Mercedes 2004 Annual Report Download - page 96

This is achieved on the one hand by a performance-based model
of four year’s duration, which builds upon internationally
accepted performance measures. Target achievement is oriented
towards the return on net assets that is actually achieved
by the Group and on its return on sales compared with selected
vehicle manufacturers (BMW, Ford, GM, Honda, Iveco, Toyota,
Volvo and VW).
Due to the allocation of phantom shares, the development of
DaimlerChrysler’s share price is also taken into consideration.
After three years, the number of phantom shares is calculated
from the degree of target achievement. These phantom shares
must then be held for one more year. After four years, the
amount to be paid out is calculated by multiplying the number of
phantom shares by the share price valid at that time.
The members of the Board of Management have to use a quarter
of this gross amount paid out to purchase “real” shares in the
company. These shares have to be held until the end of their
Board of Management membership.
Composition of Board of Management compensation as of
the year 2005. Thus, as of the year 2005, Board of Management
compensation comprises the three components of base salary,
annual bonus and long-term stock-based compensation as
described above.
Pensions. The pension agreements of the current Board of
Management members with DaimlerChrysler AG include a
commitment to an annual retirement pension which is calculated
as a percentage of the fixed annual base salary.
In 2004, disbursements to former members of the Board of
Management of DaimlerChrysler AG and their survivors amounted
to €17.4 million. An amount of €203.8 million has been accrued
for pension obligations to former members of the Board of Manage-
ment and their survivors.
The aggregate amount accrued by us during the year ended
December 31, 2004, to provide pension, retirement and similar
benefits for the members of the Board of Management was
€9.0 million.
Sideline activities of the Board of Management members.
Members of the Board of Management require the consent of
the Chairman of the Supervisory Board before commencing any
sideline activities. This ensures that neither the time required
nor the compensation paid for such activities leads to a conflict
with the members’ duties to the Group.
Insofar as such sideline activities are memberships of other
supervisory boards or comparable boards, these are disclosed
in the financial statements of DaimlerChrysler AG and on the
Internet.
No compensation is paid to Board of Management members for
other positions held at companies of the Group.
Compensation of the Supervisory Board
Supervisory Board compensation in 2004. The compensation
of the Supervisory Board is determined by the Annual Meeting
of DaimlerChrysler AG and is governed by the company’s Articles
of Incorporation. The current regulation lays down that the
members of the Supervisory Board receive, in addition to the
refund of their expenses and the costs of any value added tax
incurred by them in the performance of their office, a fixed
compensation of € 75,000 , three times this amount for the
Chairman of the Supervisory Board, twice this amount for the
Deputy Chairman of the Supervisory Board and the Chairman of
the Audit Committee, 1.5 times this amount for the chairmen
of other Supervisory Board committees and 1.3 times this amount
for members of the Supervisory Board committees. If a member
of the Supervisory Board exercises several of the aforementioned
functions, he shall be remunerated solely according to the function
with the highest compensation. The individual compensation of
the members of the Supervisory Board is shown in the table on the
right.
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend.
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