Remuneration Report

Remuneration of the Board of Management

At the proposal of the Human Resources Committee, the Supervisory Board deliberates and decides on the remuneration system for the Board of Management, including the significant contractual elements, and reviews it regularly. The criteria for the appropriateness of the remuneration of the Board of Management include the duties of the respective member of the Board of Management, the economic and financial situation, the size and global alignment of the company as well as sustainable corporate development. The remuneration is to be determined such that it is competitive in international and national comparison and thus offers an incentive for committed and successful work. The Human Resources Committee regularly reviews whether the remuneration of the Board of Management is appropriate, while taking into account the earnings, sector and future prospects of the company.

Due to the new recommendations of the Code, a revision of the remuneration system for the Board of Management is necessary. This is currently being undertaken and will be submitted for approval to the Annual General Meeting on June 2, 2021.

The following remarks are based on the remuneration system in place since January 1, 2015:

The total remuneration of the members of the Board of Management consists of basic remuneration, a three-year EBT incentive and a sustainability bonus.

The basic remuneration is paid on a proportionate monthly basis as non-performance-based remuneration. Furthermore, the remuneration rules for the members of the Board of Management provide for customary fringe benefits, such as provision of a company car and allowances for a preventive health care examination. Members of the Board of Management additionally receive remuneration for Supervisory Board activities at Group companies.

The three-year EBT incentive is based on an individual participation in earnings of the respective member of the Board of Management measured against the average EBT (Group earnings before income taxes) for the financial year and the two preceding financial years. The Chairman of the Board of Management has a 1.0875 percent share in the average EBT, while the remaining members of the Board of Management have a share of 0.725 percent. The Supervisory Board has the possibility to adjust the participation rate on the recommendation of the Human Resources Committee.

The sustainability bonus is calculated on the basis of the current financial year and the next two financial years. The target bonus is EUR 100,000 for the Chairman of the Board of Management and EUR 66,700 for the other members of the Board of Management. The assessment is made by comparing the planned average EBT over the three years with the actual average EBT (target achievement). A threshold of at least 90 percent of the target must be achieved. The maximum degree of target achievement is 110 percent. If between 90 percent and 100 percent of the target is achieved, between 75 percent and 100 percent of the target bonus is granted; if between 100 percent and 110 percent of the target is achieved, between 100 percent and 150 percent of the target bonus is granted. If the threshold is reached, the payment is made in the financial year following the last plan year. New members of the Board of Management are paid the sustainability bonus for the first time after a three-year blocking period.

Contracts concluded with the Board of Management as of January 1, 2011 provide for severance pay in the amount of no more than two years’ remuneration in the case of early termination of the position on the Board of Management without good cause. If the remaining term of the contract is less than two years, the severance pay must be calculated pro rata temporis. The amount of the severance pay is determined as a matter of principle according to the sum of the fixed remuneration and variable remuneration components excluding remuneration in kind and other fringe benefits for the last full financial year prior to the end of the employment contract. No general compensation agreements were made for the case of early termination of the position on the Board of Management.

Jens Bieniek resigned as a member of the Board of Management on December 11, 2020 and has been released from his duties with effect from December 12, 2020. In accordance with the terms of the severance agreement, he continues to receive his fixed remuneration until the end of his originally appointed term on May 31, 2021. Entitlements to variable remuneration components were compensated by a lump-sum payment of EUR 80,000 at the beginning of 2021.

On the basis of contractual agreements, Michael Blach received a retroactive payment in the 2020 financial year in the amount of EUR 174,000 for underpaid variable remuneration for the years 2017 until 2019.

Due to the earnings situation, which was significantly impacted by the coronavirus pandemic, there were no further variable remuneration components in the 2020 financial year.

Since Ulrike Riedel was at the same time employed by EUROGATE GmbH & Co. KGaA, KG in the period from July 1 until December 31, 2020, EUROGATE GmbH & Co. KGaA, KG made a reimbursement to BLG KG in the amount of 50 percent of Ulrike Riedel’s salary.

The following tables show the benefits granted to each member of the Board of Management for the 2019 and 2020 financial years, including fringe benefits, supplemented in the case of variable remuneration components by the maximum and minimum remuneration achievable.

¹Some amounts are reimbursed to BLG KG by EUROGATE GmbH & CO. KGaA, KG; the 2020 variable remuneration relates to payments for the 2017 to 2019 financial years

Since it is unlikely that the target threshold for the sustainability bonus for the tranches 2019 until 2021 and 2020 until 2022 will be reached due to the current earnings situation, no provision was recognized for this in the 2020 financial year. The previous grant (provision) for the tranches 2018 until 2020 and 2019 until 2021 was reversed accordingly and presented in the above tables as negative amounts.

The Board of Management already decided in the middle of the second quarter of 2020 to waive both the variable remuneration and the sustainability bonus due to the negative earnings trend in light of the pandemic.

Employee benefit expenses are presented in accordance with IAS 19 as this is the most appropriate presentation method.

On the back of the coronavirus pandemic, the Board of Management voluntarily waived 10 percent of its fixed remuneration in the period from April 1, 2020 until December 31, 2020. Therefore the disclosures relating to benefits granted and benefits received differ. The following tables show the benefits received for each member of the Board of Management in the 2019 and 2020 financial year, consisting of fixed remuneration, three-year EBT incentive and sustainability bonus with differentiation according to the respective reference years.

Some of the members of the Board of Management were granted pension entitlements, some of which are against companies of BLG LOGISTICS. For purposes of comparability these entitlements are disclosed here.

The current members of the Board of Management are fundamentally entitled to receive pension benefits after leaving the BLG Group, but not before reaching the age of 63.

New pension commitments were agreed for Messrs. Dreeke, Bieniek and Blach in December 2015 and for Messrs. Schumacher and Wollesen in February and September 2018, respectively. In addition, a new pension commitment was agreed for Andrea Eck in February 2019. On her joining the company on July 1, 2020, BLG LOGISTICS also assumed the pension obligations for Ulrike Riedel from EUROGATE GmbH & Co. KGaA, KG, Bremen. The pension commitments provide for a retirement and disability pension of 10 percent of the basic salary. They also provide for a survivor’s pension of 60 percent of the agreed retirement pension. If a retirement pension is claimed before the age of 65, the pensions are reduced by 0.5 percentage points for each full month of early claim, but the maximum reduction is 18 percent. No waiting period is provided for.

In amendments dated January 2020, it was agreed with each individual member of the Board of Management that in the event of their leaving the company prematurely without a benefit event occurring, there would no longer be a pro rata reduction in the defined benefits if the vesting conditions were met.

Furthermore, it is possible for Board of Management members to acquire defined benefit pension commitments through deferred compensation.

As was the case in the previous year, members of the Board of Management had not been granted any loans or advance payments as of December 31, 2020. As in the previous year, no contingent liabilities were contracted for the benefit of the members of the Board of Management.

The pension entitlements of members of the Board of Management active as of December 31, 2020 are shown in the table.

Total remuneration of former members of the Board of Management

In the 2020 financial year, the former members of the Board of Management received total remuneration (in particular pension benefits) of EUR 191,000. The present value of pension obligations pursuant to IAS 19 for former members of the Board of Management totaled EUR 5,202,000 as of December 31, 2020.

Remuneration of the Supervisory Board

The remuneration of the Supervisory Board is stipulated in Section 17 of the Articles of Incorporation of BLG AG. On May 24, 2016, the Annual General Meeting approved an adjusted remuneration system for the Supervisory Board for activities from January 1, 2017, which provides for exclusively non-performance-based remuneration. Accordingly, each member of the Supervisory Board receives fixed annual remuneration of EUR 8,300.00. The Chairman of the Supervisory Board receives three times this remuneration, and the Vice Chairwoman as well as the Chairman of the Audit Committee and the Chairman of the Human Resources Committee, provided they are not Chairmen of the Supervisory Board at the same time, receive twice this remuneration. Members of the Supervisory Board who are on the Board for only part of the financial year receive remuneration pro rata temporis. In addition, EUR 1,000.00 is paid annually for membership of the Audit Committee or the Human Resources Committee.

The members of the Supervisory Board additionally receive EUR 500.00 per meeting, and any expenses going beyond that are refunded in the verified amount.

The remuneration of the members of the Supervisory Board in the 2020 financial year is shown in the table.

¹ In accordance with Section 5a of the Senate Act and Sections 6 and 6a of the Ordinance on secondary activities of the state parliament of Bremen, there is a requirement to surrender remuneration received for Supervisory Board work to the state.

² Supervisory mandates within the Group.

In the previous year, the Supervisory Board received remuneration totaling EUR 271,000, of which EUR 163,000 was attributable to fixed payments. The meeting allowances came to EUR 59,000, the remuneration for committee work EUR 14,000 and the remuneration for in-Group Supervisory Board seats EUR 35,000.

As of December 31, 2020, as in the previous year, members of the Supervisory Board had not been granted any loans or advance payments. There were no loan redemptions in the reporting year. As in the previous year,no contingent liabilities were contracted for the benefit of the members of the Supervisory Board. Travel expenses were reimbursed to the customary extent.