HEIDELBERG MATERIALS AG Remuneration report | Heidelberg Materials 2022 | 1 |
Remuneration report
Introduction
The remuneration report sets out the principles and structure of the remuneration of the Managing Board and the Supervisory Board of HeidelbergCement AG. When the remuneration report reports on remuneration at Group level, the brand name "Heidelberg Materials" is used. The remuneration report contains the remuneration granted and owed to the current and former members of the Managing Board and the Supervisory Board in the 2022 financial year. The remuneration granted includes the remuneration components whose underlying (single or multi-year) service or performance period was fully completed in the financial year. The remuneration report was jointly prepared by the Managing Board and the Supervisory Board in accordance with the provisions of section 162 of the German Stock
Review of the 2022 financial year
Business development and target achievement in the 2022 financial year
The good business development of Heidelberg Materials in the financial year 2022 despite the challenging conditions is also reflected in the target achievement of the variable elements of the remuneration of the Managing Board. The good result in the profit for the financial year attributable to the shareholders of HeidelbergCement AG adjusted for special effects and the reduction in CO2 emissions compared with the previous year contributed to the achievement of the objectives for the annual bonus. In addition, initiatives were implemented that served as a basis of the individual target agreements for the members of the Managing Board within the framework of the company strategy.
Target achievement 2022
For the management component of the long-term
bonus 2020-2022/2023, a strong performance of EBIT and ROIC, adjusted for special effects, led to a target achievement of 200%. However, the total shareholder return (TSR) of the HeidelbergCement AG share after the end of the performance period from 2019 to 2022 was below that of the TSRs of the DAX and the MSCI World Construction Materials Index. Conse- quently, there is no payment from the capital market component of the long-term bonus 2019-2021/2022.
Corporation Act (Aktiengesetz, AktG). In addition, it takes into account the recommendations and suggestions of the German Corporate Governance Code (GCGC) in its version of 28 April 2022.
The remuneration report was also audited with reasonable assurance by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft beyond the requirements of section 162(3) of the AktG. The report on the audit of the remuneration report can be found at the end of the remuneration report.
Annual bonus 2022 | ||
∅ Actual: 158% | ||
Capital market component | ||
(Tranche 2019) | Actual: 0 % | |
Management component | ||
(Tranche 2020) | Actual: 200% | |
Minimum: 0 % | Target: 100 % | Maximum: 200 % | |
Remuneration report
Granted and owed remuneration in the 2022 financial year
Dr Dominik von Achten | (€'000s) | Ø Members of the Managing Board 1) 2) | (€'000s) |
(only active members throughout the year) |
Heidelberg Materials 2022 2
time, in addition to the degree of target achievement in terms of share ownership.
6,000 | 5,606 | 5,850 | 6,000 |
74% | 75% | ||
4,000 | 4,000 | ||
2,000 | 2,000 | ||
26% | 25% | ||
0 | 2021 | 2022 | 0 |
Fixed remuneration | Variable remuneration |
3,078 | |
67% | 2,493 |
62% | |
33% | 38% |
2021 | 2022 |
Remuneration of the Managing Board in the 2022 financial year
Principles of remuneration of the Managing Board
The remuneration system of the Managing Board is aligned with the Group strategy. By selecting appropriate performance criteria for the variable remuneration, incentives are given to implement the Group strategy and to promote the long-term and sustainable devel-
opment of Heidelberg Materials. Both financial and
- Excluding the Chairman of the Managing Board
- Decrease from 2021 to 2022 as, in contrast to 2021, the 2022 value includes the remuneration of the three members of the Managing Board that were appointed during 2021 and that do not receive a payout from the long-term bonus for 2022.
non-financial performance criteria are used to represent the company's success as a whole. The consideration of ESG targets in the variable remuneration underlines the desire for excellent economic performance
Changes in the composition of the Supervisory Board
The long-standing Chairman of the Supervisory Board, Mr Fritz-Jürgen Heckmann, and Mr Tobias Merckle resigned their Supervisory Board mandates with effect from the end of the ordinary 2022 annual general meeting and thus stepped down from the Supervisory Board on 12 May 2022. By way of a vote to choose their successors with effect from the end of the annual general meeting on 12 May 2022, Dr Bernd Scheifele and Dr Sopna Sury were elected to the Supervisory Board, and Dr Scheifele was elected by the Supervisory Board as its new chairman at the meeting on 12 May 2022.
2021 remuneration report
In accordance with the requirements of the German Act Implementing the Second Shareholder Rights Directive (Gesetz zur Umsetzung der zweiten Aktionärs- rechterichtlinie, ARUG II), the 2021 remuneration report was submitted to the 2022 annual general meeting as part of a consultative vote for approval pursuant to section 120a(4) of the AktG and approved with an acceptance rate of 94.16%. The 2021 remuneration report is available via the following link: https://www.heidel-bergmaterials.com/en/corporate-governance.
The Managing Board and Supervisory Board are committed to continuously reviewing and further improving the transparency and clarity of remuneration report- ing. For that reason, the 2022 remuneration report
reports the number of shares held by the members of the Managing Board on an individual basis for the first
as well as environmentally and socially responsible conduct.
The remuneration of the company's Managing Board is based on the principle that members of the Managing Board should be remunerated appropriately according to their performance. With the high proportion of
variable and thus performance-based remuneration elements, the Supervisory Board pursues a strict pay-for-performance approach.
Remuneration report | Heidelberg Materials 2022 3 |
The following overview summarises the most important principles of remuneration of the Managing Board. To- gether, they provide incentives to promote the long- term and sustainable development of Heidelberg Materials.
Fundamentals of the Managing Board remuneration
-
Strong pay for performance orientation
due to high performance-related share of total remuneration - Alignment of variable remuneration and perfor- mance criteria with the long-termGroup strategy
- Sustainability as important component of Manag- ing Board remuneration through CO2 component in variable remuneration
- Alignment with shareholder interests through share-basedremuneration and obligation for individual investment
- Use of relative performance assessment and prevention of adjustments of target values or performance criteria during the year
- Capping of total remuneration through contractually fixed payout caps
- Malus and clawback rules for the variable
remunerationin total
Procedure for determining and implementing the remuneration system and the amount of Managing Board remuneration
The remuneration system for the members of the Managing Board is determined by the Supervisory Board pursuant to section 87a of the AktG following a recommendation by the Personnel Committee and is then submitted to the annual general meeting for approval.
As a result of the German Act Implementing the Second Shareholder Rights Directive (ARUG II) entering into force on 1 January 2020, the remuneration system of the Managing Board was submitted to the annual general meeting in 2021 after a resolution by the Supervisory Board and was approved by the annual general meeting with an acceptance rate of 92.21%. It has been applicable to all members of the Managing Board since 1 January 2021 and is available via the following link: https://www.heidelbergmaterials.com/en/corporate-governance.
As long as no significant changes are made to the remuneration system, it will be submitted to the annual general meeting for approval at least every four years in accordance with the legal requirements. In the event of significant changes to the remuneration system, the adjusted remuneration system will also be submitted to the annual general meeting for approval in the year of its change.
The remuneration of the Managing Board is determined by the Supervisory Board following a recommendation by the Personnel Committee. The Supervisory Board takes into account the responsibility and tasks of the individual members of the Managing Board, their individual performance, the economic situation, as well as the success and future prospects of Heidelberg Materials.
Further development of the remuneration system
The Supervisory Board is committed to continuously improving the remuneration system for the members of the Managing Board in the interests of the shareholders of HeidelbergCement AG. It aims to do so by means of ongoing dialogue with our investors as well as regular analysis of current market practice.
By introducing a CO2 component to the annual bonus awarded to the members of the Managing Board in 2021, Heidelberg Materials has taken an important step in aligning the remuneration of the Managing Board with a reduction in CO2 emissions. To lend further support to the achievement of our ambitious climate targets, the Supervisory Board is currently reviewing the inclusion of a CO2 emissions-related key performance indicator in the long-term bonus. In addi- tion, a fundamental review of the Managing Board remuneration system is planned for the current year, with the aim of submitting a revised remuneration system to the annual general meeting for approval in 2024.
By doing so, the Supervisory Board intends to go beyond the regular, legally mandated four-yearly review of the Managing Board remuneration system in order to take account of the constantly changing requirements of a dynamic market and economic environ- ment.
Remuneration report
Heidelberg Materials 2022 4
Review of the appropriate remuneration of the Managing Board
The Supervisory Board regularly reviews the appropriateness of the remuneration of the Managing Board with the support of the Personnel Committee. This includes an external, horizontal comparison with the remuneration of managing boards of comparable companies as well as an internal, vertical comparison of remuneration within Heidelberg Materials. For the horizontal comparison, the selection of companies is based on the size and international activity of Heidelberg
Materials, the economic and financial situation, and future prospects.
The companies of the DAX are used for the horizontal comparison. The horizontal comparison serves to verify that the remuneration of the Managing Board is market common.
For the vertical comparison, the remuneration of the Managing Board is compared with the remuneration of top and senior management (upper management) and the remuneration of the total workforce of
HeidelbergCementAG, both overall and in terms of development over time.
The following overview shows the development of the target direct remuneration (fixed annual salary, target value of the annual bonus and - if the corresponding employee groups are eligible - the target value of the long-term bonus) in the internal comparison in the period from 2018 to 2022. The vertical comparison of the target remuneration is used when reviewing the appropriateness of the remuneration of the Managing Board pursuant to section 87a of the AktG. The comparative statement pursuant to section 162(1)(2) of the AktG can be found in the Comparative presentation of the development in remuneration and earnings section.
Development of the average target direct remuneration1) of the Managing Board and total workforce of HeidelbergCement AG
2018 | Change | 2019 | Change | 2020 | Change | 2021 | Change | 2022 | ||||||||||
€'000s | 2019/2018 | 2020/2019 | 2021/2020 | 2022/2021 | ||||||||||||||
Managing Board2) | 3,036.0 | -5.6% | 2,866.8 | 0.1% | 2,868.7 | -9.1% | 2,607.8 | -0.7% | 2,590.5 | |||||||||
Top and senior | 207.7 | 4.6% | 217.2 | 5.9% | 230.0 | 2.7% | 236.3 | -1.0% | 233.9 | |||||||||
management3) | ||||||||||||||||||
Total workforce of | 61.4 | 2.0% | 62.6 | 1.2% | 63.4 | 1.4% | 64.3 | -2.2% | 62.9 | |||||||||
HeidelbergCement AG4) | ||||||||||||||||||
- Fixed salary (incl. 13th monthly salary, vacation pay), annual bonus (target 100%) and long-term bonus (target 100%) on a full-time basis.
- The decrease of 5.6% in the average target direct remuneration of the Managing Board from 2018 to 2019 is due to personnel changes to the Managing Board. The decrease of 9.1% from 2020 to 2021 is mainly due to the new appointment of three Managing Board members, whose target direct remuneration was lower than the average remuneration of the other Managing Board members.
- Top- and Senior-Management of HeidelbergCement AG excluding the Managing Board. Top Management comprises positions with management responsibility for global and area functions as well as for large- and medium-sized countries. Senior management comprises mostly positions with management responsibility that are not included in Top Management.
- Including top and senior management, excluding Managing Board.
Remuneration report
In the 2022 financial year, the ratio of the average
remunerationof the Managing Board (including the Chairman of the Managing Board) to the average
remunerationof top and senior management was 1:11 (previous year: 1:11), and the ratio to the total work- force of HeidelbergCement AG was 1:41 (previous year: 1:41).
Remuneration structure
Pay for performance and the focus on the sustainable and long-term development of the company are central principles of the remuneration of its Managing Board. With these principles in mind, 71% of the target direct remuneration for the Chairman of the Managing Board and around 67% for the members of the Managing Board consist of variable remuneration elements. The fixed annual salary thus accounts for 29% of the target direct remuneration for the Chairman of the Managing Board and around 33% for the members of the Managing Board.
To ensure the long-term focus of the remuneration of the Managing Board, the share of the long-term bonus exceeds that of the annual bonus within the variable remuneration elements.
Heidelberg Materials 2022 5
Remuneration components
of the Chairman of the Managing Board in %
71 % Share | ||
of variable | ||
remuneration | ||
29 | of which 59 % long- | |
term bonus and | ||
42 | 41 % annual bonus | |
● Long-term | ||
bonus | ||
● Annual bonus |
29 % Share of fixed | |
29 | remuneration |
● Fixed remunera- | |
tion |
Remuneration components
of the members of the Managing Board 1) in %
67 % Share | |
of variable | |
remuneration | |
33 | of which 61 % long- |
term bonus and | |
39 % annual bonus | |
41 | |
● Long-term | |
bonus | |
● Annual bonus |
33 % Share of fixed | |
remuneration | |
26 | ● Fixed remunera- |
tion |
1) Excluding the Chairman of the Managing Board
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Disclaimer
HeidelbergCement AG published this content on 23 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 March 2023 06:02:09 UTC.
