Compensation Report

The following compensation report forms part of the combined management report and of the audited consolidated financial statements.

Compensation System for the Executive Board

On the basis of preparatory input from the Executive Committee, the full Supervisory Board is responsible for determining the individual compensation paid to members of Wacker Chemie AG’s Executive Board. In light of German Stock Corporation Act and German Corporate Governance Code changes, the Supervisory Board has decided to modify certain aspects of the compensation system effective January 1, 2021. This will be proposed for approval at the next annual shareholders’ meeting.

The compensation system for the Executive Board, in effect since January 1, 2010 and until December 31, 2020, comprises the following key components:

(I) A fixed annual salary:

The fixed annual salary is paid in equal monthly installments.

(II) A variable, performance-related bonus:

The amount of the variable bonus (long-term bonus), which is paid annually and in arrears, depends on the achievement of agreed annual Group targets set by the Supervisory Board for all Executive Board members. The bonus is calculated based on target achievement in the reporting year, as well as on average overall target achievement in the two years prior to the reporting year. The targets are based on the following key indicators: , cash flow, target return, and return on (). The computational target bonus in the event of 100-percent target achievement during the evaluation period amounts to 180 percent of the average annual base salary in the last year of the evaluation period, while the maximum bonus amounts to 220 percent of the average annual base salary in the last year of the evaluation period. The Supervisory Board thus has the discretion to increase or reduce the calculated bonus by as much as 30 percent, taking into account all circumstances and the Executive Board member’s individual performance. The Executive Board members are obligated to purchase Wacker Chemie AG shares for an amount equal to 15 percent of their annual gross bonus and to hold these for at least two years. First of all, the annual gross bonus is calculated, 15 percent of which is invested in shares. Any taxes payable are deducted from the remaining 85 percent of the annual gross bonus and the net amount disbursed to the Executive Board members. As a result, around 30 percent of the annual net bonus is accounted for by the stock component and has a forward-looking, multiyear assessment basis. The exact percentage depends on each Executive Board member’s personal tax situation.

(III) A contribution to retirement benefits:

The members of the Executive Board are entitled to payment of an annual retirement pension should the event insured against occur, i.e. reaching retirement age or suffering permanent occupational disability. The amount of the pension is calculated on the basis of the last pensionable fixed annual salary received and the length of Executive Board membership. A percentage of the pensionable base salary is defined as a basic amount and adjusted by means of an annual percentage rate of increase for each year of service. Entitlement to a pension presupposes at least five years of service on the Executive Board. Since 2016, increases in the annual salaries of Dr. Rudolf Staudigl and Auguste Willems have taken the form of additional fixed, non-pensionable salary components and thus have no influence on the calculation of their pensions – though they do have an effect on the calculation of their long-term bonuses (see (II) above).

The company grants the members of the Executive Board appropriate insurance coverage, in particular D&O insurance, with a deductible as stipulated in the German Stock Corporation Act (AktG).

If they leave the company, Executive Board members are subject to a twelve-month obligatory waiting period, during which they are paid competitive-restriction compensation. The competitive-restriction compensation is calculated as 50 percent of the member’s latest overall annual compensation (average of the last three years). Any pension received is offset against the competitive-restriction compensation.

If Executive Board membership is prematurely terminated without good cause, the contracts with Executive Board members specify that any compensatory payments shall be limited to a maximum of two full annual salaries. This is referred to as the severance payment cap.

Total Compensation for the Members of the Executive Board for 2020

The current level of each Executive Board member’s compensation is listed in the tables below, which follow the model tables recommended by the German Corporate Governance Code.

No changes were made to the Executive Board members’ compensation in 2020.

The following table shows the payments for fiscal 2020 from fixed compensation, additional benefits and variable compensation, as well as pension expenses.

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Payments in the Year under Review (Compensation for 2020 and 2019)

 

 

2020

 

2019

 

 

 

 

 

 

 

Dr. Rudolf Staudigl

 

 

President & CEO

 

 

 

 

 

Fixed compensation1

 

880,000

 

880,000

Additional benefits2

 

95,945

 

64,464

 

 

 

 

 

Total

 

975,945

 

944,464

 

 

 

 

 

Multiyear variable compensation3

 

1,042,360

 

1,012,000

Total

 

2,018,305

 

1,956,464

Pension expenses4

 

 

Total compensation

 

2,018,305

 

1,956,464

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auguste Willems

 

 

Executive Board member

 

 

 

 

 

Fixed compensation1

 

610,000

 

610,000

Additional benefits2

 

51,387

 

56,047

 

 

 

 

 

Total

 

661,387

 

666,047

 

 

 

 

 

Multiyear variable compensation3

 

722,545

 

701,500

Total

 

1,383,932

 

1,367,547

Pension expenses4

 

667,680

 

593,979

Total compensation

 

2,051,612

 

1,961,526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Tobias Ohler

 

 

Executive Board member

 

 

 

 

 

Fixed compensation1

 

580,000

 

580,000

Additional benefits2

 

61,175

 

81,225

 

 

 

 

 

Total

 

641,175

 

661,225

 

 

 

 

 

Multiyear variable compensation3

 

687,010

 

667,000

Total

 

1,328,185

 

1,328,225

Pension expenses4

 

593,120

 

491,025

Total compensation

 

1,921,305

 

1,819,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Christian Hartel

 

 

Executive Board member

 

 

 

 

 

Fixed compensation1

 

580,000

 

580,000

Additional benefits2

 

54,909

 

58,333

 

 

 

 

 

Total

 

634,909

 

638,333

 

 

 

 

 

Multiyear variable compensation3

 

687,010

 

667,000

Total

 

1,321,919

 

1,305,333

Pension expenses4

 

390,349

 

390,349

Total compensation

 

1,712,268

 

1,623,661

1

Calculation of the pensionable portion of the compensation excluded an amount of €80,000 for Dr. Staudigl and €30,000 for Mr. Willems.

2

Additional benefits include the use of a company car, social insurance allowances and other cost reimbursements.

3

Multiyear refers to the assessment basis. The Executive Board members purchase Wacker Chemie AG shares in the amount of 15 percent of their annual gross bonus (holding period of two years). Once determined, the fixed bonus amount calculated using a three-year assessment basis is not influenced by subsequent developments.

4

Service cost, pursuant to IAS 19, from pension commitments and other pension-related benefits

The following table shows the value of compensation and benefits granted for fiscal 2020. It also lists the minimum and maximum attainable values.

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Compensation and Benefits for the Year under Review (Targets)

 

 

2020 (target)

 

2020 (min.)

 

2020 (max.)

 

2019 (target)

 

 

 

 

 

 

 

 

 

 

 

Dr. Rudolf Staudigl

 

 

President & CEO

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

880,000

 

880,000

 

880,000

 

880,000

Additional benefits2

 

95,945

 

95,945

 

95,945

 

64,464

 

 

 

 

 

 

 

 

 

Total

 

975,945

 

975,945

 

975,945

 

944,464

 

 

 

 

 

 

 

 

 

Multiyear variable compensation3

 

941,600

 

289,520

 

1,384,240

 

1,434,400

Total

 

1,917,545

 

1,265,465

 

2,360,185

 

2,378,864

Pension expenses4

 

 

 

 

Total compensation

 

1,917,545

 

1,265,465

 

2,360,185

 

2,378,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auguste Willems

 

 

Executive Board member

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

610,000

 

610,000

 

610,000

 

610,000

Additional benefits2

 

51,387

 

51,387

 

51,387

 

56,047

 

 

 

 

 

 

 

 

 

Total

 

661,387

 

661,387

 

661,387

 

666,047

 

 

 

 

 

 

 

 

 

Multiyear variable compensation3

 

652,700

 

200,690

 

959,530

 

994,300

Total

 

1,314,087

 

862,077

 

1,620,917

 

1,660,347

Pension expenses4

 

667,680

 

667,680

 

667,680

 

593,979

Total compensation

 

1,981,767

 

1,529,757

 

2,288,597

 

2,254,326

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Tobias Ohler

 

 

Executive Board member

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

580,000

 

580,000

 

580,000

 

580,000

Additional benefits2

 

61,175

 

61,175

 

61,175

 

81,225

 

 

 

 

 

 

 

 

 

Total

 

641,175

 

641,175

 

641,175

 

661,225

 

 

 

 

 

 

 

 

 

Multiyear variable compensation3

 

620,600

 

190,820

 

912,340

 

945,400

Total

 

1,261,775

 

831,995

 

1,553,515

 

1,606,625

Pension expenses4

 

593,120

 

593,120

 

593,120

 

491,025

Total compensation

 

1,854,895

 

1,425,115

 

2,146,635

 

2,097,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Christian Hartel

 

 

Executive Board member

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

580,000

 

580,000

 

580,000

 

580,000

Additional benefits2

 

54,909

 

54,909

 

54,909

 

58,333

 

 

 

 

 

 

 

 

 

Total

 

634,909

 

634,909

 

634,909

 

638,333

 

 

 

 

 

 

 

 

 

Multiyear variable compensation3

 

620,600

 

190,820

 

912,340

 

945,400

Total

 

1,255,509

 

825,729

 

1,547,249

 

1,583,733

Pension expenses4

 

390,349

 

390,349

 

390,349

 

318,328

Total compensation

 

1,645,858

 

1,216,078

 

1,937,598

 

1,902,061

1

Calculation of the pensionable portion of the compensation excluded an amount of €80,000 for Dr. Staudigl and €30,000 for Mr. Willems.

2

Additional benefits include the use of a company car, social insurance allowances and other cost reimbursements.

3

Multiyear refers to the assessment basis. The Executive Board members purchase Wacker Chemie AG shares in the amount of 15 percent of their annual gross bonus (holding period of two years). Once determined, the fixed bonus amount calculated using a three-year assessment basis is not influenced by subsequent developments. The actual level of target achievement in the two previous years was taken into consideration when the minimum and maximum values were calculated. The following values were set for 2020: a minimum value of 0 percent and a maximum value of 220 percent. The theoretically achievable minimum or maximum values are also influenced by the Supervisory Board’s potential scope of discretion.

4

Service cost, pursuant to IAS 19, from pension commitments and other pension-related benefits

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Compensation for Former Members of the Executive Board or Their Surviving Dependents

 

 

 

 

 

 

2020

 

2019

 

 

 

 

 

Total

 

1,906,493

 

2,255,993

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Pension Obligations for Executive Board Members

 

 

 

 

 

 

2020

 

2019

 

 

 

 

 

Pension obligations for active Executive Board members

 

 

 

 

Total

 

42,230,614

 

36,731,498

 

 

 

 

 

Pension obligations for former members of the Executive Board or their dependents

 

 

 

 

Total

 

36,109,573

 

35,727,056

Compensation of Supervisory Board Members

The compensation of Wacker Chemie AG’s Supervisory Board members is governed by the company’s Articles of Association.

In return for their work, the members of the Supervisory Board receive fixed annual compensation in the amount of €90,000, payable when the fiscal year expires, and are additionally refunded any VAT payable on their compensation. Supervisory Board members who join, or depart from, the Supervisory Board during the fiscal year receive prorated compensation.

The compensation is multiplied by a factor of 3 for the Chairman of the Supervisory Board, by a factor of 2 for the Vice Chairman and for chairs of committees, and by a factor of 1.5 for members of committees. Multiple functions are ignored in this calculation.

The members of the Supervisory Board are compensated for any outlays incurred in connection with the execution of their duties with an annual lump sum of €20,000 and are also reimbursed for any VAT payable on that lump sum.

The company grants the members of the Supervisory Board appropriate insurance coverage; in particular, the company concludes a D&O insurance policy for the benefit of the Supervisory Board’s members.

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Supervisory Board Compensation

 

 

 

 

 

 

2020

 

2019

 

 

 

 

 

Fixed compensation1, 2

 

2,165,000

 

2,159,877

Variable compensation

 

 

Total

 

2,165,000

 

2,159,877

1

Fixed compensation includes the above-mentioned annual lump sum for expenses.

2

The employee representatives are subject to the rules of the German Trade Union Confederation (DGB) and of the Association of Employed Academics and Executives in the Chemical Industry (VAA) concerning the transfer of supervisory board compensation.

Business Value Contribution (BVC)
BVC is a financial performance measurement that determines the value created by the WACKER Group and its units once all capital costs have been deducted. BVC is the difference between profit (EBIT) and cost of capital (WACC x CE). BVC is a profit variable that is adjusted to allow for extraordinary effects (e.g. sale of parts of the company). This makes it an ideal tool for measuring business performance.
Capital Employed (CE)
Capital employed is the sum of average noncurrent assets (less noncurrent securities and deferred tax assets), plus inventories and trade receivables (less trade payables). It is the variable used in calculating the cost of capital.
Return on Capital Employed (ROCE)
Return on capital employed is the profitability ratio relating to the capital employed. It is defined as earnings before interest and taxes (EBIT) divided by capital employed. Investment income from Siltronic AG and the corresponding carrying amount in equity are not included when ROCE is calculated. ROCE is a clear indicator of how profitably the capital required for business operations is being employed. It is influenced not only by profitability, but also by capital intensity with regard to noncurrent assets required for business operations and to working capital. ROCE is reviewed annually as part of our planning process and is a key criterion for managing our capital expenditure budget.

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