Remuneration

Remuneration of the Executive and Supervisory Boards

The remuneration report contains the principles regarding the remuneration of Vossloh AG’s Executive Board members and specifies the amount and structure of the Executive Board’s income. In addition, the report describes principles and the amount of the Supervisory Board remuneration.

Principles of Executive Board remuneration

Goals. The aim of the Executive Board remuneration system is the fair remuneration of Vossloh AG’s Executive Board members in accordance with their areas of activity and responsibility and in compliance with legal requirements.

Criteria for the appropriate level of remuneration for Executive Board members are based on each member’s function and personal performance, Vossloh AG’s economic situation, success and future prospects, and customary remuneration polices, while also taking the remuneration structure of the company and comparable corporations into account.

Classification of Executive Board member remuneration for 2015. The annual remuneration is a fixed basic salary plus variable remuneration. The variable remuneration is calculated on the basis of target remuneration defined for each Executive Board member in the case of 100 percent target attainment in terms of performance targets set by the Supervisory Board. 45 percent of the target remuneration is calculated using annual performance targets (one-year bonus); the larger portion of 55 percent of the target remuneration is determined according to the achievement of multi-year performance targets (multi-year bonus).

The details of the remuneration system are:

Basic remuneration is a fixed sum, based on the yearly salary and area of responsibility of each Executive Board member and is to be payed in twelve equal monthly installments. In addition, Executive Board members receive non-cash fringe benefits as payments in kind (PIK), primarily in the form of company car use.

The performance targets of the variable remuneration are set and regularly reviewed by the Supervisory Board and are based either on financial performance indicators or personal targets. In the event of 100 percent target attainment, the variable remuneration equals the basic remuneration. The potential target attainment is capped at double the base value.

In addition, the Supervisory Board, in well-founded cases and on a voluntary basis, may set an extra bonus allocation for extraordinary performance in the reporting period.

Executive Board remuneration in financial year 2015

Total remuneration granted by Vossloh AG to the Executive Board is calculated from

  • basic remuneration in 2015, as well as
  • variable remuneration in 2015.

Total remuneration granted by Vossloh AG to the Executive Board is calculated from basic remuneration in 2015 and variable remuneration for 2015. The performance targets for the one-year bonus in financial year 2015 are the EBIT, sales and working capital intensity of the Vossloh Group. The performance targets for the multi-year bonus are the average sales growth and average ROCE. In addition, the Supervisory Board granted Executive Board members special bonuses for extraordinary performance in 2014/2015 in connection with the realignment and transformation of the Vossloh Group. These comprised €300,000 for Dr. h.c. Hans M. Schabert, €192,500 € for Mr. Oliver Schuster and €100,000 € for Mr. Volker Schenk.

Remuneration for the Executive Board has been assigned by name and is in compliance with the recommendations of the German Corporate Governance Code. The benefits granted also include accrued amounts for variable remuneration components that will not be paid out until 2016 or 2017. Payments in kind (PIK) cover private company car use in the amount recognized for tax purposes. No remuneration was received for services performed on behalf of subsidiaries. The special bonus granted for extraordinary performance in 2014 and 2015 is separately reported as multi-year variable remuneration.

   Variable remuneration  
  Fixed remuneration1Fringe benefitsTotalOne-year variable remunerationMulti-year variable
remuneration
TotalBenefit expensesTotal remuneration
Benefits granted     2014 & 2015Special bonus2015 & 2016   
Dr. h.c. Hans M. Schabert
Chairman of the Executive
Board since April 1, 2014
2014562,51316,274578,787187,500-2--187,500203,844970,131
2015500,00014,736514,736343,993306,317300,000161,65831,111,968212,5941,839,298
2015 min.500,00014,736514,73600000212,594727,330
2015 max.500,00014,736514,736450,000550,000500,000550,0002,050,000212,5942,777,330
Oliver Schuster
CFO since March 1, 2014
2014510,42917,443527,87272,917-2--72,917138,614739,403
2015525,00021,970546,97065,795214,422192,500113,1613585,878144,3801,277,228
2015 min.525,00021,970546,97000000144,380691,350
2015 max.525.00021,970546,970140,000385,000350,000385,0001,260,000144,3801,951,350
Volker Schenk
COO since May 1, 2014
2014350,0107,422357,432--2---135,557492,989
2015350,00011,461361,461240,795214,422100,000113,1613668,378141,1911,171,030
2015 min.350,00011,461361,46100000141,191502,652
2015 max.350,00011,461361,461315,000385,000350,000385,0001,435,000141,1911,937,652
Werner Andree
Chairman of the Executive Board until March 31, 20144
2014320,0104,623324,633250,500---250,500-575,133
Dr.-Ing. Norbert Schiedeck
COO until March 31, 2014
201483,7985,48289,280-----145,716234,996

1 Of this, €187,500 (Dr. h.c. Schabert), €218,750 (Mr. Schuster) and €116,667 (Mr. Schenk) are a guaranteed bonus for 2014 and €175,000 (Mr. Schuster) are a guaranteed bonus for 2015.

2 The grant of multi-year variable compensation for 2014 & 2015 depends on the achievement of the performance targets for the years 2014 and 2015. Target attainment was measured after the expiry of the contractually defined multi-year period.

3 The grant of multi-year variable compensation for 2015 & 2016 was calculated on the basis of the most likely value and recognized as a provision.

4 Expiry of employment contract on August 31, 2014

The table below shows the receipt of remuneration in the reporting year and the previous year in accordance with the recommendations of the German Corporate Governance Code. The paid amounts for the one-year variable remuneration were allocated to the years in which they were received by the respective Executive Board members.

 Fixed remunerationFringe benefitsTotalOne-year variable remunerationMulti-year variable
remuneration
TotalBenefit expensesTotal remuneration
Receipt     2014 & 2015Special bonus2015 & 2016   
Dr. h.c. Hans M. Schabert
Chairman of the Executive
Board since April 1, 2014
2014562,51316,274578,787--1---203,844782,631
2015500,00014,736514,736187,500---2187,500212,594914,830
Oliver Schuster
CFO since March 1, 2014
2014510,42917,443527,872--1---138,614666,486
2015525,00021,970546,97072,917---272,917144,380764,267
Volker Schenk
COO since May 1, 2014
2014350,0107,422357,432--1---135,557492,989
2015350,00011,461361,461----2-141,191502.652
Werner Andree
Chairman of the Executive Board until March 31, 20143
2014320,0104,623324,633250,500---250,5000575,133
Dr.-Ing. Norbert Schiedeck
COO until March 31, 2014
201483,7985,48289,280-----145,716234,996

1 The grant of multi-year variable compensation for 2014 & 2015 depends on the achievement of the performance targets for the years 2014 and 2015. Target attainment was measured after the expiry of the contractually defined multi-year period.

2 The grant of multi-year variable compensation for 2015 & 2016 was calculated on the basis of the most likely value and recognized as a provision.

3 Expiry of employment contract on August 31, 2014

Entitlements to defined retirement benefits in accordance with German GAAP (Commercial Code) are as follows:

 Amount accrued for the fiscal yearPresent value of pension obligation
Dr. h.c. Hans M. Schabert
Chairman of the Executive Board
201493,18493,184
2015165,303258,487
Oliver Schuster
Member of the Executive Board
201464,42664,426
2015107,512171,938
Volker Schenk
Member of the Executive Board
201451,49851,498
2015103,862155,360
Werner Andree
Chairman of the Executive Board
(until March 31, 2014)
2014-4,002,598
Dr.-Ing. Norbert Schiedeck
Member of the Executive
(until March 31, 2014)
2014265,753947,170

Commitments in the event of termination of duties

Retirement benefits. The members of the Executive Board have been granted entitlements to defined retirement benefits in the form of pension payments upon reaching the retirement age of 63. Depending on the years of service on the Executive Board, annual pension benefits after a minimum three-year Executive Board membership amount to 1 percent, or in the case of a first time contract renewal 2 percent, up to a maximum of 40 percent of the pensionable annual basic remuneration. In financial 2015, a total of €376,677 was provided for the accrued balance of Executive Board members (previous year: €474,861). Upon the death of an active or former member of the Executive Board, the pension entitlement or the most recent pension paid to the surviving spouse is reduced to 60 percent.

Commitments in the event of early termination of duties. In the case of early termination of services provided, without proper grounds for said termination, the Executive Board employment contracts guarantee the payment of a base salary, with a set maximum limit of two years’ salary remuneration. No payment obligations are made in the event of an early termination of Executive Board duties due to a change of control.

Loans to Executive Board members. In 2015 no advances or loans were granted to any Executive Board members of Vossloh AG.

Remuneration to former Executive Board members of Vossloh AG and their surviving dependents. The remuneration in the form of pension payments to former members of the Executive Board and their surviving dependents totaled €1,082,407 (previous year: €907,230). Current retirement pensions are subject to adjustment respective to the collective pay trend of salaried employees in the metal and electrical industries of North Rhine-Westphalia. Pension obligations to former members of the Executive Board and members of the Executive Management, as well as their surviving dependents, amounted to €19,070,851 (previous year: €17,500,736). Employer pension liability insurance policies totaling €10,930,434 (previous year: €11,054,586) are pledged in each beneficiary’s favor. The balance of these pension obligations is covered by provisions.

Supervisory Board remuneration

Supervisory Board remuneration in 2015. The remuneration of members of the Supervisory Board is to be determined by the Annual General Meeting and governed by the company’s Articles of Incorporation. The remuneration system is in compliance with German law and takes into account the responsibilities and duties of Supervisory Board members.

By resolution of the Annual General Meeting on May 28, 2014, the Supervisory Board’s remuneration was changed to an entirely fixed annual fee. Through this change, the independence required for the Supervisory Board to carry out its monitoring function is further strengthened.

Remuneration for Supervisory Board members for financial year 2015 is defined by the Articles of Incorporation as amended on May 28, 2014, as follows: Supervisory Board members receive fixed annual remuneration for duties performed of €40,000 (gross) to be paid after the conclusion of the financial year and are also reimbursed for their expenses.

The following regulation applies to the current and future remuneration policy for the Supervisory Board: The Supervisory Board Chairman receives 300.0 percent, the Vice-Chairman 150.0 percent and all other committee members receive 125.0 percent of the above remuneration. Membership for each committee is thus compensated through a premium of 25.0 percent for each of the aforementioned remuneration amounts. The Audit Committee Chairman receives three times the premium for Audit Committee membership. However, membership in the Nomination Committee is only remunerated by the payment of an additional 25.0 percent of the fixed annual remuneration if the Committee convenes in the financial year. At the meeting of the Supervisory Board on September 24, 2015, the members of the Nomination Committee unanimously declared that they would waive the remuneration stipulated by the Articles of Incorporation for their work on the Nomination Committee. If the Supervisory Board Chairman is also a committee member, no additional remuneration is to be paid for his activities on the committee.

In accordance with the Articles of Incorporation, Supervisory Board members received a total remuneration of €393,334 for 2015 (previous year: €306,667).

The table below itemizes the amounts attributable to each Supervisory Board member.

 20152014
Heinz Hermann Thiele (Chairman)120,00090,000
Ulrich M. Harnacke (from May 20, 2015)160,000-
Ursus Zinsli 61,66735,833
Dr.-Ing. Wolfgang Schlosser 51,66732,500
Michael Ulrich60,00045,000
Silvia Maisch 40,00030,000
Dr. Alexander Selent (until Sept. 14, 2014)-44,167
Dr. Wolfgang Scholl (until May 28, 2014)-16,667
Dr.-Ing. Kay Mayland (until May 28, 2014)-12,500
Total393,334306,667

1 Vice Chairman since May 20, 2015

Loans to Supervisory Board members. In 2015, no advances or loans were granted to any Supervisory Board members.

Consulting Contracts. In 2015 a consulting contract was concluded with Mr. Ursus Zinsli, from which he received €34,000 in the financial year.