Compensation of the Management Board

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Compensation of the Executive Board

Axel Springer’s compensation policy follows the principle of granting compensation to the Management Board that is based on their performance in the interest of sustainable corporate development. This compensation consists of fixed and variable performance-dependent components.

The variable compensation is composed of a cash component paid in the form of an annual bonus and a long-term, stock-based component. All components of compensation are appropriate, both individually and as a whole. The criteria used to determine appropriateness are the tasks of the individual Management Board member, his personal performance, as well as the economic situation, profit, and the future prospects of Axel Springer.

Due consideration is also given to the industry environment. No external compensation experts were consulted in 2011.

The fixed compensation corresponds to the annual fixed salary; in addition, the Management Board members receive a company car or company car allowance and security expenses as fringe benefits. The annual fixed salary is established for the entire term of an employment agreement and is disbursed in 12 monthly installments. It is set on the basis of the duties of the individual Management Board member, the current economic situation, the profit, and the future prospects of the Group, among other considerations.

The variable compensation in the form of a cash component paid in the form of an annual bonus is limited in its maximum amount and is set according to the performance of the individual in the context of individual goals (including quantitative divisional goals and qualitative individual goals aligned with the strategy of Axel Springer AG) as well as corporate goals. For financial year 2011, the corporate goals were Group EBITDA, the index of Group customer satisfaction, and EBITDA in the Digital Media segment; for financial year 2012, the determining corporate goals will be Group EBITDA and the EBITDA of the Digital Media segment. The Supervisory Board adopts both the goals applied for measuring individual performance and the corporate goals. Goal achievement is determined initially by the Supervisory Board Chairman, in consultation with the respective Management Board member, and is then resolved by the Supervisory Board. In the case of Management Board members whose employment contracts were either amended or concluded anew, or extended in the time since the Act on the Appropriate Compensation of Management Board Members (VorstAG) became effective on August 5, 2009, a portion of the variable cash compensation is determined on the basis of fulfillment of the corporate goals adopted for an appraisal period of three years.

In addition, Management Board members receive a long-term variable compensation component in the form of virtual stock option plans that were introduced in 2009 and as of January 1, 2012.

For additional information on the Virtual Stock Plans 2009 and 2012, please refer also to the disclosures in the notes to the consolidated financial statements, in Section (12).