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Fielmann : Agenda Item 9 – Remuneration System for Management Board Members
Fielmann : Agenda Item 9 – Remuneration System for Management Board
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Remuneration System for Management Board Members Basic components of the remuneration system for the Management Board of Fielmann Group AG The remuneration system for the members of the Management Board of Fielmann Group AG is geared towards sustainable and long-term corporate development. In this respect, it contributes to the promotion of the business strategy and to the value-creating and long-term development of the company. The aim of the remuneration system is to compensate the members of the Management Board appropriately in line with their duties and responsibilities taking into account both the performance of the members of the Management Board and the economic situation and success of the company. The remuneration system should enable the determination of remuneration that is competitive by national and international standards and thus provide an incentive for committed and successful work. When determining the total remuneration, the Supervisory Board ensures that it is commensurate with the tasks and performance of the Management Board member and the situation of the company and does not easily exceed the usual remuneration. The remuneration system of Fielmann Group AG provides for fixed remuneration on the one hand, alongside additional fringe benefits. Secondly, the remuneration system provides for performance-related variable remuneration consisting of two components: the one-year Short Term Incentive (STI) and the multi-year Long Term Incentive (LTI). The remuneration system contains financial and non-financial performance criteria that are based on strategic objectives in addition to operational objectives. Both short-term and long-term variable remuneration reflect customer satisfaction as the key feature of Fielmann's corporate philosophy and longterm business strategy. In principle, this remuneration covers all activities for the company and for companies affiliated with the company in accordance with Sections 15 et seq. German Stock Corporation Act ("AktG") are compensated. If remuneration is agreed for mandates at affiliated companies, this is offset against the fixed remuneration. The Supervisory Board decides on such offsetting when accepting mandates from outside the Group or for functions in associations or similar groups to which the company or an affiliated company belongs. The system for the remuneration of Management Board members is clear and comprehensible and complies with the requirements of the AktG, in particular those of Sections 87 and 87a AktG. Where individual recommendations of the German Corporate Governance Code ("GCGC") are not complied with, this is explained in the company's declaration of compliance in accordance with Section 161 of the AktG, including an explanation. The remuneration system adopted by the Supervisory Board was submitted to the Annual General Meeting on July 8, 2021 for approval in accordance with Section 120a (1) AktG and was approved by a large majority at the Annual General Meeting. Individual adjustments were made by the Annual General Meeting on 11 July 2024. Following a review, the remuneration system for the members of the Management Board has now been adjusted again and a new resolution has been passed by the Supervisory Board on the recommendation of its HR Committee. The adjusted remuneration system applies to all provisions of new service contracts to be concluded with Management Board members from January 1, 2026, as well as to corresponding contract amendments and contract extensions and to service contract provisions with Management Board members that come into force with effect from January 1, 2026. In accordance with Section 87a para. 2 sentence 2 AktG, the Supervisory Board may temporarily deviate from individual components of the remuneration system if this is necessary in the interests of the long-term well-being Fielmann Group AG. In such a case, the Supervisory Board declares an exceptional case and decides on the corresponding deviations. Such deviations are reserved for exceptional circumstances, such as an economic or corporate crisis, pandemics, natural disasters, wars, disrupted supply chains or similar circumstances. The components that can be deviated from in the aforementioned sense are type, amount and payment date of the remuneration components; performance criteria of the variable remuneration components; maximum remuneration (as defined below); relative proportions of the remuneration components to each other. Furthermore, the Supervisory Board may introduce new remuneration components or additional or alternative performance criteria or caps for variable remuneration components. Maximum remuneration for members of the Management Board The total remuneration to be granted for a financial year (maximum expense amount of the company from the sum of all remuneration amounts spent for the financial year in question, including fixed annual salary, fringe benefits, variable remuneration components but excluding any termination benefits) of the members of the Management Board - regardless of whether it is paid out in this financial year or at a later date - is capped (" Maximum Remuneration "). The maximum remuneration (gross) is 2% of the adjusted net profit for the year for the Chairman of the Management Board and 1% of the adjusted net profit for the year for each of the other members of the Management Board. Presentation of the procedure for establishing, implementing and reviewing the remuneration system The remuneration system is determined by the full Supervisory Board, which is supported by the Supervisory Board's HR Committee. To this end, the HR Committee develops the structure and the individual components of the remuneration system and reports on this to the full Supervisory Board in order to prepare its discussion and resolution. Both the HR Committee and the full Supervisory Board can consult external remuneration experts, whose independence must be ensured. External consultants may also be consulted. The remuneration system is regularly reviewed by the HR Committee every three years and whenever a Management Board remuneration agreement is pending, and the HR Committee submits proposals for adjustments to the remuneration system to the Supervisory Board if necessary. The Annual General Meeting shall pass a resolution on the remuneration system whenever a significant change is made to the remuneration system, but at least every four years. If the Annual General Meeting has not approved the remuneration system, a revised remuneration system must be presented for approval at the following Annual General Meeting at the latest. As part of the development and review of the present remuneration system, the Supervisory Board, supported by the HR Committee, subjected the previous structure of the company's Management Board remuneration to an appropriateness review. The detailed discussion of Management Board remuneration included, in particular, a horizontal remuneration comparison in which the target and Maximum Remuneration of the Management Board members was compared the remuneration paid by companies listed in the SDAX and, due to Fielmann Group AG's long-standing membership of the MDAX in the past, in the MDAX. The comparison was made taking into account Fielmann Group AG's sales profitability, net profit for the year, sales and number of employees. Secondly, the Supervisory Board carried out a vertical remuneration comparison, in which the remuneration and employment conditions of the employees of the company and Fielmann Group AG were taken into account. In particular, the basic salary, variable remuneration, the ratio of basic salary to variable remuneration and other employment conditions were examined. The first management level below the Management Board and the employees of all German companies of Fielmann Group AG were used as the relevant comparison groups. In view of the company's business model, the Supervisory Board decided, after careful consideration, to essentially define the criteria for granting variable remuneration components uniformly for all members of the Management Board and only agree individual parameters. To date, no conflicts of interest have for individual Supervisory Board members in connection with the decision on the remuneration system for the Management Board or its review. Should such a conflict of interest arise during the determination, implementation and review of the remuneration system, the Supervisory Board will treat it in the same way as other conflicts of interest in the person of a Supervisory Board member, so that the Supervisory Board member in question can be excluded from the passing of resolutions or, in the event of a more serious conflict of interest, in the deliberations. Should a permanent and irresolvable conflict of interest arise, the Supervisory Board member concerned will resign from office. Early disclosure of conflicts of interest ensures that the decisions of the full Supervisory Board and the Personnel Committee are not influenced by improper considerations. Target total remuneration The target total remuneration for each member of the Management Board is made up of the sum of all remuneration components relevant to the total remuneration. The target total remuneration can also be determined provisionally for a multi-year period and confirmed or adjusted by the Supervisory Board for the upcoming financial year, subject to any extraordinary developments. This also applies to performance criteria for the variable remuneration components, insofar as this remuneration system does not exclude an adjustment. No absolute amount is envisaged for the target remuneration of the variable remuneration component STI. In this respect, the target remuneration for each Management Board member is determined by an individually agreed percentage of Fielmann Group AG's adjusted net profit for the year. With regard to the LTI, the target amount of the annual LTI tranche is agreed in individual contracts. Fixed and variable remuneration components The remuneration system provides for fixed and variable remuneration components. Fixed remuneration components Variable remuneration components Fixed remuneration Fringe benefits STI LTI In addition to the fixed remuneration, which includes fixed remuneration and fringe benefits, each Management Board member receives variable remuneration for their work, which is divided into an STI based on the short-term success of Fielmann Group AG and an LTI based on the long-term success of Fielmann Group AG. According to the model calculations, the share of fixed remuneration (fixed annual salary and fringe benefits) is approximately 25%, while the share of variable remuneration is approximately 75%. The STI accounts for around 50% of total remuneration, while the LTI accounts for around 25% of total remuneration. The aforementioned proportions may change due to future circumstances, in particular the adjustment of individual remuneration components, the development of the costs of the contractually agreed The amount of the net profit for the year may vary depending on the level of fringe benefits and any new appointments. Fixed remuneration components Fixed remuneration Each member of the Management Board receives a non-performance-related fixed salary, which is paid in twelve equal monthly installments. In addition, there is a thirteenth salary amounting to one month's salary, half of which is paid out with the payroll for the months of June and November. Fringe benefits In addition to the fixed remuneration, the members of the Management Board receive fringe benefits. In addition to the reimbursement of reasonable expenses, these mainly the provision of a company car that can also be used privately in accordance with the current guidelines or, alternatively, the payment of a company car allowance. In addition, the Management Board contracts contain other customary provisions with a remuneration value, such as in particular those relating to continued remuneration in the event of illness, death benefits for dependents, remuneration benefits in the event of termination of contract due to permanent incapacity for work, healthcare and the assumption of travel expenses. Furthermore, the Management Board contracts may contain provisions on the assumption of consultancy costs (in particular for legal or tax consultants) incurred in connection with the service for the company and the performance of Management Board duties. In addition, the following insurance policies are taken out for each member of the Management Board: Accident insurance which, in addition to benefits in the event of disability, can also provide for benefits to be paid to the heirs of the Management Board member in the event of death. A pecuniary loss liability insurance (D&O insurance) in compliance with § 93 para. 2 sentence 3 AktG (insofar as the conclusion of such an insurance policy is regarded as a remuneration component under stock corporation law). Any tax liabilities arising from these fringe benefits shall be borne by the relevant member of the Management Board. Variable remuneration components The performance-related variable remuneration consists of a short-term variable remuneration component, the STI, and a long-term variable remuneration component, the LTI.