Compensation of the Members of the Board of Management
The total compensation of the members of the Board of Management in the 2007 financial year amounted to EUR20.4 million (2006: EUR21.7 million). Individual members of the Board of Management were paid the following total compensation:
The performance rights granted in 2007 as the second tranche of the E.ON Share Performance Plan were quoted at their fair value of EUR83.24 per right on the date of their issuance and were included in the total compensation of the members of the Board of Management. This fair value is determined by means of a recognized option pricing model. The model, called a Monte Carlo simulation, simulates a large number of different scenarios for E.ON AG stock and its benchmark index, the Dow Jones STOXX Utilities Index (Return EUR). According to the terms and conditions of the E.ON Share Performance Plan, the intrinsic value of the performance rights is determined for each scenario based on E.ON stock’s outperformance or underperformance of its benchmark index and the stock’s corresponding payout value. The fair value is equal to the discounted average of these intrinsic values.
For purposes of internal communications between the Board of Management and the Supervisory Board, the target value is used instead of the fair value. The target value is equal to the cash payout amount of each performance right, if at the end of the maturity period, E.ON stock maintains its price and the performance equals the performance of the benchmark index. The target value for the second tranche is EUR96.52 per right and equals the average E.ON stock price during the 60 trading days prior to the issuance of the rights on January 1, 2007. The Executive Committee of the Supervisory Board used the target value to determine the number of rights to be issued. These correspond to a target value of EUR1.35 million for the Chairman of the Board of Management, EUR0.8 million for Board of Management members, and 80 percent of EUR0.8 million for the members who joined the Board of Management in 2006.
The German Commercial Code (Section 314, Paragraph 1, Item 6a, Sentence 9) requires supplemental disclosure of the Company’s expenses for the performance rights granted in 2007 and all tranches existing in the 2007 financial year that were granted in prior years. The following expenses in accordance with IFRS 2 were recorded for the 2007 financial year: Dr. Bernotat (EUR5.6 million), Dr. Bergmann (EUR2.6 million), Mr. Dänzer-Vanotti (EUR0.8 million), Mr. Feldmann (EUR0.4 million), Dr. Schenck (EUR0.4 million), and Dr. Teyssen (EUR1.6 million). Income of about EUR0.1 million was recorded relating to Dr. Gaul for January 1 – March 31, 2007, due to a decline in the value of SAR and performance rights during this period.
Additional detailed information about E.ON AG’s stock-based compensation program can be found in Note 11 to the Consolidated Financial Statements of the 2007 Annual Report.
No loans were outstanding or granted to members of the Board of Management in the 2007 financial year.
Pages 14, 15, and 213 of the 2007 Annual Report contain additional information about the members of the Board of Management.
Payments Made to Former Members of the Board of Management
Total payments made to former Board of Management members and to their beneficiaries amounted to EUR6.6 million in 2007 (2006: EUR11.7 million). Provisions of EUR97.4 million (2006: EUR99.9 million) have been provided for pension obligations to former Board of Management members and their beneficiaries.
