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terminated his employment, to receive retirement benefits
(reduced by amounts received under Metallurg’s pension
plan). Mr. Jackson’s benefits will be reduced if his
employment with Metallurg ends prior to his reaching age
65. In 2010 the Supervisory Board has aligned the pension
entitlements of Mr. Levy and Dr. Walter with those of
Mr. Jackson. Accordingly, if either Mr. Levy or Dr. Walter are
employed by AMG or remain in AMG’s employment until
either of them is 65 whether or not he has terminated his
employment, he is entitled to receive retirement benefits
(reduced by amounts received under Metallurg’s respectively
ALD’s pension plan). Total costs to AMG with respect
to the pension and retirement benefits of the Management
Board in 2010 is provided in the table above which sets
forth total costs incurred in 2010 for Management Board
remuneration.
Other benefits
All Management Board members receive benefits, which
are in line with industry and individual country practice.
No loans and guarantees are granted to any Management
Board members. Total costs to the Company with respect
to other remuneration of the Management Board is provided
in the table on page 43 which sets forth total costs
incurred in 2010 for Management Board remuneration.
Contracts
Each member of the Management Board has a contract
of employment with AMG. In case AMG terminates the
contract(s) of employment without cause, the maximum
severance payment is limited to two years Base Salary
and two years of target Annual Bonus. Current agreements
with respect to severance payments do not comply
with best practice provision II.2.7 of the Dutch Corporate
Governance Code. As part of its approved and adopted
Remuneration Policy, AMG will honor existing contractual
agreements for its current Management Board members
and adapts to individual country practices, which differ
from best practice provision II.2.7 of the existing Dutch
Corporate Governance Code.
In addition to the employment contracts with AMG, the
members of the Management Board have a contract with
one of AMG’s subsidiaries. Details of the employment
contracts of the Management Board members with AMG
and its subsidiaries are provided on the Company’s website
under the Corporate Governance section.
Management Board Remuneration for 2011
In line with the Remuneration Policy, the Remuneration
Committee has set up the size and structure of the
46 Report of the Supervisory Board
Management Board’s remuneration for 2011. The
Remuneration Committee has analyzed the possible
outcomes of the different remuneration components in
view of various economic scenarios and how these may
affect the remuneration of Management Board members.
Base Salary
The Supervisory Board has for 2011 decided that the
Base Salary of the Management Board members will not
change as compared to the Base Salary levels of 2010. The
table below shows the Base Salaries for 2011 and 2010.
Differences are only due to exchange rate assumptions.
BASE SALARy 2011 2010
Dr. Heinz
Schimmelbusch
$ 1,087,500 $ 1,081,750
Eric Jackson $ 635,000 $ 632,700
Dr. Reinhard Walter $ 641,250 $ 607,108
William J. Levy $ 495,000 $ 492,700
Annual Bonus
Each year, a variable cash bonus can be earned based on
achievement of challenging targets. The Annual Bonus criteria
are set forth below and relate 80% to financial indicators
of the Company and 20% to the individual performance
of Management Board members. The Supervisory Board
determines ambitious target ranges with respect to each
performance metric with respect to the threshold, target
and maximum pay-out and determines whether performance
targets are met. It has the ability to adjust the value
upward or downward if the predetermined performance
criteria would produce an unfair result due to incorrect
financial data or extraordinary circumstances.
The Annual Bonus pay-out in any year relates to achievements
realized during the preceding year in relation to the
agreed targets.
The Annual Bonus for 2011 will be determined as follows:
• 40% from ROCE (excluding construction in progress)
• 40% from adjusted EBITDA growth
• 20% from Individual Performance—discretionary by the
Supervisory Board
The table below shows the Annual Bonus for each
member of the Management Board as a percentage of
Base Salary in case threshold, target and maximum performance
levels are reached. Below threshold level the
payout will be 0%. The Supervisory Board has considered
whether given the continued challenging economic
circumstances adjustment of the annual bonus components
would be merited and has concluded that such