HORNBACH Holding AG & Co. KGaA
Group
Remuneration Report
as of February 28, 2023
Convenience Translation
2022/23 Remuneration Report
HORNBACH Holding AG & Co. KGaA is a publicly listed company with the legal form of a partnership limited by shares (Kommanditgesellschaft auf Aktien - "KGaA"). Pursuant to § 162 of the German Stock Corporation Act (Aktiengesetz - "AktG"), the "management and supervisory boards of the listed company […] are required to prepare a clear and understandable report each year on the remuneration granted and owed to each individual current or former member of the management and supervisory boards of the company and of companies with the same group (§ 290 of the German Commercial Code (Handelsgesetzbuch - "HGB")). As a KGaA, HORNBACH Holding AG & Co. KGaA has a Supervisory Board, but does not have a Board of Management. The management of HORNBACH Holding AG & Co. KGaA is instead incumbent on the unlisted company HORNBACH Management AG as the General Partner. HORNBACH Management AG has a Supervisory Board and a Board of Management.
The Supervisory Board of HORNBACH Holding AG & Co. KGaA and the General Partner HORNBACH Management AG compiled a remuneration report pursuant to § 162 AktG for the first time for the 2021/22 financial year. The Annual General Meeting of HORNBACH Holding AG & Co. KGaA on July 8, 2022 approved the 2021/22 remuneration report with a majority of 96.04% of the votes cast. The Supervisory Board of HORNBACH Holding AG & Co. KGaA and the General Partner HORNBACH Management AG have again compiled a remuneration report pursuant to § 162 AktG for the 2022/23 financial year. This report on the on one hand presents the remuneration granted and owed to each individual current and former member of the Supervisory Board of HORNBACH Holding AG
- Co. KGaA. On the other hand, it voluntarily presents the remuneration granted and owed to each current and former member of the Board of Management and Supervisory Board of HORNBACH Management AG. Moreover, the report explains the principles underlying the remuneration systems for members of the Board of Management and the Supervisory Boards of HORNBACH Holding AG & Co. KGaA and HORNBACH Management AG.
- Remuneration of members of Board of Management of HORNBACH Management AG
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Overview of remuneration system for Board of Management of HORNBACH Management AG
The remuneration of the Board of Management for the 2022/23 financial year is based on the remuneration system adopted by the Supervisory Board of HORNBACH Management AG on December 18, 2019, which took effect as of March 1, 2020 ("remuneration system of HORNBACH Management AG").
The remuneration of members of the Board of Management comprises fixed and variable components. Fixed remuneration components for the members of the Board of Management are the fixed annual salary, ancillary benefits, and the company pension scheme. The variable components are one-year variable remuneration ("OVR") and multiyear variable remuneration ("MVR"). Furthermore, the remuneration system lays down share ownership guidelines ("SOG") for members of the Board of Management.
Remuneration component | Assessment basis / parameter |
Fixed remuneration components | |
Fixed annual salary | in 12 equal monthly instalments at the end of each calendar month |
Ancillary benefits | - Private use of a company car |
- Accident insurance | |
- Employer grants to health and nursing care insurance | |
- Grant to voluntary pension insurance or, alternatively, to | |
contributions to a life insurance policy amounting to 50% of the | |
respectively valid pension insurance rate up to the amount of the | |
assessment ceiling | |
- D&O insurance at the expense of HORNBACH Holding AG & Co. KGaA | |
Divergent rules apply in some cases for members of the Board of | |
Management who are simultaneously members of the Board of | |
Management of HORNBACH Baumarkt AG and already entitled to the | |
respective ancillary benefit due to their employment relationship at that | |
company. | |
Company pension scheme | Plan type: Defined contribution commitment |
Contribution: Half-yearly pension contribution amounting to 12.5% of | |
fixed gross annual salary | |
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Remuneration component | Assessment basis / parameter | |||
Variable remuneration components | ||||
One-year variable remuneration (OVR) | Plan type: | Target bonus | ||
Target amount: | - Chief Executive Officer: € 265,000 | |||
- Members of Board of Management: | ||||
€ 60,000 | ||||
Cap: | 200% of target amount | |||
Performance criteria: | - Sales (40%), free cash flow (30%), | |||
and EBT (30%) of HORNBACH Holding | ||||
AG & Co. KGaA (figures taken from | ||||
- | consolidated financial statements) | |||
Modifier (0.8-1.2) | ||||
One year (prospective) | ||||
Assessment period: | Month in which consolidated financial | |||
Payment date: | statements of HORNBACH Holding AG & | |||
Co. KGaA for respective financial year are | ||||
approved, at latest month thereafter | ||||
Objective: To provide an incentive for the Board of Management to focus | ||||
its activities on the growth strategy pursued by the company and to | ||||
incentivize the ongoing increase in the company's earnings strength and | ||||
internal financing potential. | ||||
Multiyear variable remuneration (MVR) | Plan type: | Performance cash plan | ||
Target amount: | - Chief Executive Officer: € 425,000 | |||
- Members of Board of Management: | ||||
€ 100,000 | ||||
Cap: | 200% of target amount | |||
Performance criteria: | - Relative TSR (25%) of HORNBACH | |||
Holding AG & Co. KGaA and ROCE | ||||
premium over WACC (75%) of | ||||
HORNBACH Holding AG & Co. KGaA | ||||
(figures taken from consolidated | ||||
- | financial statements) | |||
Modifier (0.8-1.2) | ||||
Performance period: | Four years (prospective) | |||
Payment date: | Month in which consolidated financial | |||
statements for final financial year in four- | ||||
year performance period are approved, at | ||||
latest month thereafter | ||||
Objective: To create long-term incentives to generate an adequate return | ||||
for shareholders, also by comparison with the market, and to present and | ||||
promote in the remuneration system for the Board of Management all | ||||
aspects of sustainably profitable value creation resulting from | ||||
entrepreneurial actions. | ||||
Other provisions | ||||
SOG | - Obligation to use 50% of MVR payment amount to acquire shares in | |||
HORNBACH Holding AG & Co. KGaA | ||||
- SOG target: 150% of one fixed gross annual salary for Chief | ||||
Executive Officer; 100% of one fixed gross annual salary for regular | ||||
member of Board of Management | ||||
- Shares to be held for duration of activity on Board of Management | ||||
The share ownership guideline (SOG) is intended in particular to align | ||||
the remuneration structure to the company's permanent business | ||||
success. The obligation to acquire and hold shares links the | ||||
remuneration of the Board of Management to the share price | ||||
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Convenience Translation
Remuneration component | Assessment basis / parameter |
performance of HORNBACH Holding AG & Co. KGaA, which in turn | |
reflects the company's inherent earnings strength. | |
Maximum remuneration | - Cap on total remuneration payable for a financial year (total of fixed |
annual salary, variable remuneration components, company pension | |
scheme, and ancillary benefits), irrespective of payment date | |
- Chief Executive Officer; € 2,040,000; regular members of Board of | |
Management: € 520,000 each | |
- If remuneration exceeds the maximum amount, the MVR payment | |
amount is reduced for the respective grant year. | |
Malus and clawback regulations | - The Supervisory Board may reduce the OVR and/or MVR payment |
amounts by up to 100% in the event of improper conduct on the part | |
of a member of the Board of Management during the assessment | |
period ("malus"). | |
- Claim to repayment of OVR and/or MVR in the event of objectively | |
erroneous consolidated financial statements ("clawback") | |
Outlook for the 2023/24 financial year:
By resolution dated February 24, 2023, the Supervisory Board amended the remuneration system at HORNBACH Management AG with effect as of March 1, 2023. Starting in the 2023/24 financial year, ESG criteria will be added to the MVR as new non-financial performance criteria. The ESG criteria will be weighted at 25% alongside the existing financial performance criteria of ROCE premium over WACC (new weighting of 50% from 2023/24 financial year replacing previous weighting of 75%) and total shareholder return (weighting unchanged at 25%) (for further details, please see Section II.2.2.1b)ff).
- Remuneration of incumbent members of Board of Management of HORNBACH Management AG in 2022/23 financial year
1. Members of Board of Management of HORNBACH Management AG in 2022/23 financial year
The following individuals were members of the Board of Management of HORNBACH Management AG in the 2022/23 financial year:
- Albrecht Hornbach, member of Board of Management and Chief Executive Officer since October 9, 2015
- Karin Dohm, member of Board of Management since January 1, 2021
In principle, the remuneration paid to members of the Board of Management of HORNBACH Management AG is also deemed as settlement for activities at subsidiaries and shareholdings.
Albrecht Hornbach is Chair of the Supervisory Boards of HORNBACH Baumarkt AG and HORNBACH Immobilien AG. He receives additional remuneration for his activity as Chair of the Supervisory Board of HORNBACH Baumarkt AG.
Karin Dohm has been a member of the Board of Management of HORNBACH Baumarkt AG since January 1, 2021. In addition to her remuneration as a member of the Board of Management of HORNBACH Management AG, in the 2022/23 financial year Karin Dohm also received remuneration as a member of the Board of Management of HORNBACH Baumarkt AG. The remuneration system applicable at HORNBACH Baumarkt AG in the 2022/23 financial year is based on the same principles as the remuneration system at HORNBACH Management AG (see Section I above). It comprises the same remuneration components and refers to the same performance criteria with the same weightings - merely based in this case on corresponding references to HORNBACH Baumarkt AG. The remuneration system of HORNBACH Baumarkt AG was approved by the Annual General Meeting of HORNBACH Baumarkt AG on July 9, 2020. Upon application by HORNBACH Baumarkt AG, the Frankfurt Stock Exchange withdrew its approval for shares in HORNBACH Baumarkt AG to be traded on the Regulated Market of the Frankfurt Stock Exchange as of the conclusion of February 28, 2022, as a result of which the stock market listing of HORNBACH Baumarkt AG was discontinued pursuant to § 3 (2) AktG ("delisting"). By resolution adopted on February 17, 2022 the Supervisory Board adapted the remuneration system for members of the Board of Management of HORNBACH Baumarkt AG such that, to the extent that their remuneration was previously based on the share price of HORNBACH Baumarkt AG, such remuneration would from March 1, 2022 be linked to the share of HORNBACH Holding AG & Co. KGaA. Furthermore, by analogy with the amendment made to the remuneration system at HORNBACH Management AG, on February 23, 2023 the Supervisory Board of HORNBACH Baumarkt AG adopted a resolution amending the remuneration
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system for members of the Board of Management of HORNBACH Baumarkt AG in order to integrate ESG targets as a new third performance criteria in MVR with effect as of March 1, 2023 (see ESG criteria below under 2.2.1b)ff) which are also applicable to the MVR at HORNBACH Baumarkt AG).
The disclosures provided on the remuneration granted and owed in the 2022/23 financial year include disclosures on the remuneration at HORNBACH Baumarkt AG.
2. Remuneration granted and owed in 2022/23 financial year
Pursuant to § 162 (1) Sentence 1 AktG, the remuneration report must report on the remuneration granted and owed to each individual member of the Board of Management in the past financial year. The terms used are based on the following understanding of the concepts:
- The term "granted" refers to "the actual payment of the remuneration component";
- The term "owed" refers to "all legally existent liabilities for remuneration components that are due for payment but which have not yet been settled".
This understanding of the concepts differs from the terms "benefits granted" and "benefits received" used in remuneration reports before the entry into effect of § 162 AktG in the version modified by the German Second Shareholder Rights Directive Implementation Act ("ARUG II"). As defined in the 2017 version of the German Corporate Governance Code, "benefits granted" included all remuneration components basically committed to a member of the Board of Management in the respective year and whose amount could be estimated, irrespective of the time of payment. Since the introduction of § 162 AktG, the distinction made between "granted" and "received" in the former understanding of the concepts can no longer be upheld. In terms of its content, the term "granted" as used in § 162 AktG corresponds to the previous understanding of "received".
2.1. Tabular overview
The remuneration tables below present the remuneration for the assessment period ending on February 28, 2023 as being granted and owed. Accordingly, the following components are reported as remuneration granted in the 2022/23 financial year:
- The basic salary paid in the 2022/23 financial year,
- Ancillary benefits,
- The OVR for the 2022/23 financial year paid at the beginning of the 2023/24 financial year.
The MVR has been allocated in annual tranches since March 1, 2020 (2020/21 financial year). Each tranche of the MVR has a performance period of four years. Accordingly, the first MVR tranche still runs through to February 29, 2024 and is due for payment at the beginning of the 2024/25 financial year. It will be reported in the remuneration report for the 2023/24 financial year (final year in the four-year performance period). Accordingly, no payments relating to the MVR have been included within remuneration granted and owed in this remuneration report.
As HORNBACH Management AG is not in arrears with the payment of remuneration components, none of the remuneration components presented in the tables are owed.
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Hornbach-Baumarkt AG published this content on 16 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 May 2023 07:29:08 UTC.