German Corporate Governance Code

G. Remuneration of Management Board and Supervisory Board

I. Remuneration of the Management Board
Principle 24

The Supervisory Board decides on a clear and comprehensible system on the remuneration for the Management Board members and, on this basis, determines the actual remuneration for each Management Board member.

The General Meeting generally adopts advisory resolutions on the approval of the remuneration system for the Management Board members prepared by the Supervisory Board, as well as proposing resolutions on the approval of the remuneration report for the preceding financial year. 

The remuneration structure of listed companies is to be oriented towards the company’s sustainable and long-term development. The remuneration of Management Board members shall promote the corporate strategy and support the long-term development of the company.

1. Determining the remuneration system

The remuneration system shall define in particular:

  • how the target total remuneration is determined for each Management Board member, and the amount the total remuneration must not exceed (maximum remuneration);
  • the relative share in the target total remuneration of fixed remuneration on the one hand, and short-term variable and long-term variable remuneration components on the other hand;
  • which financial and non-financial performance criteria are relevant for the granting of variable remuneration components; 
  • what kind of relationship exists between achieving previously agreed performance criteria and variable remuneration; and
  • when and in what form Management Board members have access to granted variable remuneration components.
2. Determining total remuneration
G.2 The Supervisory Board shall establish the specific target total remuneration for each Management Board member on the basis of the remuneration system, which shall be appropriate to the corresponding Management Board member’s tasks and performance as well as to the enterprise’s overall situation and performance, and shall not exceed the usual level of remuneration without specific reasons.
G.3 In order to assess whether the specific total remuneration of Management Board members is in line with usual levels compared to other enterprises, the Supervisory Board shall use an appropriate peer group of other third-party entities, and shall disclose the composition of such group. The peer-group comparison shall be applied with a sense of perspective, in order to prevent an automatic upward trend.
G.4 In order to determine whether remuneration is in line with usual levels within the enterprise itself, the Supervisory Board shall take into account the relationship between Management Board remuneration and the remuneration of senior managers and the workforce as a whole, and how remuneration has developed over time.
G.5 If the Supervisory Board calls upon an external remuneration expert to develop the remuneration system, and to evaluate whether the remuneration is appropriate, it shall ensure that the expert is independent from the Management Board and the enterprise.
3. Determining the total amount of variable remuneration components
G.6 The share of variable remuneration achieved as a result of reaching long-term targets shall exceed the share from short-term targets.
G.7 Referring to the forthcoming financial year, the Supervisory Board shall establish the performance criteria for each Management Board member covering all variable remuneration components; besides operating targets, the performance criteria shall be geared mainly towards strategic goals. The Supervisory Board shall determine to what extent individual targets for each Management Board member – or targets for the entire Management Board as a whole – are decisive for the variable remuneration components.
G.8 Subsequent changes to the targets or comparison parameters shall be excluded.
G.9 After the end of every financial year, the Supervisory Board shall establish the amount of individual variable remuneration to be granted, depending on target achievement. The target achievement shall be comprehensible in terms of both its rationale and amount.
G.10 Taking the respective tax burden into consideration, variable remuneration amounts of Management Board members shall be invested predominantly in company shares by the respective Management Board member, or shall be granted as share-based remuneration. Granted long-term variable remuneration components shall be accessible to Management Board members only after a period of four years.
G.11 The Supervisory Board shall have the possibility to account for extraordinary developments to an appropriate extent. It shall be permitted to retain or reclaim variable remuneration, if justified.
4. Benefits granted at contract termination
Recommendations and suggestion:
G.12 If the contract of a Management Board member is terminated, the disbursement of any remaining variable remuneration components, which are attributable to the period until contract termination, shall be based on the originally agreed targets and comparison parameters, and on the due dates or holding periods stipulated in the contract.
G.13 Any payments made to a Management Board member due to early termination of their Management Board activity shall not exceed twice the annual remuneration (severance cap) and shall not constitute remuneration for more than the remaining term of the employment contract. If post-contractual non-compete clauses apply, the severance payments shall be taken into account in the calculation of any compensation payments.
G.14 Change of control clauses that commit to benefits in the case of early termination of a Management Board member’s contract due to a change of control should not be agreed upon.
5. Other Provisions
G.15 If Management Board members are also members intra-group Supervisory Boards, the remuneration shall be offset.
G.16 If Supervisory Board memberships are assumed at non-group entities, the Supervisory Board shall decide whether and to what extent the remuneration from such memberships shall be taken into account.
II. Remuneration of the Supervisory Board
Principle 25 The members of the Supervisory Board receive remuneration that is appropriate to their tasks and the situation of the company. Remuneration is specified by resolution of the General Meeting, or in the Articles of Association, if applicable.
Recommendations and suggestion:
G.17 The remuneration of Supervisory Board members shall take into account, in an appropriate manner, the higher time commitment of the Chair and the Deputy Chair of the Supervisory Board as well as of the Chair and the members of committees.
G.18 Supervisory Board remuneration should be fixed remuneration. If members of the Supervisory Board are granted performance-related remuneration, it shall be geared to the long-term development of the company.
III. Reporting
Principle 26 The Management Board and the Supervisory Board prepare an annual remuneration report, in accordance with statutory provisions.