Compensation report
The compensation report outlines the compensation system and lists the individual compensation of the members of the Management Board and the Supervisory Board.
Compensation system of the Management Board
The compensation system for the Management Board of DB AG aims to provide appropriate compensation to members of the Management Board in accordance with their duties and areas of responsibility, while at the same time directly taking into account the performance of each Management Board member and the success of the company.
The appropriate level of compensation is reviewed regularly using a comparison process. This review examines the level of Management Board compensation both in comparison to the external market (horizontal appropriateness) and in comparison to other levels of compensation within the company (vertical appropriateness). If the review shows a need to adjust the compensation system or the level of compensation, the Personnel Committee of the Supervisory Board submits its proposals in this regard to the Supervisory Board for approval. The appropriateness of Management Board compensation was last reviewed in the 2021 financial year.
Compensation components
The total compensation for Management Board members consists of a fixed salary, a performance-linked annual bonus and a long-term incentive plan based on multi-year figures. Total compensation also includes benefit commitments, other commitments and ancillary benefits.
The fixed salary is cash compensation linked to the financial year. It is based on the scope of responsibility and the experience of each Management Board member. The individually defined fixed income is paid out in 12 equal installments.
The performance-linked annual bonus is calculated based on the achievement of business targets (business factor) and the achievement of individual targets (performance factor). There is a multiplicative link between the business factor and the performance factor. The business factor depends on the extent to which the business targets set out by corporate planning are achieved. The parameters for this factor are operational success (operating income after interest) and return on capital employed (ROCE), with equal weighting.
The performance factor reflects success in meeting personal targets. The target bonus corresponds to the annual bonus paid to the Management Board member in a “normal financial year” for meeting performance targets in full. If the Group results do not meet planned objectives, the business factor can, in extreme cases, be reduced to zero, regardless of personal performance. This means that the annual bonus can be zero. If planned objectives are exceeded and the maximum performance factor is also achieved, the annual bonus can be as high as 2.6 times the target bonus.
The business and personal targets of the Management Board members are decided by the Supervisory Board each year based on recommendations from the Personnel Committee, and are then agreed in writing with the Management Board members.
Together with the corporate plan adopted by the Supervisory Board, the personal targets form the basis for calculating the annual bonus. This means that all of the key parameters for total compensation are established at the beginning of the financial year.
At the end of each financial year, the business and personal performance factors are calculated for each Management Board member based on Group results. Target income is attained if both business goals and individual targets have been met in full. The final decision on this matter is made by the Supervisory Board and is prepared by the Personnel Committee.
In December 2021, the Supervisory Board adopted an amendment to the short-term incentive (STI) methodology, which is applicable for the 2022 financial year. In the interests of transparent and uniform rules on profit-sharing in the Integrated Rail System, this should also apply, as far as possible, to other Group subsidiaries and management levels from 2022.
The long-term incentives (LTI) for the Management Board now also focus on long-term transport and climate policy targets and the sustainable creditworthiness and profitability of DB Group. After the end of the respective plan term of four years, the extent to which LTI targets have been achieved at the end of the tranche is measured using the average target achievement for the individual years. The payment amount for the long-term incentive plan has an upper limit and can vary between 0% and 200%. The entitlement arising from the LTI commitment is heritable.
The Management Board members are entitled to an appropriate severance package if their contract is terminated before the contractually stipulated termination date, provided that the Management Board member was not personally responsible for the termination through his or her actions. The severance package is based on the remaining term of the contract, the agreed target salary and, where applicable, the pension benefits already owed by DB AG for the remainder of the contract.
In accordance with the recommendations of the PCGK, a severance payment cap is included in all contracts of DB AG Management Board members. This cap means that payments made to a Management Board member due to premature termination of Management Board duties cannot, without good cause as defined by section 626 of the German Civil Code (Bürgerliches Gesetzbuch; BGB), exceed the value of two years’ salary, including variable compensation components, and must not provide compensation for more than the remaining term of the employment agreement.
Management Board members do not receive any additional compensation for mandates exercised in control bodies of Group companies or affiliated companies.
The compensation system for executives aims primarily to closely link compensation to the sustainable success of the company in the sense of the business success of the Integrated Rail System and of DB Group, as well as the alignment of all divisions toward this target.
The annual bonus for executives and employees not subject to wage agreements in the Integrated Rail System is structured as a profit share. Personal goals are then agreed with executives as part of a regular process. The achievement of the goals is regularly included in the assessment when making decisions on increases to the fixed salary.
If the executives are members of DB AG subsidiaries, the respective subsidiary’s Supervisory Board is responsible for discussing the personal goals, if possible by the end of a financial year. Where applicable, the respective decision-making will take place after the DB AG Supervisory Board meeting in which the mid-term planning and the targets for the Group’s Management Board are adopted. This chronological sequence of the handling of personal goals in the Supervisory Boards of the subsidiaries is due to the Group structure of DB AG.
In some cases, given the regulatory requirements, DB Netz AG is subject to separate regulatory requirements which take even greater account of the business success of DB Netz AG.
In the interests of transparent and uniform rules on profitsharing in the Integrated Rail System, the modified STI methodology adopted for 2022 by the Supervisory Board in December 2021 should also apply, as far as possible, to other Group subsidiaries and management levels from 2022.
The Supervisory Board of DB AG set a general retirement age of 65 for Management Board members. In the previous year, in accordance with the provisions of the PCGK 2020, this regulation was modified to stipulate that the Management Board should not include any members who have exceeded the statutory retirement age. After leaving the company, Management Board members are entitled to pension payments. At the latest upon reaching the age of 65, Management Board members who were in office prior to 2017 are entitled to a lifelong pension if the term of employment ends due to permanent invalidity, or if the contract is terminated before the agreed termination date or is not extended, without good cause, or if the Management Board member refuses to continue the contract under the same or more beneficial conditions.
The system governing benefit commitments to Management Board members was amended in 2017. Members appointed to the Management Board for the first time in 2017 and thereafter receive a defined benefit commitment under which a capital stock is saved up for the Board member for the duration of their employment and paid out when they reach retirement age. An annual amount derived as a specific percentage of fixed salary is paid into the defined contribution plan.
Company pension commitments for Management Board members already in office are based on a percentage of the basic salary depending on the length of time that the Management Board member has been with the company. Pension commitments include lifelong retirement and surviving dependent benefits. There is no lump-sum payment option.
In addition, for Management Board member contracts entered into before January 1, 2009, a reinsurance policy was concluded to cover company pension benefits.
The contractual ancillary benefits for Management Board members include a company car with driver for business and personal use, a personal BahnCard 100 First free travel card and standard insurance coverage. A housing allowance is provided for second homes where these are required for business purposes. Where these benefits in kind cannot be granted on a tax-free basis, they are taxed as non-cash benefits for which the Management Board members are fully responsible. Management Board members, like any other member of the Group’s executive personnel, can choose to take part in the company’s deferred compensation program.
The members of the Management Board are covered by liability insurance against financial losses incurred due to DB AG’s business operations (D&O insurance). In the year under review, this insurance was designed as a Group insurance policy with the deductible provided for under law; it provides coverage for financial losses that may occur during the performance of Management Board activities. The insurance coverage of the existing D&O insurance policy is valid for a period of five years after the termination of activities as a member of the Management Board.
Compensation for the 2021 financial year
The director’s fee for the previous financial year is due at the end of the month in which the company’s Annual General Meeting takes place.
The DB AG Management Board members will receive the following compensation for their work during the year under review:
TOTAL COMPENSATION OF THE MANAGEMENT BOARD / € thousand | Fixed compensation | Variable copmensation | Other 4) | Total 5) | ||
Short- term 1),2) | Longterm payment 2) | Provision 3) | ||||
| I N C U M B E N T M A N A G E M E N T BOARD MEMBERS OF DB A G AS OF DEC 31, 2021 | ||||||
Dr. Richard Lutz | 900 | – | – | 495 | 11 | 911 |
Dr. Daniela Gerd tom Markotten | 118 | – | – | 22 | 6 | 124 |
Dr. Levin Holle | 400 | – | – | 144 | 15 | 415 |
Berthold Huber | 650 | – | – | 315 | 12 | 662 |
Dr. Sigrid Nikutta | 400 | – | – | 150 | 9 | 409 |
Ronald Pofalla | 650 | – | – | 315 | 12 | 662 |
Martin Seiler | 650 | – | – | 255 | 9 | 659 |
Total | 3,768 | – | – | 1,696 | 75 | 3,843 |
| MEMBERS WHO LEFT THE MANAGEMENT BOARD OF DB A G D U R I N G THE YEAR UNDER REVIEW | ||||||
Prof. Dr. Sabina Jeschke | 271 | – | – | 198 | 15 | 286 |
Total | 4,039 | – | – | 1,894 | 90 | 4,129 |
Individual figures are rounded and therefore may not add up.
1) Subject to the resolution of the Supervisory Board.
2) All Board members have waived their variable compensation components for 2021.
3) Long-term variable compensation refers to the addition/release of provisions for long-term incentives (LTI).
4) Non-cash benefits from travel discounts, usage of company cars, and insurance and housing allowances.
5) Total without long-term variable compensation.
In the year under review, no Management Board members of DB AG received benefits or promises of benefits from a third party with regard to their activities as a member of the Management Board.
In the year under review, an amount of € 1,880 thousand was added to the pension provisions.
| ADDITIONS TO PENSION PROVISIONS / € thousand | 2021 |
| INCUMBENT MANAGEMENT BOARD MEMBERS OF DB AG AS OF DEC 31, 2021 | |
Dr. Richard Lutz | 390 |
Dr. Daniela Gerd tom Markotten | 58 |
Dr. Levin Holle | 183 |
Berthold Huber | 685 |
Dr. Sigrid Nikutta | 177 |
Ronald Pofalla | 0 |
Martin Seiler | 275 |
Total | 1,768 |
| MEMBERS WHO LEFT THE MANAGEMENT BOARD OF DB A G DURING THE YEAR UNDER REVIEW | |
Prof. Dr. Sabina Jeschke | 112 |
Total | 1,880 |
Pension provisions for former Management Board members are shown in total in the Notes to the consolidated financial statements..
Compensation of the Supervisory Board for the 2021 financial year
Compensation of the Supervisory Board of DB AG was most recently regulated by the Annual General Meeting resolution of September 21, 2010. In addition to being reimbursed for their cash outlays and the value-added tax due on their compensation and cash outlays, the DB AG Supervisory Board members each receive fixed annual compensation of € 20,000, plus performance-linked annual compensation. The performance-based compensation is calculated based on the relationship between operating profit (EBIT) as disclosed in the consolidated financial statements for the financial year compared to the previous year’s figures, and the attaining of specific operational performance figures. Performance-based compensation is limited to a maximum of € 13,000. The Chairman of the Supervisory Board receives twice this amount, while his deputy receives one and a half times the above figure. This compensation is increased by a quarter for every position held on a committee by the individual Supervisory Board member. This compensation increases by 100% for the Chairman of the Executive Committee and the Chairman of the Audit and Compliance Committee, and by 50% for the Chairman of the Personnel Committee. This does not include membership or chairmanship of the committee that is formed under the terms of section 27 (3) of the Co-determination Act (MitbestG).
In addition, the members of the Supervisory Board of DB AG receive an attendance fee of € 250 for each meeting of the Supervisory Board and its committees at which they are present. The members of the Supervisory Board also have the choice between a personal BahnCard 100 First and five free train tickets.
The members of the Supervisory Board are covered by liability insurance against financial losses incurred due to DB AG’s business operations (D&O insurance). This insurance is designed as a group insurance policy with no deductible and provides coverage for financial losses that may occur during the performance of Supervisory Board activities. There is also a Group accident insurance policy in place for members of the Supervisory Board. The company pays the premiums for these policies.
Supervisory Board members who have only been members for part of the respective financial year receive a twelfth of the total compensation for each month or part of a month of their membership. This rule also applies to the increase in compensation for the Chairman of the Supervisory Board and his or her deputy and to the increase in compensation for membership and chairmanship of a Supervisory Board committee.
Compensation is paid after the conclusion of the Annual General Meeting that votes to ratify the Supervisory Board’s activities in the previous financial year.
Taxes due on compensation received, including the personal BahnCard 100 First and the five free train tickets, are the individual responsibility of each Supervisory Board member.
Supervisory Board members currently hold no shares in the company, nor do they hold options entitling them to purchase shares in the company.
Subject to the approval of the activities of the Supervisory Board by the Annual General Meeting on March 30, 2022, the members of the Supervisory Board of DB AG will receive the following compensation for their work during the year under review::
TOTAL COMPENSATION OF THE SUPERVISORY BOARD / € thousand | Annual compensation 2021 | ||||
Fixed compensation | variable | Atten- | Ancillary services | Total | |
AM 31.12.2021 AMTIERENDE AUFSICHTSRATSMITGLIEDER DER DB AG 2) | |||||
Michael Odenwald | 70.0 | 45.5 | 4.5 | 0.9 | 120.9 |
Klaus-Dieter Hommel | 40.0 | 26.0 | 3.8 | 6.4 | 76.1 |
Jürgen Beuttler | 20.0 | 13.0 | 1.5 | – | 34.5 |
Martin Burkert | 20.0 | 13.0 | 3.0 | – | 36.0 |
Enak Ferlemann 3) | – | – | – | – | – |
Werner Gatzer | 20.0 | 13.0 | 2.5 | – | 35.5 |
Dr. Ingrid Hengster | 20.0 | 13.0 | 1.3 | 6.4 | 40.6 |
Jörg Hensel | 25.0 | 16.3 | 2.8 | 0.9 | 44.9 |
Cosima Ingenschay | 25.0 | 16.3 | 2.8 | – | 44.0 |
Prof. Dr. Susanne Knorre | 20.0 | 13.0 | 1.5 | 6.2 | 40.7 |
Jürgen Knörzer | 20.0 | 13.0 | 1.5 | 6.2 | 40.7 |
Kirsten Lühmann | 20.0 | 13.0 | 1.5 | 0.9 | 35.4 |
Heike Moll | 20,0 | 13.0 | 1.3 | 6.4 | 40.6 |
Dr. Immo Querner | 40.0 | 26.0 | 2.8 | 6.4 | 75.1 |
Mario Reiß | 20.0 | 13.0 | 1.3 | – | 34.3 |
Eckhardt Rehberg | 20.0 | 13.0 | 1.3 | – | 34.3 |
Christian Schmidt | 20.0 | 13.0 | 1.5 | 0.9 | 35.4 |
Jens Schwarz | 30.0 | 19.5 | 4.3 | 6.2 | 60.0 |
Veit Sobek | 20.0 | 13.0 | 1.5 | 6.4 | 40.9 |
Elisabeth Winkelmeier-Becker 3) | – | – | – | – | – |
MEMBERS WHO LEFT THE SUPERVISORY BOARD OF DB A G D U R I N G THE YEAR UNDER REVIEW 2) | |||||
Dr. Tamara Zieschang | 26.3 | 17.1 | 4.5 | – | 47.8 |
Compensation for further Supervisory Board mandates in DB subsidiaries | 92.4 | ||||
Total | 1,010 | ||||
Individual figures are rounded and therefore may not add up.
1) All Supervisory Board members waived the variable compensation due to them for 2021.
2) Some Supervisory Board members request that their compensation is donated to the Hans Böckler Foundation (Hans-Böckler-Stiftung) in line with the directive of the German Trade Union Confederation (Gewerkschaftsbund).
3) Ms. Winkelmeier-Becker and Mr. Ferlemann waived the compensation they are due for their work as a member of the Supervisory Board.
There are no pension obligations for members of the Supervisory Board.
The members of the Supervisory Board did not receive any compensation in the year under review for any personally provided services.
