Compensation Report

Compensation Report for the Executive Board

Since the German Act on the Appropriateness of Management Board Compensation (VorstAG) came into force on August 5, 2009, the Supervisory Board’s full meeting, following preparation by the Executive Committee, has been responsible for determining the individual compensation paid to members of Wacker Chemie AG’s Executive Board. Until that date, the Executive Committee had been responsible.

The compensation system for the members of the Executive Board is currently being examined in the light of the VorstAG so that it takes account of the new legal requirements. Effective July 1, 2010, WACKER is going to implement the regulations introduced under the VorstAG for a deductible in D&O insurance for all members of the Executive Board. WACKER will regularly examine the compensation system for its Executive Board on the basis of external market comparisons.

In the 2009 fiscal year, the Executive Board’s compensation consisted of the following significant components:

(I) A fixed annual salary:

The fixed annual salary is paid monthly in identical installments.

(II) A variable, performance-related bonus:

The amount of the variable bonus, which is paid annually and retrospectively, depends on the attainment of agreed annual targets of the WACKER Group with regard to the following key indicators: business value contribution, cash flow and target return, as well as the individual targets of the Executive Board’s members. The members of the Executive Board are entitled to a minimum bonus.

(III) A contribution to retirement benefits:

The members of the Executive Board become entitled to the payment of an annual retirement pension should the event insured against occur, i.e. when the member in question reaches retirement age or becomes afflicted by permanent occupational disability. Before the event insured against occurs, Dr. Staudigl, Dr. Rauhut and Dr. Sittenthaler have a basic entitlement to the premature payment of an annual pension if they leave the Executive Board against their will without good cause or if they, of their own accord, cease their activity for good cause, the company being responsible for said cause. The amount of the retirement pension, which, like the fixed annual salary, is not performance related, is determined by the amount of the last annual salary to be drawn and the duration of Executive Board membership. A percentage of the basic salary is defined as a basic amount and adjusted by means of an annual percentage rate of increase for each year of service.

The last adjustment of the Executive Board members’ annual salaries and variable bonuses was made with effect as of July 1, 2007. Dr. Staudigl’s fixed annual salary, moreover, was increased on his appointment as President & CEO in 2008.

In the 2009 fiscal year, as a response to the general economic crisis, WACKER implemented a multiplicity of measures to reduce the Group’s personnel expenses and the cost of materials. In 2009, the Supervisory Board’s Executive Committee, in consultation with the Executive Board, set a reduced bonus for the 2008 fiscal year. At first, only 50% of this bonus was paid in 2009. The withheld 50% of the bonus has been paid in 2010.

The company grants the members of the Executive Board appropriate insurance coverage, in particular D&O insurance.

Compensation Report for the Supervisory Board

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

In return for their work, the members of the Supervisory Board receive fixed annual compensation in the amount of €25,000 payable when the fiscal year expires. Supervisory Board members who join or depart from the Supervisory Board during the ongoing fiscal year receive the appropriate pro rata compensation.

In addition to their fixed compensation, the members of the Supervisory Board receive performance-related compensation for the past fiscal year based on the return on assets¹ percentage. The performance-related compensation can be between 0% and 125% of the fixed annual compensation.

The fixed and performance-related 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 committee chairmen, and by a factor of 1.5 for members of committees. This arrangement does not take account of double and multiple functions.

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 €12,000. They are additionally refunded any VAT payable on their compensation.

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.

¹ Definition of the return on assets for this purpose: the percentage ratio of earnings before interest and taxes to the capital employed in accordance with IFRS consolidated financial statements, with the capital employed corresponding to the total of current and noncurrent assets less liquidity.