Engineering

To our shareholders
1.3 To our shareholders Corporate governance report
The bonus component of of Executive Board
compensation is is determined on on the the basis
of a cash flow-related indicator.
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Additional bonus
This system of performance bonus and LTI is appropriate but requires supplementation under certain
constellations. For example, due to the high negative TKVA in fiscal year 2008/2009 and despite substantial
increases in the 2009/2010 and 2010/2011 fiscal years there will be no payments under the previous MTI
plan for the reporting period – just as there were none for the last two fiscal years – owing to the plan’s longterm
focus. In difficult economic years, which demand particular efforts of the Executive Board, the work of
the Executive Board should not be rewarded only with the fixed compensation, as was the case in
2008/2009. In view of the tasks facing the Executive Board and its particular responsibility this would impair
the competitiveness of our executive remuneration. It must also be considered that high financial discipline
is essential in critical times. For this reason a performance-based compensation element based on a cash
flow-related indicator has been established for a certain period. This indicator is the ratio of funds from
operations to total debt (FFO/TD), which makes it possible to balance out fluctuations in EBT, net working
capital and capital expenditures. The achievement of set targets by the Executive Board is to be rewarded
with an additional bonus. The additional bonus is based 50% on the year-end values and 50% on the
annual average values of FFO/TD; with a year-end value of 18.2% and an annual average value of 17.2%
the additional bonus amounts to €350,000; it changes by €50,000 for each 1.1% change in the year-end
value and 0.8% change in the annual average value. To ensure the sustainability and multi-year assessment
basis required by the VorstAG particularly in the ratio between short-term and long-term compensation, 55%
of the additional bonus is converted into ThyssenKrupp stock rights and paid out after a three-year lock-up
period (as with the performance bonus). Whether this additional bonus is granted again, and if so at what
level, will be decided each year.
Pensions
Pensions are paid to former Executive Board members who have either reached pension age or become
permanently incapacitated for work. Under the amended contract provisions now applied, pensions
(“transitional allowances”) are no longer paid upon premature termination or non-renewal of employment
contracts.
The pension of an Executive Board member already in office is a percentage of the final fixed salary they
received before their employment contract ended. This percentage increases with the duration of the
Executive Board member’s appointment. In general it is 30% at the start of the first five-year period of
appointment, 50% at the start of the second and 60% at the start of the third. Dr. Heinrich Hiesinger’s
pension is 50%. Current pensions are adjusted annually in line with the consumer price index. For new
Executive Board members to be appointed in the future, this final-salary pension plan has been switched to
a defined-contribution pension plan, with the annual pension benefit (“module”) amounting to 40% of the
annual fixed salary.
Under the surviving dependants’ benefits plan, a widow receives 60% of the pension and each dependant
child (generally up to the age of 18, maximum age 25 years, in justified exceptional cases up to the age of
27) 20%, up to a maximum of 100% of the pension amount.