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The Chairman’s Committee of the Supervisory Board has functional responsibility for determining the structure and size of the compensation of the members of the Management Board. In particular, the Chairman’s Committee determines salaries and other compensation elements for the Management Board.
We have entered into service agreements with members of our Management Board. These agreements established the following principal elements of compensation:
Salary. The members of the Management Board receive a salary which is disbursed in monthly installments. It is determined on the basis of an analysis of salaries paid to executive directors at a selected group of comparable international companies.
Cash Bonus. As part of the variable compensation we pay annual cash bonuses to members of our Management Board primarily based on achievement of the planned return on equity of the Group.
Mid-Term-Incentive (“MTI”). As further part of the variable compensation we grant a performance-based mid-term-incentive which reflects, for a rolling two year period, the ratio between our total shareholder return and the corresponding average figure for a peer group. The mid-term-incentive payment consists of a cash component (1/3) and equity-based awards (2/3) which contain long-term risk elements under the DB Global Partnership Plan.
The aggregate remuneration, including performance-based compensation, earned by the members of our Management Board for the year ended December 31, 2005 was € 28,716,909. This aggregate remuneration was comprised of the following:
| in € | 2005 |
|---|---|
| Salary | 3,550,000 |
| Bonuses, mid-term-incentive (cash and equity-based) | 24,560,000 |
| Other remuneration1 | 606,909 |
| Total remuneration | 28,716,909 |
| 1 | Insurance premiums, payments in kind and taxes. |
The members of our Management Board received as part of the mid-term-incentive share-based awards, the ultimate value of which to the members of the Management Board will depend on the price of Deutsche Bank shares. The units of each portion of this share-based compensation are described below.
DB Equity Units. In February 2006, we awarded an aggregate of 93,290 deferred share awards to members of our Management Board. These shares are scheduled to be delivered on August 1, 2009.
For further information on the terms of our DB Global Partnership Plan, pursuant to which DB Equity Units are issued, see Note [20] to the consolidated financial statements.
Pursuant to the service contracts concluded with each member of our Management Board, the board members are entitled to receive certain transitional payments when they leave the Management Board. Such payments are based on the total compensation previously earned (salary, bonuses, and MTI’s) and the remaining term of the contract, where applicable. If the member of the Management Board leaves in connection with a change of control and the remaining term is less than three years, a term of three years will be assumed. The amounts will generally be paid as a lump sum.
Our board members as of December 31, 2005 received the following remuneration for the year 2005:
| Members of the Management Board | Annual cash compensation | Equity-based MTI | Total | |||
|---|---|---|---|---|---|---|
| in € | Salary | Cash bonus/ cash MIT |
Value of share-based awards1 | |||
| Dr. Josef Ackermann | 1,150,000 | 7,233,750 | 3,516,250 | 11,900,000 | ||
| Dr. Clemens Börsig | 800,000 | 3,273,750 | 1,576,250 | 5,650,000 | ||
| Dr. Tessen v. Heydebreck | 800,000 | 2,903,750 | 1,576,250 | 5,280,000 | ||
| Hermann-Josef Lamberti | 800,000 | 2,903,750 | 1,576,250 | 5,280,000 | ||
| 1 | The number of DB Equity Units granted to each member was determined by dividing such euro amounts by € 88.38, the closing price of our shares on January 31, 2006. The number of DB Equity Units granted to each member was as follows: Dr. Josef Ackermann 39,786, Dr. Clemens Börsig 17,835, Dr. Tessen v. Heydebreck 17,835, and Hermann-Josef Lamberti 17,835. |
In addition to the above amounts that we paid to members of the Management Board in 2005, we paid former members of the Management Board or their surviving dependents an aggregate of € 17,318,339 in 2005. During 2005 we set aside € 1,369,417 for pension, retirement or similar benefits for our Management Board.
