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adjustment is not needed. The Supervisory Board 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.
MANAGEMENT BOARD
POSITION
Chairman and Chief
Executive Officer
MINIMUM
PAyOUT
TARGET
PAyOUT
MAXIMUM
PAyOUT
0% 85% 255%
Divisional head 0% 65% 195%
Chief Financial Officer 0% 65% 195%
Long-term incentives
In line with the Remuneration Policy, the long-term
incentives for the Management Board for 2011 consist
of two programs: the Performance Share Unit Plan and
the Stock Option Plan.
To facilitate a smooth transition from the old remuneration
policy to the (new) Remuneration Policy, the
Performance Share Unit Plan has a phasing-in schedule
as indicated below.
PSU INITIAL
GRANT 2009 2010 2011 2012 2013 2014
Grant #1
Phase-in
Grant #2
Phase-in
Grant #3
Normal
cliff
Grant
1
1/3
vest
Grant
2
1/3
vest
No
vest
Grant
3
1/3
vest
1/3
vest
No
vest
2/3
vest
No
vest
3/3
vest
This year’s grant (2011) will be the third grant under the
new plan and vesting will apply as outlined in the schedule
above. Vesting of the Performance Share Units under
the third grant is subject to:
• A minimum average ROCE over the performance period
• The relative Total Shareholder Return compared to the
Bloomberg World Fabricate/Hardware Index.
Each year the Supervisory Board determines the target
range with respect to the ROCE performance metric
which serves as threshold and determines whether such
threshold has been achieved. In addition it monitors and
establishes the applicable TSR Ranking for the relevant
PSU period. The TSR Ranking used applies the Bloomberg
World Metal Fabricate/Hardware Index as further explained
in the Company’s Remuneration Policy, which is available
in the Corporate Governance section of the Company’s
website. The Supervisory Board 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 present value of the PSUs to be granted in 2011 is
1500,000 for Dr. Schimmelbusch, 1150,000 for Mr. Jackson
and Dr. Walter and 1100,000 for Mr. Levy. The present value
of the PSUs is calculated as 80% of the fair market value at
the grant date.
With regard to the Stock Option Plan (“SOP”), each member
of the Management Board will be granted stock options
in 2011 in accordance with the Remuneration Policy.
Vesting of the stock options is subject to a minimum
three year average ROCE requirement. The stock options
will vest half after the third anniversary and half after
the fourth anniversary. The present value of the stock
options under the SOP to be granted in 2011 is 1500,000
for Dr. Schimmelbusch, 1150,000 for Mr. Jackson and
Dr. Walter and 1100,000 for Mr. Levy. The present value of
the stock options under the SOP is calculated as 50% of
the fair market value of the shares at the grant date. The
aggregate number of stock options to be granted under
the Remuneration Policy to members of the Management
Board shall not exceed 10% of the outstanding share
capital of the Company from time to time.
Pension and other benefits
The pension and other benefits of the members of the
Management Board will not change compared to 2010.
Contracts
The current contractual agreements will not change compared
to 2010. Main elements of the contracts with the
Management Board members are published under the
Corporate Governance section of the Company’s website.
Report of the Supervisory Board 47