Compensation Report Aurubis Group
The following compensation report is part of the Group Management Report. It outlines the structure and level of the Aurubis AG’s Executive Board and Supervisory Board compensation.
Compensation for the Executive Board
The Supervisory Board defines the total compensation of the individual Executive Board Members on the basis of proposals from the Personnel Committee and decides on and reviews the compensation system for the Executive Board at regular intervals.
The current compensation system has been in effect since the beginning of fiscal year 2009/10. The principle of the compensation provisions is to orient the Executive Board’s contracts more strongly to long-term corporate development.
The compensation of the individual Executive Board members is defined in their employment contracts and consists of a series of components, comprising fixed compensation, variable compensation and fringe benefits and pension plans.
The various compensation components are as follows:
The compensation of the Executive Board members is made up of fixed and variable components. The fixed parts con-sist of fixed compensation, the fringe benefits and pension plans. The fixed compensation amounts to € 480,000 for
the Chief Executive Officer and € 336,000 for the ordinary members of the Executive Board and is paid out monthly in equal installments. In his first year as Chief Executive Officer, Mr. Willbrandt received fixed compensation of € 408,000.
This will increase to € 480,000 effective January 1, 2013. In addition, the Executive Board members receive fringe benefits in the form of benefits in kind, mainly comprising the value of insurance premiums in accordance with the fiscal guidelines and the use of a company car. The individual Executive Board members must pay tax on these fringe benefits as components of their compensation.
The system for variable compensation consists of two compo-nents, which are paid out each year. The first component (Component 1) is dependent on achieving an annual target related to an adjusted average consolidated EBT (earnings before taxes) of three years, in each case related to the current and the two prior fiscal years before the respective fiscal year. The target is an EBT derived from a ROCE of 15 %. The target bonus of Component 1 amounts to about 60 %of the variable compensation in relation to Component II and can reach a cap of 100 %. If the EBT is less than 40 %of the target, Component 1 will not be paid. The maximum amount that can be reached from these components is € 600,000 for the Chief Executive Officer and € 400,000 for ordinary members of the Executive Board.
In his first year as Chief Executive Officer, Mr. Willbrandt received variable compensation of € 490,000.
Component II stipulates that an annual assessment of the joint (Component II a) and individual (Component II b) per-formance of the Executive Board will be carried out by the Supervisory Board. Both components are based on a qualitative criteria-supported assessment of the long-term company
The target bonus of Component II has a cap of 100 %. At least 50 %of the target bonus is always paid out unless the grant-ing of same would be unreasonable in the sense of Section 87 paragraph II Companies Act. The maximum amount to be reached from Components II a and II b amounts to € 200,000 for the Chief Executive Officer and € 140,000 for each of the ordinary members of the Executive Board. In his first year as Chief Executive Officer, Mr. Willbrandt received compensation of € 332,500 from this component.
In addition to this, the Executive Board members received compensation from the Company’s incentive plan, which is coming to an end, for the last time during the past fiscal year.
This plan has two components:
It was oriented firstly to the performance of Aurubis shares and was triggered when the Aurubis share price had risen by a previously determined percentage during the reference period (usually three years) (Part A, hurdle component). Secondly, the incentive plan was oriented to the performance of Aurubis
shares compared with the performance of the CDAx(Part B: performance component). The participation of Executive Board members in the incentive plan was conditional on their continued ownership of a certain number of Aurubis shares.
One acquired share was entitled to five options in each case from Part A and Part B of the plan. The profit per option was limited to the Aurubis share price at the beginning of the term.
The hurdle component (Part A) took into account the performance of Aurubis shares during the reference period (usually three years) and was only triggered once the price had risen by a percentage defined at the beginning of the term (usually an exercise hurdle of 10 %). The difference between the price when exercising the option plus the most recent dividend and the price at the beginning of the term multiplied by the number of options was paid out.
The performance component (Part B) took into account the performance of Aurubis shares in relation to the performance of the CDAxand was only triggered if Aurubis shares out-performed the CDAxover a period of three years.
In addition, pension plans have been agreed for the individual Executive Board members, with the exception of Dr. Boel.
The pension benefits are determined as a varying percentage of the fixed compensation. The percentage increases based on the length of service on the Board. The pension is payable once the Executive Board member reaches the age of 65 (Mr. Faust und Mr. Willbrandt) or 62 (Dr. Landau) or in the event of their disability. Dr. Boel has a defined contribution pension plan, for which an amount of € 50,000 and, starting December 2012, € 80,000 is paid to an insurance company each year.
The employment contracts of Executive Board members include no change of control clauses. In the event of non-renewal of their Executive Board contracts, Executive Board members (with the exception of Dr. Boel) will under certain conditions receive an early retirement pension. These conditions are fulfilled if the Executive Board member has completed at least five years of service at Aurubis AG and is at least 55 years old (Mr. Faust and Mr. Willbrandt) or has
completed either 25 or 15 years of service and is at least 50 years old (Dr. Landau). The provision came into effect for Dr. Drouven starting January 1, 2012. Dr. Drouven receives 2/3 of his average salary of the last 12 months as compensation for the no-competition clause in place until the end of 2012.
Pensions paid before they reach 62 or 65 years, respectively, have the character of an interim payment. Compensation paid to an Executive Board member for activities outside the Aurubis Group after termination of his contract is offset against the pension until he reaches the age of 62 or 65,
Apart from the defined benefit pension plans for Mr. Faust, Mr. Willbrandt and Dr. Landau and the defined contribution pension plan for Dr. Boel, all the members of the Executive Board, with the exception of Dr. Landau, have an additional defined contribution company pension plan. This pension plan is based on a lump sum single payment. At the end of each fiscal year, € 120,000 for the Chief Executive Officer and € 80,000 for the other three Executive Board members is paid into liability insurances. A total of € 98,750 was paid in for Mr. Willbrandt in his first year as Chief Executive Officer.
The Executive Board members can use the accumulated capital at the earliest hen they have reached 60 years of age, but not before ceasing to be employed by the company.
The total compensation paid to active members of the Exe-cutive Board for activities in fiscal year 2011/12 amounted to € 5,831,921. In addition, expenditure for pension funds in the amount of € 999,405 was recognized as an expense.
The following table provides details of the compensation of the individual members:
|in €||Fixed salary||Variable compensation||Fringe benefits||Compensation from incentive plan||Total||Expenditure for pension funds|
|Dr. Bernd Drouven*||120,000||250,000||7,580||351,625||729,205||94,970|
|Dr Stefan Boel||336,000||680,000||10,701||190,155||1,216,856||130,000|
|Dr Michael Landau||336,000||680,000||33,173||196,910||1,246,083||315,888|
* until 31 December 2012
The Company has set up pension provisions on the basis of IFRS for the Executive Board members, with the exception of Dr. Boel. Allocations to the pension provisions for active members of the Executive Board in the year under review amounted to € 660,655. This amount comprises service cost and interest cost. In addition, an amount totaling € 338,750 per fiscal year is paid into an external pension fund for the Executive Board members, with the exception of Dr. Landau.
Former members of the Executive Board and their surviving dependents received a total of € 1,671,312, while € 18,402,655 has been provided for their pension entitlement.
Compensation for the Supervisory Board
The compensation paid to the Supervisory Board is agreed at the Annual General Meeting and is covered by Section 12 of Aurubis AG’s Articles of Association. It is based on the duties and responsibilities of Supervisory Board members as well as the business situation and the Company’s business success.
In addition to the reimbursement of expenses incurred while carrying out his office, each member of the Supervisory Board receives a fixed fee of € 40,000 per fiscal year. The Chairman of the Supervisory Board receives twice this amount and his deputy 1.5 times this amount. Supervisory Board members
who serve on a Supervisory Board committee receive an additional € 5,000 per fiscal year for each committee served on, not however exceeding € 10,000 per fiscal year. Supervisory Board members who chair a Supervisory Board committee receive an additional € 10,000 per fiscal year per chairmanship, not however exceeding € 20,000 per fiscal year.
In addition to the fixed fee, every member of the Supervisory Board receives an annual bonus linked to the Company’s long-term performance of € 250 for every € 1,000,000 of the Company’s adjusted earnings before taxes (EBT) in excess of an adjusted EBT of € 50,000,000 per annum on average over the last three fiscal years. The adjusted EBT is the EBT in accordance with IFRS before revaluation of LIFO inventories using the average cost method and without taking into account the effects of copper price fluctuations in the valuation of inventories of the former Cumerio companies. It has averaged € 261 million in the last three fiscal years. The Chairman receives twice and his deputy 1.5 times this amount.
The fixed compensation (excluding compensation for committee membership) and the bonus linked to the Company’s long-term performance are limited to € 80,000 per fiscal year for each member of the Supervisory Board. The limit
for the Chairman amounts to € 160,000 per fiscal year and € 120,000 per fiscal year for his deputy.
Furthermore, Supervisory Board members receive an attendance fee of € 500 for each meeting of the Supervisory Board and of its committees attended.
The following table provides details of the compensation of the individual members of the Supervisory Board for fiscal year 2011/12:
|in €||Fixed compensation||Variable compensation||Compensation for committee membership||Attendance fees||Total|
|Fuhrmann, Prof. Dr.-Ing. Heinz Jörd||80,000||80,000||20,000||6,000||186,000|
|von Foerster, Dr. Peter||40,000||40,000||10,000||3,500||93,500|
|Leese, Prof.Dr.-Ing. Wolfgang||40,000||40,000||5,000||3,000||88,000|
|Schultek, Dr. Thomas||40,000||40,000||5,000||3,500||88,500|
|Vahrenholt, Prof. Dr. Fritz||40,000||40,000||5,000||3,000||88,000|
|Wortberg, Dr.-Ing. Ernst J.||40,000||40,000||20,000||5,000||105,000|
On this basis, the Supervisory Board members received a total of € 1,220,000.
Hamburg, December 12, 2012
The Executive Board
Peter Willbrandt Dr. Michael Landau
Chairman Member of the Board
The Supervisory Board
Prof. Dr.-Ing. Heinz Jörg Fuhrmann