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AUTO1 Group SE — Remuneration Information 2025
Jun 4, 2025
720_cgr_2025-06-03_9cda8c92-591b-4452-9eae-95fa96424809.pdf
Remuneration Information
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AUTO1 | GROUP
Remuneration system for the members of the Management Board
The remuneration system for the Management Board (Remuneration System 2025) described in more detail below was approved by the Supervisory Board in April 2025 and submitted to the Company's Annual General Meeting on June 4, 2025 for approval. The Company's Annual General Meeting on June 4, 2025, approved the Remuneration System 2025 in accordance with Section 120a para. 1 of the German Stock Corporation Act (AktG) with a majority of 73.940 % of the valid votes cast under agenda item 6. It will be used by the Supervisory Board as the basis for all subsequent remuneration arrangements.
The Remuneration System 2025 amends and updates the previous remuneration system approved by the Annual General Meeting on June 7, 2023 (Remuneration System 2023) to integrate the planned Long Term Incentive Plan 2025 ("LTIP 2025"), which is intended as long-term remuneration for a new five-year contract term for the Management Board member Christian Bertermann from 2026.
Like the Long Term Incentive Plan 2020, the long-term variable remuneration component for the current five-year appointment period of Management Board member Christian Bertermann, the LTIP 2025 is also designed as an entrepreneurial remuneration and is intended to create an incentive to achieve continued strong corporate growth and high shareholder returns. The LTIP 2025 options in turn have a high risk/return profile due to the exercise conditions, which are linked to an ambitious increase in the Company's market capitalization, among other things, via a corresponding share price hurdle. The aforementioned share price hurdle, measured as the volume-weighted average price of the Company's shares over three months ("3-Month Average Price"), is EUR 75.00 and must be reached for the first time by the end of 2030 at the latest. Based on the current 3-Month Average Price of the Company's shares of EUR 20.02 for the first quarter of 2025, this corresponds to a share price increase of around 375%. For further details on the LTIP 2025, please refer to the information under agenda item 7 of the invitation to the Company's Annual General Meeting on June 4, 2025.
Due to its high risk/return profile and the associated high maximum achievable remuneration volume in the event of success, the planned LTIP 2025 – like the LTIP 2020 – requires inclusion of corresponding special provisions in the section of the remuneration system on maximum remuneration. Otherwise, the content of the remuneration system remains unchanged.
A. Main features of the remuneration system and contribution to the promotion of the business strategy and the long-term development of the Company
The aim of the remuneration system for the Management Board is to remunerate the members of the Management Board appropriately in accordance with their duties and responsibilities and to take into account the performance of each member of the Management Board and the success of the Company. Accordingly, the remuneration system includes variable remuneration components in addition to fixed remuneration components.
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The corporate strategy is aimed at dynamic and long-term profitable growth as well as a sustainable and long-term increase in the value of the Company. The structure of the remuneration system for the Management Board of AUTO1 Group SE is derived from this objective. The variable remuneration, therefore, depends both on performance parameters that are geared towards the long-term growth of the business and/or earnings and/or key prerequisites for this, as well as on the long-term performance of the Company's share price, which directly reflects the performance of the Company. The remuneration system, therefore, provides incentives for the long-term and sustainable positive development of the Company.
The Company is also aware of the importance of ecologically sustainable management (environment), social responsibility and the principles of good corporate governance (together "ESG"). In the view of the Supervisory Board, however, the achievement of corresponding ESG targets does not necessarily need to be anchored in the Management Board's remuneration. The remuneration system, therefore, does not stipulate the additional use of non-financial performance parameters for variable remuneration, but does not exclude their use either. The Supervisory Board will regularly review this issue and reserves the right to also use non-financial performance parameters for variable remuneration in the future, which are based on the Company's respective ESG targets.
The remuneration system for the members of the Management Board is simple, clear and comprehensible and complies with the requirements of the German Stock Corporation Act. Insofar as it deviates from the recommendations of the German Corporate Governance Code ("GCGC"), this is explained and justified in the declaration of compliance in accordance with the statutory requirements.
B. The remuneration system in detail
I. Remuneration components
1. Overview of the individual remuneration components
The remuneration is made up of fixed and variable components. The fixed components are the annual fixed remuneration and fringe benefits. The variable remuneration consists in each case of share-based remuneration with a multi-year assessment basis. In addition, short-term variable remuneration with a one-year assessment basis can also be agreed with the respective Management Board member.
In addition, non-recurring bonus payments may be granted by the Supervisory Board in individual cases for exceptional performance.
The Company's pension benefits for members of the Management Board are not provided for in the remuneration system.
2. Fixed remuneration components
(a) Annual fixed remuneration
The annual fixed remuneration is a cash payment relating to the financial year, the amount of which is based in particular on the duties and responsibilities of the respective member of the Management Board. The annual fixed remuneration is paid in twelve monthly installments at the end of each month. If a
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member of the Management Board joins or leaves the Company during the year, the fixed salary is paid on a pro rata basis.
In the event of illness or other cases of inability to work through no fault of one's own, the fixed salary may continue to be paid for a period determined by the Supervisory Board. The same applies if the Management Board member dies during the term of the contract.
(b) Fringe benefits
In addition to the annual fixed remuneration, the members of the Management Board receive fringe benefits in the form of benefits in kind and other financial benefits.
As a standard benefit, the members of the Management Board are each provided with a Company car, which can also be used privately. In addition, the Company has taken out directors' and officers' liability insurance (D&O insurance) for the benefit of the members of the Management Board.
The Supervisory Board may decide that suitable additional benefits in kind (in particular in the form of insurance, security services and preventive medical services) may also be provided or the corresponding costs reimbursed if required.
New members of the Management Board may also be granted compensation for remuneration/pension entitlements that they lose due to their move to the Company. Furthermore, relocation costs and, for a transitional period to be determined by the Supervisory Board, other costs associated with the move to the Company or a move to another company location (e.g., costs for trips/flights home including ancillary costs and for double housekeeping) may also be reimbursed. For members of the Management Board residing outside Germany, the Company may also assume the costs associated with this on a permanent basis (in particular, costs for trips/flights home, including ancillary costs and double housekeeping). Such benefits are intended to ensure that the Company can attract the best possible candidates for a position on the Management Board.
- Variable remuneration components
3.1 Short-term variable remuneration (annual bonus)
In addition to the variable remuneration with a multi-year assessment basis, members of the Management Board may also be granted an entitlement to short-term variable remuneration with a one-year assessment basis for each full financial year of their contract term (hereinafter "Annual Bonus").
The amount of the Annual Bonus depends on the achievement of the relevant performance targets in the relevant financial year on the basis of a target amount set individually for each member of the Management Board.
(a) Performance parameters
The Supervisory Board determines one or more performance parameters for the Annual Bonus. As a rule, the Supervisory Board will use key financial indicators, the development of which the Company reports on at least once a year as part of its periodic financial reporting and which represent key control elements for the growth of the Company's business volume and/or earnings. These may also be performance parameters relating to individual divisions. In particular, sales or the number of units sold can be used as
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parameters for measuring the development of business volume, while earnings before interest, taxes, depreciation and amortization (EBITDA) or the contribution margin per unit sold can be used as parameters for measuring the development of earnings. In addition or instead, other key prerequisites for long-term and sustainable growth in the Company's business volume and/or earnings, such as securing favorable financing conditions, can also be used as performance parameters. By aligning the performance parameters in this way, the Annual Bonus serves to implement the Company's overarching strategic objective.
If necessary, non-financial performance parameters that measure the implementation of ESG targets included in the corporate strategy can also be used in addition or instead by the Supervisory Board. The Annual Bonus also serves the Company's overarching strategic objectives through such performance parameters.
If several performance parameters are used, the Supervisory Board also determines their relative weighting; this determines the proportion of the Annual Bonus for which the performance measurement is to be based on the relevant performance parameter. Instead, however, a cumulative performance measurement based on several performance parameters can also be provided for.
(b) Target values and determination of target achievement
The Supervisory Board sets a target value for each performance parameter for the respective financial year.
When using financial indicators from periodic financial reporting as performance parameters, the target achievement or the degree of target achievement is determined by comparing the target values with the corresponding actual values resulting from the audited and approved consolidated financial statements of the Company for the relevant financial year. The Supervisory Board can make adjustments to the respective actual values to take into account non-recurring, extraordinary circumstances and/or non-operating effects. For other performance parameters, the Supervisory Board also determines the benchmark used to determine the degree of target achievement when setting the respective targets.
(c) Calculation of the payout amount
The Supervisory Board also assigns a target achievement curve to each performance parameter, which is used to determine the payout amount on the basis of the individual target amount depending on the weighting of the respective performance parameter and the associated degree of target achievement. In particular, the target achievement curve may stipulate that the payout may exceed or fall below the target amount or the share of the target amount attributable to the respective performance parameter according to its weighting, depending on the degree of target achievement; if it is also possible to exceed the target amount, the Supervisory Board also sets a maximum amount (cap). Instead, the target achievement curve can also only provide for minimum hurdles that must be reached for a payout to be made, while a further increase in target achievement no longer leads to an increase in the payout.
(d) Payment and processing
The Annual Bonus is calculated and paid out after the end of the financial year for which it is granted and approval of the associated consolidated financial statements. The Supervisory Board may also determine another suitable date for payment after the end of the financial year in question.
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Instead of a cash payment, the Company may also provide for the Annual Bonus or parts of it to be settled in shares of the Company. In the case of settlement in shares, the payment claim is converted into a corresponding number of shares that are issued or transferred to the beneficiary based on the market price of the Company's share.
In the event of joining or leaving the Company during the year or in the event of a financial year that is shorter than a calendar year, the Annual Bonus is reduced pro rata temporis. Furthermore, a reduction may also be provided for periods of absence during which there is no entitlement to continued payment of the fixed remuneration. The entitlement to an Annual Bonus can also be limited to individual financial years.
3.2 Variable remuneration with a multi-year assessment basis
The long-term variable remuneration is structured as share-based variable remuneration with a multi-year assessment basis in the form of share options, the value of which is linked to the performance of the Company's share price ("Options").
(a) Allocation; vesting (time vesting)
For this purpose, the respective Management Board member receives a number of Options individually determined by the Supervisory Board by way of a one-off allocation for the entire term of the contract.
In addition to fulfilling the other exercise requirements, the Options must be earned by the respective Management Board member over the term of appointment or contract through continued membership of the Management Board (so-called time vesting) with the result that in the event of premature leaving, all or part of the share options granted are forfeited. The details are determined by the Supervisory Board.
(b) Type of Options
The Options can be structured as virtual share options or – if a corresponding authorization is granted by the Annual General Meeting – as real share options.
Virtual share options only grant the beneficiary a right to payment of the settlement value of the relevant options in cash upon exercise. However, they will each be provided with a settlement option on the part of the Company, on the basis of which the Company can choose to settle in shares instead of cash.
Real share options can only be issued on the basis of a corresponding authorization by the Annual General Meeting. They grant the beneficiary, upon exercise, a separate subscription right to shares in the Company. However, the relevant options will be provided with a settlement option on the part of the Company, on the basis of which the Company can also choose to pay out in cash instead of delivering shares.
(c) Exercise price; price hurdle
The Supervisory Board determines the corresponding exercise price when the Options are issued. The exercise price may correspond to the market price when the Options are issued or may also include a premium or discount compared to this price. Furthermore, several tranches of share options with different exercise prices can be issued to the respective Management Board member; this allows the risk/return profile associated with the Options to be individually managed.
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In addition to the exercise price, the Supervisory Board can also set a price hurdle above the exercise price, which must be exceeded for the Options to be exercised. As the share price directly reflects the valuation of the Company on the capital market, the payment of variable remuneration can be made dependent on a corresponding minimum increase in the value of the Company, as can an exercise price that exceeds the current share price.
(d) Performance measurement based on performance parameters
The exercise of the Options depends not only on the price performance but also on a performance measurement based on one or more performance parameters.
Performance parameters
The corresponding performance parameters are determined by the Supervisory Board. As a rule, the Supervisory Board will use key financial indicators on the development of which the Company reports at least once a year as part of its periodic financial reporting and which represent key control elements for the growth of the Company's business volume and/or earnings. These may also be performance parameters relating to individual divisions. In particular, sales or the number of units sold can be used as parameters for measuring the development of the business volume, while earnings before interest, taxes, depreciation and amortization (EBITDA) or the contribution margin per unit sold can be used as parameters for measuring the development of earnings. In addition or instead, other key prerequisites for long-term and sustainable growth in the Company's business volume and/or earnings, such as securing favorable financing conditions, can also be used as performance parameters. By aligning the performance parameters in this way, the variable remuneration serves to implement the Company's overarching strategic objectives. If necessary, the Supervisory Board can also use non-financial performance parameters that measure the implementation of ESG targets included in the corporate strategy.
If several performance parameters are used, the Supervisory Board also determines their relative weighting; this determines the proportion of the Options for which the performance measurement is to be carried out using the relevant performance parameter. Instead, however, a cumulative performance measurement based on several performance parameters can also be provided for.
Performance period
Performance is generally measured over a measurement period ("Performance Period") of at least four financial years of the Company, whereby the Performance Period may also begin and/or end during the year. For a maximum of one third of the Options granted to the respective Management Board member, a shorter Performance Period of at least two financial years may be provided for instead.
Target values and determination of target achievement
The Supervisory Board sets corresponding target values for each performance parameter. These are generally set in advance for the entire Performance Period; however, annual targets can also be set for individual or all performance parameters for the respective financial year.
The target achievement or the degree of target achievement is determined after the end of the Performance Period. The target achievement or the degree of target achievement is determined for financial performance parameters by comparing the target values with the corresponding actual values
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resulting from the audited and approved consolidated financial statements of the Company for the financial year in question. The Supervisory Board can make adjustments to the respective actual values to take into account non-recurring, extraordinary circumstances and/or non-operating effects. In the case of the additional use of non-financial performance parameters, the Supervisory Board also determines the benchmark used to determine the degree of target achievement when setting the target values.
Expiry of Options if targets are not met
The target values can be set by the Supervisory Board as minimum hurdles or as a 100% target. If structured as a minimum hurdle, the achievement of the target value is a prerequisite for exercising the proportion of the Options that is attributable to the associated performance parameter according to its weighting; if the target value is not achieved, the Options in question lapse in their entirety. In the case of a 100% target, the Supervisory Board also defines a target achievement curve, which is used to determine, depending on the degree of target achievement, what proportion of the Options will lapse if the degree of target achievement is less than 100%.
(e) Waiting and exercise periods
For the first-time exercise of Options, the Supervisory Board stipulates a waiting period of at least four years from the issue or granting of the Options. For a maximum of one third of the Options granted to the respective Management Board member and insofar as virtual share options are concerned, a shorter waiting period may be stipulated instead, which, however, does not end before the end of the associated Performance Period.
The exercise period for Options is up to four years from the end of the relevant waiting period. The Supervisory Board can restrict the exercise of Options within the exercise period to exercise windows or dates determined by the Supervisory Board and determine further blocking periods for the exercise of Options. Options not exercised at the end of the exercise period expire.
(f) Settlement; Cap
The settlement value of an Option corresponds to the difference between the relevant market price of the Company's share when the Option is exercised and the exercise price; however, it is limited to a maximum amount ("Cap") to be determined by the Supervisory Board. The relevant market price of the Company's share when the Option is exercised is calculated as a weighted three-month average price in order to eliminate short-term price fluctuations.
By linking the settlement value to the share market price on exercise and the planned waiting period of several years for exercising the Option, the variable remuneration is thus geared towards a long-term increase in the value of the Company as a central component of the corporate strategy.
In the case of settlement in shares, the settlement value of the exercised Options is converted into a corresponding number of shares, which are issued or transferred to the beneficiary, based on the market price of the Company's share. No additional holding periods are provided for these shares after exercising the Option.
In the case of cash settlement, the settlement value of the exercised Options is paid out to the beneficiary in cash after the Option has been exercised.
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The taxes and duties arising from the exercise or settlement of the Option shall be borne by the beneficiary.
(g) Options for reducing or reclaiming variable remuneration components (malus/claw-back)
The remuneration system stipulates that the Company can reduce variable remuneration components or demand a refund in the following cases:
Correction of the consolidated financial statements
If the determination of the degree of target achievement based on performance parameters is based on audited and approved consolidated financial statements that were objectively incorrect and are subsequently corrected in accordance with the relevant accounting regulations, the Supervisory Board is entitled to recalculate the degree of target achievement on the basis of the corrected figures. In the case of the Annual Bonus, the payment claim is then reduced accordingly; if the Annual Bonus has already been settled, the Company may be required to return all or part of the economic benefits gained from the settlement. If, in the case of variable remuneration with a multi-year assessment basis, the redetermination of target achievement leads to an (additional) forfeiture of Options, this must be taken into account accordingly with regard to Options that have not yet been exercised; in the case of Options that have already been exercised, they may also be offset in full or in part against Options that have not yet been exercised and are not affected by the correction, or full or partial restitution of the economic benefits obtained from the settlement may be demanded. The Supervisory Board determines the details, including the corresponding deadlines for correction and restitution.
Premature termination of the Management Board position for good cause
If the appointment of a member of the Management Board is terminated prematurely by the Company for reasons that also constitute good cause for extraordinary termination of the employment relationship by the Company in accordance with Section 626 of the German Civil Code (BGB), any Annual Bonuses and/or Options of the Management Board member concerned that have not yet been settled and have already been earned for the purposes of time vesting shall also expire in full or in part. The Supervisory Board shall determine the details.
The assertion of claims for damages by the Company in accordance with Section 93 of the German Stock Corporation Act (AktG) remains unaffected.
4. Other remuneration components
The remuneration system provides for the Supervisory Board to grant additional, non-recurring bonus payments for special performance or special commitment at its reasonable discretion; however, the member of the Management Board has no contractual entitlement to the granting of such a bonus.
II. Total target remuneration; ratio of fixed and variable remuneration components
The Supervisory Board determines a specific total target remuneration for each individual member of the Management Board in accordance with his/her area of duties and responsibilities. The total target remuneration relates to a full financial year and is made up of the sum of all remuneration components relevant to the total remuneration that are granted for the financial year in question, regardless of when
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they are paid out. In the case of benefits in kind promised as fringe benefits, the relevant value for wage tax purposes is applied. The D&O insurance policy taken out by the Company for the benefit of the members of the Management Board is not taken into account separately, as this is not a remuneration benefit in the narrower sense. For the Annual Bonus, the payment entitlement is recognized at 100% target achievement. For the Options to be granted as part of the variable remuneration with a multi-year assessment basis, the allocation value attributable to each year of the associated appointment period is recognized.
The relative share of the fixed annual remuneration in the total target remuneration is generally between 5% and 40% for each Management Board member, the relative share of fringe benefits is up to 10% and the relative share of short- and long-term variable remuneration components is between 60% and 95%. Within the variable remuneration components, the proportion of variable target remuneration with an assessment basis of at least four years is higher than the proportion of the Annual Bonus. In the case of fringe benefits granted on a one-off basis or for a limited period, the above relative shares of the individual remuneration components in the total target remuneration can also be deviated from for individual financial years.
III. Maximum remuneration for individual members of the Management Board
The total remuneration granted for a financial year, consisting of a fixed salary including fringe benefits and variable remuneration components, is limited to a maximum gross amount of EUR 20 million for each member of the Management Board, irrespective of whether payment is made in the financial year in question or at another time. The maximum remuneration takes into account the maximum possible non-performance-related and variable remuneration components. The remuneration actually promised or paid may therefore be (possibly significantly) lower.
Benefits in kind granted as fringe benefits are recognized at their relevant wage tax value for the purposes of maximum remuneration. With regard to Options granted as variable remuneration, the maximum settlement value attributable to each year of the appointment period is recognized as part of the maximum remuneration.
In addition to the limitation of the settlement value of the Options granted by the above-mentioned maximum remuneration, the grant value of the Options granted to the respective Management Board member, pro rata to each year of the appointment period, may not exceed EUR 5 million gross at the time they are granted.
In deviation from the maximum remuneration of EUR 20 million gross per financial year set out above, with regard to the LTIP 2020 and the LTIP 2025, the following caps apply to Management Board member Christian Bertermann for financial years for which the long-term variable remuneration granted by the Company consists exclusively of options under the LTIP 2020 (financial years 2021 to 2025) or exclusively of options under the LTIP 2025 (intended for financial years 2026 to 2030): The maximum gross remuneration for the respective financial year amounts to EUR 181 million in each case. Taking into account the maximum settlement value of the associated options defined for the LTIP 2020 and LTIP 2025, a partial amount of EUR 179 million gross is attributable to the maximum settlement value of the LTIP 2020 and LTIP 2025 options granted for the financial year in question. The remaining partial amount of
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EUR 2 million gross constitutes the maximum remuneration for other remuneration components granted for the financial year in question.
However, the separate cap of EUR 5 million gross on the allocation value of Options granted for each year of the appointment period also applies to options under LTIP 2020 and LTIP 2025.
The above special provisions for the LTIP 2020 and LTIP 2025 take into account the high risk/return profile of the respective plan. This also applies, in particular, to the planned new LTIP 2025: the options under this plan can only be exercised if the Company's share price (measured as a 3-Month Average Price and therefore not just in the short term) is increased to at least EUR 75.00 for the first time by the end of 2030 at the latest. Compared to the current 3-Month Average Price of EUR 20.02 for the first quarter of 2025, this corresponds to an increase in the share price of around 375%. The maximum settlement value of the LTIP 2025 options on which this special provision is based will only be reached at an exercise price (again measured as a 3-Month Average Price) of EUR 144.30. This would correspond to an increase of around 721% in the current 3-Month Average Price for the first quarter of 2025 of EUR 20.02.
IV. Remuneration-related legal transactions
- Terms and conditions for the termination of remuneration-related legal transactions
The employment contracts of the members of the Management Board are concluded for the duration of their appointment. Initial appointments are made for a maximum of three years, while appointments can be extended for up to five years.
In view of their fixed term, there is no provision for ordinary termination of the employment contracts. However, in the event that a member of the Management Board becomes permanently incapacitated for work during the term of the contract, provision can be made for the employment contract to end automatically at the end of the quarter in which the permanent incapacity for work is established.
Otherwise, the respective employment contract can only be terminated before the end of its term by mutual agreement by means of a termination agreement or by extraordinary termination for good cause. Extraordinary termination for good cause by the Company can also occur in particular in the event of the revocation of the appointment of a Management Board member by the Supervisory Board for good cause in accordance with Section 84 para. 3 AktG. In this case, the statutory notice periods pursuant to Section 622 BGB apply to the termination, unless there is also good cause for the Company to terminate the employment contract without notice pursuant to Section 626 BGB.
Extraordinary termination for good cause by the Management Board member can be provided for in particular in the event that (i) the agreed remuneration or individual components do not cover the entire term of the contract or the employment contract contains a reservation of adjustment and (ii) no agreement is reached on a follow-up arrangement or adjustment within an agreed period. The Supervisory Board determines the details, including the notice period.
- Commitments to severance payments
The remuneration system provides for a Management Board member to receive a severance payment if the Company terminates the employment contract for good cause in accordance with Section 84 para. 3
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AktG without there also being good cause for the Company to terminate the employment contract without notice in accordance with Section 626 BGB. The severance payment to be stipulated in the employment contract for this purpose may not exceed two years' remuneration, but may not exceed the remuneration for the remaining term of the employment contract; however, the Supervisory Board may also stipulate a lower severance payment and make lump-sum payments and/or reductions in the calculation.
In other cases, the remuneration system does not provide for any severance payments agreed in advance. The Company's right to agree severance payments in the event of premature termination of a Management Board member's contract by mutual agreement remains unaffected.
For the purposes of the determined maximum remuneration, severance payments are to be allocated (pro rata, if applicable) to the financial year for which they are granted; this applies regardless of whether they are paid out or accrued in the financial year in question or at another time.
- Non-compete clause
The Management Board employment contracts each provide for a contractual non-competition clause for the duration of the employment contract.
In addition, a post-contractual non-competition clause can be agreed with members of the Management Board for a period of up to two years. The compensation for non-competition to be granted for this purpose may not exceed 75% of the last annual remuneration granted in relation to one year, whereby the individual remuneration components can also be set at a flat rate. The Supervisory Board may also stipulate that the compensation for non-competition relates exclusively to the fixed remuneration; in such a case, the compensation for non-competition may also amount to up to 100% of the last fixed remuneration received in relation to one year. Any severance payment to be made to the Management Board member in connection with the termination of the employment contract shall be offset in full against any compensation for non-competition to be paid for the relevant period.
V. Procedure for determining, implementing and reviewing the remuneration system
The Management Board remuneration system is determined by the Supervisory Board in accordance with legal requirements and is regularly reviewed by the Supervisory Board. The Supervisory Board is supported in this by its Presidential and Nomination Committee. The Presidential and Nomination Committee of the Supervisory Board prepares the decision of the entire Supervisory Board and submits corresponding proposals, which the Supervisory Board then discusses and resolves on.
In particular, the Supervisory Board also reviews the appropriateness of the remuneration compared to the Management Board remuneration within a peer group (horizontal appropriateness). The peer group is determined by the Supervisory Board and comprises comparable domestic and foreign companies that are comparable to the Company in terms of sector, size, turnover and/or growth dynamics.
When determining the remuneration system and its implementation, the Supervisory Board also takes into account the remuneration of senior management and the rest of the workforce in relation to the German Group companies (vertical appropriateness) and compares their respective remuneration with the remuneration of the Management Board. For these purposes, senior management is defined by the Supervisory Board as the group of managers at the first management level below the Management Board.
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The Supervisory Board considers not only the current remuneration ratio, but also how this develops over time. This remuneration system is also based on a review of vertical appropriateness in accordance with these principles.
If necessary, the Supervisory Board commissions an external remuneration consultant to review the vertical and/or horizontal appropriateness. When appointing external remuneration consultants, care is taken to ensure their independence.
Any conflict of interest in the determination, implementation and review of the remuneration system is treated by the Supervisory Board in the same way as other conflicts of interest in the person of a Supervisory Board member. The Supervisory Board member in question must therefore disclose a conflict of interest and will not participate in the resolution or discussions. Early disclosure of any conflicts of interest ensures that the decisions of the Supervisory Board are not influenced by improper considerations.
The remuneration system adopted by the Supervisory Board is submitted to the Annual General Meeting for approval.
The Presidential and Nomination Committee of the Supervisory Board prepares the regular review of the remuneration system for members of the Management Board. If necessary, it recommends changes to the Supervisory Board. In the event of significant changes, but at least every four years, the remuneration system is resubmitted to the Annual General Meeting for approval.
If the Annual General Meeting does not approve the remuneration system put to the vote, a revised remuneration system will be presented in accordance with the statutory requirements at the following Annual General Meeting at the latest.
C. Temporary deviations from the remuneration system
Pursuant to Section 87a para. 2 sentence 2 AktG, the Supervisory Board is entitled to temporarily deviate from the remuneration system if this is necessary in the interests of the long-term well-being of the Company. A Supervisory Board resolution is required for a deviation, in which the reasons, the manner and the intended period of the deviation are to be explained in each individual case. Deviations from the remuneration system for all remuneration components are possible on the basis of such a resolution. However, a deviation from the specified maximum remuneration is excluded.