Annual pension units are accrued for the members of the Board (“Board Performance Pension”). The method of determination of the amount of the pension benefits generally corresponds to that used for other employee groups. The method is designed such that both the performance of the company and the progression of the individual Board member’s career significantly affect the pension entitlement.
The annual pension benefits accruing to Board members in a given reporting year (pension unit) are composed of a fixed and a variable component. The fixed component is calculated by multiplying the annual fixed compensation above the Social Security Contribution Ceiling by 32% (contribution factor). The resulting amount is converted into a lifelong pension using actuarial factors based on an actuarial interest rate (5%), the probability of death, invalidity and bereavement (Heubeck-Richttafeln, 2005G) and an assumed pension increase (1.5% per annum). This is the amount that is payable upon retirement. The variable component of the pension unit depends on the return on assets in the reporting year and the performance factor, which is also decisive for the bonus. The variable component of the pension unit is based on a return on assets of 12% and on a performance factor of 1.0 at which point the variable component is equal in value to the fixed component. With regard to the return on assets, there is a linear relationship between the variable component and the return on assets figures between 10% and 14%. Should the return on assets exceed 14%, the variable component levels off; should the return on assets fall below 10%, the decline accelerates. With regard to the performance factor, there is a linear relationship between the variable component of the pension unit and a goal achievement of more than 50% and less than 125%. The performance factor ranges between 0 for a goal achievement of 50% or less and 1.5 for a goal achievement of 125% and more. The fixed and the variable components together result in the acquired pension unit for the reporting year. The sum of the pension units accumulated over the reporting years determines the respective Board member’s pension benefit in the event of a claim. The pension benefit takes effect at the end of service upon reaching retirement age of 60 years, or disability or death. Pension payments are adjusted on an annual basis, by at least 1% annually, in accordance with changes in the German consumer price index.
The pension units also include survivor benefits. Upon the death of an active or former member of the Board, the surviving spouse receives a survivor pension amounting to 60% of the Board member’s pension entitlement. The orphan pension amounts to 10% for each half-orphan, 33% for an orphan, 25% each for two orphans and 20% each for three or more orphans of the pension entitlement of the deceased (former) Board member. The survivor benefits may not exceed 75% of the Board member’s total pension entitlement. If the survivor pensions exceed the upper limit, they will be proportionately reduced.
Board members are members of the BASF Pensionskasse VVaG, as are generally all employees of BASF SE. Contributions and benefits are determined by the Statutes of the BASF Pensionskasse VVaG and the General Conditions of Insurance.
The service costs attributable to 2011 include costs for BASF Pensionskasse VVaG as well as for the Performance Pension and are as follows: Dr. Kurt Bock €760 thousand (2010: €430 thousand); Dr. Jürgen Hambrecht (until May 6, 2011) €3 thousand (2010: €9 thousand); Dr. Martin Brudermüller €566 thousand (2010: €414 thousand); Dr. Hans-Ulrich Engel €485 thousand (2010: €439 thousand); Dr. John Feldmann (until May 6, 2011) €60 thousand (2010: €236 thousand); Michael Heinz (since May 6, 2011) €226 thousand; Dr. Andreas Kreimeyer €497 thousand (2010: €456 thousand); Dr. Stefan Marcinowski €500 thousand (2010: €460 thousand); Dr. Harald Schwager €465 thousand (2010: €420 thousand); and Margret Suckale (since May 6, 2011) €256 thousand.
The present value of pension benefits (defined benefit obligation) is an accounting figure for the entitlements that the Board members have accumulated in their years of service at BASF. The defined benefit obligation up to and including 2011 are as follows: Dr. Kurt Bock €8,647 thousand (2010: €7,416 thousand); Dr. Martin Brudermüller €5,768 thousand (2010: €4,884 thousand); Dr. Hans-Ulrich Engel €4,620 thousand (2010: €3,862 thousand); Michael Heinz €3,136 thousand; Dr. Andreas Kreimeyer €7,943 thousand (2010: €6,899 thousand); Dr. Stefan Marcinowski €9,068 thousand (2010: €7,914 thousand); Dr. Harald Schwager €4,277 thousand (2010: €3,566 thousand); and Margret Suckale €975 thousand.