Reebok 2012 Annual Report Download - page 80

adidas Group
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2012 Annual Report
To Our Shareholders
58
2012
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01.7
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Compensation Report
Other benefits and additional commitments
The Executive Board members receive other minor benefits which
are individually taxed as required. These may include, for example,
entertainment expenses, contributions to pension insurance as well as
non-monetary benefits resulting from the provision of a company car.
They do not receive any additional compensation for mandates within the
adidas Group. The Executive Board members did not receive any loans or
advance payments from adidas AG.
Pension commitments
All members of the Executive Board have individual contractual pension
commitments which essentially include the following provisions:
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The pensions which our active Executive Board members receive upon
reaching the age of 65 are based on a percentage of their individual
pensionable income. This currently equals the individual fixed annual
salary stated in the table. Starting from a base amount totalling 10%
of the pensionable income, a module of 2% of the pensionable income
is formed for each full year of tenure as an Executive Board member.
The pension payable to an Executive Board member can reach a
maximum level of 40% of the pensionable income.
Herbert Hainer and Erich Stamminger, who belonged to the group
of senior executives of adidas AG prior to their Executive Board
appointments, will at the time of their retirement receive additional
payments from the “Supplementary Retirement Provisions for Senior
Executives”. Until their appointment as Executive Board members,
adidas AG had contributed pension components for Herbert Hainer
and Erich Stamminger under these supplementary provisions which
were introduced for all senior executives of the company in 1989.
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In the event of occupational disability of an Executive Board member
prior to reaching the retirement age, he receives a disability pension
amounting to the pension entitlements achieved up to this point.
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Survivor’s benefits provide a pension for the spouse or partner
amounting to 50% of the pension entitlements up to this point, and
15% or 30% for each dependent child as half-orphan or orphan; it
amounts to a maximum of 100% of the pension entitlements. If an
Executive Board member dies during the term of his service contract,
his spouse or partner receives or, alternatively, any dependent
children additionally receive the pro-rata annual fixed salary for the
month of death and the following three months but no longer than
until the agreed end date of the service contract.
In the event of the retirement of an Executive Board member prior
to reaching the retirement age, the non-forfeiture of the pension
entitlement will be in line with legal provisions.
From the second year of pension payments, the current pension
payments will increase on the anniversary of the initial pension payment
by at least 1% of the amount of the prior year pension and additionally
by any income from the pension trust fund allocable to the respective
Executive Board member.
Commitments to Executive Board members upon
premature termination of tenure
Executive Board service contracts are usually agreed with a contractual
term of three years. This term will be shortened accordingly if the
Executive Board member reaches the age of 65 prior to expiration.
In the case of premature termination of tenure by mutual consent and
without good cause, the following shall apply:
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The Executive Board members Glenn Bennett, Robin J. Stalker and
Erich Stamminger each receive a compensatory payment in the
amount of the payment claims for the remaining period of service
contract. Due to the relatively short contractual terms of up to three
years, a severance payment cap is not provided.
The service contract of Herbert Hainer, on the other hand, which
has a contractual term of more than three years, does provide for
a severance payment of a maximum of twice the overall annual
compensation, limited to payment claims for the remaining period
of his service contract (Severance Payment Cap). In this respect, the
overall annual compensation means the overall compensation paid
to the Executive Board member, as outlined in the compensation
report, for the last full financial year prior to resignation from the
Executive Board while considering the expected total compensation
for the current financial year. If Herbert Hainer’s service contract is
terminated due to a change of control, a possible severance payment
is limited to 150% of the Severance Payment Cap.
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In the case of regular termination of the service contract, i.e. in the
case of non-renewal of the service contract or termination due to
reaching retirement age, the respective Executive Board member
is entitled to a follow-up bonus as individually agreed. This bonus
amounts to 75% for Glenn Bennett, 100% for Robin J. Stalker, and
125% each for Herbert Hainer and Erich Stamminger and is based
on the Performance Bonus granted to the respective Executive Board
member for the last full financial year. The follow-up bonus is payable
in two tranches, 12 and 24 months following the end of the contract.
Payments to former members of the Executive Board
and their surviving dependants
In 2012, pension payments to former Executive Board members or
to their surviving dependants amounted to € 3.336 million (2011:
€ 3.261 million). As at December 31, 2012, the provisions for pension
entitlements of this group of persons totalled € 50.826 million (2011:
€ 46.150 million). The dynamisation of the pension payments to former
Executive Board members is made in accordance with statutory
regulations or regulations under collective agreements unless a
surplus from the pension fund for former Executive Board members
is used after the commencement of retirement for an increase in
retirement benefits.