The compensation structure is geared toward the sustainable growth of the Company by factoring in compensation components with a multi-year assessment period. The total compensation of individual members of the Managing Board is specified by the Supervisory Board based on a performance assessment, taking into account any payments made by Group companies. Criteria for determining the appropriateness of the compensation are the responsibilities of the individual member of the Managing Board, their personal performance, the economic situation, the performance and outlook of the Company, as well as the level of compensation usually paid, taking into account peer companies and the compensation structure in place in other areas of the Company. At its professional discretion, the Supervisory Board can decide on special payments for outstanding achievements or successes of a member of the Managing Board. Compensation information from comparable national and international listed companies operating in the fashion and lifestyle industry is used to assess the appropriateness of the total compensation. In compiling the set of competitors, the Supervisory Board takes into account not only industry affiliation, but also market position, as well as the size and global orientation of the companies.
The compensation system for the Managing Board is designed to ensure the increase in enterprise value. Consequently, the long-term variable compensation and its respective objectives are designed to promote sustainable and long-term growth for the Company. At the same time, and in order to account for short-term developments, sales, operating profit (EBIT) and trade net working capital are the targets for short-term variable compensation. Also, during the design process, a great deal of importance was attached to the fact that above-average performance would be rewarded accordingly. At the same time, variable compensation would cease to be paid in the event of below-average performance.
In addition to non-performance-related (fixed) compensation components, the compensation system also includes core performance-related (variable) compensation components in the form of a short-term incentive program (STI) and a long-term incentive program (LTI). In this regard, the average share of the fixed compensation components in the total target compensation amounts to 36%, while the average share of compensation from the STI and from the LTI account for 25% and 39% respectively, assuming a target achievement of 100% each for both the STI and the LTI.
Details on this topic may be found in the Compensation Report of our Annual Report 2020.