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 income of each such officer. In addition, the report describes principles and level of Supervisory Board fees.

Remuneration of Executive Board members in 2010
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 in monthly installments. The profit share is payable when the annual financial statements have been adopted. In fiscal 2010, an outside consultant specializing in compensation issues reviewed the Executive Board’s compensation for a fair and reasonable scale and concluded that the overall compensation of the Executive Board represents fair and reasonable remuneration for each member’s functions, duties, and personal performance, as well as for Vossloh’s economic situation, successful performance and future prospects, besides being in line with industry peers and in proportion to Vossloh’s general pay system.

The variable compensation (profit share) is linked to group earnings.

In fiscal 2010, Vossloh AG’s executive officers received a total compensation of €2,839,517 (down from €3,050,230), including €759,326 of fixed, and €2,045,300 variable, remuneration. In addition, they received noncash fringes of €34,891 (tax base) as payments in kind (PIK), basically in the form of private company car use. PIK income is taxable income of each executive officer.

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 retirement age of 63. Depending on the years of service on the Executive Board, annual pension benefits amount after a minimum 3-year board membership to 15 (Dr.-Ing. Schiedeck) or 35 percent (Werner Andree), and are stepped up by 4 percent annually (as from April 1, 2010, or Jan. 1, 2005, respectively) to a maximum of 60 percent, of the pensionable annual basic compensation. In fiscal 2010, a total €1,182,489 was provided for accrued pension obligations to Executive Board members (up from €508,867). Current postretirement pensions are adjusted annually in line with the collective pay trend of white-collar employees.

The table below itemizes the remuneration of each executive officer:

€	Short-term benefits				Retirement benefits
	Fixed salary	PIK	Profit share	Total	Provision in 2010	Total accrued
CEO Werner Andree	461,767	15,315	1,247,134	1,724,216	923,828	2,604,120
COO Dr.-Ing. Norbert Schiedeck	297,559	19,576	798,166	1,115,301	258,661	381,502
Total	759,326	34,891	2,045,300	2,839,517	1,182,489	2,985,622

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 any change of control.

No loans or advances were granted in 2010 to any Executive Board member.

The compensation paid as current pensions to former executive officers and their surviving dependants totaled €612,274 (down from €674,597).

Pension obligations to former executive officers and their surviving dependants amounted to €11,411,253 (up from €8,648,353) and are fully covered by accruals.

The option introduced in 2008 by the Supervisory Board to grant Executive Board members a discretionary bonus was not exercised in 2010.

Remuneration of Supervisory Board members in 2010
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 business performance.

Besides being reimbursed for their out-of-pocket expenses and costs advanced, Supervisory Board members receive a fixed annual fee of €20,000 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 €2.00, calculated on the basis of shares issued.

The Supervisory Board Chairman receives 300 percent, the vice-chairman 150 percent and each committee member 125 percent. The Audit Committee Chairman receives three times the additional Audit Committee membership fee. Membership in the Slate Submittal Committee is remunerated by paying only an additional 25 percent of the fixed fee, provided that the Committee convened in the fiscal year. If the Supervisory Board Chairman is also committee member, no additional fee is paid to him.

In accordance with the bylaws, Supervisory Board members will receive a total €689,375 (up from €612,125), including €222,500 fixed and €466,875 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	60,000	135,000	195,000
Peter Langenbach, Vice-Chairman	42,500	84,375	126,875
Dr. Jürgen Blume	30,000	56,250	86,250
Dr. Christoph Kirsch	40,000	78,750	118,750
Wolfgang Klein	30,000	67,500	97,500
Michael Ulrich	20,000	45,000	65,000
Total	222,500	466,875	689,375

In addition to these fees, no Supervisory Board member received in 2010 any further compensation, benefits or advantages for personally rendered (consultancy or agency) services.

No loans or advances were granted in 2010 to any Supervisory Board member.