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.

The current compensation system has been in effect since the beginning of fiscal year 2009/10. The principle of the compensation provisions is to orient the Executive Board’s contracts more strongly to long-term corporate development.

The compensation of the individual Executive Board members is defined in their employment contracts and consists of a series of components, comprising fixed compensation, variable compensation, fringe benefits and pension plans.

The various compensation components are as follows: The compensation of the Executive Board members is made up of fixed and variable components. The fixed parts consist of fixed compensation, the fringe benefits and pension plans. The annual fixed compensation amounted to € 540,000 for the Chief Executive Officer (increased to € 570,000 starting fiscal year 2015/16) and € 378,000 for the ordinary members of the Executive Board (increased to € 399,000 starting fiscal year 2015/16) and is paid out monthly in equal installments. In addition, the Executive Board members receive fringe benefits in the form of benefits in kind, mainly comprising the value of insurance premiums in accordance with the tax guidelines and the use of a company car. The individual Executive Board members must pay tax on these fringe benefits as components of their compensation.

The system for variable compensation consists of two components, which are paid out each year. The first component (Component 1) is dependent on achieving an annual target related to adjusted average consolidated EBT (earnings before taxes of the Group) of three years, in each case related to the current and the two prior fiscal years before the respective fiscal year. The target is EBT derived from ROCE of 15 %. The target bonus of Component 1 amounts to about 60 % of the variable compensation in relation to Component II and can reach a cap of 100 %. If EBT is less than 40 % of the target, Component 1 will not be paid. The maximum amount that can be reached from these components is € 675,000 for the Chief Executive Officer (increased to € 712,500 starting fiscal year 2015/16) and € 450,000 for ordinary members of the Executive Board (increased to € 475,000 starting fiscal year 2015/16).

Component II stipulates that an annual assessment of the joint (Component II a) and individual (Component II b) performance of the Executive Board will be carried out by the Supervisory Board. Both components are based on a qualitative criteria-supported assessment of the long-term Company management.

The target bonus of Component II has a cap of 100 %. At least 50 % of the target bonus is always paid out unless the granting of same would be unreasonable in the sense of Section 87 (2) German Stock Corporation Act (AktG). The maximum amount to be reached from Components II a and II b amounts to € 225,000 for the Chief Executive Officer (increased to € 237,500 starting fiscal year 2015/16) and € 157,500 for each of the ordinary members of the Executive Board (increased to € 166,250 starting fiscal year 2015/16).

In addition, pension plans have been agreed for the individual Executive Board members, with the exception of Dr. Boel. The pension benefits are determined as a percentage of the fixed compensation. The percentage increases based on the length of service on the Board. The pension is payable once the Executive Board member reaches the age of 65 or in the event of his disability. Dr. Boel has a defined contribution pension plan, for which an amount of € 80,000 (increased to € 100,000 starting fiscal year 2015/16) is paid to an insurance company each year.

The employment contracts of Executive Board members include no change of control clauses. In the event of non-­renewal of their Executive Board contracts, Executive Board members (with the exception of Dr. Boel) will, under certain conditions, receive an early retirement pension. These conditions are fulfilled if the Executive Board member has completed at least five years of service as an Executive Board member at Aurubis AG and is at least 55 years old. Dr. Drouven fulfilled these conditions during his previous Executive Board membership and received a pension. These claims were suspended during his dispatch from the Supervisory Board to the Executive Board. The assessment basis for the pension increased slightly due to his new Executive Board membership.

Pensions paid to Executive Board members before they reach 65 years of age have the character of an interim payment. Compensation paid to an Executive Board member for activities outside the Aurubis Group after termination of his contract is offset against the pension until he reaches the age of 65.

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

The Executive Board members can use the accumulated capital at the earliest when they have reached 60 years of age, but not before ceasing to be employed by the Company.

The total compensation paid to active members of the Executive Board for activities in fiscal year 2014/15 amounted to € 5,175,013 including pension expenses.

The following table provides details of the compensation of the individual members:

Benefits granted

                  T 002
                   
in €   Fixed compensation Fringe
 -benefits
Total Variable compensation for one year Variable compensation for several years Total Pension expenses 1) Total compensation
                   
Peter Willbrandt 2013/2014 540,000 33,317 573,317 393,750 504,900 1,471,967 253,879 1,725,846
Executive Board Chairman until October 31, 2014 2014/20153) 270,000 16,458 286,458 196,875 67,838 551,171 232,721 783,892
Contract until March 31, 2015 Min 540,000 16,458 556,458 112,500 0 668,958 232,721 901,679
  Max 540,000 16,458 556,458 225,000 337,500 1,118,958 232,721 1,351,679
Dr. Stefan Boel 2013/2014 378,000 15,234 393,234 275,625 336,600 1,005,459 160,000 1,165,459
Executive Board member since April 19, 2008 2014/2015 378,000 17,813 395,813 275,625 90,450 761,888 160,000 921,888
  Min 378,000 17,813 395,813 157,500 0 553,313 160,000 713,313
  Max 378,000 17,813 395,813 315,000 450,000 1,160,813 160,000 1,320,813
Erwin Faust 2013/2014 378,000 17,945 395,945 275,625 336,600 1,008,170 270,158 1,278,328
Executive Board member since -October 1, 2008 2014/2015 378,000 18,365 396,365 275,625 90,450 762,440 310,852 1,073,292
  Min 378,000 18,365 396,365 157,500 0 553,865 310,852 864,717
  Max 378,000 18,365 396,365 315,000 450,000 1,161,365 310,852 1,472,217
Dr. Frank Schneider 2013/2014 378,000 16,858 394,858 275,625 336,600 1,007,083 256,937 1,264,020
Executive Board member until June 30, 2015 2014/20152) 283,500 13,490 296,990 206,719 67,838 571,547 60,000 631,547
  Min 283,500 13,490 296,990 118,125 0 415,115 60,000 475,115
  Max 283,500 13,490 296,990 236,250 337,500 870,740 60,000 930,740
Dr. Bernd Drouven 2013/2014 0 0 0 0 0 0 0 0
Executive Board Chairman starting November 1, 2014 2014/2015 495,000 4,112 499,112 360,938 124,369 984,419 110,000 1,094,419
  Min 495,000 4,112 499,112 206,250 0 705,362 110,000 815,362
  Max 495,000 4,112 499,112 412,500 618,750 1,530,362 110,000 1,640,362
Total 2013/2014 1,674,000 83,354 1,757,354 1,220,625 1,514,700 4,492,679 940,974 5,433,653
  2014/2015 1,804,500 70,238 1,874,738 1,315,782 440,945 3,631,465 873,573 4,505,038
  Min 2,074,500 70,238 2,144,738 751,875 0 2,896,613 873,573 3,770,186
  Max 2,074,500 70,238 2,144,738 1,503,750 2,193,750 5,842,238 873,573 6,715,811
                    
1) Pension expenses in accordance with HGB amounted to € –315,552 (previous year: € 394,215) for Peter Willbrandt, € 429,361 (previous year: € 279,624) for Erwin Faust, € –140,771 (previous year: € 226,352) for Dr. Frank Schneider, € 160,000 (previous year: € 160,000) for Dr. Stefan Boel and € 232,607 € (previous year: € 0) for Dr. Bernd Drouven.
2) Due to Dr. Schneider’s resignation, 9/12 of the previously granted salary is listed.
3) For 2014/15, 50 % of the benefits granted are listed due to the end of the contract on March 31, 2015.
The variable compensation for several years for fiscal year 2014/15 is calculated according to the ratio of actual EBT to the target EBT of the Aurubis Group and the average of fiscal years 2012/13, 2013/14 and 2014/15. The average actual EBT amounts to € 198 million, a 51.2 % target achievement.

Inflow

                  T 003
                   
in €   Fixed -compensation Fringe
 -benefits
Total Variable compensation for one year Variable compensation for several years Total Pension expenses 1) Total compensation
                   
Peter Willbrandt 2013/2014 540,000 33,317 573,317 337,500 310,500 1,221,317 253,879 1,475,196
Executive Board Chairman until October 31, 2014                  
Contract until March 31, 2015 2014/2015 270,000 16,458 286,458 168,750 155,250 610,458 232,721 843,179
Dr. Stefan Boel 2013/2014 378,000 15,234 393,234 236,250 207,000 836,484 160,000 996,484
Executive Board member since April 19, 2008 2014/2015 378,000 17,813 395,813 295,313 230,400 921,526 160,000 1,081,526
Erwin Faust 2013/2014 378,000 17,945 395,945 236,250 207,000 839,195 270,158 1,109,353
Executive Board member since October 1, 2008 2014/2015 378,000 18,365 396,365 295,313 230,400 922,078 310,852 1,232,930
Dr. Frank Schneider 2013/2014 378,000 16,858 394,858 236,250 207,000 838,108 256,937 1,095,045
Executive Board member until June 30, 2015 2014/2015 283,500 13,490 296,990 177,188 2) 144,788 2) 618,966 60,000 678,966
Dr. Bernd Drouven 2013/2014 0 0 0 0 0 0 0 0
Executive Board Chairman starting November 1, 2014 2014/2015 495,000 4,112 499,112 412,500 316,800 1,228,412 110,000 1,338,412
Total 2013/2014 1,674,000 83,354 1,757,354 1,046,250 931,500 3,735,104 940,974 4,676,078
  2014/2015 1,804,500 70,238 1,874,738 1,349,064 1,077,638 4,301,440 873,573 5,175,013
                    
1) Pension expenses in accordance with HGB amounted to € –315,552 (previous year: € 394,215) for Peter Willbrandt, € 429,361 (previous year: € 279,624) for Erwin Faust, € –140,771 (previous year: € 226,352) for Dr. Frank Schneider, € 160,000 (previous year: € 160,000) for Dr. Stefan Boel and € 232,607 € (previous year: € 0) for Dr. Bernd Drouven.
2) Variable compensation for the period from October 1, 2014 to June 30, 2015
The variable compensation for several years for fiscal year 2014/15 is calculated according to the ratio of actual EBT to the target EBT of the Aurubis Group and the average of fiscal years 2012/13, 2013/14 and 2014/15.
The average actual EBT amounts to € 198 million, a 51.2 % target achievement.

Mr. Willbrandt resigned from the Executive Board on October 31, 2014 by mutual agreement. The fixed compensation was paid until March 31, 2015. The three components of the variable compensation were established at the time of his resignation and were paid out in fiscal year 2014/15. The contributions to the additional defined contribution company pension plan were paid until March 31, 2015.

Dr. Schneider resigned from the Executive Board on June 30, 2015. The termination agreement foresees a lump-sum compensation, which includes the fixed compensation until April 30, 2016 as well as the variable compensation for fiscal year 2014/15 and the proportional variable compensation for fiscal year 2015/16. The payout will be in January 2016. The contributions to the additional defined contribution company pension plan were paid until April 30, 2016.

The Company has set up pension provisions on the basis of IFRS for the Executive Board members. Allocations to the pension provisions for active members of the Executive Board in the year under review amounted to € 873,573. This amount comprises the service cost and contributions to an external pension fund.

Former members of the Executive Board and their surviving dependents received a total of € 2,011,433, while € 25,638,636 has been provided for their pension entitlement.

Compensation for the Supervisory Board

The compensation paid to the Supervisory Board is agreed at the Annual General Meeting and is covered by Section 12 of Aurubis AG’s Articles of Association. It is based on the duties and responsibilities of Supervisory Board members as well as the business situation and the Company’s business success.

In addition to the reimbursement of expenses incurred while carrying out his/her office, each member of the Supervisory Board receives a fixed fee of € 40,000 per ­fiscal year. The Chairman of the Supervisory Board receives twice this amount and his deputy 1.5 times this amount. Supervisory Board members who serve on a Supervisory Board committee receive an additional € 5,000 per fiscal year for each committee served on, not however exceeding € 10,000 per fiscal year. Supervisory Board members who chair a Supervisory Board committee receive an additional € 10,000 per fiscal year per chairmanship, not however exceeding € 20,000 per fiscal year.

In addition to the fixed fee, every member of the Supervisory Board receives an annual bonus linked to the Company’s long-term performance of € 250 for every € 1,000,000 of the Company’s adjusted earnings before taxes (EBT) in excess of an adjusted EBT of € 50,000,000 per annum on average over the last three fiscal years. Adjusted EBT is EBT in accordance with IFRS before revaluation of LIFO inventories using the average cost method and without taking into account the effects of copper price fluctuations in the valuation of inventories of the former Cumerio companies. It has averaged € 170 million in the last three fiscal years. The Chairman receives twice and his deputy 1.5 times this amount.

The fixed compensation (excluding compensation for committee membership) and the bonus linked to the Company’s long-term performance are limited to € 80,000 per fiscal year for each member of the Supervisory Board. The limit for the Chairman amounts to € 160,000 per fiscal year and € 120,000 per fiscal year for his deputy.

Furthermore, Supervisory Board members receive an attendance fee of € 500 for each meeting of the Supervisory Board and of its committees attended.

The following table provides details of the compensation of the individual members of the Supervisory Board for fiscal year 2014/15:

            T 004
in €            
Name   Fixed compensation Variable compensation Compensation for committee membership Attendance fees Total
             
Prof. Dr.-Ing Heinz Jörg Fuhrmann. 2013/2014 80,000 58,500 20,000 3,000 161,500
  2014/2015 80,000 60,000 20,000 5,000 165,000
Hans-Jürgen Grundmann 2013/2014 60,000 43,875 10,000 5,000 118,875
  2014/2015 60,000 45,000 10,000 6,500 121,500
Burkhard Becker 2013/2014 40,000 29,250 10,000 4,500 83,750
  2014/2015 40,000 30,000 10,000 4,000 84,000
Dr. Bernd Drouven 2013/2014 40,000 29,250 5,000 3,000 77,250
  2014/2015 3,397 2,548 425 0 6,370
Jan Eulen 2013/2014 40,000 29,250 5,000 4,000 78,250
  2014/2015 40,000 30,000 5,000 4,000 79,000
Dr. Joachim Faubel 2013/2014 40,000 29,250 0 2,500 71,750
  2014/2015 40,000 30,000 0 2,500 72,500
Renate Hold 2013/2014 40,000 29,250 10,000 3,000 82,250
  2014/2015 40,000 30,000 10,000 5,000 85,000
Sandra Reich 2013/2014 40,000 29,250 5,000 2,500 76,750
  2014/2015 40,000 30,000 5,000 1,000 76,000
Dr. Thomas Schultek 2013/2014 40,000 29,250 5,000 3,000 77,250
  2014/2015 40,000 30,000 5,000 5,000 80,000
Rolf Schwertz 2013/2014 40,000 29,250 0 2,500 71,750
  2014/2015 40,000 30,000 0 2,500 72,500
Prof. Dr. Fritz Vahrenholt 2013/2014 40,000 29,250 10,000 2,500 81,750
  2014/2015 40,000 30,000 10,000 5,000 85,000
Dr.-Ing. Ernst J. Wortberg 2013/2014 40,000 29,250 15,000 4,500 88,750
  2014/2015 40,000 30,000 15,000 4,000 89,000
Total 2013/2014 540,000 394,875 95,000 40,000 1,069,875
  2014/2015 503,397 377,548 90,425 44,500 1,015,870

On this basis, the Supervisory Board members received a total of € 1,015,870.

Hamburg, December 10, 2015

The Executive Board

Erwin Faust
(Spokesman)

Dr. Stefan Boel
(Member)

Supervisory Board

Prof. Dr.-Ing. Heinz Jörg Fuhrmann
(Chairman)