Pension commitments under the new system

The pension commitment system was restructured in financial year 2008. Starting on 4 March 2008, newly appointed Board of Management members will receive pension commitments based on a defined contribution plan rather than the previous commitments which were based on final salary.

Under the new defined contribution pension plan, each year the company pays a uniform amount of 25% of the annual basic salary into a virtual pension account for the Board of Management member concerned. The maximum contribution period is 15 years. Interest is paid on the pension capital at the rate applicable to pension provisions recognised for tax purposes (currently 6% annually) until the pension is drawn or the Board of Management member leaves the company. The retirement benefits are paid out in a lump sum in the amount of the value accumulated in the pension account. The benefits fall due when the Board of Management member reaches the age of 62 or in the case of invalidity or death. The pension beneficiary may opt to receive a pension in lieu of a lump-sum payment. If this option is exercised, the capital is converted to a pension on the basis of the relevant tax base, taking into account the individual data of the surviving dependents and a future pension increase of 1%. If the Board of Management member leaves the company before the benefits fall due, the pension account will be maintained at the balance existing at the time the member left the company. The account will no longer accrue interest and no further contributions will be paid.

The new pension system is applicable to Board of Management members Hermann Ude and Bruce Edwards, who were appointed in 2008. The pension commitment made to Hermann Ude contains an arrangement guaranteeing him a minimum benefit in the amount of the benefits payable to him had his former pension commitment been continued using the assessment basis applicable at the time of his appointment to the Board of Management.

Benefits of former Board of Management members

Benefits paid to former members of the Board of Management or their surviving dependants amounted to €43.1 million (restated prior-year figure: €10.28 million). The defined benefit obligations (DBO) for current pensions calculated under IFRS amount to €25.3 million (previous year: €27.0 million).

Severance payment complies with Code recommendation

In accordance with the recommendation of No. 4.2.3 of the German Corporate Governance Code as amended on 6 June 2008, the Board of Management contracts of Hermann Ude and Bruce Edwards contain a provision stipulating that in the event of premature termination of a Board of Management member’s contract without good cause, the severance payment may compensate no more than the remaining term of the contract. The severance payment is limited to the value of two years’ remuneration (severance payment cap). Future Board of Management contracts or extension to existing Board of Management contracts will contain comparable provisions.

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