The remuneration report also forms part of the Group Management Report.
The total remuneration paid to the individual Board of Management members for financial year 2009 was determined by the Supervisory Board or, more specifically, by its Executive Committee, which is headed by the chairman of the Supervisory Board. After holding consultations, the Supervisory Board resolved on the remuneration system for the Board of Management – including the main contractual elements – based on the recommendations submitted by the Executive Committee. The remuneration of the Board of Management reflects the size and global reach of the company, its economic and financial situation and the roles fulfilled by the individual members. It is set to ensure competitiveness with comparable German and international companies, thus incentivising the Board of Management members to deliver maximum performance and achieve results.
The remuneration of the Board of Management for 2009 is in line with standard market practice, appropriate to the tasks involved and designed to reward performance; it comprises fixed and variable elements as well as long-term incentives.
Non-performance-related components are the fixed annual remuneration (annual base salary), fringe benefits and pension commitments. The fixed annual remuneration is paid in 12 equal monthly instalments retroactively at the end of each month. Fringe benefits mainly comprise the use of company cars and supplements for insurance premiums as well as special allowances and benefits for assignments outside the home country.
The variable remuneration components for 2009 comprise one component linked to the company’s annual profits (annual performance-related remuneration) and one long-term incentive component (the Long-Term Incentive Plan).
The amount of the annual performance-related component (the annual bonus) is set at the due discretion of the Supervisory Board on the basis of the company’s performance. The individual bonus amounts reflect the extent to which predefined targets are achieved, missed or exceeded. The Group’s EBIT after asset charge performance metric is the main parameter used in this calculation. For the Board of Management members in charge of the MAIL, GLOBAL FORWARDING, FREIGHT, EXPRESS and SUPPLY CHAIN divisions, the EBIT after asset charge of their respective division is also a key parameter. Achievement of the upper target for the financial year is rewarded with the maximum annual performance-related remuneration (annual bonus). The maximum annual bonus opportunity is 100% of the fixed annual remuneration. In addition, the Supervisory Board may elect to award an appropriate special bonus for extraordinary achievement.
The remuneration component linked to the company’s annual profits now also includes a sustainability component in line with the provisions of the Gesetz zur Angemessenheit der Vorstandsvergütung (VorstAG – Act on the appropriateness of management board remuneration), which came into force on 5 August 2009. It will be taken into account in employment contracts and contract renewals entered into after 5 August 2009, increasing the emphasis on sustainable company development in determining management board remuneration. For such contracts, the annual performance-related remuneration will in future no longer be paid in full for the year on the basis of having reached the agreed targets. Instead, 50% of the annual performance-related remuneration will flow into a new medium-term component with a three-year calculation period (performance phase of one year, sustainability phase of two years). This medium-term component will be paid out after expiry of the sustainability phase subject to the condition that the targets related to reported EBIT after asset charge (including the asset charge on goodwill and before goodwill impairment) have been reached during the sustainability phase. If the sustainability criteria are not met, the payment is forfeited without compensation. This demerit system puts greater emphasis on sustainable company development in determining management board remuneration.
Stock appreciation rights (SAR) are granted as a long-term remuneration component based on the Long-Term Incentive Plan resolved by the Supervisory Board in 2006 (2006 LTIP).