German Corporate Governance Code in the future. DaimlerChrysler
AG deviates from the Code’s recommendations and suggestions
solely in the following points:
Deviations from the Recommendations of the German
Corporate Governance Code.
1. Deductible with the D&O insurance. The directors’ and
officers’ liability (D&O) insurance obtained by DaimlerChrysler AG
for the Board of Management and the Supervisory Board does not
provide any insurance cover for intentional acts and omissions or
for breaches of duty knowingly committed. Insurance cover is
limited to negligent breaches of duty by members of the Board of
Management and Supervisory Board, so that this is the only
context in which the question of the agreement of a deductible
arises. It is not advisable to agree on a deductible for negligence
on the part of the members of the Supervisory Board, as
Corporate Governance | Supervisory Board | Report of the Supervisory Board | Corporate Governance at DaimlerChrysler