Compensation, shareholdings and loans

Nature and method of determining compensation

Under the Articles of Association and Organisational Regulations, incumbent members of the Board of Directors receive compensation based on their workload and responsibilities. This consists of a fixed compensation plus meeting expenses. The compensation is not dependent on company performance and is set by the Board of Directors. The Board of Directors last adjusted the fixed compensation and meeting expenses in 2006 based on comparisons with compensation received by members of Boards of Directors of Swiss energy-sector companies of a comparable size. The compensation is reviewed at unspecified intervals and redefined if necessary.

Compensation for members of the Executive Board comprises a fixed basic salary plus a variable bonus, which can amount to up to 40 per cent of the annual basic salary if operating targets are met, as well as a profit-based bonus which is set at the end of a three-year assessment period. The fixed basic salary and the variable bonus are defined annually by the Board Committee in its role as Compensation Committee. A proposal from the CEO oriented around the development of the group serves as the basis for the fixed basic salary. In its capacity as Compensation Committee, the Board Committee uses its discretion to weight this reference standard to define the fixed basic salary. The bonus depends on whether the financial targets of the Repower Group and personal performance objectives are met. EBIT, EVA (economic value added) and the net debt/EBITDA figures of the Repower Group serve as common goals and are weighted to account for 50 per cent of the bonus determined. Between three and five personal performance objectives are set for each member of the Executive Board and also account for 50 per cent of the bonus determined.

The aim of the profit-based bonus, which was implemented for the 2007 financial year, is to drive the company's medium-term strategic direction and sustainably enhance corporate value. It is paid out at the end of a three-year period (the first time from 2007 to 2009; new period 2010 to 2012) and can account for 30 per cent of the fixed basic salary in the third year of the assessment period if targets are met in full. The performance targets are based on the cumulative strategic key figures (EVA) of the Repower Group and were determined at the beginning of the assessment period.

The CEO submits to the Board Committee, in its capacity as Compensation Committee, a proposal as to how the individual compensation components are to be determined. In its role as Compensation Committee, the Board Committee makes the final decision. Individual performance is evaluated at the end of the reporting period in a meeting with the individual's line manager, based on the objectives agreed upon at the beginning of the fiscal year. All compensation components take the form of compensation in cash. The Board Committee must brief the Board of Directors on the progress of the bonus-setting and compensation process. This is done by means of minutes to be submitted immediately following meetings on such matters, as well as a verbal briefing by the Chairman of the Board of Directors at the next meeting of the Board of Directors. During the financial year, one meeting was held by the Board Committee in its capacity as Compensation Committee for the purpose of setting compensation. Members of the Executive Board and the remaining members of the Board of Directors may neither attend nor participate in any meetings of the Board Committee in its capacity as Compensation Committee. The CEO, however, is called on in an advisory capacity for certain parts of these meetings. No external consultants were engaged for the purpose of structuring the compensation.