Payment Report

Performance-related remuneration of the Executive Board

The structure of the remuneration system for the Executive Board is regularly reviewed. In accordance with the provisions of the German Act on the Appropriateness of Management Board Remuneration (VorStAG), in 2009, the Supervisory Board consulted and decided upon Executive Board remuneration for 2009 and 2010. Accordingly, responsibility for this was transferred from the Working Committee, which now prepares the relevant decisions, to the Supervisory Board plenum.

The remuneration received by Executive Board members is composed of fixed and performance-related (variable) components. The fixed components comprise a fixed salary and non-cash benefits. The performance-related components are based directly on the Company’s performance, measured by EBITDA and ROCE, and include additional long-term incentive components. They comprise rights to subscribe for shares in accordance with the Company’s long-term incentive program. Moreover, pension commitments have been made to members of the Executive Board and former members of the Executive Board. This remuneration structure largely fulfills the objectives of the provisions of the law. Irrespective of that and of the fact that all the Executive Board members’ contracts of service still provide for a relatively long period of office, the Supervisory Board will deal in 2010 with the details of future remuneration systems.

The criteria for determining the appropriateness of this remuneration are in particular the duties of the respective Executive Board members and their personal performance as determined within the discretion permitted by company law and in consideration of standard market practices.

The fixed salary is paid monthly as basic, non-performance-related remuneration. Until further notice, the members of the Executive Board have waived 10% of their fixed salaries. The Supervisory Board approved this waiver in its meeting on December 9, 2009.

Executive Board members additionally receive non-cash benefits, in particular compensation for maintaining two households and a company car. These benefits are generally available to all Executive Board members equally, but the value varies depending on each member’s personal situation.

The variable components are based on earnings before interest, taxes, depreciation and amortization (EBITDA), return on capital employed (ROCE) as well as the achievement of personal targets and the performance of the individual Executive Board members.

In 2009, variable components accounted for approximately 42.7% of total income.

The structure of the remuneration system complies with the recommendations of the German Corporate Governance Code.

This remuneration system also applies to Mr. Pawel Wyrzykowski, who was appointed to the Executive Board effective January 1, 2009.

Dr. Robert Hopperdietzel stepped down from the Company’s Executive Board of his own accord with effect as of November 15, 2009. Mr. Michael Ernst also stepped down from the Executive Board of his own accord effective at the end of his contractual period of office on January 31, 2009.

Executive Board remuneration in 2009

The total remuneration paid to the Executive Board (fixed salary plus non-cash benefits plus bonuses) totaled 3,713 thousand euros in 2009 (2008: 3,848 thousand euros). This remuneration for 2009 includes a fixed component including non-cash benefits of 1,995 thousand euros (2008: 1,981 thousand euros). A remuneration review resulted in an adjustment of the target management bonus of Mr. Overdiek as of January 1, 2009. It also took into consideration the contractually fixed commitment of a guaranteed performance-related component for Mr. Graeve and Mr. Wyrzykowski. This guarantee applies only to the first full fiscal year of their current contracts of service.

Provisions for pensions for Executive Board members, former Executive Board members and their surviving dependents amounted to 6,968 thousand euros (2008: 6,123 thousand euros). In 2009, remuneration and pensions were paid to former members of the Executive Board in a total amount of 240 thousand euros (2008: 214 thousand euros).

The following table shows the fixed and performance-related (variable) remuneration components of each individual Executive Board member:

In connection with his premature departure from the Company and under the agreement terminating his contract of service, Dr. Robert Hopperdietzel also received an amount of 2.75 million euros as onetime compensation for his material contractual claims until the expiry of his original contract period.

An arrangement was made with the Chairman of the Executive Board for the eventuality of a change of control, allowing him the extraordinary right of termination. Beyond the contractual obligations connected with the continuation of the contract, the arrangement does not provide for any additional severance compensation. Furthermore, a stay-on bonus was agreed with the Chairman of the Executive Board with the objective of retaining him at the Company until the expiry of his contract of service.