Remuneration report

In the spirit of transparent corporate governance, SYSTAIC discloses the composition of the remuneration paid to members of its Executive Board and Supervisory Board. The Company also explains which stock options were issued to members of the Executive Board within the scope of a long-term performance and achievement-orientated remuneration system.
 
REMUNERATION OF THE SUPERVISORY BOARD
 
Remuneration structure
The remuneration of the Supervisory Board is regulated in Art. 16 of systaic AG's Articles of Association; the Annual Shareholders' Meeting resolves upon the amount of remuneration to be paid. In addition to being reimbursed their expenses and any value-added tax payable on their remuneration and expenses, the members of the Supervisory Board receive a fixed sum and, from financial year 2009, a variable sum, if the Company has net retained profits. The variable remuneration paid to each member of the Supervisory Board amounts to 0.1% of the Company's net retained profits after deduction of 4% of the share capital. In financial year 2009, the fixed remuneration component amounted to € 15,000 per Supervisory Board member; the Chairman of the Supervisory Board received a fixed sum of € 22,500. Total remuneration paid to all members of the Supervisory Board in financial year 2009 amounted to € 52,500. No variable remuneration accrued in financial year 2009.
 
SYSTAIC also took out financial liability insurance (D&O insurance) for the members of the Supervisory Board, which provides for an excess of € 5,000.
 
SYSTAIC did not pay any advances or loans to any members of the Supervisory Board in the reporting period. No additional consultancy or other service agreements extending beyond the activities of the Supervisory Board existed between individual members of the Supervisory Board and SYSTAIC in the period under review.
 

SHAREHOLDINGS OF THE SUPERVISORY BOARD

Section 6.6 of the Code prescribes a separate presentation of the overall shareholdings or related financial instruments of the Executive Board and Supervisory Board. The Company does not intend to provide this information in the Corporate Governance Report, even if the total holdings of all Executive and Supervisory Board members exceed 1% of the Company’s shares. It is the opinion of the Executive Board and Supervisory Board that the duties of notification foreseen by the German Securities Trading Act (Wertpapierhandelsgesetz) – which require notification if the shareholdings of an individual shareholder exceed certain thresholds – are sufficient.
 
REMUNERATION OF THE EXECUTIVE BOARD
 
The Company generally concludes contracts of employment with members of the Executive Board for limited periods. The contracts generally have a term of between three and four years. During the fixed term, the contracts may only be terminated by one of the two parties unilaterally for compelling reasons. The Company's remuneration policy specifies that Executive Board members shall receive fixed and variable remuneration components. In addition to a fixed cash sum, the fixed remuneration components include typical benefits in kind, such as insurance contributions and company cars. Variable remuneration components usually include management bonuses that are contingent upon the Company's business performance, as well as stock options. The stock options are not generally fixed upon conclusion of the employment contract, but are granted at the Supervisory Board's discretion as an additional incentive.
Benefits for cases of early resignation are not generally specified upon conclusion of the contracts of employment for Executive Board members, with the exception of the legally required waiting allowance in connection with non-competition clauses.
 
Performance-related remuneration
The remuneration structure established by the Supervisory Board for the members of the Executive Board is reviewed on a regular basis. It was designed to be performance-orientated and is based both on the size of the Company and its economic situation. The remuneration consists of two components: the fixed salary and payments in kind are paid on a non-performance-related basis, while the performance-related portion of the remuneration is divided into the management bonus and components with a long-term incentive effect.
 
Fixed components of the remuneration
The fixed portion is paid in monthly instalments as a basic salary. The members of the Executive Board also receive payments in kind in the form of private use of a company car, which is added to the taxable income of the respective member. Furthermore, the members of the Executive Board receive contributions to health, nursing care and pension insurance policies taken out privately. SYSTAIC also maintains financial liability insurance (D&O insurance) for the members of the Executive Board, which provides for an excess of € 20 thousand, and legal protection insurance. No advances or loans were paid to any members of the Executive Board in financial year 2009. No commitments exist regarding pension schemes for members of SYSTAIC's Executive Board.
 
Performance-related bonus payments
Each member of the Executive Board is paid a management bonus as a performance-related remuneration component: the payment of this variable remuneration to the members of the Executive Board is based on the Company's consolidated EBIT for financial year 2009. Mr. Hölzenbein, however, was not subject to this policy, and instead received a variable remuneration of € 65,000.
 
The remuneration paid to systaic AG's Executive Board in financial year 2009 totalled € 1,253 thousand and consisted of the following:

The variable remuneration paid to Mr. Pack of € 114 thousand applies to financial year 2008. Due to the termination of his Executive Board contract, Mr. Piossek will receive the fixed and variable remuneration due to him up until 31 March 2011, in accordance with the specifications of the Executive Board contract. An amount of € 427 thousand was recognised under "Other provisions" for the remunerations described for 2010 and 2011. Mr. Hölzenbein received a severance payment of € 320 thousand in financial year 2009.
 
An additional, long-term incentive is provided by SYSTAIC's stock option plan, for which a new tranche was issued in 2009.

Stock option plan

Stock Option Plan 2009
By way of a resolution by the Annual Shareholders' Meeting on 29 May 2008, the Executive Board of systaic AG was authorised, subject to the approval of the Supervisory Board, to implement a stock option plan for employees of the Company. The Executive Board formulated the resolution to implement this stock option plan on 6 April 2009. The Supervisory Board approved this resolution on 20 March 2009. Subsequently, a total of 194,104 stock options were offered to the members of the Executive Board (46% of the volume), employees of the Company (13%) and the senior executives (32%) and employees of its affiliated companies (9%). A total of 126,622 of these options were accepted.
 
Following a holding period of two years, the bearers of the stock options issued will be entitled to subscribe to one no-par value share per option within fixed exercise periods. The market value was fixed at € 4.407. The possibility to exercise the options also depends on the achievement of market-related performance targets: the options may only be exercised, if the current market value of the share at the time the option is exercised exceeds the market value of the share at the time the option is purchased by at least 110%; this corresponds to the fixed subscription price of the share of € 4.85. The options may only be exercised within precisely defined exercise periods, but no earlier than two years after the date of issue and only within two years of the first opportunity to exercise them; after this time, they shall expire without compensation.
 
The Executive Board held a total of 184,000 options in the reporting period. At the beginning of financial year 2009, the members of the Executive Board were already entitled to the options listed in the following table. The members of the Executive Board did not exercise any options in financial year 2009. No options expired in the reporting period.
 
Overview of individual stock options granted:

1: options granted in 2008 from the Employee Stock Option Plan 2008 I
2: options granted in 2008 from the Employee Stock Option Plan 2008 II
3: options granted in 2009 from the Employee Stock Option Plan 2009 III 

SHAREHOLDINGS OF THE EXECUTIVE BOARD

Section 6.6 of the Code prescribes a separate presentation of the overall shareholdings or related financial instruments of the Executive Board and Supervisory Board. The Company does not intend to provide this information in the Corporate Governance Report, even if the total holdings of all Executive and Supervisory Board members exceed 1% of the Company’s shares. It is the opinion of the Executive Board and Supervisory Board that the duties of notification foreseen by the German Securities Trading Act (Wertpapierhandelsgesetz) – which require notification if the shareholdings of an individual shareholder exceed certain thresholds – are sufficient.


TRANSACTIONS EXECUTED BY MEMBERS OF THE EXECUTIVE BOARD
 
Pursuant to Section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz, WpHG), all persons who undertake management duties at a share issuer or who are closely connected to such a person, are obliged to disclose any transactions they execute with shares of this issuer or with financial instruments related to those shares. This disclosure obligation applies to all transactions which exceed a total of € 5,000 per calendar year. In financial year 2009, the members of the Executive Board made the following disclosures concerning transactions executed by executives pursuant to Section 15a WpHG:
 
On 30 June 2009, Hans-Jörg Hölzenbein purchased 3,333 shares at a price of € 5.00 per share. On 15 September 2009, Michael Pack acquired 1,926 convertible bonds, each with a nominal value of € 100.00 and an issuing price of € 125.00. On 12 November 2009, Mr. Pack purchased 20,000 shares at a price of € 5.18 per share.

Updated on 31 March 2010