Report on Compensation

The remuneration report describes the principles underlying the system of remuneration for the members of the Management Board and the Supervisory Board of Deutsche Wohnen AG and explains the composition and amount of the individual remuneration paid to each of the Board members.

System of remuneration for the Management Board

The remuneration system for the Management Board and the total remuneration of the individual members of the Management Board are determined by the Supervisory Board and are subject to regular review. The remuneration is governed by the German Stock Corporation Act (AktG), supplemented by the regulations of the German Corporate Governance Code (GCGC).

Criteria for the appropriateness of the remuneration paid to members of the Management Board are the responsibilities of the individual member, his/her personal performance, the economic situation, the success and future prospects of the company, the extent to which the amount of his/her remuneration is customary among his/her peers and the remuneration structures within the company. The system of remuneration as a whole is geared towards the sustainable development of the company.

The contracts of all of the members of the Management Board provide for the payment of compensation in the event that their term of office ends early for reasons other than termination for good cause. The amount of this payment is limited to a maximum of two years' remuneration (settlement cap) and will not constitute remuneration for more than the residual term of the employment contract. The contracts also provide for the payment of compensation in the event of an early termination of the term of office as a result of a change of control, in which case the amount of the payment is limited, in line with sec. 4.3.2 of the GCGC, to a maximum of three years' remuneration and will not constitute remuneration for more than the residual term of the employment contract.

In addition to fixed remuneration, the members of the Management Board receive variable short-term and variable long-term remuneration, which may be withheld in the event of the non-attainment of targets and is also subject to an upper limit. The members of the Management Board, moreover, receive benefits in kind in the form of insurance premiums and personal use of means of communication and company vehicles. The contracts also authorise the Supervisory Board to approve bonuses in the event of extraordinary developments, the amount of which will is limited to the amount of annual fixed remuneration of the individuals concerned. No pension arrangements have been made.

The variable short-term remuneration component – short-term incentive (STI) – is orientated towards short-term company targets, which are agreed annually in a target agreement between the Management Board and the Supervisory Board. The level of target attainment is determined after the respective financial year has ended. All claims to remuneration will be forfeited if the level of target attainment is lower than 75%, with the upper limit in this regard being 125%.

The variable long-term remuneration component – long-term incentive (LTI) – was revised in 2014. The stock option programme 2014 (Aktienoptionsprogramm - "AOP 2014") enables the members of the Management Board, who shape and implement the company's business strategy and are thus materially responsible for its performance, to partake in the financial risks and opportunities to which the company is exposed.

However, in order to safeguard the shareholders' interest in the sustainable enhancement of the value of the company, the stock options may only be exercised where, at the end of a four-year waiting period, defined performance targets have been reached, as follows: increase in (i) adjusted NAV per share (weighting: 40%), (ii) FFO I (without disposals) per share (weighting: 40%) and (iii) the share price development (weighting: 20%). Each of the above-mentioned performance targets in turn comprises a minimum target, which must be attained in order to render half of the stock options allotted to this performance target exercisable. In addition, there is a maximum target, upon the attainment of which all of the share stock options allotted to this performance target will become exercisable. The minimum target will be attained upon target attainment of 75% and the maximum target will be attained upon target attainment of 150%, taken across all of the individual targets. The performance targets take account of both the development in absolute terms of the key industry-specific indicators Adjusted NAV per share and FFO I (without disposals) per share on the basis of the company's four-year projections prior to the issuance of any stock options, and also the relative performance of the Deutsche Wohnen share as compared to a group of its publicly listed German competitors. This is intended to encourage the beneficiaries of the programme to act in furtherance of the goal of attaining positive sustainable performance on the part of the company.

In accordance with sec. 193 para. 2 sent. 4 of the German Stock Corporation Act (AktG), the waiting period for a tranche of stock options will in each case commence on the date of issue and end four years after that date. The period for the exercise of the options is three years. Stock options that are not or cannot be exercised by the end of the relevant seven-year term will expire or be forfeited without reparation or compensation.

The following stock options have been granted to date:

The number of exercisable stock options per tranche will conclusively be determined upon the expiration of the waiting period and in accordance with the degree of the achievement of the above-mentioned criteria.

In addition to their respective stock options, Mr Michael Zahn holds 26,389, Mr Lars Wittan 11,104 and Mr Philip Grosse 500 shares in the company.

Illustrative overview of the number of the company's shares and stock options held by the members of the Management Board (by way of example, on the basis of exercisability upon target attainment levels of 75% and 150%):



The members of the Management Board have been granted the following remuneration in return for their activities as members of the Board:



The members of the Management Board have received the following amounts in return for their activities as members of the Board:



Special remuneration was granted in 2013 for the successful acquisition of GSW Immobilien AG. The final instalment, which had been granted subject to the realisation of synergies and was to be immediately invested in shares of Deutsche Wohnen AG, was paid out in 2015.

The PSU Plan 2012 and the retained portion of his short-term variable remuneration in the total amount of EUR 0.4 million were paid out to the former member of the Management Board, Helmut Ullrich, in 2016.

Andreas Segal, a former member of the Management Board, was paid a severance package in the amount of EUR 1.6 million upon his early departure from the company. Apart from this, his agreement provided for the payment of compensation with regard to the existing LTI in the amount of EUR 0.6 million. No further amounts of remuneration were paid to Mr Segal in 2016.

Given that Mr Philip Grosse was only appointed a member of the Management Board in 2016, no amounts of remuneration were paid to him in this capacity with respect to 2015.

No loans or advances were granted to members of the Management Board of Deutsche Wohnen AG in the financial year 2016.

System of remuneration for the Supervisory Board

Each member of the Supervisory Board receives a fixed remuneration of EUR 60 k; the Chairman of the Supervisory Board receives double that amount and the Deputy Chairman of the Supervisory Board receives one and a half times that amount as remuneration. Each member of the Supervisory Board receives lump-sum remuneration in the amount of EUR 10 k per financial year for his/her membership of the Audit Committee, with the Chairman receiving double that amount. Remuneration for membership of any other Supervisory Board committees, with the exception of the Nomination Committee, is paid in the amount of EUR 5 k per member, committee and financial year. Each member of the Nomination Committee receives EUR 2.5 k per committee meeting.

The Supervisory Board remuneration for the financial year amounts to EUR 542.5 k (previous year: EUR 521 k) net of value added tax. Mr Flach received EUR 147.5 k net (previous year: EUR 140 k), Dr Kretschmer received EUR 122.5 k net (previous year: EUR 118 k), Mr Clement received EUR 67.5 k net (previous year: EUR 60 k), Mr Hünlein received EUR 65 k net (previous year: EUR 68 k), Dr Stetter received EUR 75 k net (previous year: EUR 73) and Mr Wisser received EUR 65 k (previous year: EUR 63 k).

The company will reimburse the members of the Supervisory Board for any reasonable expenses incurred by them in the performance of their duties. The company will also reimburse the amount of any value added tax accruing on the remuneration paid to the members of the Supervisory Board, provided that the latter are entitled to invoice the company for the value added tax on a separate basis and avail themselves of this option.

Furthermore, the company has taken out liability insurance on behalf of the members of the Supervisory Board (so-called D&O insurance), with a retention of 10% of the value of the damage in question. This retention amount is limited, for all events of damage occurring within an annual policy period, to one-and-a-half times the amount of the fixed annual remuneration for the member of the Supervisory Board in question.

No loans were granted by the company to members of the Supervisory Board.

Current share price

 

Video



watch video
 

Share/Recommend

Links