DIC Asset Aktiengesellschaft · Real estate company

Remuneration Report

Remuneration system for the Management Board

The Supervisory Board sets the total remuneration of individual members of the Management Board and regularly reviews the remuneration system for the Management Board. The requirements of the law on the appropriateness of Management Board remuneration (VorstAG) were taken into account when extending contracts with the Management Board.

The relationship between total remuneration and the tasks of each member of the Board, their personal achievements, the economic situation, the success and future prospects of DIC Asset AG is appropriate and is also appropriate taking account of the remuneration paid in comparable companies and the compensation paid to other people working for the company. At the same time, remuneration is structured in such a way that it is competitive.

The remuneration of the Management Board is made up of three components: it includes (i) fixed remuneration and ancillary benefits, (ii) variable remuneration that is dependent on the achievement of specific targets (short-term performance-related component) and (iii) a share-based component (long-term incentive component).

• Fixed remuneration and ancillary benefits
  The fixed remuneration is paid in equal monthly instalments. The ancillary benefits consist of the provision of a company car, a mobile telephone and insurance subsidies, for accident and medical insurance, in particular.
  
• Variable, performance-related compensation
  The Management Board's variable, performance-related remuneration (profit-sharing) is based on the operating results of the DIC Asset Group and therefore takes account of both positive and negative developments.
  
  A positive operating result for the DIC Asset Group is prerequisite for the granting of profit-sharing for members of the Management Board, whose Management Board contract was extended after the enactment of the VorstAG. The amount of profit-sharing is based on the extent to which corporate and personal targets were achieved. Corporate and personal targets are each given a 50% weighting by the Supervisory Board when setting profit-sharing. The amount of profit-sharing is limited to 70% of the fixed remuneration. The Supervisory Board decides on profit-sharing once a year up to 31 May of the following year. Payment of profit-sharing takes place on the last bank working day of the month in which the Supervisory Board decides on profit-sharing.
  
  For members of the Management Board, whose Management Board contract was concluded or extended before enactment of the VorstAG, profit-sharing is supposed to amount to at least 50% of the fixed remuneration if the DIC Asset Group has achieved satisfactory operating earnings (EBT). The Supervisory Board decides on profit-sharing once a year up to 30 April of the following year. Payment of profit-sharing takes place on the last bank working day of the month in which the Supervisory Board decides on profit-sharing.
  
• Share-based remuneration as a long-term incentive
  In addition, members of the Management Board hold options on so-called virtual shares in DIC Asset AG, which also take account of both positive and negative developments. The number of options granted is specified in individual contracts. Options are fictitious and only guarantee the right to cash payment. When exercising the options, Board members receive payments to the amount of the share price less EUR 2.90 (Ulrich Höller) or EUR 6.00 (Markus Koch) for each virtual share. The exercise of the options is linked to a specific number of years' service (vesting period). The duration of the vesting period is regulated by contract and amounts to between 22 and 46 months. The share price is calculated from the average of the closing prices in a reference period of ten trading days before the option is exercised. The fair value of the options at 31 December 2011 amounted to TEUR 292. The number of shares issued virtually is unchanged on the previous year. No new options were issued.
  
• Termination of Board membership
  With the exception of a Board contract covering the eventuality of a change of control, the Board contracts do not contain an express undertaking to provide a severance payment. Contrary to the recommendation given in section 4.2.3 of the German Corporate Governance Code, no agreement has been made that payments, including fringe benefits, to Board members who leave the Board early without good cause should not exceed the value of two years' remuneration (settlement cap) and should not reimburse more than the remaining period of the contract of employment.
   
  In the event of a change of control, the Chairman of the Board, Ulrich Höller, has the right to prematurely terminate his contract of employment. In exercising his right to terminate, Mr Höller is entitled to receive a payment of twice his total annual earnings in the financial year prior to the change of control. If the remaining period of his contract of employment is less than two complete years, the equivalent of two years' total earnings is replaced by a proportion of two years' total annual earnings calculated pro rata over the shorter period remaining.
  
  If a Board member dies during the term of his contract with the Management Board, in the case of Ulrich Höller, the fixed annual salary and, in the case of Markus Koch, the total remuneration are to be paid pro rata temporis to their surviving dependants for a period of six months after the end of the month in which the Board member died. If a Board member becomes permanently incapable of working during the term of his contract, the contract will end three months after the end of the half-year in which his permanent incapacity was established. In the event of illness, remuneration will be paid for a term of six months, however, at the latest until the contract ends.

Management Board remuneration in financial year 2011
In addition to his work for DIC Asset AG, the Chairman of the Management Board, Ulrich Höller, also held the position of Chairman of the Management Board for Deutsche Immobilien Chancen Beteiligungs AG in the financial year 2011. The total compensation of the members of the Management Board granted by DIC Asset AG amounted to TEUR 1.212 in 2011. 

Compensation of members of the Board of Directors

Compensation of members of the Supervisory Board

Supervisory Board remuneration is based on § 10 of the Articles of Incorporation of DIC Asset AG. Each member receives remuneration appropriate to his work, which is made up of fixed and variable performance-related remuneration. Members of the Supervisory Board receive fixed compensation of EUR 15,000 for each full financial year. As a variable, performance-dependent fee, each member receives EUR 2,556.46 for each percentage point of dividend over the rate of seven percent, calculated on the amount of equity, that is distributed, but no more than EUR 12,782.30. The Chairman receives double the fixed and variable compensation. In addition to the remuneration, each member of the Supervisory Board receives reimbursement of his expenses, including Value Added Tax. Supervisory Board taxes in the amount of TEUR 12 were taken on by the company.

For membership of a committee, which has met at least once during the financial year, the members of the Supervisory Board also receive compensation of EUR 2,500 per committee for each full financial year of their membership of this committee, but not exceeding EUR 5,000 in total. The Chairman of a Supervisory Board committee receives twice this additional compensation.

Total remuneration of the members of the Supervisory Board in 2011 amounted to EUR 204 thousand. In addition, in 2011 EUR 602 (previous year: EUR 24,000) in fees for services received was paid to the law firm Weil, Gotshal & Manges LLP, in which the Prof. Dr Gerhard Schmidt, the Chairman of the Supervisory Board, is a partner. In 2011, this mainly related to services within the framework of the acquisition of the Galeria Kaufhof properties.

Compensation of members of the Supervisory Board

Directors’ transactions in the financial year 2011

In 2011 the members of the Management Board Ulrich Höller and Markus Koch acquired respectively 9,868 and 5,736 shares in DIC Asset AG and reported these securities transactions pursuant to § 15a WpHG.

Directors`Dealings

Shares held by members of the Management Board and Supervisory Board

The members of the Management Board and of the Supervisory Board each hold less than one percent of issued shares. However, 38.66% of the voting rights in DIC Asset AG are attributed to the Chairman of the Supervisory Board, Prof. Dr. Gerhard Schmidt, in accordance with § 22 para. 1 sentence 1 No. 1 WpHG, which are held by Deutsche Immobilien Chancen AG & Co. KGaA and its subsidiaries DIC ML GmbH and DIC Opportunity Fund GmbH and the DIC associate company under civil law and its subsidiaries.