The total remuneration of the Board of Management members is determined by the Executive Committee, which is headed by the Chairman of the Supervisory Board. The Supervisory Board discusses the structure of the remuneration system on the basis of a proposal submitted by the Executive Committee and reviews it on a regular basis. The compensation of the Board of Management is set in accordance with the company’s size and global reach, its economic and financial situation and the responsibilities of the individual Board of Management members. The amount of remuneration is set to ensure competitiveness with comparable German and international companies, thus providing an incentive to the Board of Management members to deliver maximum performance and achieve results. The Supervisory Board conducts regular reviews to determine whether the compensation of the Board of Management is appropriate, taking into account the company’s results, the industry in which it operates and its future prospects.

The remuneration of the Board of Management is made up of the following components, weighted towards incentives for performance.

Components not linked to performance are the basic salary, fringe benefits and pension commitments. The basic salary is paid monthly. Fringe benefits are comprised mainly of the use of company cars, the reimbursement of travel costs, a telephone allowance, supplements for insurance premiums and special allowances and benefits paid when working outside Germany.

The performance-linked (variable) remuneration component is the annual bonus. The Executive Committee of the Supervisory Board determines the amount of the bonus on the basis of the company’s business performance, exercising due discretion. In addition, the committee can approve an appropriate special bonus to reward extraordinary performance. The amount of the annual bonus cannot exceed the fixed annual remuneration.

As a variable remuneration component with a long-term incentive effect, the members of the Board of Management are granted SARs (stock appreciation rights), which were issued for the first time in fiscal year 2006 on the basis of the new long-term incentive plan (LTIP 2006) .

The remuneration paid to the active members of the Board of Management in fiscal year 2006 amounted to €18.50 million (previous year: €14.76 million). This amount was comprised of €9.65 million in non-performance-related components (previous year: €7.73 million) and €8.85 million in bonuses (previous year: €7.03 million). The members of the Board of Management were granted a total of 1,575,000 SARs in fiscal year 2006 with a total value of €6.38 million at the time of issue (July 1, 2006).

The remuneration was broken down as shown in the following table and covers all activities of the members of the Board of Management within the Group.