DHL 2010 Annual Report Download - page 144

Provisions to cap severance payments pursuant to the Corporate Governance
Code recommendation, change-of-control provisions and post-contractual
non-compete clauses
In accordance with the recommendation of section .. of the German Corporate
Governance Code as amended on  May , Board of Management contracts contain a
provision stipulating that in the event of premature termination of a Board of Management
member’s contract without good cause, the severance payment may compensate no more
than the remaining term of the contract.  e severance payment is limited to a maximum
amount of two years’ remuneration including fringe bene ts (severance payment cap).
In the event of a change in control, any member of the Board of Management is
entitled to resign his o ce for good cause within a period of six months following the
change in control, a er giving three months’ notice as at the end of the month, and to
terminate his Board of Management contract (right to early termination).
 e contractual provisions stipulate that a change of control exists if a shareholder
has acquired control within the meaning of section   of the Wertpapiererwerbs- und
Übernahmegesetz (WpÜG – German securities acquisition and takeover act) via posses-
sion of at least   of the voting rights, including the voting rights attributable to such
shareholder by virtue of acting in concert with other shareholders as set forth in section
of the WpÜG or if a control agreement has been concluded with the company as a depend-
ent entity in accordance with section  of the Aktiengesetz (German stock corporation
act) and such agreement has taken e ect or if the company has merged with another
legal entity outside of the Group pursuant to section of the Umwandlungsgesetz (Ger-
man reorganisation and transformation act), unless the value of such other legal entity as
determined by the agreed conversion rate is less than   of the value of the company.
In the event that the right to early termination is exercised or a Board of Manage-
ment contract is terminated by mutual consent within nine months of the change of
control, the Board of Management member is entitled to payment to compensate the
remaining term of his Board of Management contract. Such payment is limited to
  of the severance payment cap pursuant to the recommendation of the German
Corporate Governance Code.  e amount of the payment is reduced by   if the Board
of Manage ment member has not reached the age of  upon leaving the company. If
the remaining term of the Board of Management contract is less than two years and the
Board of Management member has not reached the age of  upon leaving the company,
the payment will correspond to the severance payment cap.  e same applies if a Board
of Management contract expires prior to the Board of Management member’s reaching
the age of  because less than nine months remained on the term of the contract at the
time of the change of control and the contract was not renewed.
Board of Management members are also subject to a non-compete clause e ective
upon the cessation of their contracts.  e previous two-year non-compete clause was
reduced to one year starting in  nancial year . During the non-compete period,
former Board of Management members receive   (previously  ) of their last
contractually stipulated annual base salary on a pro rata basis as compensation each
month. Any other income earned during the non-compete period is subtracted from the
compensation paid.  e amount of the compensation payment itself is deducted from
any severance payments or pension payments. Prior to or concurrent with cessation of
the Board of Management contract, the company may declare its waiver of adherence to
the non-compete clause. In such case, the company will be released from the obligation
to pay compensation due to a restraint on competition six months a er receipt of such
declaration. A non-compete clause e ective for two years a er the end of his contract
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