Mercedes 2009 Annual Report Download - page 253

Consolidated Financial Statements |Notes to Consolidated Financial Statements |249
35. Remuneration of the members of the Board of
Management and the Supervisory Board
Information regarding the remuneration of the members of the
Board of Management and of the Supervisory Board is disclosed
on an individual basis in the Remuneration Report, which is part of
the Management Report (see page 156).
Board of Management remuneration. The total remuneration
granted by Group companies to the members of the Board of
Management of Daimler AG is calculated from the total amounts
of remuneration paid in cash (base salary and annual bonus),
the value of the Group’s personnel expense or income recognized
from share-based remuneration, and the total of non-cash
benefits in kind that are subject to income tax. Further informa-
tion on share-based remuneration is provided in Note 20.
In 2009, total remuneration comprised €4.8 million as fixed,
i.e. non-performance-related remuneration (2008: €6.2 million;
2007: €7.2 million) and €1.8 million as short-term variable, i.e.
short-term performance-related remuneration (2008: €1.5 million;
2007: €17.0 million). In addition, there was expense for the Group
of €4.5 million as variable performance-related remuneration
with a medium and long-term incentive effect granted in 2009 and
previous years (2008: income of €22.5 million; 2007: expense
of €30.3 million). In total, this adds up to expense for the Group of
€11.1 million for the year 2009 (2008: income of €14.8 million;
2007: expense of €54.5 million). The income from share-based
remuneration in the year 2008 resulted from the release of
provisions following the negative share-price development. The
amounts stated for fixed and short-term performance-related
remuneration for the year 2007 also include payments to Board
of Management members who resigned from their positions in
the context of the Chrysler transaction. For 2007, those Board of
Management members also received bonus and severance
payments in connection with the Chrysler transaction and their
resignation from the Board of Management in a total amount
of €19.3 million.
The decline of the fixed remuneration is based on the voluntary
waiver by the Board of Management of 15% of their fixed
remuneration effective from May 1, 2009 until June 30, 2010
due to the labor costs reduction measures that were agreed
Group-wide and the reduced number of Board of Management
members in 2009.
The pension agreements of the German Board of Management
members which were concluded before 2005, included a com-
mitment to an annual retirement pension, calculated as a propor-
tion of the base salary and depending on the years of service.
Those pension rights remain and have been frozen at that level
(70% for Dr. Dieter Zetsche, 69% Guenther Fleig, 60% for
Dr. Ruediger Grube and Dr. Thomas Weber, 50% for Andreas
Renschler and Bodo Uebber, and 35% for Wilfried Porth).
The pension payments begin in the form of a retirement pension
when a member’s contract of service ends or after his 60th
birthday, or in the form of an invalidity pension when a member’s
service contract ends before his 60th birthday due to disability.
An annual increase of 3.5% is effected (Wilfried Porth: in accor-
dance with applicability law). Similar to the retirement pension
of the German workforce, arrangements for widows and orphans
are also included.
The pension rights of Mr. Porth were also determined in 2005,
however related to his then position and remuneration
at the executive level reporting to the Board of Management.
Effective January 1, 2006, those pension agreements were
converted into a new pension system. Each Board of Management
member is credited with a capital component each year.
This capital component comprises an amount equal to 15% of the
sum of the Board of Management member’s fixed base salary
and the annual bonus that was actually achieved, multiplied by an
age factor equivalent to a certain rate of return, at present
6% (Wilfried Porth: 5%). This pension is payable at the age of 60
at the earliest.
In the year 2009, the pension provision was increased by service
costs of €1.7 million (2008: €2.5 million; 2007: €2.2 million).
No severance payments are foreseen for Board of Management
members in the case of early termination of their service contracts.
Solely in the case of early termination of a service contract
by mutual consent, the Board of Management service contracts,
which are in general concluded for a period of 3 years only,
include a commitment to payment of the base salary and to pro-
vision of a company car until the end of the original service
period. Such persons are only entitled to payment of the perfor-
mance-related component of remuneration pro rata for the
period until they leave the Group. Entitlement to payment of the
performance-related component of remuneration with a long-
term incentive is defined by the exercise conditions specified in
the respective plans. For the period beginning after the end
of original service period, Board of Management members can
receive pension payments in the amounts of the commitments
granted until 2005 as described in the previous section, as well
as the use of a company car.