With the Remuneration Report, the Supervisory Board and the Management Board of SolarWorld AG also comply with the German Corporate Governance Code (GCGC) in its most recent version of May 26, 2010. While section 3.10 GCGC makes provision for the Corporate Governance Report, which is contained in this annual report under an appropriate headline, and apart from that is also covered in the Supervisory Board Report, section 4.2.5 GCGC stipulates the explanation of the remuneration system for members of the Management Board, including the disclosure of individual remuneration; section 5.4.6 GCGC recommends – also as part of the Corporate Governance Report – individualized reporting of Supervisory Board remuneration broken down by components and including compensation paid or benefits granted for personal services rendered, in particular, consulting and brokerage services.
MANAGEMENT BOARD REMUNERATION.
Ultimately, the Management Board remuneration also complies in all other respects with the requirements of the VorstAG. Both the individual performance of Board members and the customariness in the industry are taken into account, as well as its orientation towards a sustainable corporate development. The deductible for members of the Management Board of at least ten percent of damage claims and up to at least one and a half times of their fixed annual compensation was already agreed upon with respect to D&O insurance as of January 1, 2010. Incidentally, Management Board remuneration at SolarWorld AG was already determined according to these principles before the VorstAG came into force.
As fringe benefits, all members of the Management Board receive the costs respecting their accident and D&O insurance, as well as a company car in the upper medium range for their own use. Furthermore, business-related payments, expenditure and expenses are reimbursed pursuant to § 670 German Civil Code (Bürgerliches Gesetzbuch, BGB). In addition, the board members in charge of finance (CFO), operations (COO), sales (CSO), and human resources and brand (CHRBO) receive grants towards their health insurance. Finally, mention must be made of the 2011 share of remuneration paid to the Chairman of the Management Board (CEO) in his capacity as Chairman of the Supervisory Boards of Deutsche Solar AG as well as Sunicon AG. This position was eliminated on January 13, 2011, which also ended the Supervisory Board activities of Dr. Recktenwald and Dr. Gansen, since on this day the change in the legal form from an AG to a GmbH was entered in the Register of Companies. Due to the initial full consolidation of Solarparc AG in the year under review, the CEO’s remuneration as Chief Executive Officer (CEO) of Solarparc AG for 2011 must also be taken into account. The relevant amounts are shown in the table Management Board remuneration.
Management contracts do not contain any severance provision for the case of premature termination of an employment relationship.
There is no separate pension entitlement, which is why Management Board members are permitted to convert parts of their remuneration into pension provisions.
The fixed annual compensation is to be paid to the Management Board members in twelve monthly installments at the end of each month. In addition, every Management Board member receives variable, performance-dependent special compensation that amounts to an individually negotiated euro amount per eurocent and share of the dividend distributed to shareholders. The amount is paid within four weeks of the AGM during which the dividend payment to be used as a basis has been decided upon. The following individualization of Management Board compensation refers, on the one hand, to the fixed remuneration that has fallen due and was paid in the year 2011. On the other hand, the variable compensation for fiscal year 2011 is also included, but this will not fall due until after the upcoming AGM; apart from that, it will depend on approval of the profit appropriation proposal by management, which provides for the distribution of 9 eurocents per share.
Variable compensation is capped in such a way that, per year, a member of the Management Board cannot receive more than a multiple of the fixed compensation that has been agreed with the Supervisory Board. The sustainability component, stipulated by section 5.4.6 GCGC and § 87 Sec. 1, sentence 3 AktG for variable compensation of the Management Board, is complied with as follows with regard to an assessment basis of several years: Initially, only 75 percent of the bonus for the last fiscal year is paid out. Then, based on a three-year assessment, an average value is determined. If this is below the initial payment of 75 percent, no additional amounts are paid. If this value is higher, a corresponding back payment is made.
In accordance with a resolution of the AGM in 2009, the total management compensation per member of the Management Board is capped to 20 times the average employee remuneration. On May 20, 2010, the AGM also declared the approval of the system of remuneration for members of the Management Board pursuant to § 120 Sec. 4 AktG.
The annual Management Board compensation fixed in terms of its structure by the Supervisory Board and agreed with all Management Board members of SolarWorld AG is composed of fixed and variable compensation components. It is guided by § 87 AktG, according to which the total remuneration for an individual Management Board member must be in appropriate relation to their tasks and the situation of the company. Where the Act on the Appropriateness of Management Board Remuneration (Gesetz zur Angemessenheit der Vorstandsvergütung, VorstAG), passed by the Bundestag on June 18, 2009, also provides for medium- and long-term remuneration components, these were taken into consideration in new management contracts and in the extension of expiring contracts. Only the management contracts with Frank Henn and Dr.-Ing. E. h. Frank Asbeck, which run out on May 31, 2013, and January 9, 2014, respectively, are to be adjusted accordingly, if necessary. Management Board remuneration now already meets all appropriateness limits as well as the recommendations of the GCGC; account is taken of the special conditions of the company in the context of the Group as well as the individual connection in the personal and professional field, taking into consideration the relevant environmental conditions. In this context, the financial situation of the SolarWorld Group is also considered. This in turn is reflected in the dividend distribution possibilities that form the basis for the variable Management Board compensation.
SUPERVISORY BOARD REMUNERATION.
The Supervisory Board remuneration is net so that turnover tax is added if a member of the Supervisory Board is liable to pay turnover tax. Fixed annual remuneration is paid retroactively for the closed fiscal year. Variable remuneration also refers to the fiscal year ended and becomes due upon the AGM that passes the resolution on a dividend to be distributed.
Should the next AGM approve a dividend of 9 eurocent per share, variable remuneration of every member of the Supervisory Board will amount to € 23,751.50. As regards the meeting attendance fees, with nine Supervisory Board meetings in addition to the AGM on May 24, 2011, this amounted to a total of € 5,000.00 net per member.
With respect to further details, we refer to the table Supervisory Board remuneration.
With regard to the information recommended in the last paragraph of section 5.4.6 GCGC, it is pointed out that the Chairman of the Supervisory Board of SolarWorld AG is a partner in the law firm of Schmitz Knoth Rechtsanwälte. Essentially, this firm provides legal advice and representation for the SolarWorld Group through other partners and employees of the law firm as well as the required international coordination.
As far as the law firm's own service provision in the year under review 2011 is concerned, Schmitz Knoth Rechtsanwälte invoiced a total amount of € 520,600.40, excluding turnover tax and tax-free out-of-pocket expenses. Additionally, further costs for legal proceedings amounting to € 52,027.30 in total were incurred, of which an amount of € 35,376.40 has already been reimbursed by the opponents. After the deduction of cost reimbursements, SolarWorld AG had incurred lawyer's fees amounting to € 537,251.30. For the 2011 performance period, further legal costs were incurred by the subsidiaries that amounted to € 150,610.20 and € 133,937.11 for court fees for Deutsche Solar GmbH, of which € 61,138.40 is reimbursable, € 11,614.20 for Deutsche Cell GmbH, € 2,758.60 for Solar Factory GmbH, € 195.00 for SolarWorld Industries Deutschland GmbH, € 7,085.00 for Sunicon GmbH, € 41,935.40 for SolarWorld Innovations GmbH and € 260.00 for SolarWorld Solicium GmbH. Due to the public takeover by SolarWorld AG of Solarparc AG in the year under review, which resulted in lawyer's fees of € 58,869.00, and its initial consolidation, this company must also be taken into account. All individual items within the group amount to a total of € 979,892.21 (2010: € 723,819.90 excl. Solarparc AG), of which € 572,627.70 were subject to approval by SolarWorld AG. An amount of € 35,376.40 has been reimbursed by third parties; an additional amount of € 61,138.40 is still reimbursable. The increase in the total sum to € 979,892.21 as compared to 2010 is due to the fact that Solarparc AG was included in the calculations for the first time as a result of the public take-over and that Deutsche Solar GmbH had to conduct more legal proceedings than in the previous year. All individual items and the total sum accepted by the group were discussed and approved by the Supervisory Board of SolarWorld AG, both at the meeting on February 7, 2012 and at the closing meeting on February 23, 2012 with BDO Wirtschaftsprüfungs AG. Commissioning was approved in each individual case, and the necessity for and appropriateness of the measures were confirmed after completion of the services.
Due to the initial full consolidation of Solarparc AG in the year under review, the Supervisory Board remuneration from Solarparc AG must also be taken into account as regards the members of the Supervisory Board of SolarWorld AG, who are also members of the Supervisory Board of Solarparc AG. The relevant amounts are shown in the table Supervisory Board remuneration.
In conclusion, it is pointed out that the Supervisory Board members, Dr. Claus Recktenwald and Dr. Georg Gansen, were each Deputy Chairman of the Supervisory Board of Deutsche Solar AG until January 13, 2011. The Chairman of the Supervisory Board of SolarWorld AG, Dr.-Ing. E. h. Frank Asbeck, was Chairman of that Supervisory Board. Supervisory Board remuneration, excluding variable remuneration agreed, at Deutsche Solar AG amounted to € 25,000.00 net per year, plus a meeting attendance fee each of € 700.00 net. For the period to January 13, 2011, Supervisory Board remuneration was € 890.41 each. Dr. Claus Recktenwald, Dr. Georg Gansen and Dr.-Ing. E. h. Frank Asbeck were also members of the Supervisory Board of Sunicon AG until January 13, 2011. Supervisory Board remuneration, excluding variable remuneration agreed, at Sunicon AG amounted to € 15,000.00 net per year, plus a meeting attendance fee of € 400.00 net each. For the period to January 13, 2011, Supervisory Board remuneration was € 534,25 each.
The AGM on May 24, 2011, modified the Supervisory Board remuneration, which was approved earlier at the AGM of May 25, 2005. It still consists of fixed remuneration, performance-related special remuneration, fringe benefits and reimbursement of out-of-pocket expenses. Current Supervisory Board remuneration has been applicable since January 1, 2011, and also applies to the following years, unless a new AGM passes different resolutions for the future. Fixed remuneration for a member amounts to € 35,000.00, for the Deputy Chairman to € 52,500.00 and for the Chairman to € 70,000.00. A lump sum of € 500.00 for every meeting attended is paid as reimbursement of expenses. In addition, the company pays variable remuneration in relation to a basic amount of € 2,639.055; this basic amount is to be multiplied by each dividend cent if a dividend has been adopted. Ultimately, the company assumes the premium payments for insurance cover concerning legal liability arising from Supervisory Board activities (D&O insurance). In accordance with the GCGC, the Supervisory Board has also agreed upon the deductible that is compulsory for the Management Board pursuant to the VorstAG, effective as per July 1, 2010.