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The Remuneration Report summarizes the principles that are
applied to determine the remuneration of the Board of Manage-
ment of Daimler AG, and explains both the level and the structure
of its members’ remuneration. It also describes the principles
and level of remuneration of the Supervisory Board. The Remune-
ration Report is part of the Group’s Management Report.
Principles of Board of Management remuneration
Goals. The remuneration system for the Board of Management
aims to remunerate its members commensurately with their
areas of activity and responsibility when compared international-
ly, so that Daimler is an attractive employer also for top execu-
tives. The system should also clearly and directly reflect in the
variability of remuneration the joint and individual performance
of the Board of Management members and the performance of
the Group.
Practical implementation. For each upcoming financial year,
the Presidential Committee at first reviews the system and level
of remuneration on the basis of a comparison with competitors.
The main focus is on the question of appropriateness. In this res-
pect, the following aspects are given particular attention, also
in relation to a group of comparable companies in Germany, other
European countries and the United States:
– the effects of the individual fixed and variable components, that
is, the methods behind them and their reference parameters,
– the relative weighting of the components, i.e. the relationship
between the fixed base salary and the short-term and long-
term variable components, and
– the resulting target remuneration consisting of base salary
(approximately 20% of the target remuneration), annual bonus
(approximately 30% of the target remuneration) and long-term
remuneration (approximately 50% of the target remuneration)
with an assumed 100% goal accomplishment.
In carrying out this review, the Presidential Committee regularly
consults external experts. If the review results in a need for chan-
ges to the remuneration system for the Board of Management,
including the main contractual elements, the Presidential Commit-
tee submits proposals for changes to the entire Supervisory
Board for its approval.
Furthermore, once a year, goals are jointly set by the Chairman
of the Supervisory Board, the Chairman of the Board of Manage-
ment and the members of the Board of Management for the follo-
wing financial year. Together with the planning approved by the
Supervisory Board, these targets form an additional basis for the
subsequent calculation of the annual bonus.
In this way, the individual base and target remuneration and the
relevant performance parameters are set by the beginning of
each year. The Presidential Committee informs the Supervisory
Board accordingly.
After the end of each year, goal accomplishment is measured on
this basis and the actual remuneration is calculated and set by
the Presidential Committee. The Supervisory Board is informed
accordingly.
The system of Board of Management remuneration in 2008.
The remuneration system continues to comprise a fixed base
salary, an annual bonus and a variable component of remunerati-
on with a medium-term and long-term incentive effect. The latter
has an element of risk character as recommended by the German
Corporate Government Code due to its link to the share price
and to additional parameters. The details of the system are as
follows:
The base salary is fixed cash remuneration relating to the entire
year, oriented towards the area of responsibility of each Board
of Management member, and paid out in twelve monthly install-
ments.
The annual bonus is variable cash remuneration, the level of
which is primarily linked to EBIT – the measure of operating profit
at the Daimler Group, as well as to earnings per share and the
individual performance of the Board of Management members in
the past financial year.
Reference parameters:
– 50% comparison of actual EBIT in 2008 with EBIT targeted for
2008.
– 50% comparison of actual EBIT in 2008 with actual EBIT in 2007.
Amount with 100% goal accomplishment:
At present, 1.5 times the base salary, to be set in consideration
of a market comparison.
Remuneration Report