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Remuneration Report
Remuneration of the Board of Management members, which is determined by the Supervisory Board, is comprised of fixed and variable income components. Fixed components of the remuneration are comprised of a fixed salary and remuneration in kind, whereas the variable, performance-based components are comprised of bonuses and components with long-term incentive effect (stock appreciation rights). The criteria for measuring the overall remuneration include duties and services performed by the respective Board of Management member, as well as factors relating to the economic situation, the strategic five-year planning and associated targets, the sustainability of achieved results, the long-term profit outlook of the Company and international benchmark comparisons.
The fixed remuneration component is paid out monthly in the form of a salary, which is not based on performance. In addition, Board of Management members receive remuneration in kind such as the use of company cars and insurance coverage. These benefits are generally provided to all Board of Management members on an equal footing and are included in the non-performance-based remuneration.
The bonus, as a part of performance-based remuneration, is essentially based on the operating profit of the PUMA Group and is awarded on a graduated scale in accordance with the level of target achievement. An upper limit is also agreed.
The performance-based remuneration components with long-term incentive effect (stock appreciation rights) are generally provided as a supplement to the five-year plans. In this context, the number of stock appreciation rights issued is measured as a component of total remuneration. Measurement is based on the fair value of the respective stock appreciation rights at the allocation date. The possibility of a cap limit is provided as cover against unforeseen developments. Particulars concerning the parameters used for the respective programs are provided in the Notes to the Consolidated Financial Statements under No. 19.
Board of Management
In the financial year, fixed remuneration for the six members of the Board of Management (previous year; three members) amounted to € 5.2 million (previous year: € 4.3 million), and performance-based (profit-sharing bonus) remuneration amounted to € 6.2 million (previous year: € 5.3 million).
The stock appreciation rights in accordance with the Long-Term Incentive Program represent another performance-based remuneration component with long-term incentive effect. Following expense allocation to the vesting period, the newly issued options and the options issued in the previous year yield a total amount of € 1.6 million, compared to expense of € 6.8 million in the previous year. The return in 2008 resulting from valuation is due to the difference between newly issued options (expense: € 0.9 million) and the options issued in previous years (return € 2.5 million). In the financial year, a total of 85,500 options were issued to the Board of Management from the “SOP 2008” program. The fair value as at the grant date was € 49.45 per option.
In the event of premature termination of the employment relationship, a Board of Management member is paid the agreed-upon salary components up to the original end of the contract term. With respect to the salary components from the Long-Term Incentive Program, it is agreed that option rights already granted shall be paid out at a value determined in accordance with ”black-scholes” at the time of leaving the company.
The Board of Management is provided with pension commitments for which the Company took out a pension liability insurance policy. The proportion of the pension capital which is already financed through contributions to the pension liability insurance is deemed to be a vested claim. Following an addition of € 0.5 million, as of the balance sheet date this results in a pension claim of T€ 233 p.a., or one-off capital compensation in the amount of the present value upon retirement.
Pensions commitments to former members of the Board of Management amounted to € 2.0 million (previous year: € 2.0 million). They are recorded in pension provisions. No pension benefit payments have been made.
Supervisory Board
In accordance with the Articles of Association, the Supervisory Board has six members. Supervisory Board compensation includes a fixed and a performance-based component.
Fixed amounts to T€ 30.0 for each member of the Supervisory Board. The Chairman of the Supervisory Board receives twice this amount and the Deputy Chairman receives one and a half times the amount. Overall, total fixed compensation in the financial year amounted to T€ 225.0 (previous year: T€ 222.2)
Performance-based compensation amounts to € 20.00 per € 0.01 of the earnings per share as reported in the consolidated financial statements (before dilution) that exceed a minimum amount of € 16.00, the maximum amount being T€ 10.0 per year. The Chairman of the Supervisory Board receives twice this amount, and the Deputy Chairman receives one and a half times the amount. Owing to earnings per share of € 15.15 in the financial year, no performance-based compensation is paid for financial year 2008 (previous year: T€ 11.9).
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