Management Board remuneration system

The total remuneration paid to Board members consists of non-performance-related and performance-related components. When deciding on the remuneration paid to Management Board members at TAKKT AG, consideration is given to the company’s size, its economic and financial position, and the amount and structure of the remuneration paid to Management Board members at comparable companies. At the Personnel Committee’s suggestion, the Supervisory Board regularly reviews the structure of the remuneration system for the Management Board members and examines whether the system and the amounts paid are appropriate.

Non-performance-related components
The non-performance-related components consist of a fixed basic salary, fringe benefits and a contribution towards a pension scheme. TAKKT pays its Management Board members a fixed basic monthly salary. The fringe benefits received by the Management Board comprise the use of company cars, accident insurance, foreign travel health insurance, luggage insurance and D&O insurance. Each individual Board member pays tax on their use of a company car as this constitutes a remuneration component. TAKKT has made a pension commitment to its Management Board members. Every year, a contribution equivalent to ten percent of the basic salary and the target bonus is made, though contributions are only made for as long as the individual is appointed to the Management Board. The success-based target bonus corresponds to a 100 percent achievement of the appropriate targets. A guaranteed minimum rate of interest applies to the pension contributions. Management Board Members are entitled to pension payments when they leave the company, but no earlier than the member’s 60th birthday. In the case of disability or death, an enhanced pension plan is paid out. This is supplemented by the missing contributions which would have been paid up to the age of 63.

Performance-related remuneration components
The performance-related components consist of a successbased bonus paid annually and a rolling remuneration component, that acts as a long-term incentive. This currently takes the form of a performance cash plan.

TAKKT Group’s cash flow from operating activities is used as the basis for valuating the bonus. How much of a bonus is paid is determined by a percentage share of this key performance figure in the relevant financial year. The bonus amount paid out is capped. The Supervisory Board also has the right to increase or reduce the bonus by 20 percent in case of an extraordinary contribution by a Board Member or any unusual circumstances, according to its best judgement. Based on a system of age bands, Board members can convert certain portions of their bonus into pension components.

New performance cash plans are set up each year. They are paid out in cash after a period of four years if the relevant targets are met. The cash payout due depends on the attainment of two objectives. Firstly, the development of the total shareholder return (TSR) throughout the term of the relevant plan. The TSR is equivalent to the TAKKT share’s total return, taking dividend payouts into account. The second factor is the cumulative EVA® generated throughout the plan’s term. The component which is linked to share performance is classified as a cash-settled share-based payment transaction as per IFRS 2. It is valued using a binomial probability method of
share option valuation. The expenditure for the benefits received or liability to settle these benefits is recorded over the expected vesting period. The liability is reassessed on each balance sheet date and on the due date. Changes in fair value are recorded through profit and loss. The EVA® indicator is used for value-based corporate management. It shows whether the interest demands of equity and debt investors are adequately met. Remuneration is therefore based on sustainably increasing the company’s value. The amount paid out under the performance cash plans is also capped. Individuals are only entitled to payouts under the performance cash plan if they were employed during the term of the relevant plan. If an individual reaches retirement age or terminates the Board membership, a pro rata payment is made.

Share options are not part of the Management Board remuneration at TAKKT AG. There are no plans to change this in the future.

The total remuneration of the Management Board amounted to EUR 2,764,000 in 2010. this comprised non-performance-related remuneration of EUR 1,249,000 and performance-related remuneration of EUR 1,515,000. Variable remuneration amounting to EUR 1,515,000 includes a provision release of EUR 300,000. In 2010, performance-related remuneration without the release of provision was made up of EUR 1,600,000 (EUR 2,136,000) in bonuses and EUR 215,000 (EUR 114,000) for the long-term performance cash plans. On the balance sheet date, the fair value of the performance cash plans and the corresponding provision amounted to EUR 531,000 (EUR 114,000). This valuation is based on the expected development of the relevant contributing factors and is made by taking into account the partial amounts earned. At the balance sheet date, the defined benefit obligation for the Management Board members amounted to EUR 2,318,000 (EUR 2,486,000).

At 31 December 2010, TAKKT AG Management Board members held 5,676 (5,676) shares. With the exception of EVA® certificates of EUR 1,115,000 (EUR 1,095,000) as well as the usual amounts due in accordance with the employment contracts, no further claims or obligations exist.

Payments to retired Management Board members amounted to EUR 241,000 (EUR 194,000). The pension provision for the former members amounts to EUR 3,718,000 (EUR 2,908,000).