Compensation report for the Executive Board and the Supervisory Board of Aurubis AG

The following Compensation Report is part of the Combined Management Report. It outlines the structure and level of the Aurubis AG’s Executive Board and Supervisory Board compensation.

Compensation for the Executive Board

The Supervisory Board defines the total compensation of the individual Executive Board members on the basis of proposals from the Personnel Committee and decides on and reviews the compensation system for the Executive Board at regular intervals. In fiscal year 2016/17, the Supervisory Board fundamentally revised the compensation system, working together with an independent external compensation expert. The aim of the new regulation is to orient Executive Board compensation toward sustainable corporate development. In particular, the variable compensation components have a multiannual assessment basis, which is primarily forward-looking.

The new system is valid for new and subsequent appointments and is thus valid for the new Chief Financial Officer, Mr. Rainer Verhoeven, who was appointed with effect from January 1, 2018. For the Executive Board members Mr. Jürgen Schachler and Dr. Stefan Boel, as well as for the former Chief Financial Officer Mr. Erwin Faust, the old compensation system applied/will initially continue to apply.

Previous compensation system for the Executive Board

The compensation of the individual Executive Board members is defined in their employment contracts and consists of a series of compensation components. In each case this involves fixed compensation, variable compensation as well as fringe benefits and pension plans.

Fixed components
The fixed portion consists of fixed compensation, fringe benefits and pension plans. For the Executive Board Chairman, the annual fixed compensation amounts to € 570,000 (€ 600,000 from October 1, 2017), and € 399,000 for the ordinary Executive Board members (€ 420,000 from October 1, 2017) and is paid out monthly in equal installments.

Additionally, the Executive Board members receive fringe benefits in the form of benefits in kind, which primarily consist of insurance premiums and company car use and are assessed according to tax guidelines.

Mr. Faust has a performance-based pension plan. The pension benefits are determined as a percentage of the fixed compensation. The percentage increases with the length of membership on the Executive Board. The pension is payable upon reaching the age of 65, as well as in the event of disability. Pensions that are paid before reaching the age of 65 have the character of an interim payment. Compensation that an Executive Board member receives from an activity outside of the Aurubis Group after leaving the company is offset against the pension until reaching the age of 65.

Mr. Schachler and Dr. Boel receive defined contribution pension plans from the company. Annual contributions in the amount of € 140,000 for Mr. Schachler and € 100,000 for Dr. Boel are paid to an insurance company.

All Executive Board members additionally have a defined contribution company pension plan. The pension plan is based on a lump-sum single payment. At the end of every fiscal year, € 120,000 for the Chief Executive Officer and € 80,000 for each further Executive Board member is paid into liability insurances.

The respective Executive Board member can use the accumulated capital after reaching the age of 62 (for Mr. Erwin Faust, after reaching the age of 60) at the earliest; however, not before ceasing to be employed by the company.

Variable components
The old system of variable compensation includes two components, which are paid out annually: The first component (Component I) is dependent on achieving an annual target related to adjusted average consolidated EBT (Earnings Before Taxes) for the Group for three years, and in each case relating to the current as well as both of the two prior fiscal years preceding the respective fiscal year. The target is EBT derived from ROCE (return on capital employed) of 15 %. If the EBT is less than 40 % of the target, Component I is not paid. The target bonus from Component I can reach a maximum of 100 % (cap). The maximum amount that can be reached from these components for 100 % target achievement is € 712,500 (€ 750,000 from October 1, 2017) for the Chief Executive Officer and € 475,000 (€ 500,000 from October 1, 2017) for each ordinary Executive Board member.

Component II stipulates an annual assessment of the joint (Component II a) and individual (Component II b) performance of the Executive Board by the Supervisory Board. Both components are based on a qualitative, criteria-supported assessment of the sustainable company management. The target bonus from Component II can reach a maximum of 100 % (cap). A payout of a minimum of 50 % of the target bonus always occurs unless this is unreasonable in the sense of Section 87 (2) of the German Stock Corporation Act. The maximum amount that can be reached from Components II a and II b is € 237,500 (€ 250,000 from October 1, 2017) for the Chief Executive Officer and € 166,250 (€ 175,000 from October 1, 2017) for each ordinary Executive Board member.

The target bonus for Component I amounts to 60 % of the total variable compensation; the target bonus for Component II, 40 %.

Premature termination
The employment contracts for the Executive Board members do not contain Change of Control clauses.

Amount of compensation for the Executive Board in fiscal year 2016/17
In total, compensation for active Executive Board members for activities in fiscal year 2016/17 amounted to € 4,589,106, inclusive of pension expenses.

Mr. Erwin Faust resigned his post as Chief Financial Officer with effect from June 30, 2017. The termination agreement stipulates that the fixed portion of the salary will be paid in full until the end of fiscal year 2016/17. Furthermore, Mr. Faust will receive a one-off payment in the amount of € 400,000 (gross), as well as variable compensation for the time period from July 1, 2017 to September 30, 2017 in the amount of € 177,532. The payment will take place in January 2018. Beginning October 1, 2017, Mr. Faust receives a pension in the form of an interim payment until reaching 65 years of age. Upon reaching 65 years of age, Mr. Faust will receive the pension agreed on in the employment contract. The contributions to the defined contribution company pension plan for Mr. Faust were paid until September 30, 2017.

The company has set up pension provisions on the basis of IFRS for the Executive Board members. In the reporting year, the allocations to the pension provisions for the active Executive Board members amounted to € 808,104. This amount comprises the so-called service cost and the contributions to an external pension fund.

Former members of the Executive Board and their surviving dependents received a total of € 2,099,400 in fiscal year 2016/17, while € 27,554,891 has been provided for their pension entitlement.

Individual details can be found in the following table:

Benefits granted

T 003
 
in €   Fixed
compensation
Fringe
benefits
Total Variable compensation
for one year
Variable compensation
for several years
Total Pension
expenses1)
Total
compensation
                   
Jürgen Schachler 2015/16 142,500 3,465 145,965 118,750 157,106 421,821 260,000 681,821
Executive Board Chairman 2016/17 570,000 19,586 589,586 475,000 686,850 1,751,436 260,000 2,011,436
since July 1, 2016 Min 570,000 19,586 589,586 237,500 0 827,086 260,000 1,087,086
  Max 570,000 19,586 589,586 475,000 712,500 1,777,086 260,000 2,037,086
Dr. Stefan Boel 2015/16 399,000 18,177 417,177 332,500 418,950 1,168,627 180,000 1,348,627
Executive Board member 2016/17 399,000 18,389 417,389 332,500 457,900 1,207,789 180,000 1,387,789
since April 19, 2008 Min 399,000 18,389 417,389 166,250 0 583,639 180,000 763,639
  Max 399,000 18,389 417,389 332,500 475,000 1,224,889 180,000 1,404,889
Erwin Faust 2015/16 399,000 19,139 418,139 332,500 418,950 1,169,589 321,506 1,491,095
Executive Board member 2016/17 2) 299,250 16,058 315,308 249,375 343,425 908,108 368,104 1,276,212
from October 1, 2008 to Min 299,250 16,058 315,308 124,688 0 439,996 368,104 808,100
June 30, 2017 Max 299,250 16,058 315,308 249,375 356,250 920,933 368,104 1,289,037
Total 2015/16 940,500 40,781 981,281 783,750 995,006 2,760,037 761,506 3,521,543
  2016/17 1,268,250 54,033 1,322,283 1,056,875 1,488,175 3,867,333 808,104 4,675,437
  Min 1,268,250 54,033 1,322,283 528,438 0 1,850,720 808,104 2,658,824
  Max 1,268,250 54,033 1,322,283 1,056,875 1,543,750 3,922,908 808,104 4,731,012
    
1) Pension expenses in accordance with the German Commercial Code (HGB) amounted to € 399,821 (previous year: € 230,041) for Erwin Faust, € 180,000 (previous year: € 180,000) for Dr. Stefan Boel and € 260,000 (previous year: € 260,000) for Jürgen Schachler
2) Refers to compensation for the time period from October 1, 2016 to June 30, 2017.
Mr. Faust additionally receives a one-off payment in the amount of € 400,000 within the scope of contract termination, fixed compensation for the time period from July 1–September 30, 2017 in the amount of € 99,750 as well as annual variable compensation in the amount of € 62,344 and the multiannual variable compensation in the amout of € 115,118.
The variable multiannual compensation for fiscal year 2016/17 is determined according to the ratio of the operating actual-to-target EBT relating to the Aurubis Group and the average of the fiscal years 2014/15, 2015/16 and 2016/17. The average actual EBT is € 285 million and represents a target achievement of 97 %.

Inflow

T 004
 
in €   Fixed
compensation
Fringe
benefits
Total Variable compensation
for one year
Variable compensation
for several years
Total Pension
expenses1)
Total
compensation
                   
Jürgen Schachler                  
Executive Board Chairman 2015/16 142,500 3,465 145,965 118,750 117,563 382,278 260,000 642,278
since July 1, 2016 2016/17 570,000 19,586 589,586 475,000 691,125 1,755,711 260,000 2,015,711
Dr. Stefan Boel                  
Executive Board member 2015/16 399,000 18,177 417,177 290,938 313,500 1,021,615 180,000 1,201,615
since April 19, 2008 2016/17 399,000 18,389 417,389 299,250 460,750 1,177,389 180,000 1,357,389
Erwin Faust                  
Executive Board member 2015/16 399,000 19,139 418,139 290,938 313,500 1,022,577 321,506 1,344,083
from October 1, 2008 until June 30, 2017 2016/17 2) 299,250 16,058 315,308 187,031 345,563 847,902 368,104 1,216,006
Total 2015/16 940,500 40,781 981,281 700,626 744,563 2,426,470 761,506 3,187,976
  2016/17 1,268,250 54,033 1,322,283 961,281 1,497,438 3,781,002 808,104 4,589,106
    
1) Pension expenses in accordance with the German Commercial Code (HGB) amounted to € 399,821 (previous year: € 230,041) for Erwin Faust, € 180,000 (previous year: € 180,000) for Dr. Stefan Boel and € 260,000 (previous year: € 260,000) for Jürgen Schachler
2) Refers to compensation for the time period from October 1, 2016 to June 30, 2017.
Mr. Faust additionally receives a one-off payment in the amount of € 400,000 within the scope of contract termination, fixed compensation for the time period from July 1–September 30, 2017 in the amount of € 99,750 as well as annual variable compensation in the amount of € 62,344 and the multiannual variable compensation in the amout of € 115,118.
The variable multiannual compensation for fiscal year 2016/17 is determined according to the ratio of the operating actual-to-target EBT relating to the Aurubis Group and the average of the fiscal years 2014/15, 2015/16 and 2016/17. The average actual EBT is € 285 million and represents a target achievement of 97 %.

Compensation for the Supervisory Board

The compensation for the Supervisory Board was redefined at the Annual General Meeting with effect from October 1, 2015 and is governed by Section 12 of Aurubis AG’s Articles of Association. It is oriented towards the various demands of the Supervisory Board and its committees.

All Supervisory Board members receive fixed compensation of € 75,000/fiscal year each, in addition to the reimbursement of expenses incurred while performing their duties. The Supervisory Board Chairman receives three times that amount, and the Deputy receives twice that.

Supervisory Board members who serve on the Personnel and/or Audit Committee additionally receive fixed compensation in the amount of € 15,000/fiscal year per committee. Supervisory Board members who serve on the other Supervisory Board committees additionally receive fixed compensation in the amount of € 7,500/fiscal year per committee. Supervisory Board members who chair a Supervisory Board committee receive twice that amount per fiscal year.

The fixed compensation for committee activity is limited to € 25,000/fiscal year for each Supervisory Board member, in accordance with Section 12 (2) of the Articles of Association. The limit for every committee chairmanship is € 50,000/fiscal year.

Supervisory Board members who do not belong to the Supervisory Board or one of its committees for a full fiscal year receive compensation corresponding to the duration of their service.

Furthermore, Supervisory Board members receive an attendance fee in the amount of € 1,000 for each meeting of the Supervisory Board and of its committees attended.

The compensation for the individual members of the Supervisory Board for fiscal year 2016/17 is broken down in the following table:

T 005
 
in €

Name
  Fixed
compensation
Compensation for committee membership Attendance fees Total
           
Prof. Dr.-Ing Heinz Jörg Fuhrmann 2015/16 225,000 50,000 10,000 285,000
  2016/17 225,000 50,000 12,000 287,000
Renate Hold-Yilmaz 2015/16 149,795 25,000 14,000 188,795
  2016/17 150,000 25,000 14,000 189,000
Burkhard Becker 2015/16 75,000 22,500 10,000 107,500
  2016/17 75,000 22,500 11,000 108,500
Dr. Bernd Drouven 2015/16 68,648 20,595 8,000 97,243
  2016/17 75,000 30,000 11,000 116,000
Dr.-Ing. Joachim Faubel 2015/16 75,000 0 5,000 80,000
  2016/17 75,000 0 5,000 80,000
Jan Koltze 2015/16 75,000 15,000 10,000 100,000
  2016/17 75,000 15,000 9,000 99,000
Dr. Sandra Reich 2015/16 75,000 7,500 6,000 88,500
  2016/17 75,000 7,500 5,000 87,500
Dr. med. Dipl.-Chem. Thomas Schultek 2015/16 75,000 21,865 10,000 106,865
  2016/17 75,000 22,500 11,000 108,500
Rolf Schwertz 2015/16 75,000 0 6,000 81,000
  2016/17 75,000 0 5,000 80,000
Prof. Dr. Fritz Vahrenholt 2015/16 75,000 22,500 7,000 104,500
  2016/17 75,000 22,500 11,000 108,500
Ralf Winterfeldt 2015/16 75,000 22,439 8,000 105,439
  2016/17 75,000 22,500 8,000 105,500
Dr.-Ing. Ernst J. Wortberg 2015/16 75,000 37,500 10,000 122,500
  2016/17 75,000 37,500 11,000 123,500
Total 2015/16 1,118,443 244,899 104,000 1,467,342
  2016/17 1,125,000 255,000 113,000 1,493,000

On this basis, the Supervisory Board members received a total of € 1,493,000.

Hamburg, December 12, 2017

The Executive Board                                                             The Supervisory Board

Signature: Jürgen Schachler
Signature: Dr. Stefan Boel
Signature: Prof. Dr.-Ing. Heinz Jörg Fuhrmann

Jürgen Schachler          Dr. Stefan Boel                              Prof. Dr.-Ing. Heinz Jörg Fuhrmann
Chairman                         Member                                       Chairman