Landesbank Berlin Holding

42
Group management report Overview of the Group
Disregarding extraordinary factors, the main factor
of measurement is the Holding’s earnings before
taxes reported in audited financial statements of the
Holding compiled in accordance with the German
Commercial Code (HGB) (the Holding’s HGB earnings)
in the financial year preceding the stipulation
of the respective instalment. If HGB earnings are
generated by the Holding that are at least equal to
the HGB earnings in the financial year for which
the variable remuneration was originally determined
(initial value) it can as a rule be assumed that the
value of the Group has developed sustainably, which
justifies a full instalment (13.33 % of the stipulated
variable remuneration). If earnings are less than
the initial value, the Supervisory Board shall decide
the amount of the instalment to be paid out. This
can lead to a reduction or even cancellation of the
instalment.
Also, when determining the amount of each instalment,
the Supervisory Board will review whether
the performance and contribution of the respective
Board of Management department and the personal
work that the Supervisory Board took as its baseline
in measuring variable remuneration has proved
sustainable over the past financial years. This also
considers the risks taken by the member of the Board
of Management and those taken in his departments.
If a member of the Board of Management leaves
the Company, the determination of the instalments
over the retention period shall not be affected by the
termination of his executive body position and / or
the termination of his employment contract; the
member cannot earn entitlement to this remuneration
elsewhere.
These shall be no remuneration in shares or sharebased
instruments. It is not suitable to issue shares
in the Holding. Given the low free-float of less than
1.5 % and the narrowness of the market this entails,
the share price of the Holding does not reflect its
economic performance. Given the ownership structure
with the Holding as the sole shareholder, it is
not in the interests of the Group to issue new shares
in LBB. Shares in LBB and the Holding, which cannot
be traded on a liquid market, also do not represent
a reasonable incentive instrument for Board of
Management remuneration. Creating share-based
instruments (phantom stocks) at LBB offers no
advantage over stipulating variable remuneration in
cash as such share-based instruments would also
be payable in cash and would have to be based on
the same criteria as variable remuneration.
There were no other remuneration components
(pre-emption rights, other share-based remuneration
elements, etc.) for Board of Management members
in the 2010 financial year.
In accordance with the new requirements of the
InstitutsVergV, the variable remuneration of the
members of the Board of Management starting with
the variable remuneration for the 2010 financial year
will be geared even more extensively than before
towards sustainable corporate development. Under
the previous regulation, 40 % of the variable remuneration
was initially retained and 60 % paid out in the
base year, the year after the financial year to which
the variable remuneration relates. The retained
amount was paid out in staged instalments over
a period of three years and subject to the sustainability
of the profit contribution.
This ratio has been reversed with the new regulation.
Now 60 % of the variable remuneration is initially
retained, 40 % is attributable to the base year. For
the retained part of the variable remuneration, the
Supervisory Board shall resolve on authorisation
of the corresponding instalment in the three subsequent
financial years after approval of the annual
financial statements. Authorisation can be given
if the development of the Group and the individual