Key Performance Indicators to criteria 8

Key Performance Indicator GRI SRS-102-35: Renumeration policies
The reporting organization shall report the following information:

a. Remuneration policies for the highest governance body and senior executives for the following types of remuneration:
i. Fixed pay and variable pay, including performance-based pay, equity-based pay, bonuses, and deferred or vested shares;
ii. Sign-on bonuses or recruitment incentive payments;
iii. Termination payments;
iv. Clawbacks;
v. Retirement benefits, including the difference between benefit schemes and contribution rates for the highest governance body, senior executives, and all other employees.

b. How performance criteria in the remuneration policies relate to the highest governance body’s and senior executives’ objectives for economic, environmental, and social topics.

Executive Board compensation for 2018

The system of the executive board compensation is geared to long-term and sustainable corporate management. The total remuneration of the members of the Management Board is determined by the Supervisory Board. The remuneration system for the Management Board is also resolved and regularly reviewed by the Supervisory Board. The Personnel Committee of the Supervisory Board prepares the corresponding resolutions of the full Supervisory Board.

The remuneration of the members of the Management Board for the 2018 financial year is composed of
1. Fixed compensation,
2. Fringe benefits,
3. Pension plan,
4. Variable compensation.

1. The fixed remuneration is paid pro rata as a monthly salary.

2. Fringe benefits include the value of the private use of the company car and benefits worthy of assets to be recognized in accordance with tax guidelines.

3. All members of the Board of Management have received individual contractual pension commitments as a company pension, which provide for the earliest drawdown of the pension from the age of 65. The amount of the pension is determined as a percentage of fixed compensation, the percentage rising with the number of years in office. The maximum amount a member of the Executive Board can receive is 65 percent of their final fixed remuneration. The survivor's pension amounts to 60 percent of the pension entitlement.
4. Variable compensation is intended as remuneration for performance. If targets are not met, variable compensation can be zero. Between 60 and 70 percent of variable compensation is not at the immediate disposal of Executive Board members.This amount is dependent upon de development of future performance indicators and so is aligned to the long-term business performance. In order to determine variable compensation, overall taget attainment is calculated annually on the basis of Group performance in the year concerned in relation to adjusted free cash flow and consolidated net profit.

Overall target fulfillment can range between zero and 200 percent of the budgeted amount. The Supervisory Board has the right to increase or decrease the overall degree of target achievement resulting from the achievement of the economic targets, while assessing the achievement of agreed strategic targets. The variable remuneration achieved is met by three variable components as follows:

a. Short-term Incentive Plan (STIP) , paid out in cash;
b. Long-term Incentive Plan I (LTIP I) , paid out by transfer of shares in HOCHTIEF AG in the net amount subject to a two-year bar;
c. Long-term Incentive Plan II (LTIP II) , paid out by the granting of an annual long-term incentive plan.

Key Performance Indicator GRI SRS-102-38: Annual total compensation ratio
The reporting organization shall report the following information:

a. Ratio of the annual total compensation for the organization’s highest-paid individual in each country of significant operations to the median annual total compensation for all employees (excluding the highest-paid individual) in the same country.

In 2018, the Group-wide ration between the total annual compensation of the 
Chief Executive Officer and the mean employee compensation was 86,76.

HOCHTIEF is an internationally active group with branches and subsidiaries in a wide variety of regions around the world. The respective cultural differences and living conditions make a representative comparison difficult, since, for example, a different compensation system exists in America than in Europe or Australia.