Compensation and Benefits

We want to attract and retain engaged and qualified employees, and motivate them to achieve top performance with a total offer package that includes market-oriented compensation, individual development opportunities and a good working environment so that they contribute to the company’s long-term success. Our employees’ compensation is based on global compensation principles according to position, market and performance. As a rule, compensation comprises fixed and variable components as well as benefits that often exceed legal requirements. In many countries, these benefits include company pension benefits, supplementary health insurance and share programs. We regularly review our compensation systems at the global and local levels.

We want our employees to contribute to the company’s long-term success. This is why the compensation granted to the 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 economic success as well as the employee’s individual performance. We use the BASF Group’s return on capital employed (ROCE) to measure economic success for the purposes of variable compensation. This links variable compensation to our ROCE target.¹ Individual performance is assessed as part of a globally consistent performance management process. In numerous Group companies, our “plus” share program ensures employees’ long-term participation in the company’s success through incentive shares. In 2021, for example, around 23,600 employees worldwide (2020: around 27,600) participated in the “plus” share program.

Since 2020, BASF has offered senior executives the opportunity to participate in a long-term incentive (LTI) program² in the form of a performance share plan. The LTI program has a term of four years and takes into account the development of the total shareholder return. It incentivizes the achievement of strategic growth, profitability and sustainability targets. To take part in this program, participants must hold BASF shares, the amount of which is based on their individual fixed compensation. In 2021, around 91% of the people eligible to participate in the LTI around the world did so, holding between 30% and 70% of their fixed annual compensation in BASF shares.

The share price-based compensation program (BASF Option Program, BOP), which had existed since 1999, was offered for the last time in 2020. Around 87% of the people eligible to participate in the program around the world did so, investing up to 30% of their actual variable compensation (for the 2019 business year) in BASF shares.

• More information on share-price based compensation programs and BASF’s share programs
• For more information on the compensation of the Board of Executive Directors and the Supervisory Board, see the Compensation Report

Personnel expenses

The BASF Group’s expenses for wages and salaries, social security contributions and assistance, as well as for pensions in 2021 totaled €11,097 million. In 2020, these expenses amounted to €10,576 million and included personnel expenses from the disposal group for the construction chemicals business in the amount of €291 million until the date of the divestiture. The rise in personnel expenses in 2021 was mainly due to higher bonus provisions. Particularly the lower average number of employees had an offsetting impact.