GEA GROUP AG REMUNERATION REPORT
EXCERPT FROM THE ANNUAL REPORT 2023
GEA.com
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REMUNERATION
REPORT
This Remuneration Report summarizes the principles governing remuneration of the members of the Executive Board and the Supervisory Board. It provides an overview of the system of Executive Board remuneration and explains the objectives of the remuneration system - which has been in force since the beginning of 2021 and has applied to all Executive Board members since the beginning of 2022.
The Remuneration Report also provides individualized and specific information on remuneration awarded and due to current and former members of the GEA Group Aktiengesellschaft Executive Board and Supervisory Board in fiscal year 2023, as well as benefits commitments. Disclosures related to the remuneration of board members comply with the requirements of the German Stock Corporation Act and the applicable German and international accounting standards.
General information on the remuneration of the members of the Executive Board
Acting on the recommendation of the Presiding and Sustainability Committee, the Supervisory Board deter mines the total remuneration of the individual Executive Board members and resolves the remuneration system applicable to the Executive Board. The Supervisory Board reviews the appropriateness of the remuneration at regular intervals. Criteria for determining the appropriateness of the remuneration include the responsibilities of the individual Executive Board members, their respective personal performance, the business situation, the success and the future prospects of the company, the result of the vote of the last Annual General Meeting on the remuneration report as well as the level of the remuneration compared with peer companies and the remuneration structure in place in other areas of the group.
Effective January 1, 2021, the Supervisory Board adopted the remuneration system that was approved by a majority of 89.54 percent at the Annual General Meeting on April 30, 2021 in accordance with section 120a(1), sentence 1 of the Aktiengesetz (AktG - the German Stock Corporation Act). The remuneration system for Executive Board members was revised to comply with the requirements of the new section 87a of the AktG and the recommendations of the German Corporate Governance Code as amended on December 16, 2019 (GCGC). An important consequence of the revision was the adoption of a new long-term incentive plan for Executive Board members. In addition, the basic remuneration, as well as the target remuneration for the Short Term Incentive (STI) and the Long Term Incentive (LTI) were increased by 20 percent. The contributions to the company pension plan remained unchanged. The remuneration system applies consistently to current Executive Board members since January 1, 2022. Details can be found in this section and are available on the gea.com website under "Company - Investors - Corporate Governance - Remuneration".*
*) Unaudited information
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Principles of the remuneration system
The remuneration system is characterized by the following basic principles:
- Strategic relevance: Performance-based remuneration components ensure support for the key objectives of the business strategy, in particular continuous, sustainable and profitable growth.
- Pay for Performance: The pay for performance concept is incorporated by linking remuneration to the achievement of predefined and ambitious performance criteria. In addition, malus and clawback provisions are also implemented.
- Sustainability and the long term orientation: The promotion of sustainable and long-term development is achieved through sustainability-related and long-term-oriented performance criteria with significant weighting. In addition, the sustainability aspect is emphasized through the comparative analysis with DAX 50 ESG companies.
- Long-termshareholder interests: Sustainable value growth is taken into account through the four-year term and the long-term incentive's (LTI) strong share orientation, as well as share ownership guidelines.
- Consideration of remuneration and employment conditions of the employees: When determining the remuneration of the Executive Board, its appropriateness in comparison to senior management and the workforce as a whole is also examined. In addition, employee satisfaction as an expression of compensation and employment conditions of the employees influences the amount of the variable remuneration of the Executive Board.
- Reasonable linkage between executive and employee remuneration: In the case of variable remuneration, care is taken to achieve a consistent steering and incentive effect between the Executive Board, senior management and employees.
- Regulatory conformity: The remuneration system for the Executive Board complies with the regulations of the German Stock Corporation Act and takes into account the recommendations of the GCGC in the version applicable at the time.
Target total remuneration under the remuneration system
The target total remuneration of the Executive Board members is composed of non-performance-related and performance-related components as follows:
Relative proportion of the components in the total target remuneration
Remuneration structure - | Remuneration structure - | |||||||||
Base salary to variable | components | |||||||||
components | ||||||||||
~30 - 34 % | ||||||||||
~49 - 57 % | ||||||||||
~19 - 23 % | ||||||||||
~1 - 2 % | ||||||||||
~9 - 13 % | LTI | |||||||||
~43 - 51 % | Bonus/STI | |||||||||
~33 - 36 % | Fringe benefits | |||||||||
Variable remuneration | Company pension plan | |||||||||
Base salary | Fixed annual salary | |||||||||
The non-performance-related components comprise a fixed annual salary, a company pension plan (bAV) and fringe benefits.
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The performance-related components comprise the bonus or short-term incentive (STI) and long-term incentive (LTI). The STI is structured as a target bonus system, which is paid out based on the financial performance criteria EBITDA (earnings before interest, taxes, depreciation and amortization) and ROCE (return on capital employed), each adjusted for restructuring expenses and effects from acquisitions and divestments (so called M&A-effects) and a criteria-based modifier, which takes into account the collective and individual performance of the Executive Board and its members, respectively. It is composed as follows:
The LTI - the second performance-related component - is structured as a Performance Share Plan, which is paid out based on the relative total shareholder return (relative TSR), strategic targets (generally ESG targets) and the company's share price performance. It is composed as follows:
One-year performance period | Target | ||||||||||||
amount | |||||||||||||
× | = | ||||||||||||
+ | |||||||||||||
Financial targets | × | Payout in cash | ø Share price | ||||||||||
(0% - 200%) | (3 months) | ||||||||||||
Target | |||||||||||||
LTI | |||||||||||||
STI | amount | Modifier | (25% to be invested in | = | |||||||||
target amount) | |||||||||||||
Financial target I | GEA shares, Cap at 200% of | Allocation | |||||||||||
(50% EBITDA) | (0.8 - 1.2) | of virtual | |||||||||||
+ | perfor | × | |||||||||||
Financial target II | mance | ||||||||||||
(50% ROCE) | shares | ||||||||||||
Payout in cash | ||
Four-year performance period | (25% to be invested in GEA shares) | |
= | ||
(Target achievement 0% - 200%) | ||
ø Share price | ||
(3 months) incl. dividend equivalent | ||
Relative TSR | x | |
(relative Total Shareholder Return (TSR) vs. Companies of DAX 50 ESG, | Final count of | |
yearly lock-in [weighting 60%]) | ||
+ | = | virtual performance |
Strategic targets | shares | |
(strategic targets, incl. ESG targets, yearly lock-in [weighting 40%]) | ||
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General information on the remuneration of the members of the Supervisory Board
In principle, the remuneration of the Supervisory Board members consists solely of fixed remuneration. It does not include a performance-related component.
At the Annual General Meeting of April 27, 2023, the remuneration of Supervisory Board members was increased retroactively to January 1, 2023, and an amended version of section 15 of the Articles of Association was adopted by a majority of 99.57 percent.
Pursuant to section 15(1) of the Articles of Association, each Supervisory Board member receives fixed annual remuneration of EUR 70 thousand payable after the end of each fiscal year, in addition to the reimbursement of their expenses. The Chairman of the Supervisory Board receives two-and-a-half times and his deputy one- and-a-half times this amount. In accordance with section 15(2) of the Articles of Association, members of the Presiding and Sustainability Committee and the Audit and Cybersecurity Committee (former Audit Committee) each receive an additional EUR 45 thousand and members of the Innovation and Product Sustainability Committee an additional EUR 35 thousand. The chairs of the committees receive twice the respective amount. No separate remuneration is paid to members of the Mediation Committee or the Nomination Committee. Members who join or leave the Supervisory Board and/or its committees during the year only receive a pro-rata amount of remuneration for the duration of their membership. After the end of the fiscal year - pursuant to section 15(3) of the Articles of Association - the Supervisory Board members also receive an attendance fee of EUR 1 thousand for each meeting of the Supervisory Board, the Presiding and Sustainability Committee, the Audit and Cybersecurity Committee or the Innovation and Product Sustainability Committee which they attend. In fiscal year 2023, the Supervisory Board held eight meetings, the Presiding and Sustainability Committee met six times, the Audit and Cybersecurity Committee convened on four occa sions, the Nomination Committee held four meetings while the Innovation and Product Sustainability Committee met twice.
In fiscal year 2023, the Supervisory Board issued a recommendation for the first time that Supervisory Board members commit voluntarily to purchase GEA shares. The majority of Supervisory Board members have voluntarily committed, with effect from fiscal year 2023, each to use 25 percent of their undisbursed (gross) remuneration (excluding attendance fees) to acquire GEA shares and to hold these until they leave the Supervisory Board. This purchase obligation applies until a total volume equivalent to a full year's remuneration of the respective Supervisory Board member is reached.
Overview of the past fiscal year
Personnel
There has been a change in the composition of the Executive Board compared with the previous year. Marcus A. Ketter passed away suddenly on August 6, 2023. As a result, the Supervisory Board appointed Bernd Brinker as a member of the Executive Board and as Chief Financial Officer (CFO) with effect from October 16, 2023, until October 15, 2024 at its meeting on September 20, 2023.
In fiscal year 2023 there were personnel changes on the company's Supervisory Board, which comprises twelve members. Prof. Hans Dieter Kempf's position as shareholder representative on the Supervisory Board was confirmed until the 2026 Annual General Meeting by his election at the Annual General Meeting of April 27, 2023. Jörg Kampmeyer resigned from his position for personal reasons with effect from August 31, 2023. Andreas Renschler was appointed by the court as his replacement on the Supervisory Board with effect from September 1, 2023.
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Key figures for fiscal year 2023
For more information, please refer to the Report on Economic Position within the Combined Group Management Report.
Consideration of the Annual General Meeting resolution regarding last year's remuneration report in accordance with section 162(1) sentence 2 no. 6 of the AktG
On April 27, 2023, the Annual General Meeting approved last year's remuneration report by a majority of
93.75 percent. Consequently, there was no reason to call into question the remuneration system that was approved by a majority of 89.54 percent at the Annual General Meeting on April 30, 2021, in accordance with section 120a(1), sentence 1 AktG, its implementation or the manner in which it is reported.
Remuneration of the members of the Executive Board
Remuneration awarded or due in 2023 (and 2022)
The total remuneration of the Executive Board members of GEA Group Aktiengesellschaft in fiscal year 2023 (current members Stefan Klebert, Bernd Brinker and Johannes Giloth as well as former member Marcus A. Ketter) amounted to EUR 9,085,845. This comprised both an amount of EUR 2,815,401 for fixed annual salaries and an amount of EUR 6,197,241 for variable remuneration. As in previous fiscal years, the company did not grant any loans to members of the Executive Board in fiscal year 2023. The option to reclaim variable remuneration components was not exercised in the reporting period.
Marcus A. Ketter's monthly base salary up to and including November 2023 along with entitlements to pension benefits were disbursed to his surviving dependents in the form of a one-off payment. The current LTI tranches were paid out in October 2023 in the amount of the cumulative grant amount to the surviving dependents of Marcus A. Ketter, with the grant amount for the 2023 tranche being reduced pro rata temporis. The STI will be disbursed, also reduced pro rata temporis, in March 2024.
In fiscal year 2022, the total remuneration of the Executive Board members (Stefan Klebert, Marcus. A. Ketter and Johannes Giloth) amounted to EUR 9,382,822. This comprised both an amount of EUR 2,976,000 for fixed annual salaries and an amount of EUR 6,311,924 for variable remuneration.
For purposes of section 162(1) sentence 2 no. 1 of the AktG, remuneration is deemed to have been awarded in the fiscal year in which the work (one or more years) on which the remuneration concerned is based was performed in full (vesting-oriented view). Remuneration is due when an unfulfilled legal obligation to pay such remuneration exists. In accordance with section 162 of the AktG, remuneration components are stated as of the earlier of the date on which the remuneration is awarded or due. Amounts attributable to the LTI and the bonus or STI are thus reported in the fiscal year in which the service period ends. In the past fiscal year, the service period ended for the 2023 tranche of the LTI, which was therefore fully vested in fiscal year 2023. The LTI and the long-term share price component (2012 remuneration system) are paid out in March of the fiscal year after the end of the three-year or four-year performance period following a resolution of the Supervisory Board establishing the target achievement. Differences between the expected payout amount at the time of full vesting and the actual amount paid out after the end of the performance period are disclosed in the year of payment. Thus, in fiscal year 2027, the corresponding difference for the 2023 tranche will be included in the remuneration to be disclosed.
Target total remuneration and actual remuneration
The following tables show - in each case for the reporting period and the prior year, each in individualized form and each broken down into fixed, non-performance-related and variable, performance-related components - the amount of the target total remuneration of the current Executive Board members and the actual remuneration of the current and former Executive Board members. A detailed description of the remuneration system applicable and applied to all current Executive Board members in fiscal year 2023 can be found on gea.com website under "Company - Investors - Corporate governance - Remuneration".*
*) Unaudited information
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Target total remuneration of the current Executive Board members:
Target | ||||||||
(in EUR) | Base salary | Variable components | total remuneration | |||||
Date joined/ | Current | Company | ||||||
appointed until | position | Fixed annual salary | Fringe benefits2 | pension plan | Bonus/STI | LTI | ||
Executive Board members | ||||||||
Stefan Klebert | Nov. 15, 2018/ | 1,440,000 | 25,511 | 400,000 | 864,000 | 1,296,000 | 4,025,511 | |
Previous year | Dec. 31, 2026 | CEO | 1,440,000 | 32,758 | 400,000 | 864,000 | 1,296,000 | 4,032,758 |
Bernd Brinker1 | Oct. 16, 2023/ | 790,000 | 27,931 | 250,000 | 460,000 | 688,000 | 2,215,931 | |
Oct. 15, 2024 | ||||||||
Previous year | CFO | - | - | - | - | - | - | |
Johannes Giloth | Jan. 20, 2020/ | 720,000 | 32,010 | 200,000 | 432,000 | 648,000 | 2,032,010 | |
Previous year | Jan. 19, 2028 | COO | 720,000 | 33,398 | 200,000 | 432,000 | 648,000 | 2,033,398 |
Total | 2,950,000 | 85,452 | 850,000 | 1,756,000 | 2,632,000 | 8,273,452 | ||
Previous year | 2,160,000 | 66,156 | 600,000 | 1,296,000 | 1,944,000 | 6,066,156 |
- Target total remuneration for a full financial year.
- The fringe benefits mainly comprise the value of the use of a company car, accident insurance premiums, and - in individual cases - the reimbursement of costs incurred for travel and accommodation.
Base salary and variable components of the remuneration awarded or due for the Executive Board members in financial year 2023:
(in EUR) | Base salary | Variable components | Total | ||||||
Date joined/ | Current | Pro-rata fixed | Pro-rata variable fixed | ||||||
remuneration | remuneration | ||||||||
appointed until | position | Fixed annual salary | Fringe benefits1 | components | Bonus/STI | LTI² | components | ||
Current Executive Board members | |||||||||
Stefan Klebert | Nov. 15, 2018/ | 1,440,000 | 25,511 | 30% | 1,553,645 | 1,911,0993 | 70% | 4,930,255 | |
Previous year | 1,440,000 | 32,758 | 32% | 1,662,250 | 1,406,8104 | 68% | 4,541,818 | ||
Dec. 31, 2026 | CEO | ||||||||
Bernd Brinker | Oct. 16, 2023/ | 167,575 | 5,924 | 36% | 174,499 | 139,156 | 64% | 487,154 | |
Previous year | Oct. 15, 2024 | CFO | - | - | - | - | - | - | - |
Johannes Giloth | Jan. 20, 2020/ | 720,000 | 32,010 | 30% | 776,822 | 938,1673 | 70% | 2,466,999 | |
Previous year | 720,000 | 33,398 | 33% | 831,125 | 681,653 | 67% | 2,266,176 | ||
Jan. 19, 2028 | COO | ||||||||
Total | 2,327,575 | 63,445 | 30% | 2,504,966 | 2,988,422 | 70% | 7,884,408 | ||
Previous year | 2,160,000 | 66,156 | 33% | 2,493,375 | 2,088,463 | 67% | 6,807,994 |
- The fringe benefits mainly comprise the value of the use of a company car and accident insurance premiums.
- The service period for the 2023 tranche of the LTI ended on December 31, 2023; the service period for the 2022 tranche ended on December 31, 2022.
- In addition to the compensation awarded in fiscal year 2023, the delta between the expected payout amount at the time of full vesting and the actual payout amount after the end of the performance period of the 2020 LTI tranche is included.
- In addition to the compensation awarded in fiscal year 2022, the delta between the expected payout amount at the time of full vesting and the actual payout amount after the end of the performance period of the 2019 LTI tranche is included.
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Base salary and variable components of the remuneration awarded or due for former Executive Board members:
(in EUR) | Base salary | Variable components | Total | ||||||||
Pro-rata fixed | Pro-rata variable | ||||||||||
Entry/departure | Last position | Fixed remuneration1 | Fringe benefits | remuneration | Long-term share | remuneration | |||||
components | Bonus/STI | LTI | price component | components | |||||||
Former Executive Board members | |||||||||||
Marcus A. Ketter | May 5, 2019/ | Ordinary Executive | 487,826 | 9,758 | 41% | 523,843 | 180,0102 | - | 59% | 1,201,437 | |
Previous year | Aug. 6, 2023 | Board member | 816,000 | 28,742 | 33% | 942,711 | 787,375 | - | 67% | 2,574,828 | |
Steffen Bersch | Jan. 1, 2016/ | Ordinary Executive | - | - | - | - | 54,0343 | - | 100% | 54,034 | |
Previous year | Feb. 29, 2020 | Board member | - | - | - | - | 21,7523 | - | 100% | 21,752 | |
Martine Snels | Oct. 1, 2017/ | Ordinary Executive | - | - | - | - | - | - | - | - | |
Previous year | Dec. 31, 2019 | Board member | - | - | - | - | - | -6364 | 100% | -636 | |
Dr. Helmut Schmale | Apr. 22, 2009/ | Ordinary Executive | 226,141 | - | 100% | - | - | - | - | 226,141 | |
Previous year | May 17, 2019 | Board member | 224,684 | - | 100% | - | - | - | - | 224,684 | |
Other previous members | 7,038,587 | - | 100% | - | - | - | - | 7,038,587 | |||
and surviving dependents5 | |||||||||||
Previous year | 5,113,891 | - | 100% | - | - | - | - | 5,113,891 | |||
Total | 7,752,554 | 9,758 | 91% | 523,843 | 234,044 | - | 9% | 8,520,199 | |||
Previous year | 6,154,575 | 28,742 | 78% | 942,711 | 809,127 | -636 | 22% | 7,934,519 |
- The fixed remuneration includes pension payments and - in the event of early departure from the Executive Board - severance payments, as well as, with regard to the previous year's figures, fixed salaries. No severance payments were paid in fiscal years 2022 and 2023.
- The compensation from the LTI components is attributable to the delta between the expected payout amount at the time of full vesting and the actual (pro rata reduced) payout amount, that will be paid off in March 2024, of the 2020, 2021 ,2022 and 2023 tranche of the LTI.
- The compensation from the LTI components is attributable to the delta between the expected payout amount at the time of full vesting and the actual payout amount after the end of the performance period of the 2019 or 2020 tranche of the LTI.
- The compensation from the LTI components is attributable to the delta between the expected payout amount at the time of full vesting and the actual payout amount after the end of the performance period of the 2019 tranche of the long-term share price component. The negative delta results from a target achievement of 99.7%.
- Individualized disclosure of the remuneration of former Executive Board members and their surviving dependents is omitted for members of the Executive Board who left the company more than ten years ago.
The total remuneration of the current and former Executive Board members for fiscal year 2023 is in line with the remuneration system applicable in the reporting period and the 2012 remuneration system applicable to individual former Executive Board members. The target total remuneration of the current Executive Board members set for the reporting period corresponds in each case to the values and ratios of fixed to variable remuneration components stipulated in the remuneration system. As shown in the following section and in the
section "Disclosures relating to share-based remuneration for the period 2021 to 2023," the actual target achievement or the target achievement expected on the basis of the ratios as of December 31, 2023 of the individual variable remuneration components was determined on the basis of the key performance indicators and the target achievement curves defined in accordance with the remuneration system.
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Target achievement and modifier multiplier applicable to the 2023 STI
At the Supervisory Board meeting in April 2023, the calibration of the financial performance targets for the bonus or STI 2023 was adjusted for the contribution of the Frozen Food business. For the key performance indicator EBITDA before restructuring expenses and M&A-effects, 100 percent of the target is achieved if EBITDA before restructuring expenses and M&A-effects amounts to EUR 764 million in the fiscal year 2023. The target achievement corridor ranges from EUR 684 million, which would correspond to a target achievement of 0 percent, to EUR 844 million, which would correspond to a target achievement of 200 percent. Linear interpolation is performed between these values. For the key performance indicator ROCE before restructuring expenses and M&A-effects, a target achievement of 100 percent is indicated if the key performance indicator of 29.3 percent is achieved. A ROCE before restructuring expenses and M&A-effects of 33.3 percent would correspond to a target achievement of 200 percent and 25.3 percent would correspond to a target achieve ment of 0 percent. Linear interpolation is performed between these values.
In the fiscal year 2023, EBITDA before restructuring expenses and adjusted for M&A-effects, totaled EUR 774.6 million, which corresponds to target achievement of 113.5 percent (previous year: 153.8 percent). ROCE in fiscal year 2023, also adjusted for restructuring measures and M&A-effects, amounted to 32.7 percent (previous year: 31.8 percent), equivalent to target achievement of 186.2 percent (previous year: 196 percent). For the 2023 STI, this results in a target achievement level of 149.9 percent (previous year: 174.9 percent).
For the 2023 STI, the Supervisory Board has set a modifier multiplier of 1.2 for Stefan Klebert (previous year: 1.1), 1.2 for Marcus A. Ketter (previous year: 1.1), 1.2 for Johannes Giloth (previous year: 1.1) and 1.2 for Bernd Brinker (previous year: not applicable due to his appointment in 2023), resulting in an overall target achieve ment level of 179.8 percent (previous year: 192.4 percent). In each case, these multipliers correspond to the average of the individual evaluations of the modifier criteria set by the Supervisory Board beforehand for the members of the Executive Board. The modifier applicable to the 2023 STI was based on the following targets and assessment criteria:
Modifier targets and assessment criteria applicable to the 2023 STI (range: 0.8-1.2)
Innovation: Milestones in the creation of a comprehensive innovation measurement system
Limited discretionary assessment by the Supervisory Board, taking into account certain parameters defined in advance by the Supervisory Board
GEA Digital: Successful market launch and scaling of digital services
Limited discretionary assessment by the Supervisory Board, taking into account certain parameters defined in advance by the Supervisory Board
Employee turnover/retention: Creating transparency and developing measures
Limited discretionary assessment by the Supervisory Board, taking into account certain parameters defined in advance by the Supervisory Board
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Calibration of financial performance targets and modifier criteria in relation to the 2024 STI
For the 2024 bonus or STI, the Supervisory Board has calibrated the following financial performance targets:
For the key performance indicator EBITDA before restructuring expenses and M&A-effects, 100 percent of the target is achieved if EBITDA before restructuring expenses and M&A-effects in fiscal year 2024 amounts to EUR 820 million. The target achievement corridor ranges from EUR 740 million, which would correspond to a target achievement of 0 percent, to EUR 900 million, which would correspond to a target achievement of 200 percent. Linear interpolation is performed between these values.
A target achievement of 100 percent should be given for the key performance indicator ROCE before restruc turing expenses and M&A-effects in fiscal year 2024 if a ROCE before restructuring expenses and M&A- effects of 32.5 percent is achieved. Here, the target achievement corridor ranges from 28.5 percent (where target achievement would correspond to 0 percent) to 36.5 percent (where target achievement would correspond to 200 percent). Linear interpolation is performed between these values.
Target achievement curve EBITDA before restructuring expenses and M&A effects | Target achievement curve ROCE before restructuring expenses and M&A effects |
Target | Target | |
achievement | achievement | |
in % | in % | |
200% | 200% | |
100% | 100% | |
0% | 0% | |
740 | 820 | 900 |
EBITDA before restructuring expenses and M&A effects in EUR million
28.5 | 32.5 | 36.5 |
ROCE before restructuring expenses and M&A effects in %
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GEA Group AG published this content on 05 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 April 2024 21:12:49 UTC.
