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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS
→ GROUP MANAGEMENT REPORT : 8. REMUNERATION REPORT
A severance package agreement was also concluded with
Mr Unger, who amicably agreed to leave the Management
Board as at 30 September 2010. This agreement includes both
a fixed and a variable component. The fixed component covers
the entitlements of Mr Unger arising from his employment
contract and makes allowance for the growth of performanceand
share-based remuneration components based on conservative
estimates. In 2010, the variable components of the
severance agreement resulted in additional remuneration
derived from the Company’s business success and can also
result in further compensation from 2011 to 2012. As a variable
severance agreement, Mr Unger is entitled to – in a manner
similar to the agreement with Mr Mierdorf – the potential difference
between total performance-based remuneration that
he would have received as a member of the Management
Board and the amount already paid as part of the severance
agreement. Mr Unger was also granted secretarial support for
an appropriate transitional period.
Agreements to terminate the employment contracts of
members of the Management Board in 2010
Severance agreements
€1,000 Fixed component
Variable
component
2010
Additions to provisions
for variable
component in
subsequent years 1
Zygmunt Mierdorf 13,007 329 2,544
Thomas Unger 6,179 114 1,269
1 discounting according to IFRS
Total compensation of former members of the Management
Board in 2010
Benefits totalling €27.4 million (previous year: €4.3 million) were
provided to former members of the Management Boards of
METRO AG and the companies that were merged into METRO AG
as well as to their surviving dependants. The described benefits
provided after the end of employment in the financial year 2010
to Zygmunt Mierdorf and Thomas Unger who left their positions
on the Management Board are included in this figure.
The cash value of provisions for current pensions and pension
entitlements amounted to €48.3 million (previous year:
€47.4 million).
Outlook: continued refinement of the remuneration system
for the Management Board
Acting upon the recommendation of its Personnel Committee,
the Supervisory Board of METRO AG decided in the finan-
→ p. 114
cial year 2010 to refine the remuneration system for the ManagementBoard.Asbefore,remunerationfortheManagement
Board will consist of a fixed salary and two variable components:
performance-based compensation (short-term incentive)
and the long-term incentive. Pension provisions and
supplemental benefits will also continue to be provided.
A change was made to the relative weighting of the remuneration
components (fixed salary, short-term incentive and
long-term incentive). The future ratio of these components
will be 30 : 30 : 40.
To achieve this ratio, the fixed salary for an ordinary member
of the Management Board will generally total €900,000 (previous
total €800,000).
The short-term incentive based on the performance metrics
RoCE and net earnings was lowered. As a rule, an ordinary
member of the Management Board now receives €625 (previous
total: €1,400) per 0.01 percentage points of RoCE
exceeding 7 percent and €380 (previous total: €850) per
€1 million of net earnings. To maintain the personal performance
aspect of Management Board remuneration, the
Supervisory Board of METRO AG retains the general right to
reduce the individual short-term incentive based on RoCE
and net earnings by up to 30 percent or to increase it by up
to 30 percent each year as it sees fit. The payout for the
short-term incentive based on net earnings and RoCE continues
to be capped at €2.6 million a year for an ordinary
member of the Management Board.
The target value of the annual long-term incentive regularly
totals €1.2 million (previous total €0.5 million) for an ordinary
member of the Management Board. The payout cap continues
to be five times the target value.
In a reflection of the new weighting of the fixed salary, shortterm
incentive and long-term incentive, the assessment
level for pension provisions was redefined as well. It now
totals €1.8 million (previous total: €1.6 million) for an ordinary
member of the Management Board.
The pending changes in the remuneration system for the Management
Board do not apply to the current employment contracts
of members of the Management Board of METRO AG. In
October 2010, a new employment contract was concluded with
Mr Muller. This contract will take effect on 1 August 2011 and
incorporates the new remuneration system.