Development of Board of Management Compensation Relative to Employee Compensation and the Financial Performance of the Company9

The European Shareholder Rights Directive requires a comparative presentation of the annual change in Board of Management compensation, the financial performance of the company and the average compensation of employees (based on full-time equivalents) over the past five years.

9 Information pursuant to the requirements of the ARUG II draft legislation

The following overview shows the development of the compensation earned by the individual members of the Board of Management in the respective fiscal year according to IFRS in relation to selected financial performance indicators used by the Bayer Group. The total earned compensation may be impacted, for example, by changes in the number of Board of Management members or overlaps between joining and departing Board members, as well as one-time effects of fringe benefits. The financial performance indicators are impacted in particular by the divestment of Covestro and its presentation as a discontinued operation in 2017, and by the acquisition of Monsanto in 2018.

Compensation Earned by the Board of Management in Relation to Company’s Financial Performance

 

 

2014

Change

 

2015

Change

 

2016

Change

 

2017

Change

 

2018

 

 

€ thou­sand

%

 

€ thou­sand

%

 

€ thou­sand

%

 

€ thou­sand

%

 

€ thou­sand

1

These amounts contain severance payments for Marijn Dekkers in 2016, Michael König in 2015 and Erica Mann in 2017.

2

Reporting is based on the financial KPIs initially published for the respective year and their development without regard to any subsequent restatements thereof.

3

The change in sales on a currency- and portfolio-adjusted basis is reported as a key indicator for corporate management.

Compensation earned (€ thousand)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Serving members of the Board of Management as of December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Werner Baumann

 

4,680

–0.2

 

4,671

+3.1

 

4,818

+19.1

 

5,740

–27.2

 

4,180

Liam Condon

 

 

 

2,475

+16.5

 

2,883

–27.1

 

2,103

Dr. Hartmut Klusik

 

 

 

2,709

–5.0

 

2,573

–22.1

 

2,004

Kemal Malik

 

2,849

+15.2

 

3,283

–26.8

 

2,402

+17.1

 

2,812

–37.6

 

1,754

Wolfgang Nickl

 

 

 

 

 

1,446

Stefan Oelrich

 

 

 

 

 

467

Heiko Schipper

 

 

 

 

 

2,983

Former members of the Board of Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marijn Dekkers1

 

8,389

–1.7

 

8,243

–11.3

 

7,311

 

 

Johannes Dietsch

 

1,003

+319.4

 

3,204

–24.2

 

2,429

+65.9

 

4,030

–51.8

 

1,941

Michael König1

 

3,217

+37.0

 

4,407

 

.

 

 

 

Erica Mann1

 

 

 

2,701

+93.3

 

5,220

–91.5

 

446

Prof. Dr. Wolfgang Plischke

 

2,096

 

 

 

 

 

Dieter Weinand

 

 

 

2,730

+6.6

 

2,910

+10.9

 

3,228

Total

 

22,234

+7.1

 

23,808

+15.8

 

27,575

–5.1

 

26,168

–21.5

 

20,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial KPIs2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA before special items (€ million)

 

8,812

+16.5

 

10,266

+10.1

 

11,302

–17.8

 

9,288

+2.8

 

9,547

Core EPS (€)

 

6.02

+13.5

 

6.83

+7.2

 

7.32

–7.9

 

6.74

–11.9

 

5.94

Sales (€ million)3

 

42,239

+2.7

 

46,324

+3.5

 

46,769

+1.5

 

35,015

+4.5

 

39,586

The following overview shows the development of the target cash compensation of the Board of Management in relation to the compensation of all employees in Germany and that of nonmanagerial employees under collective bargaining agreements in Germany. This is calculated based on contractually agreed target entitlements – in accordance with the German Corporate Governance Code – with regard to fixed compensation, the annual bonus and the four-year stock-based compensation (where the respective employee groups are eligible to participate). For nonmanagerial employees in Germany, the 13th monthly salary and the contractually agreed vacation bonus were taken into account. Variable compensation components for both the Board of Management and the other employee groups were based on the assumption of 100% target attainment. Expenditures for fringe benefits (such as home security equipment, indemnity payments for lapsed variable compensation components granted by former employers) were not taken into account due to their irregular nature. Expenditures for pensions were also disregarded in view of the interest sensitivity of the expenses. The aim of this approach is to enhance comparability in the development of compensation.

Development of Average Target Cash Compensation1 of the Board of Management and Employees

 

 

2014

Change

 

2015

Change

 

2016

Change

 

2017

Change

 

2018

 

 

%

 

%

 

%

 

%

 

1

Fixed annual compensation, STI and LTI (not taking into account individual STI payout factor), excluding pensions and fringe benefits; Calculated on the basis of full-time equivalents (FTEs)

2

Excluding the Board of Management

3

Excluding the employees of Bayer 04 Leverkusen Fußball GmbH and of the Currenta Group

The relative changes in average target cash compensation can be influenced by a range of factors and can vary both over time and across the Board of Management, the overall workforce and nonmanagerial employees. This includes changes in the composition of the workforce, various salary adjustments within and outside of collective bargaining agreements, the integration and carving out of business entities, or measures relating to HR policy. The 9.7% increase in the average target cash compensation of all employees in 2016 compared with 2015 was mainly attributable to the carve-out of Covestro, a change in workforce structure, and an increase in the proportion of managerial employees.

Board of Management

 

2,969,385

+0.8

 

2,993,141

+1.9

 

3,050,000

+0.8

 

3,074,400

+1.6

 

3,123,600

All employees2 in Germany3

 

85,658

+4.3

 

89,361

+9.7

 

98,004

+3.7

 

101,662

+2.6

 

104,336

Nonmanagerial employees in Germany3

 

59,967

+2.7

 

61,613

+3.5

 

63,749

+2.8

 

65,512

+3.2

 

67,628

In 2018, the ratio between the average compensation of a Board of Management member and that of all employees in Germany stood at of 30:1, while the ratio between the average compensation of a Board member and that of nonmanagerial employees in Germany was 46:1. For the Chairman of the Board of Management, the ratios were 51:1 in relation to all employees and 78:1 in relation to nonmanagerial employees in Germany.