Mercedes 2008 Annual Report Download - page 127

Corporate Governance |Remuneration Report |123
Value when awarded:
Determined annually in relation to a market comparison; for
2008, approximately 2 to 2.5 times the base salary.
Range of goal accomplishment:
0 – 200%, i.e. the plan has an upper limit and may also be zero.
During the four-year period, the phantom shares earn a dividend
equivalent whose amount is related to the dividend paid on real
Daimler shares in the respective year. With regard to the share-
based remuneration, any subsequent change in the defined per-
formance targets or reference parameters is expressly ruled out.
Guidelines for share ownership. As a supplement to these
three components of remuneration, the Presidential Committee
of the Supervisory Board of Daimler AG has approved Stock
Ownership Guidelines for the Board of Management. The Guideli-
nes require the members of the Board of Management to invest
a portion of their private assets in Daimler shares over several
years and to hold those shares until the end of their Board of
Management membership. The number of shares to be held is set
in relation to triple the annual base salary for the Chairman of
the Board of Management and double the annual base salary for
the other members of the Board of Management. The payments
made in the context of the Performance Phantom Share Plans are
generally to be used to acquire real shares in the company, but
the required shares can also be acquired in other ways.
Board of Management remuneration in 2008
Total Board of Management remuneration in 2008. The total
remuneration granted by Group companies to the members of
the Board of Management of Daimler AG is calculated as the total
of the amounts of remuneration paid in cash (base salary and
annual bonus), the value of the share-based remuneration at the
time granted in February 2007 and 2008 (Performance Phantom
Share Plan) and non-cash benefits.
The total remuneration comprises €6.2 million as fixed, i.e. non-
performance-related remuneration (2007: €7.2 million1); €1.5
million as short-term variable remuneration, i.e. short-term per-
formance-related remuneration (2007: €17.0 million2); and €8.9
million as variable performance-related remuneration with a long-
term incentive effect granted in 2008 (2007: €13.5 million3).
Range of goal accomplishment:
0 – 200%, i.e. the annual bonus has an upper limit and may also
be zero.
On the basis of the resulting degree of goal accomplishment,
depending on the relative development of the share price per-
formance compared with other automobile manufacturers, an
amount of up to 10% can be added or deducted. Furthermore, the
Presidential Committee of the Supervisory Board has the possibility
to take account of the personal performance of the individual
Board of Management members with an addition or deduction
of up to 25%. Individual targets have been agreed upon for this
purpose. In this context, additional individual targets were
agreed upon with the Board of Management in the year 2008
with regard to the development and sustained function of a
compliance system. The accomplishment of individual complian-
ce targets can be reflected by a deduction of up to 25% from
the individual goal accomplishment but no increase is possible;
the effect is only neutral even in the case of full accomplishment
of compliance targets.
The Performance Phantom Share Plan is an element of remu-
neration with long-term incentive effects. Its opportunity and risk
potential is primarily linked with the development of Daimler’s
share price through the granting of phantom shares. At the same
time, within the period of the plan, medium-term performance
targets are set whose accomplishment has an effect on the num-
ber of phantom shares that are earned. Payouts under the plan
occur after four years at the price of Daimler shares that is then
valid. Half of the net amount paid out must be used to buy real
Daimler shares, which must then be held for a certain period until
the guidelines for share ownership are fulfilled (see below).
Reference parameters:
– 50% return on sales achieved compared with a group of compe-
titors (BMW, Ford, General Motors, Honda, Toyota, AB Volvo and
Volkswagen).
– 50% return on net assets achieved in relation to cost of capital.
With regard to the figures for 2007, the departing members of the
Board of Management, Messrs. Ridenour, LaSorda and Sidlik, accounted for:
1 €1.1 million
2 €2.3 million
3 €4.1 million