Porsche 2007 Annual Report Download - page 30

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“In concluding Management Board contracts, care
shall be taken to ensure that payments made to a
management board member on premature termina-
tion of his contract without serious cause do not
exceed the value of two years’ compensation (seve-
rance payment cap) and compensate no more than
the remaining term of the contract. The severance
payment cap shall be calculated on the basis of the
total compensation for the past full financial year
and if appropriate also the expected total compen-
sation for the current financial year.” (No. 4.2.3 (4)
German Corporate Governance Code)
“Payments promised in the event of premature
termination of a management board member’s con-
tract due to a change of control shall not exceed
150 percent of the severance payment cap.”
(No. 4.2.3 (5) German Corporate Governance Code)
The implementation of the new recommendations
in No. 4.2.3 (4) and the recommendation based
thereon in (5) of the German Corporate Governance
Code involves considerable legal and practical
complications. We have therefore decided not to
implement the new Code recommendation.
“Disclosure [of the total remuneration of each mem-
ber of the management board] should be made in a
compensation report which as part of the corporate
governance report describes the compensation
system for management board members in a ge-
nerally understandable way.” (No. 4.2.5 (1) German
Corporate Governance Code).
The individual remuneration of the members of the
Executive Board at Porsche is not published. In our
opinion, the associated disadvantages, particular-
ly the inevitable upward leveling of the board mem-
bers’ salaries and the invasion of the individuals’
right to privacy, outweigh the advantages to in-
vestors of such a practice. The investors are, in any
case, unaware of the criteria on which differences
between Executive Board members’ salaries are
based. The annual general meeting of Porsche AG
unanimously passed the legally required resolutions
waiving publication on 27 January 2006 as did the
extraordinary stockholder meeting of Porsche AG
on 26 June 2007.
The basic principles of the remuneration system for
the members of the Executive Board are explained
in the notes to the consolidated financial statements.
In our opinion, an explanation above and beyond
that in a separate compensation report does not
provide the investor with any additional insights.
“The compensation report shall also include infor-
mation on the nature of the fringe benefits provid-
ed by the company.” (No. 4.2.5 (3) Sentence 2
German Corporate Governance Code)
The total remuneration of the Executive Board and
its composition by fixed and performance-related
shares is explained in the notes to the consolidated
financial statements. We do not see any additional
benefit for the investor in presenting an explanation
of the fringe benefits provided by the Company in
a separate compensation report.
27