Employees

Workforce Reduced by Restructuring Measures

Employee numbers at WACKER declined in 2012. We had 16,292 employees worldwide as of December 31, 2012 (December 31, 2011: 17,168), 5.1 percent down on a year earlier. The decrease was mainly due to the restructuring measures at Siltronic.

The division closed the production site at Hikari (Japan) effective May 31, 2012. Around 500 employees were affected by the closure. Siltronic supported these employees in their search for new jobs, and as of December 31, 2012, 413 employees had received offers at other companies. Siltronic ceased production of 150 mm silicon wafers at its Portland site in the third quarter of 2012. The result was a loss of some 350 jobs. As part of a redundancy plan, the affected personnel received severance packages. At Burghausen (Germany), Siltronic is also adapting 150 millimeter wafer production to permanently low demand levels. Combined with additional productivity measures, about 150 jobs will be eliminated at the site by the end of 2013. As of December 31, 2012, 70 jobs had already been cut. While not involving involuntary layoffs, cuts will be achieved primarily through job offers at the Group’s other units and through natural staff turnover. With a few exceptions, temporary employment contracts were not extended beyond January 2013.

WACKER POLYSILICON introduced short-time work in October 2012 due to reduced capacity utilization. In December 2012, 662 employees were on a short-time work schedule.

12,635 WACKER employees (77.6 percent) work in Germany and 3,657 employees (22.4 percent) at non-German sites. We also employed 91 temporary workers in the year under review.

As a manufacturing company, WACKER has a large contingent of industrial employees (55 percent), about one-eighth of whom are women (13 percent).

Personnel expenses fell to €1.21 billion (2011: €1.28 billion), down 6.0 percent from the previous year. These expenses included outlays for social benefits and the company pension plan amounting to €231.7 million (2011: €257.3 million).

In addition to a fixed base salary (which includes vacation and Christmas bonuses), WACKER employees receive variable compensation – a voluntary payment to employees on standard and above-standard pay scales. It consists of a profit-sharing amount and a personal-performance component. In 2012, WACKER’s chemical-sector employees in Germany received a profit share for 2011 amounting to 12.5 percent of their annual salary. The Group’s business performance precludes any payment of a profit share for 2012. Variable compensation payments totaled €96.6 million groupwide in 2012.

The “Working Life and Demography” collective-bargaining agreement concluded by chemical-industry employers and the German mining, chemicals and energy labor union (IG BCE) addresses the challenges posed by demographic trends. The “demographic sum 1” agreed by the parties – €312.30 per full-time employee in 2012 – is paid into the company pension plan at WACKER. The amount represents compensation for any statutory pension losses that might result from early retirement. The “demographic sum 2” of €200 per full-time standard-pay-scale employee for the years 2012 through 2015 that was additionally agreed by the parties in the 2012 collective bargaining agreement is used for lifecycle-oriented working-time models. These include, for example, phased early retirement and various leave-of-absence options. Separate rules apply in the collective bargaining region of eastern Germany. In this region, a company fund will be formed and 2.5 percent of all standard-pay-scale compensation for the previous year will be paid into it each year. Additionally, the fund will be topped up by the respective “demographic sum 2” of €200 per full-time standard-pay-scale employee for the years 2012 through 2015. The purpose of the fund is to permit the working hours of selected employees to be adjusted in line with the particular stages in their lives (such as raising children, caring for relatives), while taking into account the company’s specific business situation.

IG BCE and chemical-industry employers agreed on a new 19-month collective-bargaining agreement in May 2012. The standard pay scale increased by 4.5 percent, and training allowances were raised by €50 per month. WACKER increased the salaries of above-standard-pay-scale employees by 4.0 percent for a twelve-month period.

A WACKER company pension is an important compensation component and is available at most of our German and non-German sites – except for regions where the statutory pension appears sufficient or legal provisions are inadequate. In Germany, we offer employees a company pension via Wacker Chemie AG’s pension fund – Pensionskasse der Wacker Chemie VVaG (a mutual insurance company). The fund has around 17,000 members and provides pension payments to some 7,450 retirees. The average pension paid was around €630 per month. WACKER pays in up to 3.5 times its employees’ annual pension contributions, with the exact amount being determined by the type of agreement. In addition, employees have the opportunity to enlist in a private plan that minimizes their tax burden while saving for retirement.

Sharing the Training

Vocational training has been one of the first steps of personnel development at WACKER. In2012, 205 young people began their training at WACKER or at the Burghausen Vocational Training Center (BBiW). In total, the company employed 665 trainees, roughly the same as ayear earlier (2011: 663). At 5.0 percent, the percentage of trainees (number of trainees to Group employees in Germany) also stands at the previous year’s high level (2011: 4.9 percent). 560 trainees are in scientific and technical disciplines and 105 in business-related fields. We offered permanent jobs at WACKER to most of our suitable trainees -174 graduates – in 2012. The Burghausen Vocational Training Center (BBiW) also provides training for some 30 partner companies. Thus, the public foundation set up by WACKER also satisfies an intercompany training mandate, with 56 trainees from partner companies starting courses at the BBiW in 2012.

WACKER also trains young management talent, offering a General Management Trainee Program. In 2012, four graduates participated in the 18-month program. Since its launch in 1997, 75 young people have completed the management trainee program.

To help WACKER employees perform their tasks even better, we provide them with opportunities for additional training. At least once a year, employees and supervisors discuss development measures during performance reviews. This approach applies to all hierarchy levels. In 2012, our workforce completed about 95,000 e-learning sessions, and more than 15,500 participants attended seminars, advanced training courses and conventions, or received tutoring.

Another goal of our personnel management is to identify and prepare candidates for future leadership positions. WACKER handles this aspect in a uniform groupwide process. The 2012/2013 round of the OFK Management Circle for recently appointed executives started with 12 participants, half of them from locations outside Germany. Overall, WACKER invested €7.0 million in personnel-development measures and advanced training, 6 percent less than in the previous year (2011: €7.4 million).

HR Marketing Intensifies University Ties

To remain competitive in the face of demographic trends, WACKER intends to intensify its efforts to recruit graduates in critical disciplines. Now in its second year of existence, the Corporate Recruiting & HR Marketing department is focused on fostering contacts with academic institutions. Beside enhancing its presence at college fairs, WACKER offers a wider range of production site visits, and has intensified its contact with academically outstanding university departments. We set up a new semester-break academy in collaboration with the universities of Erlangen-Nürnberg and Stuttgart and with the Technical University of Munich. This one-week seminar program targets highly talented students in relevant academic disciplines.

WACKER is building a facility for the production of polysilicon at its new Charleston site (Tennessee, USA). To help recruit qualified employees for the new facility, we founded a training center with the local Chattanooga State Community College in 2012. The WACKER INSTITUTE trains mechanical, electronics, chemical and lab technicians. WACKER is providing $3 million to support this program. Due to the altered market environment in the solar industry and the polysilicon overcapacities, WACKER announced in 2012 that it would to extend the timeline for production start-up in Tennessee until mid-2015. The approximately 280 employees at the site will continue their work until the plant is completed.

A New Record Number of Improvement Suggestions

In order to do things better and stay competitive, WACKER relies on the ideas submitted by its employees. 2012 saw more employee suggestions than ever before. Overall, we received 8,982 suggestions (2011: 8,220) – roughly 9.3 percent more than in the previous year. The participation rate (number of submitters per 100 employees) was constant at 34 percent (2011: 34 percent). Our goal is still for every second employee to contribute ideas. The calculable benefit fell to €4.9 million (2011: €7.8 million). In its annual idea management rankings for 2012, the German Institute of Business Administration (“dib”) put WACKER in ninth place among companies with more than 5,000 employees. That makes us one of the most imaginative companies in Germany.

WACKER has been addressing the demographic trend for many years. Regional variations in age structure are not exclusive to WACKER; they reflect the age structures of the populations in each continent and country. The average age of the Group’s workforce at the reporting date was 42.0. Employees at non-German sites are younger (average age: 40.0) than in Germany (42.6). The age structure abroad varies greatly from region to region. Staff at Asian sites are comparatively young (average age: 34.3), while staff at US locations have an average age of 47.2.

Demographic Analysis of German and International Sites in 2012

We Want to Uphold Our Employees’ Performance Levels

To maintain our long-term innovative and competitive strength at WACKER, we have set ten strategic goals. Long-term measures for the workforce range from basic and advanced training opportunities to health programs. In health management, the focus is on five fields. We seek to avoid spinal disorders and cardiovascular diseases in our workforce, increase mental resilience, enable age-appropriate work and find suitable jobs for staff with health restrictions.

The pilot project we launched with the South German branch of the statutory pension insurance system (Deutsche Rentenversicherung Süd) in 2010 has developed into a permanent collaboration. The goal of the program is to improve the effectiveness of rehabilitation measures for employees, the Group and the insurer. WACKER’s Health Services department can now submit rehabilitation applications on an employee’s behalf, for expedited processing by the insurance system. Our company doctors work with partner clinics to tailor rehab measures to the requirements of the employee’s job. 33 rehab procedures were managed this way in 2012.

Since 2012, we have been offering preventive checkups to third-level executives (“FK3” personnel) at all locations in Germany. In addition to organ examinations, the FK3 checkups also focus on giving employees advice on how to deal better with mental stress situations.

Good social benefits, performance-oriented compensation and motivating tasks make WACKER an attractive employer. This is demonstrated by the long-term commitment of our employees to our company. The average length of service in Germany (permanent staff) was 16.8 years (2011: 16.7 years). The 2012 employee turnover rate rose to 7.9 percent groupwide (2011: 2.9 percent). The higher rate is due to the closure of Siltronic’s production site at Hikari (Japan) and the layoffs at the Portland (USA) site. As a consequence of these measures, the turnover rate at non-German sites rose from 8.9 percent in 2011 to 30.8 percent in 2012. It was unchanged in Germany at 0.9 percent (2011: 0.9 percent).

External Reviews Reaffirm WACKER’s Top-Employer Ranking

As rated by its own executives, WACKER continues to be one of the most popular chemical-sector employers in Germany. The annual satisfaction survey by Germany’s Association of Chemical-Industry Executives (VAA) ranked WACKER fourth out of 25 companies surveyed, with a score of 2.78 (on a scale of 1 to 5, with 1 being the highest). WACKER was ranked first place in 2011, with a score of 2.77. The Corporate Research Foundation (CRF) gave WACKER Greater China its “Top Employer 2012” seal of approval in the year under review. CRF is an independent organization that has been rating companies since 1991 for such aspects as social benefits, working conditions, professional training and career opportunities, and corporate culture.