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C | Combined Management Report | Overall Assessment of the Economic Situation | Events after the End of the 2013 Financial Year | Remuneration Report
The Remuneration Report summarizes the principles that
are applied to determine the remuneration of the Board
of Management 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.
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 and in compliance with appli-
cable law, so that Daimler is an attractive employer also
for first-class executives. By means of adequate variability, the
system should also clearly and directly reflect the joint and
individual performance of the Board of Management members
and the sustained performance of the Group.
Practical implementation. For each upcoming financial year,
the Presidential Committee at first prepares a review by the
Supervisory Board of the system and level of remuneration
on the basis of a comparison with competitors. The main focus
is on checking for appropriateness, based on a horizontal and
vertical comparison. In the horizontal comparison, the following
aspects are given particular attention in relation to a group
of comparable companies in Germany:
– 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, that is,
the relationship between the fixed base salary and the
short-term and long-term variable components;
– the ratio of an average employee’s income to that
of a member of the Board of Management;
and the resulting target remuneration consisting of base salary,
annual bonus and long-term variable remuneration, also with
consideration of entitlement to a retirement pension and fringe
benefits.
The vertical comparison focuses on the ratio of Board of
Management remuneration to the remuneration of the senior
executives and the entire workforce of Daimler AG in Germany,
also in terms of development over time. For this purpose, the
Supervisory Board has defined the group of senior executives
with the use of the Company’s internal levels of hierarchy.
In carrying out this review, the Presidential Committee and
the Supervisory Board consult independent external advisors,
above all to facilitate a comparison with remuneration
systems common in the market. If the review results in a need
for changes to the remuneration system for the Board of
Management, the Presidential Committee submits the relevant
proposals to the entire Supervisory Board for its approval.
On the basis of the approved remuneration system, the
Supervisory Board decides at the beginning of the year
on the base and target remuneration for the individual members
of the Board of Management and decides on the success
parameters relevant for the annual bonus in the coming year.
Furthermore, individual goals are decided upon for each
member of the Board of Management for the respective areas
of personal responsibility; those goals are then taken into
consideration after the end of the financial year when the annual
bonus is decided upon by the Supervisory Board.
For the long-term variable component of remuneration,
the Supervisory Board sets an amount to be granted for
the upcoming financial year in the form of an absolute
amount in euros and sets the respective performance targets.
In this way, the individual base and target remuneration and
the relevant performance parameters are set by the beginning
of each year.
After the end of each year, target achievement is measured
and the actual remuneration is calculated by the Presidential
Committee and is submitted to the Supervisory Board
for its approval.
The system of Board of Management remuneration in
2013. The remuneration system comprises a fixed base salary
(approximately 29% of the target remuneration), an annual
bonus (approximately 29% of the target remuneration), and
a variable component of remuneration with a long-term
incentive effect (approximately 42% of the target remuneration).
The spectrum of target achievement and the reference
parameters remained unchanged. Only 50% of the annual bonus
is paid out in the March of the following year. The other 50%
is paid out a year later with the application of a bonus-malus
rule (so-called deferral), depending on the development
of the Daimler share price compared with an automotive index
(Dow Jones STOXX Auto Index) E see pages 22 f, which
Daimler AG uses as a benchmark for the relative share-price
development. Both the delayed payout of the portion of the
Remuneration Report.