Remuneration Report

1. Main Features of the Remuneration Plan for the Executive Board

General Information

The full Supervisory Board is responsible for establishing the remuneration paid to members of the Executive Board of Sartorius AG. The total value of the remuneration of an Executive Board member reflects the scope of the responsibilities of the Executive Board member concerned, the Executive Board member’s personal performance, the company’s economic situation and sustainable progress. In addition, the extent to which this amount of remuneration is typical is considered, taking into account peer companies and the remuneration structure in place in other areas of the company and in similar companies.

Remuneration is comprised of both fixed non-performance-based components and of variable performance-based components, and is reviewed annually to ensure that it remains appropriate. The variable performance-based remuneration components consist of those to be paid annually and of multi-year components intended to have a long-term incentive. Fixed non-performance-based remuneration is paid in the year in which it is granted. For 100% target achievement, the variable annual and long-term performance-based components generally represent half of total remuneration, which excludes pension commitments under a defined benefit plan as well as fringe benefits.

Variable Performance-Based Remuneration

The portion of the variable performance-based remuneration that is paid annually is based on the following weighted components: sales revenue | order intake, underlying EBITDA and the ratio of net debt to EBITDA. Minimum target achievement is required for these components. The amount to be paid out depends on the degree to which the target is achieved, which the Supervisory Board defines by setting each individual subordinate target. A cap is provided for each variable component to be paid out. Variable performance-based remuneration is calculated upon approval of the company’s annual financial statements for the respective fiscal year and not settled and paid out until the following fiscal year.

Multi-year Components as Long-term Incentives

Weighted components determined by multi-year assessment depend on the development of consolidated net profit in a multi-year period, on the one hand, and on the development of the company’s share prices, on the other hand. Multi-year components providing a long-term incentive are based on a three-year average of consolidated net profit and on a four-year average of share prices, respectively. These components are paid out after two fiscal years for net profit and at the earliest after three fiscal years for share prices.

a) Consolidated Net Profit

For this subordinate target, the basis for assessment is the consolidated net profit after non-controlling interest excluding amortization (impairment of the value of intangible assets due to business combinations pursuant to IFRS 3). Target achievement for assessing annual variable remuneration in the particular year under review is based on the average taken over a period of three fiscal years, beginning with the particular year under review. To smooth the amounts to be paid out, a partial payment amounting to 50% of the target achievement for the first fiscal year of each respective average period will be effected. Any overpayments as a result of these partial payments will be offset against other remuneration components once the total target achievement has been determined after the third fiscal year of an average period. A cap for this component is provided as well.

b) Phantom Stock Plan

Through the issue of shadow shares, called phantom stock, Executive Board members are treated as if they were owners of a certain number of shares in Sartorius AG, without, however, being entitled to receive dividends. The development of the value of this phantom stock is linked with the development of the Sartorius share; both increases and decreases in the share price are taken into account. Later, the value of this phantom stock is assessed based on the share price at the time, and its equivalent is paid out, provided that the associated conditions are met. Phantom stock cannot be traded and does not entail any share subscription rights.

According to the Sartorius phantom stock plan, each Executive Board member is credited at the beginning of every year with phantom stock units valued at an agreed monetary sum. The value of this phantom stock can be paid out only as an entire annual tranche. Payment can be requested, at the earliest, after a period of four years and no later than after eight years.

An Executive Board member is entitled to receive payment for phantom stock units only if the share price at the time of such payment request has appreciated at least 7.5% per year relative to the time the phantom stock was assigned or if the share price outperformed the TecDAX as a comparative index. The phantom stock plan rules out subsequent changes to the parameters used for comparative stock valuation. The amount to be paid is capped at a maximum of 2.5 times the share price at the time the phantom stock was assigned, based in each case on the actual annual tranche concerned.

Assignment of this phantom stock and payment of its monetary equivalent depend on the mean value calculated from the average prices of both classes of Sartorius AG share in the closing auction of Xetra trading on the Frankfurt Stock Exchange over the last 20 days of trading of the previous year or over the last 20 days of trading prior to submission of a payment request. This serves to compensate for any short-term fluctuations in the share prices.

Payment for phantom stock is blocked for the four weeks preceding the scheduled publication date of quarterly and preliminary year-end results and for 20 days of trading on the stock exchange following the actual publication of quarterly and preliminary year-end results. These blackout periods are intended to prevent Executive Board members' profiting from their insider knowledge.

Pension Commitments

According to the company’s remuneration policy, Executive Board members of Sartorius AG receive performance-related benefit commitments under a defined benefit plan when reappointed for the first time. In addition to including a basic pension, these commitments provide for the Executive Board member to make his own contribution from his variable earnings and for the company to match this contribution by a bonus amount. An Executive Board member may choose to receive such defined benefits in the form of a retirement pension for old age or as a one-time payment to cover the member’s retirement pension for old age and invalidity as well as in the form of survivor’s benefits for the surviving spouse and children of the decedent.

Beyond such commitments, an Executive Board member is additionally entitled under a former company pension scheme to receive performance-based retirement benefits based on the salary of a German federal civil servant classified as grade 10 of salary class B for ministry officials according to the Federal Civil Service Remuneration Act [Bundesbesoldungsgesetz]. Such benefits are paid in the form of a retirement pension or old age and invalidity as well as in the form of survivors‘ benefits for the surviving spouse and children of the decedent.

After a member has turned 65, this shall be considered the regular age limit at which this member shall automatically be entitled to receive all such benefits.

Other Remuneration Components

The remuneration system provides that the Supervisory Board of Sartorius AG at its discretion may grant an Executive Board member special compensation based on that member's exceptional performance.

Early Termination of Executive Board Duties

In the event of any early termination of Executive Board duties, the employment contracts of Executive Board members provide for severance to be capped to a maximum of two annual salaries.

Fringe Benefits

Beyond the remuneration components stated above, the members of the Executive Board are each entitled to use a company car, reclaim expenses incurred on business travel and to be covered by accident insurance and D&O insurance as fringe benefits. The D&O insurance provides for the application of a deductible or excess in the amount required by law.

Share-based Payment

As a rule, the remuneration policy for Executive Board members does not provide for the transfer of Sartorius AG shares as compensation for members. An exception to this policy rule was made in December 2014 for Dr. Kreuzburg, who was granted entitlement to receive share-based remuneration due to the third extension of his appointment as a member of the Executive Board and as its Chairman and CEO; please refer to Section 3 in this chapter.

2. Remuneration of the Executive Board Members in the Reporting Year

In 2015, the total remuneration for active service provided by all Executive Board members totaled €3,222 K relative to €7,767 K in 2014. Of this aggregate total, €1,525 K accounted for non-performance-based components as “fixed remuneration” (2014: €1,424 K) and €1,697 K for variable performance-based components and multi-year components with a long-term incentive (2014: €6,343 K). The prior-year figures include the transfer of shares agreed in December 2014 to be granted to Dr. Kreuzburg and effected in the reporting year; for a description, please refer to Section 3 in this report. Furthermore, as part of the pension commitments to the Executive Board members, the pension service cost totaling €364 K in the reporting year was expensed, following on €503 K in the prior year.

Total Remuneration of the Executive Board Pursuant to § 314, Subsec. 1, No. 6, of the German Commercial Code (HGB)

Executive Board (total) Dr. Joachim Kreuzburg Jörg Pfirrmann Reinhard Vogt
in TK 2015 2014 2015 2014 2015 2014 2015 2014
Fixed remuneration 1,476 1,375 726 675 310 290 440 410
Fringe benefits1) 49 49 15 18 15 15 19 16
Fixed remuneration 1.525 1.424 741 693 325 305 459 426
Variable performance-based
remuneration (1 year)2)
886 759 436 373 186 160 264 226
Variable multi-year components
w/ long-term incentive
Consolidated net profit (3 years)3) 443 289 218 141 93 62 132 86
Phantom stock plan (4–8 years)4) 369 345 182 169 78 73 110 103
Shares granted4) 0 4,950 0 4,950 0 0 0 0
1,697 6,343 835 5,633 357 295 506 415
Total remuneration 3,222 7,767 1,576 6,326 682 600 965 841

1) The amounts contributed to D&O insurance totaling €171 K (2014: €263 K) are not included as these refer to the executive bodies of all companies of the Sartorius Group and are not allocated to the individual insurees.

2) Amount corresponds to actual target achievement.

3) Amount corresponds to actual target achievement of the plan in which a fiscal year ended; i.e., for 2015, consolidated net profits for 2013 –2015 (2014: consolidated net profits for 2012–2014).

4) For shares granted to Dr. Kreuzburg in fiscal 2014, the value indicated is derived from the number of shares granted (25,000 ordinary shares and 25,000 preference shares) and their respective closing prices on the stock exchange on the grant date of December 16, 2014 (€100.00 and €98.00, respectively). Due to the share-based payment arrangement, expected dividends are not to be included in the measurement of these shares.

As part of the remuneration component based on the consolidated net profit of three consecutive fiscal years, each Executive Board member receives a partial compensation payment of 50% of his respective target achievement for the first fiscal year under review. Once the total target achievement has been determined after the third fiscal year, final payment is then effected by deducting the particular partial payment already made. The amounts of the partial payments made in total at the end of the reporting year are shown as follows:

 

2015
in K€
2014
in K€
Balance as of Jan. 1 of a
fiscal year
302306
Partial payments deducted–156–150
Partial payments effected165146
Balance as of Dec. 31 of a
fiscal year
311302

3. Disclosures on Share-based Payments

For multi-year components with a long-term incentive, the phantom stock plan must be generally classified as share-based payment just as is the share-based payment agreed to be granted to Dr. Kreuzburg in December 2014 in connection with the third extension of his appointment as a member of the Executive Board and its Chairman and CEO. The latter share-based payment is explained in detail below:

Dr. Kreuzburg’s third appointment as a member of the Executive Board and its Chairman and CEO expired on November 10, 2015. By resolution of the Supervisory Board on December 16, 2014, Dr. Kreuzburg was reappointed as a member of the Executive Board and its Chairman and CEO of the company for the term of November 11, 2015, to November 10, 2020. His employment contract that entered into force on November 11, 2015, provides for granting Dr. Kreuzburg 25,000 ordinary shares and 25,000 preference shares in the company as a supplementary compensation component. These shares were transferred to him on December 18, 2015 and are thus considered granted in 2015. The shares transferred are subject to a holding period that will end on November 10, 2019. Should Dr. Kreuzburg leave the company prior to November 11, 2017, at his own request, he shall be required to transfer all such shares back to the company; if Dr. Kreuzburg leaves the company after November 11, 2017, and before November 11, 2019, at his own request, Dr. Kreuzburg shall be required to transfer half of the shares granted to him back to the company.

The amount resulting since December 16, 2014, for the shares granted are to be spread as an employee benefits expense over the full vesting period and recognized as such in profit or loss. In fiscal 2015, an amount of €1,356 K was accordingly recognized as an employee benefits expense resulting from the grant of shares.

The employee benefits expense recognized in profit or loss in connection with the share-based payments is summarized as follows:

2015
in K€
2014
in K€
Executive Board (total)3.098617
Phantom stock units1.742561
Shares granted1.35656
Dr. Joachim Kreuzburg2.212330
Phantom stock units856274
Shares granted1.35656
Jörg Pfirrmann367121
Phantom stock units367121
Shares granted00
Reinhard Vogt519166
Phantom stock units519166
Shares granted00

Disclosure of Phantom Stock Units

Number of
phantom
stock units
Price on
assignment
in €
Fair value
when
granted on
Jan. 1 of
the
particular
year
€ in K
Fair value
at yearend
on
Dec. 31,
2014
€ in K
Fair value
at year-end
on Dec. 31,
2015
¤ in K
Paid in
fiscal 2015
€ in K
Change in
value in
fiscal 2015
€ in K
Status
Dr. Joachim Kreuzburg
Tranche for fiscal 2011 5,165 26.62 138 344 0 344 0 Paid out in 2015
Tranche for fiscal 2012 4,416 33.12 146 365 365 0 0 Not exercisable
Tranche for fiscal 2013 2,289 69.36 159 224 397 0 173 Not exercisable
Tranche for fiscal 2014 2,008 84.03 169 193 422 0 229 Not exercisable
Sum of the tranches from the previous years 13,878 612 1,126 1,184 344 402
Tranche for fiscal 2015 1,840 98.78 182 0 454 0 272 Not exercisable
Total sum of tranches 15,718 794 1,126 1,638 344 674
 
Jörg Pfirrmann
Tranche for fiscal 2011 2,348 26.62 63 156 0 156 0 Paid out in 2015
Tranche for fiscal 2012 1,937 33.12 64 160 160 0 0 Not exercisable
Tranche for fiscal 2013 990 69.36 69 97 172 0 75 Not exercisable
Tranche for fiscal 2014 863 84.03 73 83 181 0 98 Not exercisable
Sum of the tranches from the previous years 6,138 269 496 513 156 173
Tranche for fiscal 2015 785 98.78 78 0 194 0 116 Not exercisable
Summe Total sum of tranches Gesamt 6,923 347 496 707 156 289
 
Reinhard Vogt
Tranche for fiscal 2011 3.193 26,62 85 212 0 212 0 Paid out in 2015
Tranche for fiscal 2012 2.699 33,12 90 223 223 0 0 Not exercisable
Tranche for fiscal 2013 1.397 69,36 97 137 242 0 105 Not exercisable
Tranche for fiscal 2014 1.220 84,03 103 117 256 0 139 Not exercisable
Sum of the tranches from the previous years 8.509 375 689 721 212 244
Tranche for fiscal 2015 1.114 98,78 110 0 275 0 165 Not exercisable
Total sum of tranches 9.623 485 689 996 212 409

4. Pension Commitments

The retirement plan for Executive Board members provides for an old age and disability pension for Dr. Kreuzburg and for an old age pension for Messrs. Pfirrmann and Vogt. To cover such pensions, a benefit contribution amounting to one percent of each pensionable income and of each pensionable bonus is paid into a reinsurance policy. The benefit contribution for Dr. Kreuzburg is 10%; for Messrs. Pfirrmann and Vogt, 14% of their respective pensionable income, which equals their fixed remuneration.

If an Executive Board member elects to convert a portion of his salary to accrued retirement benefits by paying his own contribution into the reinsurance policy, Sartorius matches this by paying a corresponding additional benefit contribution on the reporting date. This amount matched by the company is 5% of the pensionable bonus earned by Dr. Kreuzburg and 7% of the same earned by Messrs. Pfirrmann and Vogt. This pensionable bonus is comprised of their respective one year variable remuneration and of their respective multi year remuneration based on the consolidated net profit. The amount of the retirement benefits that Sartorius will pay later to each Executive Board member and his surviving dependents is dependent on the maturity payment of the insurance policy accrued up to the maturity date, including the policyholders' bonuses earned by the insurance company. An Executive Board member does not acquire any rights to the reinsurance policy; Sartorius shall be solely vested with such rights at all times.

Furthermore, an earlier pension agreement granted to Dr. Kreuzburg provides that he will receive a monthly pension of 70% of the basic salary of a German federal civil servant classified as grade 10 of salary class B for ministry officials according to the Federal Civil Service Remuneration Act (Bundesbesoldungsgesetz) in the respective version applicable. With each full year of service, 5% of his full pension is vested until after his full pension will have been reached after 20 years. Arrangements for pensions of surviving dependents basically provide for a widow's pension of 60% and an orphan's pension for each child amounting to 20% of his pension.

The projected pension payments, the present value of pension obligations and service cost are shown in the following table:

Projected pension
payment
Present value of the obligation (IFRS)Service cost (IFRS)
in K€ p. a.Dec. 31, 2015Dec. 31, 201420152014
Dr. Joachim Kreuzburg225 2,143 2,091 234174
Jörg Pfirrmann972932215953
Reinhard Vogt3135126871276
353 2,787 2,580 364503

5. Disclosures Required by the German Corporate Governance Code (DCGK)

The following table shows the benefits granted for the year 2015, including the fringe benefits and the attainable maximum and minimum remuneration for the variable remuneration components in line with the requirements of the DCGK of lit. 4.2.5 of June 2014:

Dr. Joachim Kreuzburg Jörg Pfirrmann Reinhard Vogt
Benefits granted
  € in K
2015 (min) 2015 (max) 2015 2014 2015 (min) 2015 (max) 2015 2014 2015 (min) 2015 (max) 2015 2014
Fixed remuneration 726 726 726 675 310 310 310 290 440 440 440 410
Fringe benefits1) 15 15 15 18 15 15 15 15 19 19 19 16
Total non-performancebased
  remuneration
741 741 741 693 325 325 325 305 459 459 459 426
Variable performance-based
  remuneration (1 year)1)
0 436 363 338 0 186 155 145 0 264 220 205
Variable multi-year
  components w/ long-term
  incentive
Consolidated net profit 2015
  (2015–2017)1)
0 218 182   0 93 78   0 132 110  
Consolidated net profit 2014
  (2014–2016)1)
  169     73 103
Phantom stock plan 2015
  (holding period 2015–2018)2)
0 454 182   0 194 78   0 275 110  
Phantom stock plan 2014
  (holding period 2014–2017)2)
  169     73 103
Shares granted2) 0 0 0 4,950 0 0 0 0 0 0 0 0
  741 1,848 1,468 6,318 325 798 636 595 459 1,130 899 836
Post-employment benefits 234 234 234 174 59 59 59 53 71 71 71 276
Total remuneration 975 2,082 1,702 6,492 384 857 695 648 530

1,201

970 1,112

1) Amount for 100% target achievement

2) Value at the time granted

The inflows of the various remuneration components in the reporting year are shown in the following table:

Dr. Joachim Kreuzburg Jörg Pfirrmann Reinhard Vogt
Benefits received
€ in K
2015 2014 2015 2014 2015 2014
Fixed remuneration 726 675 310 290 440 410
Fringe benefits1) 15 18 15 15 19 16
Total non-performancebased
remuneration
741 693 325 305 459 426
Variable performance-based
remuneration (1 year)1)
436 373 186 160 264 226
Variable multi-year
components w/ long-term
incentive
Consolidated net profit
(2013–2015)1)
170 74 104
Consolidated net profit
(2012–2014)1)
141 62 86
Phantom stock plan 20112) 344 156 212
Phantom stock plan 20102) 344 132 187
Shares granted 4,888 0 0 0 0 0
6,579 1,551 741 659 1,039 925
Post-employment benefits 234 174 59 53 71 276
Total remuneration 6,813 1,725 800 712 1,110 1,201

1) Amount equal to actual target achievement

2) Paid out in the fiscal year

6. Main Features of the Remuneration Plan for the Supervisory Board

The remuneration for Supervisory Board members is defined in the Articles of Association of Sartorius AG and comprises fixed remuneration, meeting attendance fees and reimbursement of out-of-pocket expenses. Members serving as chairperson and vice chairperson of the Supervisory Board receive higher fixed remuneration.

Members and chairpersons of Supervisory Board committees are entitled to receive additional annual fixed amounts and meeting attendance fees and reim-bursement of their out-of-pocket expenses. These amounts do not apply in relation to the Nomination Committee or to the committee pursuant to Section 27, Subsection 3, of the German Codetermination Law (MitBestG).

7. Remuneration of the Supervisory Board Members

2015
in K€
2014
in K€
Remuneration for the Supervisory
Board Members
Total remuneration 960 926
Fixed remuneration 600 600
Compensation for committee work 80 80
Meeting attendance fee 169 154
Remuneration for individual services 18 0
Total remuneration for the Sartorius
Stedim Biotech subgroup
93 92
Remuneration from Sartorius Stedim
Biotech GmbH, Goettingen
39 38
Remuneration from Sartorius Stedim
Biotech S.A., Aubagne
54 54


2015
in K€
2014
in K€
Prof. Dr. Dres. h.c. Arnold Picot
(Chairman)
Total remuneration 261 265
Fixed remuneration 120 120
Compensation for committee work 24 24
Meeting attendance fee 24 29
Total remuneration for the Sartorius
Stedim Biotech subgroup
93 92
Remuneration from Sartorius Stedim
Biotech GmbH, Goettingen
39 38
Remuneration from Sartorius Stedim
Biotech S.A., Aubagne
54 54


2015
in K€
2014
in K€
Dr. Dirk Basting
Total remuneration 49 46
Fixed remuneration 40 40
Meeting attendance fee 9 6


2015
in K€
2014
in K€
Annette Becker1)
Total remuneration 49 46
Fixed remuneration 40 40
Meeting attendance fee 9 6


2015
in K€
2014
in K€
Uwe Bretthauer1)
Total remuneration7982
Fixed remuneration4040
Compensation for committee work1616
Meeting attendance fee2326


2015
in K€
2014
in K€
Michael Dohrmann1)
Total remuneration4946
Fixed remuneration4040
Meeting attendance fee96


2015
in K€
2014
in K€
Dr. Lothar Kappich
Total remuneration4946
Fixed remuneration4040
Meeting attendance fee96


2015
in K€
2014
in K€
Petra Kirchhoff
Total remuneration4946
Fixed remuneration4040
Meeting attendance fee96


2015
in K€
2014
in K€
Karoline Kleinschmidt1)
Total remuneration4945
Fixed remuneration4040
Meeting attendance fee95


2015
in K€
2014
in K€
Prof. Dr. Gerd Krieger
Total remuneration 84 66
Fixed remuneration 40 40
Compensation for committee work 8 8
Meeting attendance fee 18 18
Remuneration for individual services2) 18 0


2015
in K€
2014
in K€
Prof. Dr. Thomas Scheper
Total remuneration4946
Fixed remuneration4040
Meeting attendance fee96


2015
in K€
2014
in K€
Prof. Dr. Klaus Trützschler
Total remuneration 73 68
Fixed remuneration 40 40
Compensation for committee work 16 16
Meeting attendance fee 17 12


2015
in K€
2014
in K€
Manfred Zaffke1) (as of March 1, 2014)
(Vice Chairman)
Total remuneration 120 103
Fixed remuneration 80 67
Compensation for committee work 16 13
Meeting attendance fee 24 23


2015
in K€
2014
in K€
Gerd-Uwe Boguslawski1)
(until Feb. 28, 2014)
Total remuneration 0 21
Fixed remuneration 0 13
Performance-related
remuneration
0 3
Meeting attendance fee 0 5

1) The employee representatives declared that they donate their Supervisory Board remuneration to the foundation Hans- Böckler-Stiftung according to the guidelines of the German Trade Union Association.

2) Remuneration for the legal firm Hengeler Mueller whose partner is Dr. Gerd Krieger, Professor of Law.

Beyond their Supervisory Board remuneration, the employee representatives who are employees within the Sartorius Group receive compensation that is not related to their service on the Supervisory Board.

8. Remuneration of Former Managing Directors

2015
in K€
2014
in K€
Remuneration of Former Managing
Directors
Remuneration of former managing
directors and members of the Executive
Board as well as their surviving
dependents
487 405
Retirement benefits and pension
obligations to former managing directors
and members of the Executive Board as
well as their surviving dependents
9,689 9,229

Any circumstances beyond the disclosures made above and required to be reported according to Section 289, Subsection 4, and Section 315, Subsection 4, of the German Commercial Code “HGB” do not exist or are unknown.