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Annual Report 2008 - AMG Advanced Metallurgical Group NV

Annual Report 2008 - AMG Advanced Metallurgical Group NV

last year of this

last year of this transition period and the remuneration of the members of the Management Board for 2008 was based on the transitional remuneration policy. A general overview of this transitional remuneration policy and the remuneration of the Management Board for 2008 is provided below. General Overview of Remuneration Policy for Transition Period The transitional remuneration policy provided that the amount and structure of the Management Board’s remuneration should enable qualified and expert managers to be recruited and retained in an international labor market. The transitional policy took into account for each Management Board member aspects such as sound industry practice, individual country pay practices and job market and geographic differences. In addition, the transitional remuneration policy for the Management Board was designed to strengthen the commitment of the Management Board members to AMG and its objectives. During the transition period the remuneration package of the Management Board members consisted of three components: • Base Salary • Annual Bonus – cash bonus based on individual performance against predetermined criteria, with a range from 0% to 100% of Base Salary • Long-term incentive – stock options with a vesting scheme of 25% per year starting one year after the grant date. The maximum number of shares subject to the stock options granted to the Management Board could not exceed 10% of the issued share capital at the time of grant. The terms of employment contracts between AMG and the members of the Management Board were to be between two and four years, unless existing contractual agreements contained different terms. Severance payments were to be limited to between two and four years’ Base Salary, unless existing contractual agreements contained different terms or specific circumstances dictated otherwise. The transitional remuneration policy and its remuneration packages did not fully comply with the existing Dutch Corporate Governance Code (dated December 9, 2003). The new remuneration policy for the Management Board, as explained below, will be in compliance with the revised Dutch Corporate Governance Code, unless exceptional circumstances apply, in which case an explanation will be provided. Management Board Remuneration for 2008 For 2008 the costs incurred with respect to the Management Board’s remuneration were the following: Present value Retirement For the year ended Option of Option benefits Other December 31, 2008 Base Salary Annual Bonus Compensation Compensation 1 & pensions remuneration Dr. Heinz Schimmelbusch $ 1,118,250 $ 1,118,250 $ 2,039,659 $ 398,131 $ 1,270,379 $ 55,953 Arthur Spector $ 994,600 $ 845,410 $ 1,793,932 $ 345,810 $ 1,399,463 $ 0 Eric Jackson $ 647,300 $ 485,475 $ 891,911 $ 170,727 $ 159,396 $ 40,117 Dr. Reinhard Walter $ 699,675 $ 524,756 $ 891,911 $ 170,727 $ 51,520 $ 27,922 William J. Levy $ 507,300 $ 380,475 $ 881,800 $ 166,452 $ 29,500 $ 29,524 1 Present value based upon value of AMG stock at December 31, 2008. The remuneration contracts of the Management Board members were with more than one company now comprising AMG. The remuneration levels in the table above show the aggregate amounts of the contracts per Management Board member, except for Dr. Schimmelbusch and Mr. Spector. Dr. Schimmelbusch and Mr. Spector also received remuneration from AMG’s subsidiary Timminco for their work for that company as Chief Executive Officer & Chairman of the Board and Vice Chairman of the Board of Directors respectively. Dr. Schimmelbusch received for his work as Chief Executive Officer & Chairman of Timminco during 2008 total compensation of $893,450, Mr. Spector received for his work as 48 Report of the Supervisory Board

Vice Chairman of the Board of Directors total compensation of $ 62,930. In addition, Dr. Schimmelbusch received compensation of $35,057 as Chairman of the Supervisory Board of AMG’s subsidiary Graphit Kropfmühl AG. A detailed explanation of the remuneration paid in 2008 is provided in Note 38 to the Consolidated Financial Statements. Base Salary The Base Salaries of the Management Board members were, consistent with 2007, determined by their existing remuneration contracts. Annual Bonus In this transitional year, the Annual Bonuses were determined on a discretionary basis by the Supervisory Board. Each Management Board member was given a target for 2008 expressed as a percentage of Base Salary. The target percentages ranged from 75% of Base Salary for the Management Board members to 100% of Base Salary for the CEO. Based on the assessment and performance of AMG in 2008, as well as individual performance, the Supervisory Board determined that the Management Board members should receive their target bonus levels. The table below shows the target and paid out Annual Bonus as a percentage of Base Salary per Management Board member. Target Payout For the year ended December 31, 2008 (as a % of Base Salary) (as a % of Base Salary) Dr. Heinz Schimmelbusch 100% 100% Arthur Spector 85% 85% Eric Jackson 75% 75% Dr. Reinhard Walter 75% 75% William J. Levy 75% 75% Long-term incentives Each member of the Management Board participates in the AMG Option Plan introduced in 2007. For the transitional period no performance criteria were used for the granting or vesting of options. The new remuneration policy for the Management Board, to be introduced in 2009, will include performance criteria with respect to the AMG Option Plan. The table below provides an overview of the options granted under the AMG Option Plan during 2007 and 2008. All options granted are unconditional and have a vesting scheme of 25% per year starting one year after the grant date. AMG Option Plan Non-vested options under the plan Vested options granted in 2008 all currency amounts in Euros Present Exercise value price Share price For the year ended Date of # of at date at date Vesting # of Value at at vesting December 31, 2008 Year grant options of grant 1 of grant scheme options vesting date date Dr. Heinz 2007 11.7.2007 225,000 2,025,000 24.00 25% per year 56,250 1,447,313 49,73 Schimmelbusch 2008 12.11.2008 133,333 846,665 12.70 25% per year n/a n/a n/a Arthur Spector 2007 11.7.2007 200,000 1,800,000 24.00 25% per year 50,000 1,286,500 49,73 2008 12.11.2008 93,333 592,665 12.70 25% per year n/a n/a n/a Eric Jackson 2007 11.7.2007 100,000 900,000 24.00 25% per year 25,000 643,250 49,73 2008 12.11.2008 40,000 254,000 12.70 25% per year n/a n/a n/a Dr. Reinhard Walter 2007 11.7.2007 100,000 900,000 24.00 25% per year 25,000 643,250 49,73 2008 12.11.2008 40,000 254,000 12.70 25% per year n/a n/a n/a William J. Levy 2007 11.7.2007 100,000 900,000 24.00 25% per year 25,000 643,250 49,73 2008 12.11.2008 26,667 169,336 12.70 25% per year n/a n/a n/a 1 Present value of the stock options under the AMG Option Plan is calculated as 50% of the exercise price at the date of grant. Report of the Supervisory Board 49

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