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| Remuneration of the Managing Board |
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The Personnel Committee of the Supervisory Board proposes and the Supervisory Board as a whole specifies the amount and structure of the remuneration to be paid to the Management Board. The remuneration paid to the Management Board of Carl Zeiss Meditec AG consists of a fixed and a variable portion. The variable portion is split into two components: the first component is contingent upon the achievement of certain targets for the respective financial year and the second bears a long-term incentive effect and risk elements.
The fixed portion of the remuneration paid to the Management Board is not contingent upon the achievement of certain targets. It is paid monthly.
The variable portion of the remuneration, which relates to targets set for the respective financial year, is contingent upon the achievement of certain quantitative and qualitative targets. The quantitative targets, which bear the most weight, are revenue, EBIT, free cash flow and Economic Value Added® ("EVA®"). Strategic targets agreed individually between the Chairman of the Supervisory Board and the members of the Management Board are also taken into consideration. This portion of the remuneration is paid after the end of the respective financial year. The amount is contingent upon the degree of target fulfilment.
In addition to the two portions of Management Board remuneration described above, there is also a Long Term Incentive Program ("LTIP") for Management Board members Hirsch, Krauss and Dr. Monz. This programme first came into effect in financial year 2005/2006 and a new tranche is added each year. This LTIP consists of a remuneration component with a long-term incentive effect and risk elements. The annual tranches each have a term of three years. As part of the LTIP tranches Management Board members Hirsch, Krauss and Dr. Monz may, at the end of the respective three-year period, achieve an additional "target income" amounting to one third of their respective annual salaries, consisting of a fixed and a variable component.
A key requisite for being entitled to this payment, however, is the achievement of a certain EVA® target set by the Supervisory Board for the respective three-year period, which is evaluated at the end of the period. The overachievement of this target is limited to a maximum of 200%. In addition, the respective Management Board member’s contract of employment must not have been terminated as of the end of the period. For the purposes of setting up appropriate provisions, an annual performance review is carried out at the balance sheet date at the end of each financial year during the three-year period for each tranche. The accrued amounts are not earned until the end of the period, however, and are only paid out at this time if the respective targets have been sufficiently met.
As a show of solidarity, the employees of Carl Zeiss Meditec’s German locations personally contributed to the reduction in personnel expenses within the Company by foregoing their holiday pay and Christmas bonus as part of the "Gesamtpaket zur Bewältigung der wirtschaftlichen Situation" (complete package of measures to overcome the economic situation), which was agreed in June with representatives from IG Metall and the workforce. This contributed significantly to the Company’s excellent result for the year. The retained payments amount to 8.1% of the target annual salary.
The Management Board of Carl Zeiss Meditec AG would like to show solidarity with its employees and has thus unanimously resolved to forego 8.1% of its target annual salary, the CEO 20% of its target annual salary, voluntarily and without respect to its contractual commitments. This contribution shall be offset against the variable component of the Management Board's remuneration for financial year 2008/2009.
Directors & Officers (D&O) liability insurance has been taken out for the members of the Management Board of Carl Zeiss Meditec AG, which provides for an excess that is also specified in the Management Board contracts. At the present time this does not comply with the excess that has been prescribed by the German Stock Corporation Act (AktG) since 5 August 2009 of at least 10% of the damages up to at least one-and-a-half times the fixed annual remuneration.
Pursuant to the transitional provisions pertaining to the new regulation under stock corporation law, the excess stipulated in the Management Board contracts shall be adjusted to comply with the current legal situation when the respective Management Board contracts are extended.
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