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 accordance with the Executive Board compensation system in effect since January 1, 2010, the Executive Board’s compensation 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: , , target return, and return on (). The computational target bonus in the event of 100-percent target achievement during the evaluation period depends on the Executive Board member in question and amounts to either 180 percent or 140 percent of the average annual base salary in the last year of the evaluation period. The maximum bonus, too, depends on the specific Board member and amounts to either 220 percent or 180 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 set off 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 2018

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.

With effect from October 1, 2018, Dr. Rudolf Staudigl’s gross fixed annual salary was increased from €840,000 to €880,000. This increase took the form of an additional fixed, non-pensionable salary component and thus has no influence on the calculation of his pension. It is taken into account, however, when calculating the long-term bonus.

With effect from November 1, 2018, Dr. Christian Hartel’s gross fixed annual salary was increased from €400,000 to €580,000. At the same time, the parameters for the target bonus were amended as follows: as of November 1, 2018, the computational target bonus in the event of 100-percent target achievement during the evaluation period amounts to 180 percent (January through October 2018: 140 percent) of the average annual base salary. The maximum bonus amounts to 220 percent (January through October 2018: 180 percent) of the average annual base salary.

All of the above-mentioned increases applied pro rata temporis for the year 2018.

The following table shows the payments for fiscal 2018 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 Fiscal 2018 and 2017)

 

 

2018

 

2017

1

Calculation of the pensionable portion of the compensation excluded an amount of € 50,000 (Dr. Staudigl ) and € 30,000 (Mr. Willems) in 2018.

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

 

 

 

 

 

 

 

Dr. Rudolf Staudigl

 

 

President & CEO

 

 

 

 

 

Fixed compensation1

 

850,000

 

840,000

Additional benefits2

 

93,416

 

54,644

 

 

 

 

 

Total

 

943,416

 

894,644

 

 

 

 

 

Multiyear variable compensation3

 

1,411,000

 

1,774,080

Total

 

2,354,416

 

2,668,724

Pension expenses4

 

 

Total compensation

 

2,354,416

 

2,668,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auguste Willems

 

 

Executive Board member

 

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

610,000

 

610,000

Additional benefits2

 

49,838

 

48,406

 

 

 

 

 

Total

 

659,838

 

658,406

 

 

 

 

 

Multiyear variable compensation3

 

1,012,600

 

1,288,320

Total

 

1,672,438

 

1,946,726

Pension expenses4

 

588,900

 

618,631

Total compensation

 

2,261,338

 

2,565,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Tobias Ohler

 

 

Executive Board member

 

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

580,000

 

580,000

Additional benefits2

 

51,591

 

48,314

 

 

 

 

 

Total

 

631,591

 

628,314

 

 

 

 

 

Multiyear variable compensation3

 

962,800

 

1,224,960

Total

 

1,594,391

 

1,853,274

Pension expenses4

 

473,620

 

578,020

Total compensation

 

2,068,011

 

2,431,294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Christian Hartel

 

 

Executive Board member

 

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

430,000

 

400,000

Additional benefits2

 

52,696

 

50,492

 

 

 

 

 

Total

 

482,696

 

450,492

 

 

 

 

 

Multiyear variable compensation3

 

600,467

 

668,800

Total

 

1,083,163

 

1,119,292

Pension expenses4

 

207,978

 

218,784

Total compensation

 

1,291,141

 

1,338,076

The following table shows the value of compensation and benefits granted for fiscal 2018. It also lists the minimum and maximum attainable values.

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Compensation and Benefits for the Year under Review (Targets)

 

 

2018 (target)

 

2018 (min.)

 

2018 (max.)

 

2017 (target)

1

Calculation of the pensionable portion of the compensation excluded an amount of € 50,000 (Dr. Staudigl ) and € 30,000 (Mr. Willems) in 2018.

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 2018: a minimum value of 0 percent and a maximum value of either 220 percent or 180 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

 

 

 

 

 

 

 

 

 

 

 

Dr. Rudolf Staudigl

 

 

President & CEO

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

850,000

 

850,000

 

850,000

 

840,000

Additional benefits2

 

93,416

 

93,416

 

93,416

 

54,644

 

 

 

 

 

 

 

 

 

Total

 

943,416

 

943,416

 

943,416

 

894,644

 

 

 

 

 

 

 

 

 

Multiyear variable compensation3

 

1,623,500

 

779,450

 

2,265,250

 

1,545,600

Total

 

2,566,916

 

1,722,866

 

3,208,666

 

2,440,244

Pension expenses4

 

 

 

 

Total compensation

 

2,566,916

 

1,722,866

 

3,208,666

 

2,440,244

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auguste Willems

 

 

Executive Board member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

610,000

 

610,000

 

610,000

 

610,000

Additional benefits2

 

49,838

 

49,838

 

49,838

 

48,406

 

 

 

 

 

 

 

 

 

Total

 

659,838

 

659,838

 

659,838

 

658,406

 

 

 

 

 

 

 

 

 

Multiyear variable compensation3

 

1,165,100

 

559,370

 

1,625,650

 

1,122,400

Total

 

1,824,938

 

1,219,208

 

2,285,488

 

1,780,806

Pension expenses4

 

588,900

 

588,900

 

588,900

 

618,631

Total compensation

 

2,413,838

 

1,808,108

 

2,874,388

 

2,399,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Tobias Ohler

 

 

Executive Board member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

580,000

 

580,000

 

580,000

 

580,000

Additional benefits2

 

51,591

 

51,591

 

51,591

 

48,314

 

 

 

 

 

 

 

 

 

Total

 

631,591

 

631,591

 

631,591

 

628,314

 

 

 

 

 

 

 

 

 

Multiyear variable compensation3

 

1,107,800

 

531,860

 

1,545,700

 

1,067,200

Total

 

1,739,391

 

1,163,451

 

2,177,291

 

1,695,514

Pension expenses4

 

473,620

 

473,620

 

473,620

 

578,020

Total compensation

 

2,213,011

 

1,637,071

 

2,650,911

 

2,273,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Christian Hartel

 

 

Executive Board member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed compensation1

 

430,000

 

430,000

 

430,000

 

400,000

Additional benefits2

 

52,696

 

52,696

 

52,696

 

50,492

 

 

 

 

 

 

 

 

 

Total

 

482,696

 

482,696

 

482,696

 

450,492

 

 

 

 

 

 

 

 

 

Multiyear variable compensation3

 

687,967

 

333,643

 

972,617

 

576,000

Total

 

1,170,663

 

816,339

 

1,455,313

 

1,026,492

Pension expenses4

 

207,978

 

207,978

 

207,978

 

218,784

Total compensation

 

1,378,641

 

1,024,317

 

1,663,291

 

1,245,276

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Compensation for Former Executive Board Members and Their Surviving Dependents

 

 

 

 

 

 

2018

 

2017

 

 

 

 

 

Total

 

1,963,723

 

1,995,326

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Pension Obligations for Executive Board Members

 

 

 

 

 

 

2018

 

2017

 

 

 

 

 

Pension obligations for active Executive Board members

 

 

 

 

Total

 

30,768,564

 

28,090,779

 

 

 

 

 

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

 

 

 

 

Total

 

33,981,707

 

37,590,405

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 the corresponding compensation pro rata temporis.

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 members.

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Supervisory Board Compensation

 

 

 

 

 

 

2018

 

2017

1

Fixed compensation includes the above-mentioned annual lump sum.

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.

 

 

 

 

 

Fixed compensation1,2

 

2,161,685

 

2,152,945

Variable compensation

 

 

Total

 

2,161,685

 

2,152,945

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.
Cash Flow
Cash flow represents the movement of cash and cash equivalents into or out of a business activity during a finite period. Net cash flow is the sum of cash flow from operating activities (excluding changes in advance payments received) and cash flow from long-term investing activities (before securities), including additions due to finance leases.
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 calculating ROCE. 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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