Value-Based Management Is an Integral Part of Our Corporate Policies

At WACKER, we focus on sustainably increasing our company’s value in the long term. This is why value-based management is an integral part of our corporate policies. Under the EAGLE acronym (Eye At Growing a Longterm Enterprise), WACKER has been consolidating value-based management groupwide since 2002. Value management and strategic planning complement each other. Consequently, we coordinate the strategic positioning of a business entity and its contribution to boosting the company’s value. As part of annual planning, we make fundamental decisions on investments, innovation plans, new markets and a variety of other projects.

WACKER’s second target is high profitability compared to the competition. The benchmark here is EBITDA. Each division is compared with its most profitable competitor. Using this comparison, and historical performance and divisional planning, we calculate an EBITDA margin. In a weighted divisional average, this margin lies within a corridor of 22 to 28 percent. For the Group, it amounts to 25 percent. In 2010, we exactly reached the Group’s target margin of 25.2 percent.

Our third target is net operating cash flow (NCF – defined as the sum of cash flow from operating activities and noncurrent investment activities, without securities). On average, we strive for a slightly positive value here. From year to year, this depends on our earnings situation and planned investments. The goal for 2010 was a slightly negative NCF. Thanks to our markedly positive earnings trend and high advance payments from polysilicon customers, 2010’s net cash flow was clearly above plan at €421.6 million.

To continually increase the company’s value, the variable compensation of senior managers at our divisions and corporate departments is tied to the following performance indicators: EBITDA margin, development of net operating cash flow, and BVC.