The performance-related components consist of a bonus and a rolling remu- neration component. Since 2012, 70% of the bonus is paid out annually, with the remaining 30% deferred for a retention period of around three years (share defer- ral). The long-term rolling remuneration component has taken the form of a Per- formance Share Plan since 2012.
If, in its best judgement, the supervisory board deems the extraordinary achievements or successes of a management board member to be worthy of special payments, including special remuneration, it is entitled to award these.
Short-term variable remuneration – bonus
The bonus is calculated based on a percentage share in the company’s earn- ings before tax and interest of the relevant fiscal year (EBIT - as reported). A sum in euro is determined individually as a target bonus for each member of the man- agement board.
The bonus is determined using EBIT (as reported) for all members of the man- agement board. The maximum bonus is capped at twice the target bonus.
The members of the management board will receive a cash payment for 70% of the bonus calculated for fiscal 2014 r directly after the 2015 Annual General Meeting.
In accordance with the share deferral arrangements in all management board contracts, the remaining 30% of the bonus calculated for fiscal 2014 is deferred for a retention period that expires on the date of the Annual General Meeting of the third fiscal year following the reporting period. This portion will be converted into virtual shares of Celesio AG directly after the Annual General Meeting 2015. The number of virtual shares is calculated by dividing the 30% share of the bonus by an initial reference price. The management board participates in price gains and any dividends, but also bears the risk of losses from the conversion date. If Celesio AG decides to carry out any capital measures or restructuring that affect the value of shares issued, as regards their virtual shares, the management board members are treated in the same way as the owners of real shares. The amount paid out from the retained bonus (share deferral) is calculated on the normal calculation date after approximately three years even if the member of the management board has left the company in the meantime. If the Celesio share is delisted or Celesio under- goes a merger or is split up or converted into a different legal form, calculation of the closing reference price will be the date on which the measure takes effect. The pay-out of the virtual shares remains unaffected and, at the end of the three-year retention period, these shares are paid out in cash plus any dividends. The refer- ence share prices used for conversion are based on the average share price of the last 30 stock exchange trading days at the beginning and at the end of the reten- tion period. This share deferral scheme serves as a long-term incentive by strengthening commitment to sustainability and ownership.
Applying the provisions of DRS 17 and IFRS 2, the total expense arising from share-based payment transactions and the fair value of the deferred shares are to be disclosed as of the issue date. The disclosures below are based on expectations of meeting targets for the grant period and the number of virtual shares depend- ing on meeting these targets, as well as the share price on the date of issue of these share-based payments as of 1 January 2014.
2014 Fair value of share deferral on the date of issue EUR k Expected number of virtual shares from share deferral Total expense arising from share-based payments EUR k Marc E. Owen (since 16/07/2014 Chairman) 106 4,085 93
Tilo Köster (since 23/09/2014) 35 1,343 36
Alain Vachon (CFO, since 16/07/2014) 67 2,571 60
Stephan Borchert (until 22/09/2014) 228 9,814 0
Dr Marion Helmes (until 15/07/2014 Speaker
of the Management Board and CFO) 357 15,366 0
Martin Fisher (until 22/05/2014) 182 7,834 0
Total 975 41,013 189
2013 Fair value of share deferral on the date of issue EUR k Expected number of virtual shares from share deferral Total expense arising from share- based payments
EUR k
Dr. Marion Helmes Chief Financial Officer Speaker of the Management Board
(since 4 July 2013) 331 24,871 372
Stephan Borchert 258 19,376 324
Martin Fisher (since 16 September
2013) 68 5,137 56
Markus Pinger
Former Chairman of the Management Board
(until 03 July 2013) 404 30,367 70
Total 1,061 79,751 822
Long-term variable remuneration Performance Cash Plan
The 2011 tranche of the Performance Cash Plan with the parameters of increased share price and accumulated Celesio value added has been paid out in the amount of EUR 74k in accordance with the plan's conditions.
Performance Share Plan
The supervisory board approved the change to the long-term remuneration com- ponent as of 1 January 2012 and passed a resolution to issue a new performance share plan for the period 2012 to 2014 (2012 tranche); this was followed by the 2013 tranche (for the years 2013 to 2015) and the 2014 tranche (for the years 2014 to 2016).
At the beginning of the three-year period of the Performance Share Plan, management board members receive a pledge for a defined initial value in euro (target value). This target value is divided by the average Celesio share price of the last 30 stock exchange trading days prior to the beginning of the tranche plus a mark-up of 10% and converted into virtual shares. The Performance Share Plan of the 2012 tranche, the 2013 tranche and the new 2014 tranche includes a perfor- mance target based on the average earnings per share (EPS) measured over a period of three years. If this performance target is reached, the target is consid- ered to have been met in full (100%). If the performance target is exceeded (150%), the maximum target achievement is 200%, with the amount payable capped at three times the target value. The long-term target is considered not to have been met if the performance target is missed by 20% or more. Each member of the management board is allocated a final number of virtual shares at the end of the term and in accordance with performance against targets.
If the Celesio share is delisted, or Celesio undergoes a merger, or is split up or converted into a legal form not eligible for the capital market, or a domination and profit and loss agreement is concluded (" measure"), then the amount paid out is calculated on the basis of the share price prior to the measure taking effect. The regulations pertaining to the date on which the payment amount plus the accumu- lated virtual dividend is due will not be affected. The Performance Share Plan is payable in cash provided that the targets are met. The amount of the cash pay- ment depends on the target value set for each member of the management board, as well as fulfilment of the performance target, the price development of virtual shares and the dividend paid in the performance period.
The target value for the 2014 tranche was EUR 700k for Marc E. Owen (from 16 July 2014), EUR 275k for Alain Vachon (from 16 July 2014) and EUR 175k for Tilo Köster (from 23 September 2014). A target value of EUR 700k applied for Dr Marion Helmes and EUR 335k for Martin Fisher and EUR 425k for Stephan Borchert.
2014 Fair value of performance share plan on the date of issue EUR k
Number of virtual shares on the date of issue Total expense arising from share-based payments EUR k Marc E. Owen (since 16/07/2014 Chairman) 292 11,413 101
Tilo Köster (since 23/09/2014) 44 1,712 15
Alain Vachon (CFO, since 16/07/2014) 115 4,484 40 Stephan Borchert (until 22/09/2014) 425 16,630 188 Dr Marion Helmes (until 15/07/2014 Speaker of the Management Board and
CFO) 700 27,391 267
Martin Fisher (until 22/05/2014)
335 13,108 45
Total 1,911 74,737 655
2013 Fair value of
performance share plan on the date of issue
EUR k
Number of virtual shares on the date of issue Total expense arising from share-based payments EUR k Dr. Marion Helmes Chief Financial Officer Speaker of the Management Board (since 4 July 2013) 651 48,981 465 Stephan Borchert 492 37,018 501 Martin Fisher (since 16 September 2013) 97 7,298 39 Markus Pinger Former Chairman of the Management Board