Mercedes 2015 Annual Report Download - page 119

126 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Reference parameters for Plan 2015:
– 50% relates to the Group’s return on sales in a three-year
comparison with a group of competitors comprising all listed
vehicle manufacturers with an automotive proportion of
more than 70% by revenue and an investment-grade credit
rating (BMW, Ford, Fuji Heavy, Honda, Hyundai, Isuzu,
Mazda, Nissan, Paccar, Suzuki, Toyota, Volvo and Volkswagen).
For the measurement of this success criterion, the com-
petitors’ average return on sales is calculated over a period
of three years. Target achievement occurs to the extent to
which Daimler’s return on sales deviates by a maximum of +/- 2
percentage points from 105% of the calculated average of
the competitors. Target achievement of 100% only occurs when
the average return on sales of the Daimler Group reaches
105% of the average return on sales of the group of competi-
tors. So target achievement of 200% occurs if Daimler’s
return on sales exceeds 105% of the average of the competitors
by 2 percentage points or more. An additional limitation will
be implemented starting with PPSP 2015: If a target achieve-
ment of between 195% and 200% occurs in the third year
of the performance period, the maximum target achievement
calculated from the reference parameter of return on sales
compared to the reference group will only be deemed to be
200% if the actual return on sales for Daimler’s automotive
business reaches at least the strategic target for return on
sales (currently 9%). Otherwise, target achievement will
be limited to 195%.
Target achievement of 0% occurs if Daimler’s return on sales
is 2 percentage points or more lower than 105% of the
calculated average of the competitors. In the deviation range
of +/- 2 percentage points, target achievement varies in
proportion to the deviation.
– 50% relates to “relative share performance,” i.e. the develop-
ment of Daimler’s share price in a three-year comparison
with the development of a share-price index for the defined
group of competitors. If the development of Daimler’s share
price (in percent) is the same as of the index (in percent), target
achievement is deemed to be 100%. If the development
of Daimler’s share price (in percent) is 50 percentage points
or more below (above) the development of the index, target
achievement is deemed to be 0% (200%). In the deviation range
of +/- 50 percentage points, target achievement varies in
proportion to the deviation.
Value upon allocation:
Determined annually by the Supervisory Board; for 2015,
approximately 1.3 to 1.5 times the base salary.
Bandwidth of possible target achievement:
0% to 200%, that is, the plan has an upper limit. It may also
be zero.
Value of the phantom shares on payout:
During the four-year period between the allocation of the pre-
liminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
The value of the phantom shares to be paid out depends on
target achievement measured according to the criteria
described above and on the share price relevant to the payout.
This share price is limited to 2.5 times the share price at the
beginning of the plan. In addition, the amount to be paid out
is limited to 2.5 times the absolute euro amount specified
at the beginning of the plan, which is relevant to the preliminary
number of phantom shares allocated. This maximum amount
includes the dividend equivalent paid out during the four-year
plan period. In the agreements on the inclusion of maximum
amounts of remuneration in their current contracts of service
effective as of January 1, 2014, the members of the Board of
Management also agreed to the application of this limit to the
dividend equivalents not yet due at that time from plans
issued before January 1, 2014 and still running.
Guidelines for share ownership
As a supplement to these three components of remuneration,
“Stock Ownership Guidelines” exist for the Board of
Management. These guidelines 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 member-
ship. The number of shares (between 20,000 and 75,000) to be
held was set in 2005 when the Performance Phantom Share
Plan was introduced in relation to double the then annual base
salary of each ordinary member of the Board of Management
and triple the then annual base salary of the Chairman of the
Board of Management. In fulfillment of the guidelines, up
to 25% of the gross remuneration out of each Performance
Phantom Share Plan is generally to be used to acquire
ordinary shares in the Company, but the required shares
can also be acquired in other ways.
Appropriateness of Board of Management remuneration
In accordance with Section 87 of the German Stock Corpora-
tion Act (AktG), the Supervisory Board of Daimler AG once
again had an assessment of the system of Board of Management
remuneration carried out by an external remuneration expert
in 2015. The result was that the remuneration system as
described above was confirmed as being in conformance with
the requirements of applicable law. The remuneration system
was approved as described by the Annual Shareholders’ Meeting
in 2014 with an approval ratio of 96.8%.
Board of Management remuneration in 2015
Board of Management remuneration in 2015 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB)
The total remuneration granted by Group companies (excluding
retirement benefit commitments) to the members of the
Board of Management of Daimler AG is calculated as the total
of the amounts of
– the base salary in 2015,
– the half of the annual bonus for 2015 payable in 2016 and
measured as of the end of the reporting period,
– the half of the medium-term share-based component
of the annual bonus for 2015 payable in 2017 with its value
at the end of the reporting period (entitlement depending
on the development of Daimler’s share price compared with
the Dow Jones STOXX Auto Index),
– the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2015, and
– the taxable non-cash benefits in 2015.