Remuneration of the Executive and Supervisory Boards
This report summarizes the principles underlying remuneration of Vossloh AG’s Executive Board members and specifies the details of structure and amount of each such officer. In addition, this report describes principles and level of Supervisory Board fees and discloses Vossloh stock portfolios held by Executive or Supervisory Board members.This board compensation report follows the recommendations of the German Corporate Governance Code as amended up to June 14, 2007.
Remuneration of Executive Board members in 2007
The compensation of Executive Board members (“executive officers”) breaks down into a fixed annual basic salary and an annual profit share, the fixed portion being paid out by monthly installments. The profit share is payable when the annual financial statements have been adopted. Propriety and fair market level of such compensation are reviewed for reasonableness at regular intervals.
The criteria for fair compensation include, besides the tasks and performance of each executive officer, particularly the company’s economic situation and sustained performance in comparison to industry peers.
The variable compensation (profit share) is linked to group earnings.
In fiscal 2007, Vossloh AG’s executive officers received a total monetary compensation of €5,388,916 (up from €2,389,910), including €788,220 of fixed, and €2,357,983 variable, remuneration, plus one-time payments of €2,200,000 million. In addition, they received noncash fringes as payments in kind (PIK), basically in the form of private company car use at the tax base of €42,713. PIK income is taxable income of each executive officer.
The table below itemizes the remuneration of each executive officer:
| € | Fixed salary | Fringes |
Profit share (performance-unrelated) |
Profit share (performance-related) |
Total |
|---|---|---|---|---|---|
|
Werner Andree CEO as from Aug. 9, 2007 |
278,434 | 18,166 | 100,000 | 924,554 | 1,321,154 |
|
Dr.-Ing. Norbert Schiedeck (as from Apr. 1, 2007) |
187,512 | 10,759 | 0 | 443,786 | 642,057 |
|
Dr. Gerhard Eschenröder CEO (up to Aug. 9, 2007) |
322,274 | 13,788 | 150,000 | 739,643 | 1,225,705 |
| Total | 788,220 | 42,713 | 250,000 | 2,107,983 | 3,188,916 |
Vossloh AG’s Executive Board members received no compensation for services performed on behalf of subsidiaries.
Moreover, they have been granted entitlements to defined postretirement benefits in the form of pension payments upon long-term invalidity or disability or as from the minimum retirement age of 60. Depending on the years of service on the Executive Board, annual pension benefits amount after a minimum 3-year board membership to 15 or 35 percent, and are stepped up by 3 or 4 percent annually (as from Jan. 1, 2005, or April 1, 2010, respectively) to a maximum of 60 percent, of the pensionable annual basic compensation. In fiscal 2007, a total €1,409,871 was provided for accrued pension obligations to Executive Board members (up from €658,123). Current postretirement pensions are adjusted annually in line with the collective pay trend of white-collar employees.
Upon an active or former executive officer’s death, a reduced pension is paid to their surviving dependants, spouses receiving a maximum 60 percent of the most recently paid pension, children a maximum 20 percent up to a certain age and while articled or undergoing other education.
No contractual arrangements with Executive Board members exist for the case of a change of control.
No loans or advances were granted in 2007 to any Executive Board member.
The compensation paid as current pensions to former executive officers and their surviving dependants totaled €658,809 (down from €1,165,417).
Pension obligations to former executive officers and their surviving dependants amounted to €7,589,773 (down from €7,626,993) and are fully covered by accruals.
Remuneration of Supervisory Board members in 2007
The compensation of members of the Supervisory Board and its committees is fixed by the stockholders’ meeting and governed by Art. 17 of the Company’s bylaws. These fees hinge on each Supervisory Board member’s tasks and responsibilities, as well as on the Group’s economic performance.
Besides being reimbursed for their out-of-pocket expenses and costs advanced, Supervisory Board members receive a fixed annual fee of €10,000 each. In addition, they are paid a variable annual fee of €1,000 for each €0.10 in excess of the Group’s earnings per share over €1.00.
The Supervisory Board Chairman receives 300 percent, the vice-chairman 150 percent and each committee member 125 percent. If the Supervisory Board Chairman is also committee member, no additional fee is paid to him.
In accordance with the bylaws, Supervisory Board members received a total €465,502 in 2007 (up from €126,750), including €96,980 fixed and €368,522 variable, performance-related fees. The table below itemizes the fees allocable to each Supervisory Board member:
| € | Fixed fee | Variable fee | Total |
|---|---|---|---|
| Dr.-Ing. Wilfried Kaiser, Chairman | 30,000 | 114,000 | 144,000 |
| Peter Langenbach, Vice-Chairman | 17,500 | 66,500 | 84,500 |
| Dr. Jürgen Blume | 12,500 | 47,500 | 60,000 |
| Dr. Christoph Kirsch | 12,500 | 47,500 | 60,000 |
| Wolfgang Klein | 15,000 | 57,000 | 72,000 |
| Wilfried Köpke (up to 3/31/2007) | 2,466 | 9,370 | 11,836 |
| Michael Ulrich (as from 4/20/2007) | 7,014 | 26,652 | 33,666 |
| Total | 96,980 | 368,522 | 465,502 |
No loans or advances were granted in 2007 to any Supervisory Board member.