Mercedes 2006 Annual Report Download - page 139

Corporate Governance | Compensation Report | 123
In 2006, the members of the Board of Management were granted
a total of 276,160 phantom shares within the framework of the
stock-based component of compensation, the so-called Perfor-
mance Phantom Share Plan (2005: 454,914 phantom shares).
The reference share price for the allocation of phantom shares
is the average price of DaimlerChrysler shares between January 1,
2006 and the day before the first meeting of the Presidential
Committee in which the allocation is decided upon. This value
was €46.17 per phantom share in 2006. Before being paid out
in the year 2010, the numbers of phantom shares may change,
depending on internal and external performance targets and
continuous activity in the Board of Management. Since payment
continues to depend on the share price at the time of payment,
this element of compensation will not be shown in the total com-
pensation of the Board of Management until it is actually paid
out in 2010.
Retirement provisions. Until the year 2005, the pension agree-
ments of the German Board of Management members included
a commitment to an annual retirement pension, calculated contin-
gent on the years of service as a proportion of the base salary
(70% for Dr. Dieter Zetsche, 69% for Günther Fleig, 60% for Dr.
Rüdiger Grube and Dr. Thomas Weber as well as 50% for Andreas
Renschler and Bodo Uebber). Those pension rights remain, but
have been frozen at that level. The pension payments begin in
the form of a retirement pension when a member’s contract of
service ends on or after his 60th birthday, or in the form of an
invalidity pension when a member’s contract of service ends before
his 60th birthday due to disability. An annual increase of 3.5%
is effected. Similar to the retirement pension of the German work-
force, arrangements for widows and orphans are included.
Effective January 1, 2006, those pension agreements were
converted into a defined-contribution pension system, in line with
the existing pension systems for senior management at the
Group. Each Board of Management member is credited with a
capital component each year. This capital component comprises
an amount equal to 15% of the sum of the Board of Management
member’s fixed base salary and the annual bonus that was
actually achieved, multiplied by an age factor equivalent to a certain
rate of return, at present 6%. This pension plan is payable at the
age of 60 at the earliest.
US Board of Management members are entitled to annual pension
benefits under two plans applicable to senior management of
DaimlerChrysler Corporation. For the first plan, the benefit is based
on the individual’s prior contributions (a percentage of base
salary deductions) and years of service and final average salary.
In principle, with this plan, 2.25% of the base salary is earned
as a pension payment for each year of credited service. For the
second plan, benefits are based on a percentage of annual
bonuses (currently 4%).
The company fulfilled its obligations for benefits earned last year
relating to bonuses by providing investment contracts that will
make payments at retirement equivalent on an after-tax basis to
payments the company would have otherwise had to make.
Number
Phantom shares granted in 2006
59,563
25,721
24,367
33,031
27,887
25,721
25,721
28,428
25,721
276,160
Dr. Dieter Zetsche
Günther Fleig
Dr. Rüdiger Grube
Thomas W. LaSorda
Andreas Renschler
Eric R. Ridenour
Thomas W. Sidlik
Bodo Uebber
Dr. Thomas Weber
Total