Compensation and benefits

• Compensation based on employee’s position and individual performance as well as company’s success

We want to attract committed and qualified employees, retain them and motivate them to achieve top performance with an attractive package including market-oriented compensation, individual development opportunities and a good working environment. Our employees’ compensation is based on market-, position- and performance-related global compensation principles. By linking compensation to both company and individual performance, employees can participate in the company’s success and be rewarded for their individual performance. As a rule, compensation comprises fixed and variable components as well as benefits that often exceed legal requirements. In many countries, these include company pension benefits, supplementary health insurance and share programs. We regularly review our compensation systems at local and regional levels.

Employees participate in the company’s success

• Return on assets determines variable compensation

We want our employees to contribute to the company’s long-term success. This is why the compensation granted to vast majority of our employees includes variable compensation components, with which they participate in the success of the BASF Group as a whole and are recognized for their individual performance. The same principles basically apply for all employees worldwide. The amount of the variable component is determined by the company’s economic success (measured by the return on assets¹ of the BASF Group) as well as the employee’s individual performance. Individual performance is assessed as part of a globally consistent performance management process. In numerous BASF Group companies, employees are offered the chance to purchase shares. Our plus share program ensures employees’ longterm participation in the company’s success through incentive shares: A portion of the variable compensation can be invested in BASF shares in order to profit from BASF’s long-term development. In 2017, for example, 23,700 employees worldwide (2016: approximately 24,000) participated in the plus share program.

BASF offers senior executives the opportunity to participate in a share price-based compensation program. This longterm incentive (LTI) program ties a portion of their annual variable compensation to the longterm performance of BASF shares by making an individual investment in the company’s stock. In 2017, 92% of the approximately 1,200 people eligible to participate in the LTI program worldwide did so, investing up to 30% of their variable compensation in BASF shares.

Personnel expenses

In 2017, the BASF Group spent €10,610 million on wages and salaries, social security contributions and expenses for pensions and assistance (2016: €10,165 million). Personnel expenses thus rose by 4.4%. As well as wage and salary increases, this was primarily attributable to a higher average headcount following the acquisition of Chemetall. The partial release of provisions for the long-term incentive program and currency effects had an offsetting effect.