Porsche 2011 Annual Report Download - page 33

Remuneration principles at Porsche AG
In addition to their membership of Porsche
SE’s executive board, Thomas Edig and Matthias
Müller were members of the executive board of Por-
sche AG in the fiscal year 2011 and received remu-
neration for their service. The management of Por-
sche Zwischenholding GmbH, which comprises the
same individuals as the executive board of Porsche
AG, does not receive any remuneration for the as-
sumption of its duties at Porsche Zwischenholding
GmbH.
The remuneration system for Porsche AG’s
executive board was adjusted accordingly by the
supervisory board when the German Act on the Ade-
quacy of Management Board Compensation (VorstAG)
was introduced and the service agreements of the
executive board members were changed accordingly
in the course of spin-off of operations to (the new)
Porsche AG in the fiscal year 2009/10.
The remuneration of Porsche AG’s executive
board essentially comprises three components:
Each executive board member receives a fi-
xed annual salary, comprising a fixed basic compo-
nent and a fixed management bonus. The latter is not
included in the calculation of the company pension
entitlements.
In addition, each executive board member re-
ceives a variable component, the amount of which is
based on the result from ordinary activities deter-
mined (in accordance with International Financial
Reporting Standards (IFRSs)) for the Porsche AG
group (Porsche AG and its subsidiaries) and the de-
gree of target achievement for certain agreed targets.
It is paid out after the close of a fiscal year (short-
term incentive). The targets that are arranged in a
separate agreement are oriented towards a sustain-
able development of the Porsche AG group.
In addition, the supervisory board added a
long-term incentive (LTI) to the remuneration structure
as a variable component, which is also based on the
result from ordinary activities determined (in accor-
dance with IFRSs). It is not paid out until two years
later and is additionally contingent on the defined
long-term targets being reached at the time of pay-
ment.
Payment of the LTI component is conditional
upon a profit being generated in the last fiscal year
before it falls due.
The amount paid out for the LTI component
depends to a large extent on the targets set forth in
the long-term business plan concerning the fiscal year
in question and the objective defined there. If the
result falls short of the target figure by 50 percent,
the LTI component is forfeited.
Both remuneration components are capped
(bonus cap). The supervisory board has the option to
reduce the variable remuneration components at its
discretion provided it considers this appropriate in
light of extraordinary developments. This may in
particular be the case if, for example, the result from
ordinary activities increases significantly without the
executive board or any individual member of the
board having been involved to a considerable extent.
The short-term incentive makes up approxi-
mately 40 percent of the maximum variable total
remuneration, while the long-term incentive accounts
for around 60 percent.
In addition, the members of Porsche AG’s ex-
ecutive board receive other benefits in kind, such as
the use of company cars and provision of insurance
cover, for which Porsche AG bears the taxes incurred.
The deductible provided by Sec. 93 (2) German Stock
Corporations Act (AktG) has been arranged for the
D&O insurance policy concluded by the company for
its executive board members.
The executive board members’ service
agreements with Porsche AG do not contain any
special regulations regarding premature termination
of membership of the executive board.
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