The compensation structure is geared toward the sustainable growth of the Company by factoring in compensation components with a multiple-year assessment basis. 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 make decisions as regards special payments for the outstanding achievements or successes of a member of the Managing Board.
The compensation system aligns the Managing Board’s compensation to the Company’s sustainable growth by means of setting relevant targets for long-term variable compensation. At the same time, sales, EBITDA before special items and trade net working capital in proportion to sales are the target components of short-term variable compensation. This is intended to ensure a better response to short-term developments. Also, during the design process, a great deal of importance was attached to the fact that above-average performance would be rewarded more comprehensively, but 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 structure has provided for 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 37%, while the average share of compensation from the STI and from the LTI come to 24% and 39% respectively, whereby a target achievement of 100% each is assumed for the information for the STI and the LTI.
Details on this topic may be found in the Compensation Report of our Annual Report 2018.