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Last Update:
March 1, 2012
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Compensation of Board members

This report meets the disclosure requirements of the German Commercial Code, supplemented by the additional requirements based on the German Act on Disclosure of Management Board Remuneration (Vorstandsvergütungs-Offenlegungsgesetz) as well as the German Act on the Appropriateness of Management Board Remuneration (Gesetz zur Angemessenheit der Vorstandsvergütung), and is aligned with the recommendations of the German Corporate Governance Code.

Based on a proposal by the Personnel Committee, the Supervisory Board determines the amount and structure of compensation of members of the Board. The amount of compensation is determined by the company’s size and financial position, as well as the performance of the Board of Executive Directors. Globally operating companies based in Germany and Europe serve as a reference. A review of the structure and amount of compensation of Board members takes place at regular intervals.

The compensation of Board members comprises:

  1. a fixed annual salary,
  2. an annual variable bonus,
  3. a stock price-based long-term incentive (LTI) program,
  4. non-monetary compensation and other additional compensation in varying amounts, and
  5. company pension benefits.

The compensation of the Board of Executive Directors is designed to promote sustainable corporate development. It is marked by a pronounced variability in relation to the performance of the Board of Executive Directors and BASF Group’s return on assets.

 The compensation components are shown in detail below:

 

  1. The annual fixed compensation is paid in equal monthly payments.
  2. The annual variable compensation (variable bonus) of the Board of Executive Directors is based on the performance of the entire Board and the return on assets. The return on assets is also used to determine the variable compensation of all other employee groups.

    In order to assess the sustainable performance of the Board of Executive Directors, each year the Supervisory Board sets a target agreement with the entire Board of Executive Directors that primarily contains medium- and long-term goals.

    The Supervisory Board assesses the achievement of goals in relation to the last three years. A performance factor with a value between 0 and 1.5 is determined on the basis of the goal achievement ascertained by the Supervisory Board. The variable bonus for the prior fiscal year is payable after the Annual Shareholders’ Meeting.

    Board members, as other employee groups, may contribute a portion of their annual variable gross bonus into a deferred compensation program. For members of the Board of Executive Directors, as well as for all other senior executives of the German BASF Group, the maximum amount that can be contributed to this program is €30,000. Board members have taken advantage of this offer to varying degrees.
  3. A share price-based remuneration program (a long-term incentive, or LTI program) exists for members of the Board of Executive Directors. It is also offered to all other senior executives of BASF Group. Members of the Board of Executive Directors are subject to a stricter set of rules than are contained in the general program conditions: They are required to participate in the LTI program with at least 10% of their gross bonus. This mandatory investment consisting of BASF shares is subject to a holding period of four years. For any additional voluntary investment of up to 20% of the gross bonus, the general holding period of two years applies. Under the LTI program, members of the Board of Executive Directors may only exercise their options at least four years after they have been granted (vesting period). For further details on the LTI program, see  Stock price-based compensation.
  4. Non-monetary compensation and other additional compensation include: delegation allowances, accident insurance premiums and other similar benefits, as well as the personal use of, or benefit from, communication equipment, company cars and security measures made available by the company. The members of the Board did not receive loans or advances from the company in 2011.
  5. For details on the company pension benefits, see Pension benefits.

Based on the principles listed above, individual Board members received the following compensation:

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Total compensation of the Board of Executive Directors (thousand €)

 

Non-performance relatedcompensation

 

Performance related compensation

 

 

 

Options granted

 

 

 

Year

Fixed salary

Non-monetary compensation and other additional compensation

 

Variable bonus1

 

Total cash compensation

 

Number

Market value at option grant date

 

Total compensation (cash compensation plus options granted)

1

The basis for the variable bonus is the return on assets adjusted for special items and the performance factor. These include all contributions made to the deferred compensation program.

2

Payment is made in local currency based on a theoretical net salary in Germany (on a pro rata basis, where applicable).

3

Includes payments to cover additional costs of delegates, such as assumption of prevailing local rental fees

Dr. Kurt Bock
Chairman
(since May 6, 2011)

2011

1,0442

5043

 

2,948

 

4,496

 

29,460

757

 

5,253

2010

6952

1,1743

 

1,620

 

3,489

 

20,620

384

 

3,873

Dr. Jürgen Hambrecht
Chairman
(until May 6, 2011)

2011

423

53

 

1,179

 

1,655

 

50,044

1,286

 

2,941

2010

1,100

129

 

3,240

 

4,469

 

41,244

768

 

5,237

Dr. Martin Brudermüller
Vice Chairman
(since May 6, 2011)

2011

7672

6913

 

2,158

 

3,616

 

29,460

757

 

4,373

2010

5782

7533

 

1,620

 

2,951

 

20,620

384

 

3,335

Dr. Hans-Ulrich Engel

2011

6352

5253

 

1,769

 

2,929

 

29,460

757

 

3,686

2010

550

109

 

1,620

 

2,279

 

20,620

384

 

2,663

Dr. John Feldmann
(until May 6, 2011)

2011

211

37

 

590

 

838

 

25,020

643

 

1,481

2010

550

82

 

1,620

 

2,252

 

20,620

384

 

2,636

Michael Heinz
(seit 06.05.2011)

2011

391

148

 

1,179

 

1,718

 

9,912

255

 

1,973

2010

 

 

 

 

Dr. Andreas Kreimeyer

2011

600

144

 

1,769

 

2,513

 

29,460

757

 

3,270

2010

550

105

 

1,620

 

2,275

 

20,620

384

 

2,659

Dr. Stefan Marcinowski

2011

600

111

 

1,769

 

2,480

 

29,460

757

 

3,237

2010

550

89

 

1,620

 

2,259

 

20,620

384

 

2,643

Dr. Harald Schwager

2011

600

119

 

1,769

 

2,488

 

29,460

757

 

3,245

2010

550

108

 

1,620

 

2,278

 

20,620

384

 

2,662

Margret Suckale
(since May 6, 2011)

2011

391

52

 

1,179

 

1,622

 

7,148

184

 

1,806

2010

 

 

 

 

 

Total 2011

5,662

2,384

 

16,309

 

24,355

 

268,884

6,910

 

31,265

 

Total 2010

5,123

2,549

 

14,580

 

22,252

 

185,584

3,456

 

25,708

The options granted led to expenses (personnel expense) in 2011. This personnel expense refers to the sum of all options from the LTI programs 2003 to 2011. It is calculated as the difference in the value of the options on December 31, 2011, compared with the value on December 31, 2010, considering the options exercised and granted in 2011. The value of the options is based primarily on the development of the BASF share price and its outperformance compared with the benchmark indices specified for the LTI programs 2003 to 2011.

The personnel expenses reported below are purely accounting figures which do not equate with the actual cash gains should options be exercised. The members of the Board may each decide on the timing and scope of the exercise of options of the individual years, while taking into account the general terms and conditions and ceilings of the LTI program. The personnel expenses for the year 2011 relating to all options issued were as follows: Dr. Kurt Bock €182 thousand (2010: €4,919 thousand); Dr. Martin Brudermüller €182 thousand (2010: €4,087 thousand); Dr. Hans-Ulrich Engel €517 thousand (2010: €3,198 thousand); Michael Heinz €748 thousand; Dr. Andreas Kreimeyer €346 thousand (2010: €3,449 thousand); Dr. Stefan Marcinowski €1,897 thousand (2010: €4,034 thousand); Dr. Harald Schwager €385 thousand (2010: €3,105 thousand); and Margret Suckale €107 thousand.

The members of the Board are covered by loss liability insurance concluded by the company (D&O insurance) which includes a deductible.

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