Henkel Annual Report 2011 - Henkel AG & Co. KGaA Annual Report ...

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Group management report
Corporate governance
605,000 preferred shares. Further details in
this regard can be found on our website at
www.henkel.com/ir
In accordance with the Declaration of Compliance,
the following details are reported in relation
to notifiable shareholdings: The aggregate
holdings of the members of the Supervisory
Board and of the members of the Shareholders’
Committee exceed in each case 1 percent of the
shares issued by the company. The members of
the Management Board together hold less than
1 percent of the shares issued by the company.
The corresponding declarations of compliance
together with the reasons for deviations from
recommendations can be found on our website
at www.henkel.com/ir
II. Remuneration report
This remuneration report provides an outline of
the compensation system for the Management
Board, Henkel Management AG as the Personally
Liable Partner, the Supervisory Board and the
Shareholders’ Committee of Henkel AG & Co.
KGaA, and the Supervisory Board of Henkel Management
AG; it also explains the level and structure
of the remuneration paid.
This remuneration report takes into account
the recommendations of the German Corporate
Governance Code and contains all the disclosures
and explanations required pursuant to Section
285 sentence 1 no. 9, Section 289 (2) no. 5, Section
314 (1) no. 6 and Section 315 (2) no. 4 of the German
Commercial Code [HGB]. The associated
information has not therefore been additionally
disclosed in the notes to the consolidated financial
statements at the back of this Annual Report.
1. Remuneration of the Management Board
The remuneration system described in the following,
which meets the requirements of the Act
on the Appropriateness of Management Board
Remuneration [VorstAG] and was approved by
the 2010 Annual General Meeting of shareholders
of Henkel AG & Co. KGaA with a majority of
99.93 percent of the votes cast, applies uniformly
as from fiscal 2010 with respect to the compensation
payable to all members of the Management
Board regardless of the duration of their individual
executive contracts or previous, now superseded
regulations.
Henkel Annual Report 2011
Regulation, structure and amounts
The compensation for members of the Management
Board of Henkel Management AG is regulated
by the Supervisory Board of Henkel Management
AG in consultation with the Human
Resources Subcommittee of the Shareholders’
Committee. The Supervisory Board of Henkel
Management AG is comprised of three members
of the Shareholders’ Committee.
The structure and amounts of the emoluments
accruing to the Management Board are aligned to
the size and international activities of the corporation,
its economic and financial position, its
performance and future prospects, the normal
levels of remuneration encountered in comparable
companies and also the general compensation
structure within the Henkel organization.
The compensation package is further determined
on the basis of the functions, responsibilities and
performance of the individual executives and the
performance of the Management Board as a
whole. The variable annual remuneration components
have been devised such that they take
into account both positive and negative developments.
The overall remuneration mix is designed
to be internationally competitive while also providing
an incentive for ongoing business development
and a sustainable increase in shareholder
value within a dynamic operating environment.
The Supervisory Board of Henkel Management
AG regularly reviews the compensation arrangements
applied to the Management Board.
The remuneration of the members of the Management
Board is based on a so-called target
compensation amount (total remunerations excluding
other ancillary emoluments and pension
entitlements) which accrues to a member of the
Management Board in the event of 100 percent
achievement of the underlying performance targets,
this “at-target” amount coming in at around
2.1 million euros in total per financial year, assuming
reasonable similarity of the range of responsibilities
involved. Of this target compensation,
around 30 percent is in fixed salary, some
35 percent is performance-related over the short
term and about 35 percent is performance-related
over the long term. In addition, the Supervisory
Board may, at its discretion, grant a special payment
in recognition of exceptional achievements.