Porsche 2010 Annual Report Download - page 30

Corporate governance report
the first time in 2011 for the 2010 fiscal year and
forecasts for the 2011 fiscal year. This process will
successively be applied in the years 2012 and 2013.
Calculations will be based on historical figures for
four fiscal years for the first time as of the 2014
fiscal year.
Remuneration principles at Porsche AG
In addition to their membership of Porsche
SE’s executive board, Thomas Edig and Dr. Michael
Macht were members of the executive board of Por-
sche AG in the fiscal year 2009/ 10 and received
remuneration for their service. This remuneration has
been considered in the executive board remuneration
disclosed for the fiscal year 2009/ 10 as of the be-
ginning of the comparative period until the date of
deconsolidation of the Porsche Zwischenholding
GmbH group and thus also of Porsche AG on
7 December 2009. The management of Porsche
Zwischenholding GmbH, which comprises the same
individuals as the executive board of Porsche AG,
does not receive any remuneration for the assumption
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.
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 determi-
ned (in accordance with International Financial Repor-
ting Standards (IFRSs)) for the Porsche AG group
(Porsche AG and its subsidiaries) and the degree 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 sustainable deve-
lopment 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 mem-
ber of the board having been involved to a conside-
rable 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 e-
xecutive 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.
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